You and I have forked out $191 million, via tax rebates, for Sir Peter Jackson to make hobbit movies. Up to March 2014, the taxpayer had given the film industry $258 million in direct grants and subsidies. At the time, Minister of Economic Development Steven Joyce said the money would create 3000 new jobs and bring other significant direct economic benefits.
Subsidies are generally a bad idea. We country folk know it well. Bankrolling the film industry works until someone else raises the ante and the industry decamps en masse to Albania, Arkansas or Alaska,
California has reintroduced massive payments to film makers to counter the move away from Hollywood to places like – you guessed it – New Zealand!
Meanwhile, in Central Hawkes Bay we are trying to build a dam to irrigate thousands of hectares of farmland.
Local MP Alistair Scott says the construction of the dam alone will increase employment in Hawkes Bay by 3.5% and increase GDP by 4 %. The tax take on the increased GDP alone will be $150 million, according to the man I talked to recently at Statistics NZ.
Economists assessing the project say that the fully operational scheme will create 2500 jobs in Hawkes Bay and add 1.5 % to GDP on a permanent basis .This will generate another $150 million in tax revenue per annum.
So the dam – costing $280 million – will return $300 million to the Government pretty well straight away.
It is easy to shift movie cameras and film stars. No one has yet worked out how to load a lump of concrete and a lake – weighing several million tonnes – into the hold of an aircraft and take it offshore. So the dam will keep producing revenue and jobs long after Sir Peter Jackson and co have moved elsewhere.
Minister Joyce says he may lend the dam project $80 million, but he wants commercial interest rates and the money repaid in three-five years. Jackson and co don't have to repay a cent.
So here's the question: if Mr Joyce thinks it is clever to give $258 million to an industry that is risky, transitory, barely profitable and can operate anywhere in the world, would it not be just as clever – some might say even cleverer – to give $286 million to a sector that is a stable, profitable and a permanent resident?
The water will be benefiting the nation long after Bilbo Baggins has, thankfully, been eaten by Orcs.
• Tim Gilbertson farms in Central Hawkes Bay. He is a former chairman of Waipukurau Fed Farmers and was mayor of CHB for six years before a stint on the HB Regional Council.
