Avatar delivers $307m to New Zealand economy

Economic Development Minister Gerry Brownlee says the filming of the Golden Globe Award winning movie Avatar in New Zealand delivered more than $307 million expenditure to the economy.


Avatar is on track to be the biggest grossing movie of all time, having overtaken "The Lord of the Rings: The Return of the King" and sold over US$1.6 billion worth of tickets at the box office.


"Attracting large budget film productions here offers wider benefits to the economy, including increased opportunities for New Zealanders as well as tourism benefits from having New Zealand locations shown to an international audience," he said. "Avatar has set a new standard for visual effects and this showcases our capability in what is a high value, high technology sector of our economy."


Mr Brownlee said this expenditure was made possible through the incentive of the Large Budget Screen Production Grant (LBSPG), which offers a 15 percent rebate on production expenditure over a certain value within New Zealand. Based on Avatar's qualifying production expenditure of $307m in New Zealand, it received a grant of around $45 million from the LBSPG.


Since the inception of the LBSPG in 2003, overseas movie and television productions have spent more than $1.42 billion in New Zealand, which has resulted in grant payments of $189.4 million.


Mr Brownlee says it is unlikely these productions would have decided to film in New Zealand if this grant had not been available as most locations offered an incentive to film in their territory or country.


"New Zealand's connection to the success of Avatar will continue to deliver huge benefits to the country and will help to attract more large budget productions here in the future."




Q&A on the Large Budget Screen Production Grant


How much has Avatar received from the Large Budget Screen Production Grant?


To date, Avatar has received a total of $44.69 million from the Large Budget Screen Production Grant. This is based on qualifying expenditure in New Zealand of $307 million.


What other productions have received support recently?


Aside from Avatar, other films receiving grants in the year to 30 June 2009 included the films Wolverine, Jumper, The Day the Earth Stood Still, They Came From Upstairs, Underworld 3 and Prince Caspian, as well as the latest in the Power Rangers children's TV series. In total, $47.87 million was paid in grants in that year, with qualifying expenditure by those productions totaling $319.49 million.


What productions have been supported in the past ?


These include "King Kong", which got $48.7 million based on qualifying expenditure of $389 million. "The Lion the Witch and the Wardrobe" got $16.7 million based on qualifying expenditure of $133.8 million and "Prince Caspian" got $9.5 million based on qualifying expenditure of $71.2 million.


What is the rationale for the grant?


The grant aims to increase economic growth by providing a financial incentive to attract large scale screen production to New Zealand, which would be unlikely to come in the absence of such incentives. The LBSPG provides a comparable incentive to that being offered by other jurisdictions, in particular the Australian Government.


Attracting large budget film productions here offers wider benefits to the economy in the form of increased opportunities for New Zealand crew, more use of our digital capabilities (including driving new innovations such as digital effects), the chance to learn from international crew, and the associated tourism benefits from having New Zealand locations shown to an international audience. These benefits are consistent with the government's Economic Growth Agenda focus on growing high value services.


As a result the government is committed to the development of a sustainable and vibrant screen production industry in New Zealand, and is keen to promote New Zealand as a film-friendly and competitive location.


How do large screen productions benefit our high tech sector?


Films made in New Zealand not only showcase New Zealand's landscapes, but also our innovative and technological capabilities in ways and on a scale few other projects or products can achieve.


There is a specific post-production, digital and visual effects incentive that recognises New Zealand's strengths in digital and visual effects. This is intended to act as a catalyst for growth in this sector, to enable New Zealand to attract more of the total international post-production digital and visual effects market.


How well is New Zealand doing in the screen sector?


Very well. The sector received gross revenues of $542 million from overseas sources in the 2008 year. This puts us at number 3 in the world for foreign exchange expenditure behind Canada and the UK.


Do New Zealand crew and actors benefit from the grant?


Yes. Recent exit surveys completed by productions applying for the grant have shown approximately 97% employment of New Zealand crew and 93% of New Zealand cast, which is a marked increase over past figures.


How does the Large Budget Screen Production Grant work?


The grant provides a 15 per cent rebate on total qualifying production expenditure where the New Zealand expenditure is more than $15 million.



Applicants must either be:



A New Zealand resident company, or

A foreign corporation with a fixed establishment in New Zealand for the purposes of lodging an income tax return (both when it lodges the grant application and when the grant is paid)

There is a robust audit process to assess each application for the grant. All applications received are audited by an independent auditor and compared with Inland Revenue Department receipts. The final decision on the grant payment is made by a panel (led by the New Zealand Film Commission, which takes the lead on administering the grant, and includes industry and government representatives).\


Further Information on LBSPG Criteria


http://nzfilm.co.nz/RegulatoryApprovals/LargeBudgetGrantScheme.aspx