New Zealand Film Industry Essay

Why did the New Zealand government offer Warner Brothers incentives to film â€Å"The Hobbit† in New Zealand? Analyse how this will affect the New Zealand film industry and New Zealand society. Warner Brothers, one of Hollywood’s most famous studios, was founded in 1923 by four actual brothers: Jack, Sam, Harry & Albert Warner. On April 4, 1923, with help from a loan given to Harry Warner by his banker Motley Flint, they formally incorporated as Warner Bros. Pictures, Inc. I believe that production of H0bbit movie is benefit for New Zealand economy and New Zealand Government provide that incentives to Warner Brothers. Warner Brothers is the front of any entertainment industry with its films to television, home entertainment/DVD, and inter-active creativity. New Zealand has a reputation of being in the Top Ten filming locations in the universe. Warner Brothers choose to make the film in New Zealand because they know that New Zealand infrastructure is pleasing and natural . New Zealand is an open economy and it is cost-effectively workable and attractive for large budget international productions. Firstly, it is important to know that what kind of advantage to New Zealand with the Hobbit movie. New Zealand has a both advantages comparative and absolute. Comparative advantage means â€Å"A situation in which a country, individual, company or region can produce a good at a lower opportunity cost than a competitor.† (Gans, King, Stonecash, & Mankiw, 2011) And Absolute advantage means â€Å"The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.† According to new Law New Zealand have low labour cost means lower opportunity cost. And New Zealand has land, resources and pervious knowledge. For this two reason New Zealand have both advantages. Warner Brothers has reached a deal with the New Zealand government to keep The Hobbit in New Zealand. As part of the agreement, the government will â€Å"introduce in parliament legislation sought by Warner ’s that would clarify the employment status of film industry workers.† It is being presumed that the intended effect is to, â€Å"make unionization of the film industry more difficult or impossible. â€Å"Ever since Jackson’s LOTR trilogy put New Zealand on the map, so to speak, the country has benefited greatly from the rise in tourists. Indeed that has been factored into a â€Å"long-term strategic partnership† the country has struck with Warner Brothers which will see joint promotion of New Zealand as a film production and tourism destination. The incentives provided to Warner Brothers committed more New Zealand taxpayer money to the movies. (Cheng, 2010) As well as broadening the criteria for its large-budget incentive program – which will give WB an additionally rebate of up to US$15 million – the NZ government will also provide up to US$10 million for marketing costs. On top of the obvious benefit of keeping The Hobbit on home ground, New Zealand will also host one of the world premieres for one of the films. All this just goes to show just how important The Hobbit is for New Zealand. It has been said that the production will pump U.S. $200 million into NZ’s economy. (Cheng, 2010) It is important to know the reason as to why the incentives were offered to Warner Brothers. It is stated that â€Å"the Key Government thinks that this little country can and should afford to pay these subsidies to a giant foreign corporation.† (Roger, 2010) It was highly noticeable of the government when it cowardly agreed into Warner Brother’s demands for limited and striking subsidies saying they were worth it because New Zealand’s opportunity to grow in the economy was at stake as other countries waited in the line for ‘The Hobbit’ movie. The Government was under so much pressure from the other film businesses as rivalry was intense from the UK, USA, Canada, Australia and many more countries as they all wanted a movie like ‘The Hobbit’. That was the reason the incentive of changing labour laws was undertaken in such an urgency as the government did not want to further deviate expenditure of public money while having to fight back to match the massive tax breaks offered by other countries. Warner Brothers received tax subsidies of $100 million and â€Å"government agreed to give up to $34 million of tax breaks† (Cheng, 2010) through civility of New Zealand’s tax payers. More compromises were approaching as the Government eluded the standard democratic process to move forward with Parliament legislation that undermined the Employment Relations Act, and also benefited the international film company with $25 million. The government flaunted this as triumph for the film industry in New Zealand. The New Zealand government or national party is ideologically placed on the right wing of the spectrum. Right wing means In politics, right-wing describes an outlook or specific position that accepts or supports social hierarchy or social inequality. Social hierarchy and social inequality is viewed by those affiliated with the Right as inevitable, natural, normal, or desirable, whether it arises through traditional social differences or from competition in market economies. It typically accepts or justifies this position on the basis of natural law or tradition. Therefore favors free trade, globalization and open markets. They also want more FDI (Foreign Direct Investment) such as the Warner Brothers’ Hobbit investment. (rejuvenation) The NZ Film Industry will be affected both positively and negatively. â€Å"A 2008 report found that film and television industry injected $2.5 billion into NZ’s economy†¦Ã¢â‚¬  (TVNZ-One news, 2010) The positive thing is that the more contractors get to keep their jobs; New Zealand has been able to build its flexible status again after the boycott scenario with The Hobbit. If the movie was not made in NZ then there would have been long term damage to the NZ Screen production sector and the economy. The negative consequence is that Film industry will be affected by the reductions in rights of NZ workers in Film Production as the Warner Brothers do not want to go through any cases regarding employment regulations after losing a case in the Supreme Court during their previous movie production. Warner Bros. has closed its office in New Zealand. The distribution office shut down at the end of May although Warner Bros. reaffirmed its commitment to business in New Zealand and, they said the work would be outsourced to a local company. The shutdown will raise questions in New Zealand because the Government changed employment law and provided tax breaks to get Warner Brothers to make The Hobbit there. For that The Prime Minister John Key said, â€Å"The Hobbit films have created 3000 jobs. They were crucial to New Zealand for our movie industry; it was a very positive step that the Government took. I’m not sure what has happened in Auckland, but I don’t imagine it’s many jobs.† Warner Bros. have had an office in New Zealand since 1947. (News, 2012) If the Hobbit was move from New Zealand than tourism is decrease and most of societies and their livelihood based on the jobs in tourism sectors are may be close and it’s affected very badly. One society in particular would have been drastically affected and that’s the people in Matamata near Waikato region. This would have been a major hindrance as after the Lord of the Rings movie, that place had been made world famous with its Hobbiton set. Although it’s been seven years since the release of The Lord of the Rings, Matamata and the society persist to bring in benefits after the production of The Lord of the Rings attracting more than 200 000 people each year. So by providing incentives to Warner Brothers government has saved the local societies from being drained out of tourism revenues. Changes to labour law were considered unacceptable and unfair law change. The New law was seen to create a default position, categorizing all film production workers as independent contractors. With my evidence now I know I have clear my doubts about what kinds of incentives are provided to the Warner Brothers. I am used the different sources and it’s quite helpful for increase my knowledge on globalization infusion on our economy, government role in economy, etc. I agree that there is an on-going debate with National party in the Parliament since the Green and Labour party continue to oppose the changes of the Employment laws that accommodate the foreign transnational companies’ demands which affect the tax payers either directly or indirectly in our country. The evidence have however raised a question for me and that is whether the NZ Government that poses a nation-state will be able to keep hold of its decision making powers or whether the power will be soon shifted in the hands of dominant international corporations. Bibliography TVNZ-One news. (2010, october 4). Retrieved from http://tvnz.co.nz/entertainment-news/australia-lobbying-hobbit-3816847/video : http://tvnz.co.nz/entertainment-news/australia-lobbying-hobbit-3816847/video Cheng, D. (2010, oct 27). Hobbit to stay in NZ. Retrieved from http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10683486 Gans, J., King, S., Stonecash, R., & Mankiw, G. (2011). Interdependence and gains form trade. In Globalisation and Business Enterprise (pp. 266-267). Auckland: Custom for AUT University, Faculty of Business and Law. News, O. (2012, June 19). Warner Brothers shuts down NZ office. Retrieved from http://tvnz.co.nz/national-news/warner-brothers-shuts-down-nz-office-4937753/video rejuvenation, M. (n.d.). Ideology – The New Zealand Legion. Retrieved from http://www.nzhistory.net.nz/politics/the-new-zealand-legion/ideology Roger. (2010). Retrieved from Roger Award Winner. for the worst Transnational Corporation operating in Aotraroal?New Zealand : htt p://canterbury.cyberplace.org.nz/community/CAFCA/publications/Roger/Roger2