Here comes Amazon, thanks to big subsidy

Amazon, one of the world’s largest companies, is coming to New Zealand thanks to a deal with the Government which will see hundreds of millions of dollars in film subsidies paid out to the firm.

The company is already in the country, filming a TV series based on The Lord of the Rings, but following an agreement with the government about the massive subsidies attached to the film, set to run into the hundreds of millions of dollars, Amazon has agreed to send a team of its senior employees to New Zealand and look at ‘‘opportunities’’.

The company committed to looking at research and development in sectors as diverse as drones, costume design and healthcare.

There’s no word yet on whether the company will open a distribution centre for its famous online shop in New Zealand, which would likely upend the local retail sector.

Short of running a local innovation fund, Amazon isn’t obliged to open up a business in New Zealand. Instead, it’s committed to running an innovation programme alongside the films.

The company’s agreement with the Government said it will look at research and development relating to marketing of augmented reality and gaming, as well as the production of drones used for filming and costume design.

Economic Development Minister Stuart Nash said the company would look at areas to innovate in the New Zealand economy that corresponded with the needs of each season of the series. He defended the cost of the subsidies.

‘‘This will be the largest television series ever made,’’ Nash said. ‘‘These grants are part and parcel of the international film industry, and without this you don’t get a look in the door.

The production is talking a big game. One of its application

documents estimated it would lead to 51,000 nights spent in hotels, 76,000 car hires, and 29,000 truck and van hires.

A Deloitte report said the production would help the screen sector add $500 million to the economy by 2024.

The deal, technically a memorandum of understanding, was arranged after Amazon sought a greater subsidy than was available to many ordinary productions under New Zealand’s screen production grant scheme.

All productions get a 20 per cent rebate of spending in the country, but large productions that offer ‘‘significant economic benefits’’ are invited to apply for an additional 5 per cent rebate, which they negotiate with the Government.

Thanks to a long-running Official Information Act request, Stuff can reveal the details of those negotiations in which no stone was left unturned.

The Government even negotiated for a member of the NZ Film Commission to be ‘‘escorted down the red carpet’’ at the series premiere, to be given the ‘‘opportunity to speak with interested members of the press’’.

The deal has grown out of the massive taxpayer subsidy for the Lord of the Rings films. For every dollar spent in New Zealand, Amazon will receive a 25 cent rebate.

Parliamentary written questions have revealed that it estimates the Government to be on the hook for $1 billion over the next five years to subsidise The Lord of the Rings and other films.

‘‘These grants are part and parcel of the international film industry.’’

Stuart Nash

Economic Development Minister