Jackson’s $111m Wellywood deal
Weekend Herald investigation finds call to ease support ignored after PM met moviemaker. Matt Nippert reports
Prime Minister Jacinda Ardern and economic development minister David Parker met film heavyweight Sir Peter Jackson three weeks before the pair were involved in a decision to reject official advice recommending surging taxpayer support for the sector be curbed.
In written statements, both Parker and Ardern this week said their decision wasn’t informed by lobbying from Jackson.
“I had already formed the view,” Parker said.
Ardern, who was involved as Arts Minister, said “the decision wasn’t based on that [meeting], but rather my long-standing support” for film subsidies.
A representative for Jackson — the largest single player in the New Zealand film industry — this week did not respond to emails with detailed questions or phone calls.
Act MP David Seymour was incredulous at the Minister’s claims to have made their decision independent of Jackson’s lobbying. “Anyone that believes that needs to know weed isn’t legal yet,” he said.
An eight-month Weekend Herald
investigation has found the subsidy scheme in question — the Screen Production Grant (SPG), which induces international films to be made in New Zealand with payments of up to 25c for every dollar spend in-country — has seen $111.6m in taxpayer funds spent supporting the work of Jackson’s Weta Group since July 2015.
Officials note the $111.6m figure doesn’t include recent and upcoming payments relating to work done or under way by Weta on the big-budget Mortal Engines or the in-production sequels to Avatar.
The level of government support for Jackson’s businesses — 99 per cent of which goes to special-effects house Weta Digital — has increased to at least $40m a year, comparable to or exceeding the annual budgets of state broadcaster Radio New Zealand ($38.9m) or arts funding body Creative NZ ($43.6m).
A landmark report by Sapere, commissioned by the Government and released publicly in June, concluded the film industry was now reliant on subsidies and was unable to
While I generally dislike distorting subsidies, I accept they are a fact of life . . . David Parker
conclude if the SPG was delivering taxpayers value for money.
This report led the Ministry for Business, Innovation and Employment to join Treasury in recommending measures be put in place to limit public expenditure.
SPG spending on international film productions has nearly tripled in the past three years — rising from $58.6m in 2016, to $149.3m last year, according to figures supplied by the New Zealand Film Commission — leading MBIE to repeatedly breach its budget and raising official concern about escalating costs.
This current high level of expenditure is forecast to continue, largely due to agreements signed in 2013 committing the Government to provide hundreds of millions to support the upcoming Avatar sequels being filmed in Wellington.
Officials from MBIE and Treasury suggested exploring a cap on annual SPG spending. Briefings to Ministers noted such a measure — although in place in film-destinations such as Australia, California and Ireland — “would not be favourably received” by the New Zealand film industry.
The Weekend Herald investigation, conducted mainly through the Official Information Act, revealed multiple meetings between Ministers and Jackson’s Weta Group in mid-2018 when the curb was being weighed.
On August 15, Ardern and Parker held what official briefings described as a “side-meeting” with Jackson and his partner Fran Walsh after a public event at one of Weta’s buildings in Miramar. This meeting was not listed on ardern’s public schedule.
A week later, on August 23, Parker and three other ministers — Grant Robertson, Clare Curran and Kris Faafoi — visited Weta headquarters in Miramar.
On September 11, four Ministers — Ardern, Parker, Robertson and Curran — met officials in Wellington and decided to abandon policy work on measures, including a cap, that might limit taxpayer exposure.
This decision came despite a briefing prepared for this meeting noting: “MBIE and Treasury are concerned about the level of fiscal risk associated with an uncapped scheme with few levels to maintain fiscal control, in the light of the inability to quantify value for money with any certainty.”
Parker defended meeting Jackson and Weta, and reiterated the September decision was unaffected by any lobbying.
“Whilst it would not be inappropriate in any event, I had already formed the view that we should continue uncapped funding. Capping creates uncertainty and issues around continuity,” he said.
“While I generally dislike distorting subsidies, I accept they are a fact of life in the big film industry ...”
Ardern said: “I have been a consistent and long-term advocate of the [SPG]. I have seen the jobs it helps to create, the creative opportunities it supports and the pride it brings to New Zealand when we see our country, actors and labour on the big screen.”
Act’s Seymour was scathing of both the decision to keep the subsidies running without financial controls, and the process to reach it.
Seymour said Labour were hypocrites given they campaigned strongly against the decision-making surrounding the last Government’s implementation of the “Hobbit Law”, which smoothed the path for Jackson’s Middle Earth trilogy with employment law changes.
Figures released by MBIE on support for Weta Digital suggest $40m of annual SPG support is used to generate the company about $200m in annual revenues. According to companies office filings, the firm is controlled by Jackson and Walsh who have a 75 per cent stake.
The OIA releases suggest each job at Weta Digital — the company employs 1600 people, most of whom are contractors and a quarter of whom are said to be on work visas — is underpinned by an average annual subsidy of $30,000 per year.
While Weta did not respond to questions this week, in interviews last year management emphasised subsidised work at its Digital arm had flow-on benefits for other part of their business, including several hundred largely non-subsidised jobs at propmaker Weta Workshop.
Text messages between MBIE and Weta show the film company has objected to information being released to the Weekend Herald. A Weta official said in September there was “a fair bit of unhappiness with this on top of what occurred last time” over a decision to partially unredact some financial information.
It is believed the reference to “last time” relates to OIA disclosures in 2014 relating to the extent of lobbying behind the controversial “Hobbit Law”.
The Weta official told MBIE it would push back: “I have been asked to advise that we will be seeking a legal review of this process.”
The Ombudsman has for months been investigating MBIE’s withholding of details relating to financial support for Weta after complaints from the Weekend Herald.
An MBIE official this week said Weta was “entitled to seek their own legal opinion” about information releases, and expressed “regret” over unlawful delays — in some cases, months — to OIA requests about the issue.