The case for change

Improvements we want to target through our investment

The current settings of the NZSPG have successfully developed the New Zealand screen sector into a globally recognised screen production centre with established infrastructure, technology and skilled workers. However, this review has identified some areas for improvement in the NZSPG that could support a strengthened skill base, more resilient businesses and stronger economic and cultural outcomes for New Zealand from our investment in the screen sector. The key issues to be addressed are:

• Smoothing the current peaks of production work
• Providing better support for skills development and improving career pathways
• More directly targeting outcomes through changes to the NZSPG structure and criteria
• Strengthening the cultural content test to improve cultural benefits.

This consultation provides an opportunity to help shape refreshed settings for the NZSPG to address these issues and better reflect the changes that have occurred in how screen content is created, distributed and watched since the NZSPG was introduced.

This section has been developed from analysis, a summary of which is included in Annex 1.

Tailoring NZSPG settings to incentivise business growth and stable employment in the sector

Continuity of work was identified through the review as a key issue for workers in the screen industry. Work in the sector is project-based and driven by studio and production company demand, which can make it difficult for the sector to attract, retain and develop skilled workers.

Between 2016 and 2021, New Zealand attracted significantly large productions (over $100m in budget) mainly through the Uplift.^[21] Arguably, this is at the expense of high-quality mid-sized productions (over $50m-$99m in budget). Since 2016, only one production was attracted to New Zealand at this budget. The majority of productions attracted to New Zealand tend to be under $25m in budget.

These large international productions attracted by the 5% Uplift tend to draw in large numbers of workers leading to worker shortages in some skill areas and for domestic productions, which compete for the same labour pool.  

Against this backdrop we have considered ways to amend the NZSPG settings to help support a consistent pipeline of screen-sector work. The way the 5% Uplift is currently structured appears to favour large one-off feature films. Some high-end drama seasons may be less likely to meet the 5% Uplift eligibility criteria.^[22] With the increasing use of streaming platforms to access content and increasing consumer demand for high-end TV drama seasons, there is an opportunity to target both films and high-end TV drama seasons.

The current structure of the Post, Digital and Visual Effects (PDV) Grant may favour larger PDV businesses over smaller ones, as smaller businesses may find it difficult to compete for projects requiring a minimum QNZPE spend of $500,000 to be eligible for funding. While these projects are relatively small internationally, they are potentially very meaningful for a small PDV company in terms of their business development. 

In 2017, the PDV rate was reduced from 20% down to 18% for production spending over a QNZPE $25m threshold. The change was made as part of a general review of NZSPG settings to control the fiscal costs. Since 2017, there has been a decrease in applications for NZSPG-PDV, particularly for high-value projects. This could potentially indicate a decrease in New Zealand’s competitive advantage in comparison to other countries’ support for PDV activity.

NZSPG settings could better incentivise skills development and career opportunities in the sector

The review has identified skill development for screen-sector workers as a factor to target more directly via the NZSPG. There are currently limited settings in the NZSPG that explicitly address skills development, increasing the quantity and diversity of New Zealand creative personnel or crew or enhancing Māori participation and career pathways within the sector.

Clearly defining and supporting skills development and career pathways offers an opportunity to address some concerns identified by screen-sector workers during the review. Employment can be variable and uncertain due to the project-based nature of the sector. Low pay, difficulties with staff retention, and barriers to entry into the screen sector have also been identified as issues.^[23] 

Attracting international productions to New Zealand has helped grow New Zealand’s crew base. There are opportunities to build and enhance New Zealand’s creative talent (e.g., directors, producers, writers and lead cast) and wider personnel and crew to be employed or contracted by international productions. 

Domestic productions play an important role in building the knowledge, skills and craft of local screen-sector workers, and can provide a career pathway for those wanting to move to international productions. They also increase capability and build strength in our domestic storytelling and can provide a strong contribution to the expression of cultural identity, showcasing unique voices and stories that are from and of Aotearoa New Zealand. We also want to harness growing opportunities to boost the export of ambitious and compelling New Zealand content to global audiences.

The NZSPG structure and criteria could be more directly targeted at the outcomes we seek while remaining internationally competitive

Currently, the NZSPG is designed to achieve a range of outcomes, including spill-over economic benefits, cultural benefits and sector-level benefits. To reflect these different outcomes, the current settings of NZSPG offer different headline rates, eligibility criteria and cultural and economic tests.

Achieving greater cultural benefits

The current Significant New Zealand Content Test aims to induce cultural benefits from domestic productions through a points test targeting production activity, crew and content. Analysis shows that productions receiving NZSPG-New Zealand funding tend to have significant New Zealand personnel rather than being about a New Zealand subject matter. An independent evaluation concluded that this does not appear to be consistent with the principle outlined in the guidelines.^[24] Official co-productions receiving the NZSPG for New Zealand Productions do not have to meet the Significant New Zealand Content Test, which means New Zealand content is often not included in these productions.

The overarching aim of the cultural objective in the current NZSPG-New Zealand is to provide cultural benefits to New Zealand by supporting the creation of New Zealand content and stories.  While the current Significant New Zealand Content Test allocates points across four key areas (subject matter, production activity, personnel, and New Zealand businesses), it does not directly and deliberately target specific cultural and creative objectives that the Government seeks to incentivise through its investment. Current criteria also do not give clear expression to the Government’s overarching cultural goal for this review of NZSPG settings, which is to support the development of compelling and ambitious New Zealand content.

Under current settings, NZSPG-New Zealand is structured to focus domestic content at domestic audiences. According to some stakeholders, this may limit New Zealand producers’ ability to target New Zealand content at international markets and enable global audiences to connect with unique, high-quality stories that are from and of this place.

Achieving greater economic benefits

The 5% Uplift incentive is attractive to international studios and brings very large productions to New Zealand, but the application process and meeting the significant economic benefit test has been described by stakeholders as a significant barrier. Analysis has indicated that while productions receiving the 5% Uplift receive the highest proportion of NZSPG-International funding, there is no quantitative evidence showing that New Zealand is getting spill-over economic benefits commensurate with this level of investment.

When looking internationally, we see that other countries structure their screen incentives to target specific outcomes more directly:

• Canada offers a targeted screen incentive for international screen productions subsidising Canadian labour expenditure only.
• Ireland makes no distinction between international and domestic productions with their 37.5% screen incentive. However, all productions are required to meet a cultural content test with specific requirements around Irish and European culture, and all productions are required to contribute to skills development.
• To attract large (over $100m in budget) international screen productions, Australia offers a 13.5% location incentive in addition to its 16.5% location offset. In order for productions to be awarded the location incentive they must demonstrate investment in skills and training of Australian screen workers, Australian businesses, infrastructure, R&D and/or tourism activities. Australia’s application process for the location incentive offers greater certainty and timeliness around decision making.

Culture and creativity are complex. We think cultural and creative outcomes could be better achieved by clearly focusing NZSPG cultural criteria to align with the Government’s investment goal of supporting the development of compelling and ambitious New Zealand content. This could be done through introducing a range of specific and targeted objectives, such as building, enhancing and showcasing New Zealand creative talent; telling high-quality New Zealand stories; and amplifying and celebrating diverse cultural perspectives including Aotearoa’s unique indigenous Māori culture and stories. These objectives could be incentivised through recalibrating the settings to tie NZSPG cultural requirements to key cultural and creative attributes of a production.

There are no clear provisions in the current Significant NZ content test for increasing the quality and diversity of New Zealand creative personnel, or for enhancing Māori participation and Māori career pathways within the sector. Under current settings, and in an environment of low unemployment, the screen sector is likely to struggle to attract and retain workers, particularly if it does not connect with the growing population of working-age Māori and Pacific people who do not have existing connections into the sector. Demand is also increasing for content relating to Māori, Pacific and Asian populations, which are all growing as a proportion of New Zealand’s population.

The principles of the Treaty of Waitangi – partnership, participation and protection - are integral to achieving the Government’s refreshed objectives for investment in the NZSPG. In effect, this means updating NZSPG settings so that they support existing efforts of screen-funding agencies to ensure Māori can participate in the sector and that Māori language, culture, stories and perspectives are protected and promoted. The Māori Media Sector Shift seeks to strengthen and co-ordinate Māori media, and NZSPG settings could complement the shift by supporting indigenous talent and quality Māori content through new cultural content and creative talent criteria.

Valuing, protecting and exploiting intellectual property (IP) is an important issue for the long-term sustainability of New Zealand’s screen sector. Updating NZSPG settings to focus on building New Zealand’s creative capabilities and delivery of high-quality, diverse New Zealand content to a broader audience will boost the creation of unique New Zealand IP and the capacity of New Zealand creators to derive value from it. There is an opportunity for changes to NZSPG settings to help ensure New Zealand producers retain IP ownership and benefit from the commercial exploitation of their projects, including ensuring indigenous IP is appropriately protected.

Footnotes

21. Since 2016, NZ has attracted five productions over $100m in size by production budget. All of these productions received the 5% Uplift – Meg, Mulan, Ghost in the Shell, Pete’s Dragon, Mortal Engines.

22. Minimum eligibility requirements include: the current production must have a NZ$30million QNZPE and the applicant must have incurred NZ$100million QNZPE in the previous five years prior to the date of application.

23. In a 2021 survey for Auckland Unlimited, prospective workforce entrants identified barriers including concerns about job security and continuity, nepotism, and poor working conditions and practices. Only one in five people currently working in the screen sector would recommend it as a career, due to poor remuneration, bad workplace culture, unreliable work/lack of job security, challenging work-life balance, and a general view that the sector is tough and demanding (Perceptions of Careers in the Screen Sector(external link), 2021).

24. Based on findings from Sapere Evaluation of the New Zealand Screen Production Grant Report 2017

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