Option 1

We would like to hear what you think about option 1 and the various design choices proposed to enable it.

Developing sector-level skills to enable growth: introduce a skills levy or a skills plan

We are consulting on 2 mutually exclusive approaches to help develop skills and career pathways in New Zealand’s screen sector, through NZSPG settings:

A. A skills levy where productions would be required to pay a percentage of their QNZPE to a government-administered fund established to support skills development.

B. A skills plan where an organisation would identify and regularly update specific skill gaps in the sector. Productions would be required to develop and implement a skills plan to address these identified skills gaps for New Zealanders as part of their production.

Quota requirements were considered as a potential third option. These could be designed to ensure New Zealand-based creative and technical talent have opportunities to develop skills through mentoring and paid internships on international productions. This option was discarded as incompatible with New Zealand’s international treaty and trade obligations.

A. Skills levy

A skills levy would require productions to pay a percentage of their qualifying production expenditure into a workforce development fund. The levy would direct funding into relevant training and development initiatives. The United Kingdom has taken this approach, having first established a levy for a Film Skills Fund in 1999.

Similar to the approach taken in the United Kingdom, it is proposed that a skills levy could be:

• Required from both domestic and international and PDV productions to claim the NZSPG.
• Set at a rate agreed with industry. The rate would likely be a percentage of QNZPE and may be differentiated to reflect the relative size of productions, for example the levy could be in the range of 0.2-0.5% of QNZPE.
• Applied up to a cap agreed by government and industry, which might vary for different types of productions.
• Collected by government as part of the administration of the NZSPG.

If this approach were included in any final proposal put forward, further work would be undertaken on how the levy might be administered.

Possible benefits of introducing a skills levy are that it would be clear and simple for productions to understand, and equitable across productions, as all would be paying the set percentage. It would also be simple to administer the financial deduction. As a levy on QNZPE, the amount of funding generated would remain proportionate to the size of the industry and number of workers participating, and industry would have a key role in determining how the levy was spent, ensuring a direct link from those paying the levy to those benefiting from the levy.

There would be some new administration costs for government associated with the levy, and the implementation of this approach would likely be complex and require elements of discretion in terms of how the levy was spent. Potential market distortions might need to be identified, for example, the impact on skills transferable to other sectors such as game development, or costume, hair and make-up.

B. Skills plan

Under a skills plan, a regular screen skills audit would be undertaken by an organisation/s with the required expertise to identify skill gaps and development needs in the sector. NZSPG-funded productions in their initial application would be required to submit a plan detailing how they would contribute to meeting these needs. Prior to receiving NZSPG funds, the production would need to show how the plan had been implemented. Requirements could differ by size of productions, acknowledging the differing training and development opportunities. The Screen Sector Strategy 2030 proposed that projects benefitting from the Screen Production Grant engage local creatives to provide work opportunities for screenwriters, producers, actors and directors.

This approach has been adopted in Ireland. To have an application approved under Ireland’s screen incentive (the Section 481 Film Tax Credit), international productions must submit a Skills Development Plan outlining how they will provide opportunities and learning experiences to inexperienced workers in the sector. A similar approach has been used in Georgia USA, where the Georgia Film Academy in Atlanta works with government and industry to help build a screen-sector workforce

The skills plan proposed would be similar to the approach taken in Ireland. It could:

• Consist of a screen skills audit to be developed and regularly updated by a relevant organisation. In addition, guidance would be provided on the types of roles and activities being targeted, informed by the screen skills audit.
• Identify specific, current and anticipated future skill gaps for the sector as well as opportunities to upskill and develop the workforce.
• Be publicly available and open to feedback from industry.
• Require productions applying to the NZSPG to develop a skills plan demonstrating how they will contribute to addressing the needs that have been identified while they are in New Zealand.
• Require productions to report on skills plan initiatives and outcomes before a final NZSPG payment is approved.
• Include a plan to monitor and evaluate the outcomes over time.

The skills-plan approach would help provide a much clearer understanding of the current makeup of industry skills, and current and future skills needs, which would benefit industry, government and training establishments. The onus would be on productions, which are closest to the skills needs of the sector, to describe how they would address those needs.

The requirement itself would be easy to understand, but there would be significant costs to both industry and government associated with preparing the plan and undertaking an annual skills audit. Also, the implementation of a skills plan might be relatively complex and require discretion around the types of skills to target. It is likely any skills plan would need to be assessed to ensure it met the required standard.

Supporting cultural content and creative talent: introducing new cultural content and creative talent criteria for domestic productions

There are opportunities to change the criteria of the Significant New Zealand Content Test to enhance the cultural value of government investment in the screen sector. As New Zealand’s population and communities change, the value of diverse content increases. Strengthening the cultural content and creative talent criteria to incentivise stories that reflect a wide range of New Zealand perspectives and culture could mean that more New Zealanders see themselves reflected in the films and television series produced. Supporting high-quality productions that tell a diversity of New Zealand stories also opens opportunities for global audiences to experience unique and compelling New Zealand content.

We are consulting on three potential approaches to target cultural content and creative talent. These are intended to be high-level approaches and therefore do not yet have specific detailed criteria or an assessment framework. We are seeking feedback on which aspects of cultural content and creative talent would be most beneficial to target with new criteria.

The 3 potential approaches are:

A. Targeting cultural content directly through a range of content-based criteria.

B. Targeting cultural content indirectly through focusing on the quality, quantity and diversity of New Zealand creative personnel involved in the production.

C. Targeting a mix of both content and personnel.

Annex 2 presents a comparison of the status quo (the Significant New Zealand Content Test) against the 3 potential approaches.

View annex 2

A. Targeting cultural content directly through a range of content-based criteria

Criteria focusing on content would include direct provisions to create a clear line of sight between cultural objectives such as telling New Zealand stories and expressing New Zealand’s unique culture, including authentic representation of our indigenous Māori culture.

However, determining what can be considered a culturally significant or a uniquely New Zealand story can be a challenge. New Zealand producers and other creatives have previously expressed a view that it is important that New Zealand content encompass stories that are from here but not necessarily overtly Kiwi or relevant to New Zealanders.

It is relatively common internationally for screen incentives to include a content test aimed at achieving cultural outcomes, though the criteria within these are often broad and generally applicants are not required to meet all criteria. The table below outlines criteria that could be included in the design of cultural and creative provisions directly focused on content.

To ensure we incentivise a range of storytelling showcasing broad New Zealand cultural perspectives not all aspects of the criteria would need to be met.

Table 1: Possible criteria to achieve cultural and creative objectives by focusing on content

Depending on how the criteria are applied under this approach, productions set in New Zealand or with New Zealand principal characters or stories are more likely to be supported. However, reality TV productions or other productions that are produced locally but are not set in New Zealand or do not tell a New Zealand story are more likely to find it difficult to meet the criteria.

An advantage of pursuing cultural and creative objectives through targeting NZSPG criteria towards specific elements and attributes of production content would be the ability to connect the criteria directly to the Government’s investment goal to support the development of high-quality and compelling New Zealand content.

A possible concern with this approach is that it may not be seen as appropriate for government to determine what counts as cultural content in this way, however this risk can be reduced by designing a test that retains flexibility to respond to cultural values and shifts over time.

B. Targeting cultural content indirectly through New Zealand creative personnel

Cultural content and creative talent criteria could be used to build the quality, quantity and diversity of New Zealand personnel in key roles in order to support indirectly the development of high-quality and compelling New Zealand content. This could generate a range of additional benefits including enabling more New Zealanders to take on skilled and higher-paid roles on and off screen; upholding the principles of the Treaty of Waitangi by supporting Māori to achieve their aspirations; and ultimately developing a more vibrant, resilient and sustainable screen sector

To ensure we incentivise a range of storytelling showcasing broad New Zealand cultural perspectives not all aspects of the criteria would need to be met.

Table 2: Possible criteria to achieve cultural and creative objectives by focusing on personnel

Under this approach the incentive is agnostic on content depending on how the criteria are weighted.  Films, TV and documentary productions are likely to meet the criteria if they have New Zealanders in key creative roles.

A focus on personnel rather than content indirectly targets the objective of supporting the development of high-quality and compelling New Zealand content. This approach might produce some of the same outcomes as the current NZ Significant Content Test. For example, under current settings, reality TV productions are ultimately treated the same way in terms of meeting content test requirements and accessing NZSPG as other more culturally distinctive or unique stories and content. This is not solely a function of the current NZ Significant Content Test criteria; it also reflects wider NZSPG settings. Reality TV is an approved format in current NZSPG criteria whereas in some other countries it is specifically excluded. 

A new approach to achieving cultural and creative objectives that focused specifically on personnel would need to consider carefully the definition of who qualified under different criteria in order to access the incentive.

A potential benefit of this approach is that it would remove the need for government to define what culture was in a screen context, and instead focus government investment on developing the strength and diversity of the system, by empowering creatives to do what they do best, with government taking more of a supporting and enabling role. This systems approach would be more in line with government’s role in other parts of the arts and cultural sector.

C. Targeting a mix of both content and personnel

Simultaneously targeting New Zealand content and New Zealand personnel could have the greatest likelihood of achieving wide-ranging cultural and creative objectives. It could also present the greatest opportunity to achieve some of the other  goals of the review, such as supporting business growth, sustainable careers and sector resilience through providing opportunities for both New Zealand creative talent and New Zealand stories being told.

This approach would  be somewhat unusual in terms of the wider international context; while incentives in other jurisdictions contain criteria to target cultural content and personnel (sometimes through quotas), they are rarely combined in this way to achieve multiple benefits.

To ensure we incentivise a range of storytelling showcasing wide New Zealand cultural perspectives not all aspects of the criteria would need to be met.

Table 3: Possible criteria to achieve cultural and creative objectives by focusing on personnel and content

Depending on how the criteria were weighted under this approach, productions with a mix of both New Zealand content and creative crew would be more likely to find it easier to meet the cultural content and creative talent test. 

How might new cultural content and creative talent criteria be applied?

Under any of the three proposed approaches, a points test could be applied. This is the case under the current Significant New Zealand Content test criteria, with applicants required to meet a minimum level of points in order to access the incentive. Awarding of points would be cumulative and would be based on meeting a minimum number of criteria such as those proposed in the above table. The strength of the test would come from which parts or sections were mandatory and how each section was weighted. 

The design of cultural content and creative talent criteria could retain flexiblity to determine on a case-by-case basis if provisions were met. This could include devolving decision making to a group of people and/or organisations with the cultural competency and screen sector expertise to assess if a production met the criteria. Developing protocols to assess productions with Māori content, stories and characters, alongside Māori, would be a key part of this approach and build from the work done by the NZFC in its Te Rautaki (Māori strategy).

Mechanisms to strengthen protections for unique intellectual property could also be explored as part of the development of the new cultural content and creative provisions.

Offer 20% rate for the NZSPG-PDV

The competitiveness of the NZSPG-PDV could be improved by removing the 18% sliding scale and offering a 20% rate for all productions. Sector stakeholders have noted that the sliding scale is counter-productive, dissuades studios from bringing PDV projects to New Zealand, and has studios locating work elsewhere if a project gets close to the cap.

PDV work is globalised and the market to attract this work is competitive. Currently, Australia offers an offset of 30% supporting work on post-production, digital and visual effects production. This can be combined with up to 15% from state and territory government incentives. British Colombia offers an additional 16% for PDV activity on top of the basic Production Services Tax Credit rate of 28%. California offers an additional 5% Uplift for visual effects on top of the 20% base offering, while Louisiana offers 5% on top of the 25% base for visual effects.

There is a growing demand for PDV work that has been boosted by the growth in streaming content and high-budget TV series. The types of jobs that support this work are typically higher-paying than the national average and require some form of tertiary education. Attracting PDV work to New Zealand supports the Government’s objective for a high-wage and low-emission economy.

Clarifying the 5% Uplift eligibility process

The 5% Uplift provides an additional 5% rebate on QNZPE on top of the 20% base rebate rate offered under the NZSPG-International. If a production is approved for the Uplift, they will be eligible for 25% rebate on all QNZPE for the production.

The 5% Uplift was introduced in 2014 as part of the NZSPG-International to incentivise a range of spill-over benefits from international productions locating in New Zealand. Targeted spill-over benefits include raising New Zealand’s profile internationally, attracting high-value tourists, exposure to knowledge, opportunties for technology transfer, and profiling our creativity and innovative people. Currently, there is no quantitative evidence to suggest New Zealand is realising these potential benefits from our investment in the 5% Uplift.

The Uplift process comprises four steps: invitation, assessment, decision and agreement. MBIE and the New Zealand Film Commission (NZFC) have sole discretion to issue an invitation for a production to apply formally for the Uplift.

Once an invitation is issued and an application is received, the Significant Economic Benefits panel assesses whether the application meets the Significant Economic Benefits test (SEB test). This requires the SEB panel to determine whether the value (including economic benefit and industry development) to New Zealand of the activities to be undertaken by the applicant and production meets or exceeds the value of the 5% Uplift applied for.

Since the NZSPG was introduced, seven productions have entered into MOUs to receive the 5% Uplift, with five productions receiving funds so far.

While the additional 5% Uplift is attractive to international studios, stakeholders consistently inform us that the application process is a significant barrier to choosing New Zealand as a location for large productions. The current process carries a high level of uncertainty for productions around whether they will be invited to apply formally for the Uplift, and a lack of clarity around the specific additional activities that the production would be required to deliver to receive the 5% Uplift.

 In its current form, the 5% Uplift process appears to be a disincentive for live productions locating in New Zealand, as it does not provide the necessary assurances to producers considering New Zealand during the development or pre-production phases of a project when location decisions are being made.

To add certainty and reliability to the 5% Uplift, we propose removing the invitation process and introducing a clearer criteria-based process. This would support certainty for studios and may help to ensure the spill-over benefits that 5% Uplift targets are equal to, or greater than, the additional rebate payment made by government via the Uplift. Some options for improving the certainty and clarity of the 5% Uplift process are as follows: 

A. The introduction of a clearer points test that awards points values for specified and measurable actions. These actions could still broadly align with the types of activities considered within the current Uplift criteria (e.g. skills development, tourism benefit, infrastructure, innovation), but the test would be more specific and prescriptive about what type and scale of activity must be delivered to receive these points. A minimum threshold points value would need to be met

B. The introduction of a requirement for the production to invest a specific amount in each category in order to obtain the 5% Uplift (this could either be as a percentage of the final Uplift amount received or it could be by specified investment thresholds). This approach would be similar to the above but would require reaching specific levels of investment rather than a points system to access the Uplift.

How we see Option 1 proposals changing policy settings for the NZSPG

NZSPG-NZ

• The Significant New Zealand Content Test would be removed from existing criteria. Domestic productions receiving the NZSPG-NZ would be required to meet new cultural content and creative talent criteria (approach A, B or C) explicitly targeting cultural and creative outcomes. 
• Productions getting support through the NZSPG-NZ would be required to support the skills and career development of New Zealand cast, crew and businesses. To achieve this, additional requirements would be included in the NZSPG-NZ criteria. Skills and career development requirements could be directed at the whole of the sector, or at supporting the development of creative talent more specifically.
• All other aspects of the NZSPG-NZ remain the same.

NZSPG-International

• Productions getting support through the NZSPG-International would be required to support the skills and career development of New Zealand cast, crew and businesses. To achieve this, additional requirements would be included in the NZSPG-International criteria. Skills and career development requirements could be directed at the whole of the sector, or at supporting the development of creative talent more specifically.
• An improved 5% Uplift process.
• All other aspects of the NZSPG-Int would remain the same, including the 5% Uplift aimed at attracting significantly large productions for spill-over benefits.

NZSPG-PDV

• To support PDV activity remaining internationally competitive, this option could remove the sliding scale for NZSPG-PDV, so that any production work would receive the same 20% of QNZPE.
• All other aspects of the NZSPG-PDV would remain the same.

Attraction and promotion

• Attraction and promotion activities would be tailored to support this option and could include engaging key studios so they are aware of and plan for skills development as part of any production locating in New Zealand.

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