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What Cost To Keep THE HOBBIT In New Zealand?

by Todd Brown, October 27, 2010 10:51 AM


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New Zealand Prime Minister John Key made a lot of noise insisting that New Zealand wasn't going to engage in a bidding war to convince Warner Brothers to keep production of the The Hobbit in the country. Apparently by this he meant that the nation intended to simply hand the keys to the entire Kiwi film industry over to the company instead.

So, yes, The Hobbit will shoot in New Zealand. But how are Peter Jackson and the protesting masses going to feel about the terms that were agreed to to keep it there.

First there is the money. The New Zealand government have agreed to 'broaden' the terms of the government support scheme for high budget films, a move that should put an extra fifteen million dollars into Warner Brothers pockets for shooting there. That's fifteen million above what the already generous existing program would pay. And, bizarrely, the government is refusing to say exactly what this 'broadening' entails, saying that the changes in criteria are a "commercial secret" apparently available only to Warner Brothers. Read: This is not actually a change to the subsidy program but a one time payoff.

In addition to the fifteen million dollar payment New Zealand is also paying ten million dollars towards Warner Brothers' marketing costs of the film, justifying the payment as part of a "long term strategic partnership" to promote New Zealand as a tourist destination. So in terms of cash out of pocket, the government is paying an additional twenty five million dollars on top of the previously existing subsidies.

But where things get flat out ugly is in the non-financial part of the deal. Key has agreed to introduce new legislation to the New Zealand parliament, legislation expected to effectively block the possibility of the film industry in New Zealand unionizing. Yes, Warner Brothers is now dictating New Zealand labor policy and the government is playing along. This, to put it mildly, is distasteful in the extreme - both that Warners would have the nerve to ask it and that the government would allow a foreign corporation to dictate internal policy for profit. In a string of ugly, ill advised moves surrounding The Hobbit, this strikes me as the worst.

At Mubi

20 Comments

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Couple that with the fact that there is little artistic reason for bother with THE HOBBIT, as things were done well (and properly) with LORD OF THE RINGS. This has always smacked as lucre, lucre, lucre, and this is just more of the same, broadening into politics and labour. Oh my.

Disgusting, and probably very likely annoying enough (coupled with 3D bullshit and taking a short book and blowing it up to 2 films! Profiteering at its finest, WB!) that I'm not going to bother to see these films when they come out.

It will be a serious enough compromise to take the light and sing-song nature of the HOBBIT and very likely (my speculation anyway) graft it into the more serious and ominous aesthetic laid out by the Lord of the Rings trilogy. The books are radically different in tone, but don't expect that for the Hobbit Vs. Rings....

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No artistic reason to make the Hobbit?! Come on Kurt, a lot of people hold it in much higher esteem than LoTR. It's set in the same world but its a different story, people want to see more of Middle Earth. It's not often you get a golden opportunity like this, a sequel or prequel to a fantasy film that worked very well. And that is at the same time possible to improve on: hopefully they stick a bit closer to the book this time and reign in Jackson's passion for over the top action moments.
But about those Warner siblings I couldn't agree more, that is sick. I understand they need a certain financial guarantee that their production wont be disrupted by idiots (or maybe paid agents) like that female doubletalking labour leader. But to squeeze money out of them and maybe even hobble the unions completely, that is gross. The price might be worth it in the end, NZ will get amazing exposure, their film business will be vitalized, and we get a perfect Middle Earth.

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"This, to put it mildly, is distasteful in the extreme - both that Warners would have the nerve to ask it and that the government would allow a foreign corporation to dictate internal policy for profit."



Why should Warner Bros. act any differently than any other enormous American company? Sure, it's disgusting, but it's entirely predictable.

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That they would try is entirely predictable. That the New Zealand government would cave in and go along with it is horrific. I live in Canada, man, I'm well aware of how American business treats smaller economies (or tries to) but if the Hollywood Reporter article is correct on what WB has asked for and is getting in this legislation (we'll know once it's brought forward, I guess) then John Key should be ashamed of himself because he's just sold out his own citizens for years to come in order to land a single gig now. Shortsighted and wrong headed in the extreme.

Todd, I just realised you are the one who wrote the article, and as someone who - shockingly - lives and works in New Zealand I thought I would put my nerdrage aside and respond to your article.

First, the additional money being rebated back to warners is predictable and, in the grand scheme of things, New Zealand still stands to win from this. My brothers lives in Morrinsville, and many people in that town are constantly employed taking 'Hobbit Tours'. That industry alone would pay for this.

Plus, in New Zealand we have a fairly generous social security system (the Dole) and trust me when I say the cost of paying out to 2500 out of work film workers would be much, much more than the amount offered to warners.

Also, the Employee/Contractor law is a bit of a mess. Has been since around 2000 when the previous (union-supported) government changed it so that your employment contract can be overridden if you are 'treated as an Employee would be'. Especially as film workers seem to be treated differently in this respect as opposed to other contract workers in New Zealand such as sharemilkers etc.


Having this law tidied up will be a massive relief to many, and should ensure we continue to get ongoing, large projects into the country.

Also, our entire GDP is roughly 120 billion NZD. The 670 million NZD injected directly by the Hobbit is a not-insignificant portion of that. Add the tourism it generates, and you can see why the government really wanted to keep it.

I understand you perhaps read about the government changing the law and assumed this was a case of a massive, evil, American corporation doing evil deeds. But trust me when I say that in this case, it's win-win.

Also: Down with the MEAA. That is all.

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Thanks for the local perspective, Bruce. I've written a couple friends of mine who are film makers there for their take on it and should be posting those up soon. From what I've heard the labor laws are a big mess and definitely needed to be looked at but if THR is right about part of this being a move to block unionization then that's still a very, very dodgy move in my book. Clarifying the distinction between a contractor and a full time employee is good but simultaneously putting in measures that would prevent the contractors from unionizing is very definitely not. I guess we'll have to see what the legislation looks like when it's brought forward.

I have seen no hint of the proposed changes blocking unionization in any way thus far. Interesting to see if this does come through, but the sources reported this morning seem to indicate that the proposal simply clarifies that if you have a contract which says you are a 'Contractor', then a Contractor you shall stay.

Also - the NZAE and MEAA could not negotiate with Warners and 3Foot7 (the Hobbits production company) because they are not legally registered in New Zealand as unions. As such, entering into collective bargaining would amount to price fixing. (Price fixing and collective bargaining by non-unions is illegal under New Zealand law. So is compulsory memberhip of a union, except for students).

Ironically if the NZ Actors Equity had maintained it's legal status as a Union, then producers would most likely have agreed to a meeting without fear of landing themselves in court later on, and much of this could have been avoided.

I am still, slightly bemused as to how easily an Australian union with 70-odd New Zealand members and no legal standing managed to nearly derail this whole production and drag the whole thing somewhere else.

Note: For the last few weeks, the NZAE and MEAA have been negotiating with SPADA - the new zealand body that overseas the rights and base pay rates of Actors in New Zealand - and negotiating updated minimum pay rates and conditions. This is the body whom they should have been talking to all along - not Warners, nor 3 Foot 7.

I will post further comments - and links - once the law change is debated in parliament.

Hi there;

Well, the law has been passed, pretty much as expected it clarifies that when you sign on as a Contractor you must stay as one, or get a new employment contract. (This change is, of course, limited to the Film industry).

Link below:
http://www.legislation.govt.nz/bill/government/2010/0229/latest/whole.html

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OI, that was quick! I was expecting this to take a few weeks at least.
Does the NZ-political system always move this fast?

Todd,
National and the big business lobby have been wanting to block all unionization for quite some time.
To pretend this is only about "tidying it up" is being dishonest - to put it lightly.
Bruce pretending that this is such a black and white issue as you seeing this as a problem with the American Empire, is just silly.
What I get from your article is the concern that national appear to be beholden to big business, doing their bidding for them, and keeping us Kiwis in the dark in the process.
Which is dead on from where I sit.

If NZAE was actually a New Zealand Union, I may agree with you about National disliking unions!

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Whoa. Pretty miserable. But I'd be hard pressed to call WB an American company anymore. They are truly a worldwide conglomerate and have offices in every corner of the globe and obviously have the power to sway governments. It just seems odd New Zealand is so desperate for cash on something that has no guarantee of success. But like an gamble, it could pay off big time!

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high risk, high reward. Although I think calling "The Hobbit" high risk is a super stretch and it is "almost" guaranteed success just on fanbase alone.

What a terrible piece of slanted reporting.

First of all, this is a pretty standard rebate (REBATE, not as if New Zealand is giving Warners money out of the coffers) compared to the Ireland and England offers.

Additionally, the law around defining Contractors and Employees in New Zealand is terrifyingly vague at the moment. I.e. if you are a Contractor, with a contract that says as much, you can take the company employing you to court and have Employee status (with the rights and benefits thereof) retroactively given to you if you convince a judge the company treated you like an employee.

You know. By having you turn up at work every day. And providing you the tools to do your job.

This law desperately needed cleaning up, National was itching for a chance to do so anyway, and to claim that this is the country 'selling it's soul' is a slanted piece of sensationalist reporting existing purely to ... uh ... generate pageviews and comments.

So ... good job I guess? You got me.

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If this is a fairly standard rebate then why is Key refusing to answer questions about it and referring to it as a "commercial secret"? If they're changing the rebate system then fine - change the rebate system. But all such schemes (we have several here in Canada) are ultimately funded out of the public purse either through direct payouts or lost revenues and any such changes should be made in public, not kept hidden. In my opinion governments and big business don't hide things unless there's something worth hiding.

With regards to the rebate being standard, I was referring to the amount rather than the details.

The extra $7.5 million per-film tax rebate being 'commercially sensitive' is odd, given that the Government has indicated it will be ongoing and offered for other large productions to 'stay competitive', but I have no doubt that the details will find their way into the public domain before long. (Government in NZ is about as watertight as a sieve).

It's an ADDITIONAL rebate, on top of the already enormous rebates they had been promised. That is the issue.
What's more: to have a foreign company having such an effect on our laws, regardless of whether you support them or not - should be a worry to any New Zealander.
It's yet more confirmation as to how gullible and beholden to big business, rather than actual New Zealand citizens, the National Party are.

Politically, this is going to cost John Key, As it should.

As for labor laws "desperately" needing to be tidied up: that's extremely naive.
National and big business don't want to tidy it up. They They want to destroy unions. They want to repeal the legislation.
Big difference.
If you are in any way actually familiar with this issue, you ought to know that - and if you are, you ought to be a bit more honest about it if you're going to condemn Todd's reporting.
The National Party are, and have been for some time, beholden to multinational companies, who're extremely anti-union(in line with China and every sweatshop haven on the planet, they pretend their motivations are libertarian-oriented - cover, of course, for greed), and are primarily responsible the ever-growing gap between rich and poor in most western countries. The only places where those gaps aren't growing at alarming rates, are in countries you're likely to call commie - because they care about their citizens, and respect their opinions more than those of the boardroom voices of Texas, Beijing and New York.
As for your 'sieve' comment: you miss the point entirely.
It's not that we may eventually find out: it's that John Key agreed to secrecy clauses, when the business is the people's.
Does that even matter to you?

My problem with the characterisation of the rebate as something we have lost is that it is not free money we have handed back - it is money we have agreed not to take from Warners. (Or, more accurately, agreed to take and then hand back).

If the film did not shoot here, we simply would not have that money to hand back. Nor would we have the jobs those films will generate over the next few years.

... as for your comment about National being evil and wanting to destroy Unions etc, well, you must admit that this whole affair has been a *spectacular* own goal for the CTU etc. The MEAA, NZAE and CTU basically created a situation where Saint Key could swoop in and singlehandedly save the entire NZ Film industry from the Evil Unions.

Yes, I kind of find that a little funny.

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What a load of shit Bruce speaks. He, like the NZ government, Peter Jackson and those that demonstrated (over a film, rather than worker legislation which inevitably will be broadened out beyond the film industry) tries to paint in some bizarre nationalistic terms where the country wins but the people involved in the dispute are absolutely shafted.

Yes, New Zealand stands to win, if by New Zealand you mean film executives, the government which has now set a precedent and film directors prone to temper tantrums when they don't get their way like Peter Jackson. Those who actually make these things happen, you know those insignificant thousands involved in film productions, now only have to like it or lump it.

Because what Bruce doesn't mention when talking about contractors, is that as the name suggests, they are very temporary staff with none of the perks you'd have as a permanent worker. That means no sick pay, no cancellation pay for when the contract is terminated, no holiday leave, etc etc. Rightfully, people have challenged it in the past and won through the courts, like James Bryson, who worked for WETA and was sacked. But thanks to the legislation, this is no longer possible. Win win indeed!

This is an article from a group in New Zealand written which explains the reality of the situation.
http://libcom.org/news/behind-spectacle-hobbit-30092010

As an aside, it's slightly parochial and naive to suggest that the problem is an American company abroad at work here. It would make no difference if the company in question was from New Zealand too. This is par for the course for companies the world over. And lets hope those who find themselves affected by this new law agree with you Bruce regarding the dole's adequecy.


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