Auckland Sunday Star-times (11-7-99)
The movie Lord of the rings-set to start production in New Zealand in October has received a $100 million funding boost, making it the second most expensive movie production ever. The film industry is abuzz with the news the budget for the three-part blockbuster adaptation of JRR Tolkien classic has been increased from $260 million to $360 million. It is second only to Titanic($470 million) as the most expensive movie production ever and more than ten times larger than any previous New Zealand production.
The RINGS project was "green-lit"-industry speak for getting the go-ahead -a month ago. A statement from Los Angeles yesterday, which confirmed 18 year old Elijah Wood in the lead role of Frodo Baggins, said production would start in October and take a year. RINGS Wellington based director and film maker Peter Jackson is believed to be under orders from the project's American backers, New Line Cinema not to discuss the trilogy without permission. Two highly placed film industry players said sources within the project had disclosed the film had been given another $100 m. New Line had, in effect, accepted the initial $260m budget would be over run, said another source. Publicist Sian Clements would not comment. Jackson was also responsible for the biggest budget New Zealand film to date, The Frighteners, which cost almost $30m.However another American film project, Vertical Limit, will break that record with a $94.3m budget. It starts shooting in Queenstown this year. While locations for RINGS have not been announced, film production houses report a flood of work offered in the last fortnight. "You can't get a carpenter in Wellington for love nor money" said one film technician. Post-filming production is also expected to be carried out in New Zealand, mainly at the old National Film Unit in Lower Hutt, which Jackson recently brought.
Yesterdays statement from Los Angeles said the RINGS trilogy would be produced consecutively. The script for part one, The Fellowship of the Rings, had been written and additional casting was under way. The RINGS go-ahead flies in the face of warnings last week by a Los Angeles based film finance packager, Richard Reiner, that tax changes slipped through parliment had made New Zealand a less attractive place to invest in films.
In a move which sparked no formal response from the local film industry, the government ended from last November a system which had allowed investors to claim twice for expenses associated with production of the film. Reiners company, Shooting Star pictures, is understood to have structured RINGS finances to take advantages of the loophole. But this has now been closed in such a way that Jackson will not be able to exploit it. Some of the more recent filming of the Hercules and Xena television series are also understood to have exploited the same arrangements. Reiner said the changes jeopardized American investor's willingness to invest in New Zealand because they needed arrangements which gave them an escape clause if the film lost money, or if it made so much that the tax bill was large. "There is film legislation on the books now in New Zealand that is useless because the kinds of (tax) treatments that can be done with other assets cannot be done with films. You never tell people not to go to a place" said Reiner, who packages film finance in Australia, Britain, Canada and New Zealand. "But if they asked, whats the likelihood of putting together an investment in New Zealand, I would say I have a problem".
That view was contested by local film industry representatives. Screen Producers and Directors Association chairman Jonathan Dowling said Spada had chosen not to oppose the tax changes. Although tax was one issue in deciding where to shoot a film, it was not a primary concern in most large projects. "There are lots of other reasons to shoot here. Pete Jackson is here, the talent pool around him has a significant value and a cost difference to other parts of the world". Dowling said. In another move last week, growing use of the loopholes to deliver big tax write offs to high income investors in film and other similar investments was stamped on by Revenue Minister Bill Birch. The move has angered local film-makers, who believe it will wipe out small projects, save little tax revenue and rob the fast growing film industry of investment, jobs and momentum. The Sunday Star-Times reported last month how one such film scheme, for the children's movie KIDS WORLD, gave investors an immediate return of more than 70% on their investment by exploiting loopholes in a money-go-round scheme which involved a right wing christian charity and a tax haven. The changes target schemes which "involve arrangements where investors obtain deductions for expenditure which may be effectively reimbursed tax free said Birch.
There was also a list of the most expensive films made (note New Zealand dollars) :
Lord Of The Rings(trilogy) $360m
Star Wars - TPM $217m
Wild Wild West $189m