And we challenge comments made last month to the Sunday Star Times by LA film finance packager Richard Reiner, who said the tax changes had reduced NZ's appeal to foreign investors in NZ films.
SPADA chose not to oppose the tax changes, which were backdated to last November, saying the loopholes were not the primary reason foreigners chose to film in NZ.
Onfilm suggests that Reiner and other film finance packagers have little interest in seeing films made in NZ. They are speculators whose activities could ultimately reverse the flow of funding and undermine the NZ film industry.
There was support for this view from producers contacted by Onfilm. "The major law and accounting firms that have been backing these schemes are saying this is the end of the film industry," said one senior producer.
"No, it isn't. It's the end of their high-paying fees. They are not putting anything back into the film industry."
Filmmakers, SPADA, the Film Commission and production companies like Communicado, Gibsons and South Pacific Pictures encourage private money into the industry - real money that is at risk; money that's going into productions, creating more work.
But these tax-loophole exploiters aren't operating in that area at all. What they were doing could damage the film industry.
Reiner was reported to have been targeting New Line, the American company that's financing The Lord of the Rings. New Line and Peter Jackson didn't respond to Onfilm's inquiry, but a typical model would involve putting together a tax-sweetened finance package without the producer's or distributor's prior approval. In this scenario, Reiner would then have approached New Line with the money "in his pocket" and a tempting offer to share the extra profits, which would have the effect of reducing New Line's exposure.
No wonder Reiner squealed when Revenue Minister Bill Birch closed the loopholes.
Other companies, including Universal, which owns Hercules and Xena (Pacific Renaissance is the production company contracted to make the series) and the makers of Kids' World are said to have taken up similar offers in the past, but this hasn't meant any more Hercules or Xena got made here. And the removal of the loopholes will not prevent Universal proceeding with its plans to make Cleopatra 2525 and Jack of all Trades in NZ.
We think Hercules and Xena originally came to NZ because the producers believed they could makes programmes that looked different, for a price, and because there was an infrastructure here that could support them. Rings came here because Peter Jackson had the drive and capability to make the trilogy; it was always going to be made in NZ. Sony brought Vertical Limits here partly because Rings, Hercules and Xena were here, and also because the production needed mountains, plus Sony could have total control. The alternative would have been the Himalayas or Kashmir.
So these people were coming here anyway - attracted by the creative environment, a production infrastructure, a favorable exchange rate, and locations.
The trigger for Birch's decision was undoubtedly the reef fish swarming around Rings. The other projects that had capitalised on the loopholes were relatively insignificant and may have been ignored by the Government, but a Reiner-New Line deal could have led to $120 million - or more - being lost, legitimately, from the NZ tax take.
Hello? Who's going to be clipped around the ear? Not Reiner. Such an outcome could well have signaled the end of Government support for the Film Commission and NZ On Air. Which is, of course, why SPADA didn't contest the tax changes.
The controversial tax schemes of the 1980s pall into insignificance by comparison. In the '80s, money was raised and investors reduced their tax, or paid no tax at all. But the money that was raised was at least raised to make films.
Projects like the Rings trilogy, Vertical Limits, Hercules and Xena, and Cleopatra 2525 and Jack of all Trades are already here. None of them need the tax money to get made. - THE EDITOR