$1 Billion And Counting

By September 12, 2021September 17th, 2021Cover Story, North&South

$1 Billion

And counting

Twenty years ago Peter Jackson brought Hollywood to Aotearoa — and we’re still shelling out mega bucks to keep it here. Is it worth it?

By Madeleine Chapman

Illustration: Dede Putra

They drank pinot noir and craft beer, and ate spaghetti alla chitarra at Amano in Auckland’s Britomart. The total bill was $1,428. They dined at Odette’s across town: $1,101.41. And they went to Waiheke for the day for $2,850. Amazon executives were here to discuss filming locations for their Untitled-but-clearly-Lord-of-the-Rings television series, and the New Zealand government was eager to make sure the trip left an impression. The hospitality was generous, noticeably more so than when some representatives from the New Zealand Film Commission stopped by Amazon Studios in Los Angeles in 2019 and were treated to an office lunch of “sandwiches and soda”.

For the past three years, the New Zealand government has pulled out all the stops to accommodate the biggest company in the world as it sought to make the most expensive television show in history. Convincing Amazon to film here required years of negotiations involving multiple government entities and closed-door meetings with ministers. One repeated sticking point was Amazon’s reluctance to guarantee that the show would be exclusively made in New Zealand. As negotiations dragged on, an initial plan to announce a deal on Frodo and Bilbo’s birthday — World Hobbit Day 2020 — did not come to pass.

In early 2021, it was finally declared that New Zealand would remain the home of Middle Earth for a show expected to last five seasons. The government would kick in the standard 20 per cent rebate on local spending for big international productions, plus a 5 per cent “uplift” for projects with “significant economic benefits”. In return, the government secured the rights to use the series as a branding tool for years to come.

By then, filming was already underway and shrouded in secrecy. The studios in Kumeu on the industrial outskirts of West Auckland were closed sets, with codenames for each location and scene. Huge water tanks were being used, but no one could say why. There were rumours of filming in Riverhead Forest and Muriwai, Queenstown and Fiordland. An urgent casting call was sent out in June 2020 for a show that the talent agency declined to name, seeking “funky looking people” with “long skinny limbs, deep cheekbones, lines on your face, scars, ears that stick out, bulbous or interesting noses”. One casting agent found great success in small town pubs, particularly the Puhoi Pub. Non-disclosure agreements were so strict that local actors couldn’t even reveal what accent they spoke in, let alone their character’s name.

The rewards, we were assured, were going to be huge: for film, of course, and tourism. But also technology, manufacturing, potentially even space. That was the rationale for the very steep price tag. If a location scout for Amazon flew from Auckland to Queenstown for $200, Amazon would get $50 back from the New Zealand government. A coffee bought by a production runner in Muriwai costs $4, and Amazon would get $1 back. The directors (all international) and stars (80 per cent international) worked here, so Amazon would be refunded 25 per cent of their salaries. The first season alone was estimated by economic development minister Stuart Nash to cost an eye-watering $650 million, which would have meant an equally teary contribution of around $162 million from the New Zealand taxpayer. Then, on 13 August, a few weeks after shooting on the first season wrapped, Amazon abruptly announced that it would be moving production to the United Kingdom. Some local crew were notified by email 20 minutes beforehand; others found out through media reports. Amazon said that it would no longer “actively pursue” the 5 per cent uplift, but it will still receive the 20 per cent rebate for what is expected to be the costliest season of the show by far: the huge first-season budget, an Amazon executive said, was “building the infrastructure of what will sustain the whole series”. Meanwhile, New Zealand lost what government officials saw as the key advantages of the deal: thousands of jobs and an exclusive lock on the Middle Earth brand. Even without the uplift, taxpayers are expected to funnel as much as $132 million to a company whose owner’s net worth rivals New Zealand’s GDP and who recently flung himself into space for fun.

Under the agreement between Amazon and the government, the company was required to give 12 months’ written notice to the New Zealand Film Commission of any decision to relocate the series. Stuart Nash, who was overseeing the deal, was informed of Amazon’s departure the night before the press release went out. There was no dinner.

“A film industry is about culture and money. It involves an endless tug of war between finance, investment and economic returns on the one hand and art, culture and national identity on the other.”

 

— New Zealand Film Commission, 1985 report

Twenty years after the release of The Fellowship of the Ring, the hobbits have finally left The Shire. When Peter Jackson built Middle Earth in Miramar, every Wellingtonian lived in it. Thousands auditioned to be extras and thousands more visited the Chocolate Fish Café in Shelly Bay, hoping to see a real-life celebrity in the flesh (and they did, all the time). Before a premiere for The Fellowship of the Ring in 2001, the capital, from the Beehive to the Embassy Theatre, quite literally shut down. When The Return of the King premiered, an estimated 100,000 people, every single one of whom presumably shared one degree of separation from the trilogy, attended the Wellington parade.

Jackson has had no official involvement with the Amazon series, but it would never have made its way to New Zealand without him. Having set up the studios, workshops, and soundstages for Lord of the Rings, he laid the foundation for creators with visions beyond the everyday.  

You can see Jackson’s influence in the kinds of movies that have chosen to film here in the years since — massive budgets, elaborate visual effects, an abundance of green screen. The Last Samurai recreated Japan in . . . Taranaki. Flock Hill became Narnia for The Chronicles of Narnia trilogy, and New York was built in Miramar for Jackson’s King Kong. His personal relationship with James Cameron played a not-insignificant part in the US filmmaker buying a large estate in Wairarapa and deciding to film the Avatar sequels in New Zealand. And then, of course, there was The Hobbit, a very short book that Jackson turned into three very long films.  

Some of these projects, like The Chronicles of Narnia and Mulan, spent millions filming in front of mountains and in rivers, allowing locals to yell “Oh that’s Cathedral Cove” when they watch the movies. Others, like Alita: Battle Angel and Dawn of the Planet of the Apes bear no visible trace of Aotearoa, having spent their millions on digital effects provided by the Weta Group.  

But what ultimately lures mega studios like Amazon to our shores is one of the most generous film subsidy schemes in the world, which grew out of benefits originally provided to LOTR. 

What is now known as the New Zealand Screen Production Grant refunds between 20 and 25 per cent of spending in-country on film production. This includes spending on any services provided in New Zealand, even if the person being paid (whether an actor, set producer, or director) is not a New Zealand resident. The largest local beneficiaries, by far, are Jackson’s companies, whose work on international productions resulted in $117.1 million being paid out of NZSPG between August 2015 and April 2018.

Meanwhile, the major American studios that contract Weta or that film in New Zealand have received nearly $1 billion since 2010. The scheme is currently paying out around $200 million annually, which means one in every $20 in New Zealand’s national budget is going to international productions. The scheme is also uncapped, which Treasury has flagged as a “significant fiscal risk”, especially as behemoths like the Avatar sequels gather momentum. Amazon may have taken the subsidy and run, but others will likely take its place.

Twenty years ago, Sir Peter Jackson single-handedly brought Hollywood to Aotearoa. And ever since, he’s exerted his influence to keep it here, no matter the cost. He’s led the transformation of New Zealand’s film industry from a small, domestic government-subsidised industry to a massive, international, government-subsidised industry. In the wake of Amazon’s hasty departure, it’s worth asking: Is this actually good for the New Zealand film industry — or for New Zealand?