Burns Brendon: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — In Committee 
Burns Brendon: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — In Committee 
[Volume:656;Page:5995] 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I would like to comment in a moment about the amendments I have tabled in respect of clauses in Part 1 of the Taxation (International Taxation Life Insurance and Remedial Matters) Bill. But first I make the observation that a tax bill is no more the appropriate place to start commenting upon the individual tax affairs of a given mining company than it would be for a bill that reviews the operation of finance houses to be used to single out in the Chamber a finance house for praise. The issue I want to comment on relates to clause 69 and clauses 89 to 92 in Part 1. Those relate to the tax regime that will apply to films made in New Zealand and that have benefited from the Screen Production Incentive Fund which was established in the Budget last year. 
I first acknowledge the discussions that the Minister has entertained in respect of that issue and I appreciate that and also his making available officials to discuss those matters for us. But the Labour Opposition believes that there is an issue here that deserves to be addressed and we are attempting to do so through the amendments I mentioned. In essence the Screen Production Incentive Fund provides a 40 percent grant to New Zealand films. In the treatment of those films in terms of tax what is proposed by the bill in front of us is that any investor who invests in a film that receives what is known as a Screen Production Incentive Fund grant will not be able to claim any tax deductibility until after the film is made and then over a 2-year period. I think the logic of the officials is that where the Government is making a 40 percent contribution to a film then that effectively should be a sufficient contribution by the Crown. The issue that arises however is that the film industry is notoriously fickle; people either make a bundle or lose a bundle. They never really know what they are going to get; even Peter Jackson has been known to make a film or two that has not been a great hit. People who are prepared to be film investors and there are not that many of them are then having to wait 2 years to receive the deductions and most notably if the film is a flop which happens fairly regularly. 
The amendments tabled this afternoon propose that the tax regime applicable under this bill will exclude grants made by the Screen Production Incentive Fund. That would mean that investors who support films made using one of those grants will be able to benefit in the same way as investors who support other New Zealand films benefit such as those that are made using Film Commission money. Admittedly there is a difference between the two grant schemes. In one case it is a grant up front and in the other it is an investment by the Film Commission. In the latter case if the film makes money the commission gets a return; if it is a flop the commission has to wear that loss. Again I make the point that those who invest in the film industry are taking a punt; they often will lose money. 
We want to encourage our film industry; it is a great way to promote New Zealand. If investors are engaged in various other activities they are able to get the write-off for their investment in the year that the costs are incurred. So I encourage members opposite to consider these amendments. We were advised by officials that the amount of money is not large it may just make seven figures but it is something that the film industry believes will assist it in continuing to promote and expand the film industry. If people invest in the film industry and they have to borrow money to do so because of the high risks involved they sometimes have to pay 17 percent on money borrowed for films because there is not a lot of asset that it can be based against. Therefore the need for a tax write-off to offset those kinds of high interest rates is very high. I commend these amendments to the Committee.