Government Ministers and officials who should know better have once again been seduced by the glamour of Hollywood, with the Australian Government offering around $22 million to Disney to secure production of Pirates of the Caribbean 5 in Australia (see Brisbane Times coverage). The Queensland Government also offered payroll tax exemptions so the film would partly be shot in Queensland. This is an example of the selective industry assistance most of us have come to accept is bad in other sectors (e.g. the car industry). It encourages the inefficient use of resources that could be better employed elsewhere. We don’t really face a choice of having people employed on an international film production or having them unemployed – and if that really is the choice we should make sure they get some re-training for a more reliable job.
Further, even if there were some benefit to the local economy of securing this production, the incentives provided, which are going to a highly-profitable, largely foreign-owned company, mean we’re most likely coming out behind on a cost-benefit analysis. Disney’s net profit was $2.25 billion in June quarter 2014 (see the Quarterly Earnings Reports). I have no idea why Australian taxpayers should be contributing to its future profits.
I’ve previously written about the folly of chasing after international film productions: