Next week, the Brisbane CBD road closures for the filming of scenes for Thor: Ragnarok will obviously, through the disruption to traffic and local businesses, add to the already large multi-million dollar cost to the Queensland community of hosting the production. I had a good chat with Ben Davis on 4BC’s Brisbane Live radio program on Thursday afternoon regarding the economics of assisting the film industry, which you can listen to at this link:
In the interview, I questioned the purportedly large long-term economic benefits to the State of government-subsidised international film productions, as they do not provide sustainable, long-term jobs. Ben noted that a Gold Coast Bunnings saw an increase in turnover of $100,000 per week when Pirates of the Caribbean 5 was filming on the Coast. But that is obviously only a temporary impact and one mostly beneficial to Wesfarmers’s shareholders, and of limited benefit to the broader Australian economy, given much of the product purchased was probably imported.
Our State and Federal Governments have forgone many millions of dollars in tax revenue to attract the Thor: Ragnarok production, and our State Government has probably added a few other sweeteners to a Queensland Government assistance package to the production which is reportedly in the order of $3 million (see this Gold Coast Bulletin report from last year). Disappointingly, the State Government will not disclose just how much assistance it is providing this production and the nature of that assistance. Typically governments claim such information is “commercial-in-confidence.” But, if film studios are going to receive large subsidies paid for by taxpayers, they should accept public scrutiny. Of course, film studios are probably worried that the public would realise just what a terrible deal it is getting.
Take for instance the Mega Sound Stage at Village Roadshow Studios on the Gold Coast, a $15.5 million sound stage which the State Government contributed $11 million to funding (see this media release from May). The Government described this as a “win-win” because the Sound Stage could be used for some Commonwealth Games events, including squash, boxing and table tennis. It was certainly a winning deal for Village Roadshow, which had the Queensland Government paying 70% of the cost of the largest sound stage in the Southern hemisphere. Why should a government pay such a large share of the cost of an investment that will largely benefit its private sector owners?
We need to stop wasting taxpayer dollars on luring international film productions. Instead of subsidising the film industry and benefiting film studios, highly paid stars, and apparently Wesfarmers, governments should instead focus on lowering taxes for all businesses.
Last year, the Queensland Competition Authority was highly critical of film industry assistance in the final report of its Industry Assistance Review (Final-Report-Industry-Assistance-Volume-1). After reviewing the international and Australian evidence, the QCA concluded (p. 168):
“…the Queensland Government should not provide incentives for major film productions as the benefits of doing so are likely outweighed by the costs.”
The disruption to Brisbane CBD next week from Thor: Ragnarok makes it much more likely that the costs outweigh the benefits in the case of this production.