On Monday, Prime Minister Scott Morrison made a bold claim regarding the film industry on the Gold Coast in a radio interview on Gold FM regarding the tax breaks used to lure the Godzilla vs Kong film and Disney Reef Break TV show productions to the Gold Coast (see Monsters to invade as GC lures Hollywood productions). The transcript on the PM’s website records the PM as having said:

So the film industry here on the Gold Coast is as big as the tourism industry – bigger – and so when we say we’re supporting small businesses, this is how we’re supporting small businesses.

This isn’t even close to being correct, as the economic contributions of the film industry and tourism to the Gold Coast differ by at least one order of magnitude. According to Tourism Research Australia estimates, tourism’s direct contribution to Gold Coast gross regional product (GRP) amounted to $2.6 billion or around 7.8 percent of GRP in 2016-17. While there are no comparable official figures for the Gold Coast film industry as far as I can tell, it is easy to figure out that the industry makes nowhere near the economic contribution of tourism, and most likely not even one-tenth of the economic contribution of tourism.

Consider the estimate reported in Screen Queensland’s 2016-17 Annual Review that Screen Queensland supported productions responsible for an estimated $214 million in production expenditure in Queensland in 2016-17. Given that Screen Queensland supports practically every significant film production that occurs on the Gold Coast, this suggests the Gold Coast film industry makes less than one-tenth of the economic contribution that tourism makes. The Gold Coast film industry’s economic contribution is measured in hundreds of millions of dollars, while tourism’s economic contribution is measured in billions of dollars.

Even if the film industry made a larger economic contribution, special tax breaks for the industry would still represent bad policy. It is unwise and unfair for governments to give special treatment to one industry relative to others. If one industry gets a special tax break, it means other industries (or households) need to pay higher taxes than otherwise to make up the revenue loss. It would be better for the economy overall if governments focused instead on keeping taxes on all businesses as low as possible, consistent with the need to pay for government services, of course.

For previous comments I’ve made on film industry assistance, see:

4BC Dora the Explorer interview: Do subsidies work?

Ragnarok in Brissywood

Should the Aquaman film production on the GC get a $22M tax break?

Despite the fact the vast majority of economists and state and federal Treasury officials view tax breaks for the film industry as poor policy, I expect governments will continue to offer them. Unfortunately, our politicians are attracted by the glamour of the film industry, and they greatly enjoy appearing on the red carpet with Hollywood celebrities.