Hobbit laws and the race to the bottom in the global film market

The film and television sector was one of the industries hardest hit by last year’s pandemic-induced industry shutdowns. Many productions were postponed or scuttled, due to both practical issues amidst health restrictions and uncertainty around future revenue.

Screen workers, from actors and screenwriters to camera operators and lighting crew, were largely left out to dry by the Australian government. Prime Minister Scott Morrison’s flagship assistance measure, JobKeeper, required employees to have worked with the same employer for 12 months in order to receive the payment. This excluded many creative professionals who work as freelance contractors, moving from gig to gig to patch together a modest living.

Despite meagre assistance for workers, Minister for Communications and the Arts Paul Fletcher found time to temporarily exempt television channels from adhering to Australian content requirements. Unions and industry bodies argued the relaxation stifled employment recovery and was merely an excuse for the government to help its C-Suite friends dispense with the ‘red tape’ it had long desired to cut.

Just as millions of homebound viewers were most appreciative of the outputs of screen workers’ labour, their material existence was made needlessly desperate by the government’s fiscal favouritism. Theirs was a ‘shock doctrine’ strategy, marshalling state resources to support those with clout, connections and conservative cultural affinities (farmers, businesspeople, tradies …) whilst opportunistically allowing perceived enemies (scientists, academics, artists …) to bear the brunt of the pandemic.

One can hardly begrudge screen workers for greeting the new year with cautious optimism. Not only has the economy reopened, but Australia’s relative success at containing COVID-19 has made our shores a hotspot for Hollywood film shoots. Delays for foreign competitors also created an opening for local films at the box office, with Australian films nabbing the top three spots for the first time in cinema history.

However, just as the government protected the interests of media conglomerates at the expense of creative professionals during the height of the pandemic, we must see past the spoils of a temporary boom and guard against further attempts to subordinate the interests of screen workers to those of Hollywood executives and their shareholders.

Morrison’s chief film policy, announced in last year’s budget, is a $400 million expansion of the ‘location incentive’ tax rebate and grant program, which allows foreign production companies (predominantly Hollywood-based) to claim back between 13.5 and 16.5 per cent of their expenses when filming in Australia.

The predominant criticism of the policy by unions, industry bodies and commentators has been that the government is now more generous to Hollywood filmmakers than domestic ones. They welcomed the additional support but argued the government must devote more resources to ‘telling Australian stories’, too.

Such attempts by the arts industry to appeal to national pride are not only ineffective and insular. The Coalition is unlikely to be persuaded by calls to subject Australian history and culture to critical reflection when one of their core convictions is the maintenance of jingoistic comfort.

Focusing on the foreign skew of the government’s screen budget also elides critical examination of foreign film subsidies themselves. Whilst it is understandable that the insecure workforce would welcome the creation of an estimated 8,000 jobs per year, the fiscal, industrial and cultural price must also be accounted for.

In New Zealand, this debate is already well underway. The Ardern government’s recent deal with Amazon to secure the filming of Prime’s new Lord of the Rings series has proven divisive. The government negotiated an unprecedented $160 million rebate in exchange for a slew of commitments (some real and some vague) encompassing not just Amazon Studios but other arms of Jeff Bezos’ empire too. The deal was brokered after senior NZ bureaucrats wined and dined senior Amazon staff in Auckland and Waiheke Island.

The exorbitant cost of the Amazon deal and New Zealand’s broader film subsidy regime has been questioned both by the media and by Treasury. In 2020, $1 of every $20 of new government spending was on film subsidies, most of which went to large Hollywood studios. As in Australia, locals have criticised the gap between local and international film funding. Journalist Thomas Coughlan wryly observed:

We will be ploughing more money into subsidising a film about a fake Indigenous culture (the upcoming Avatar sequel) than we are into Maori TV, which tells the stories of New Zealand’s Indigenous culture.

New Zealand’s fraught history with Hollywood handouts has led to a broader questioning of the global cultural policy landscape, which is heavily stacked in Hollywood’s favour. Most developed countries have a film subsidy regime, and the main reason for maintaining them is fear of losing foreign investment to other countries. Coughlan has labelled it a ‘race to the bottom’.

Whereas support for smaller and independent films can make a meaningful difference to their initiation and survival, LA-based executives are usually just shopping around for the cheapest place to make their already-greenlit blockbusters. Hollywood is milking an international ‘prisoner’s dilemma’.

Such schemes are also frequently abused by their recipients, who fail to deliver promised benefits to local communities. 2019 analysis of the effects of foreign film subsidies in Europe and the United States found they ‘have been exploited by Hollywood studios leaving little benefit for the local states,’ leading many US states to abandon their schemes. Coughlan cites the sci-fi film Ghost in the Shell using New Zealand government funds to pay Scarlett Johansson’s salary, instead of investing in local jobs.

Adhering to a familiar pattern since the neoliberal globalisation of trade, a ‘race to the bottom’ on taxes is often accompanied by the similar bargaining down of workers’ industrial rights. New Zealand is again familiar with this pernicious dynamic, after a previous run in with Peter Jackson’s Lord of the Rings franchise.

After Warner Bros refused to take part in union negotiations in 2010, NZ Equity, the union representing local actors, coordinated with the International Federation of Actors to impose a global workers’ boycott on the filming of The Hobbit. The studio responded by threatening to find an alternative filming location.

After nationwide protests and six weeks of daily media appearances by the conservative Prime Minister, the Key National government acquiesced to the demands of visiting Warner Bros executives to both increase subsidies to the film and ram a draconian bill known as the ‘Hobbit law’ through parliament banning unionisation in the film sector. This was despite the fact the union was already making progress on negotiations with the studio. Journalist Laura Tingle compared the studio’s obstinate weaponisation of the spectre of ‘global competitiveness’ to the contemporaneous torpedoing of the Rudd government’s mining tax on similar grounds across the ditch.

Whilst the Labour party voted against the Hobbit law and promised to overturn it in government, industry pressure saw the newly-elected Ardern government accept the recommendations of a taskforce to change but not a full repeal the legislation. Rights to unionise and negotiate with the employer were extended to all workers including previously excluded independent contractors, but the right to strike remains not lawfully protected.

Thus, the dynamic engendered by subsidies regimes, whereby nations compete for the affections of large entertainment conglomerates, can quickly be turned against the interests of screen workers, whose legitimate claims to representation and decent working conditions can be presented as an impediment to the dangling carrot of Hollywood investment and the associated benefits of ‘fandom tourism’.

When governments do impose obligations on Hollywood studios in return for their largesse, it is too often to bolster their ‘nation branding’ efforts instead of supporting labour. For instance, Singapore’s extremely generous subsidy regime is predicated on recipient filmmakers showing the country in a ‘positive light’. One can see the cultural implications of this policy in the government-backed blockbuster Crazy Rich Asians, which included so many panoramic shots of landmarks such as the Gardens by the Bay and the Marina Bay Sands hotel that you might have been excused for confusing with a feature-length tourism ad.

Ultimately, governments offering Hollywood subsidies are usually bidding for ‘place branding’, effectively a form of product placement. The economic and artistic health of the local screen industry and its workers is either an afterthought or deliberately subordinated in pursuit of national prestige and downstream tourism revenue.

It doesn’t have to be this way. Just as sweetheart deals between governments and multinationals can bargain corporate taxation and labour laws down to the lowest common denominator, global agreements could instead establish minimum standards. Governments could make subsidies conditional on minimum rates of pay and working conditions, and the right of employees to unionise. They could also establish clear eligibility criteria, rather than hashing out special deals between executives over winery lunches, to which workers’ representatives are not invited.

Or even, preferably, countries like Australia and New Zealand’s could endeavour to become attractive places to make films not due to the laxity of our tax systems or the ‘flexibility’ of our labour laws, but due to robust public health systems, well-preserved landscapes and the nurtured talent of our creative workforce. As bureaucrats clamour for the affection of the world’s richest studios, this seems as much a fantasy as Middle Earth.

Benjamin Clark

Benjamin Clark is a Melbourne-based freelance writer, whose work has appeared in Crikey, Kill Your Darlings and Junkee.

Overland is a not-for-profit magazine with a proud history of supporting writers, and publishing ideas and voices often excluded from other places.

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  1. Well stated Ben.
    Let’s face it, most of the blockbusters made these days are propaganda for the MIC and their fading Empire.
    The ‘enemy aliens’ (read Chinese, Russians, Muslims or anti Americans) must be defeated or banished by the glorious, handsome, and always heroic, ‘good guys’
    Even a film like Nomadland didn’t deal with the ugly reality of homelessness in the Empire.
    I suspect the director/producer had to self censor to get the picture into enough theatres to break even.
    Politicians will always clamour for glamour and be easily persuaded by Hollywood lobbyists and their political masters.

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