The Digital Economy Minister has defended the Government's Budget 2023 initiative to offer Kiwi video game developers a $160 million tax rebate scheme.
This year's Budget includes $160 million to establish a 20% rebate for the rapidly-growing local video game development sector.
The final design of the scheme will be the subject of consultation, but it is planned to offer up to $3 million in rebate funding per year to individual studios.
Several Australian states already have subsidy or rebate programmes, and Minister Ginny Andersen told Q+A with Jack Tame that was a key consideration for the Government after game companies lobbied for it.
"I think it's a great sector. I'm in to bat for them," she said.
"We know that there's a very aggressive move from Australian companies to take our people. We wanted to make sure we kept it here, and that's what the scheme has done."
The new scheme has been welcomed by the gaming industry and business lobby groups but also been criticised by the ACT Party as a form of corporate welfare.
Andersen said the gaming industry brought in around $400 million to the economy last year, which was more than what the wool industry brought into the country.
"They hold potential to grow even further," she said. "This was one industry we felt that they offered great opportunities for our economy. We want to be positioning ourselves to be a high-wage, low-emissions economy - this does exactly that."
Additionally, the minister said it offered a "huge potential for our young people" entering the tech sector and digital industries.
"What this subsidy does is it is able to go straight towards wages, and so that they can employ more and they can pay more competitive rates."
But Andersen said it wouldn't become a subsidy "bidding war" for game producers as Australian states could ultimately always still offer more incentives.
"Already Australia's scheme outstrips ours. We don't have as deep pockets as Australia, and we can't hope to outbid them, and it won't be a bidding war. What this subsidy does is it keeps this industry here in New Zealand and gives those businesses a future here."
When pressed on why games, in particular, needed subsidies, Andersen said the Government saw the future growth potential of the industry.
"We can't subsidise every business - that's the truth of it. And this is a sector that we know holds a whole lot of potential for our economy," she said.
"I guess one of the most common misperceptions about it as a sector is you don't have to be a software engineer or know machine code; it's people who think outside the square - people who are on the spectrum do incredibly well in this space.
"It offers so many potential opportunities for young people. I thought it was so important to make sure we keep it here and grow it."
Twenty hours free childcare education has now extended to 2-year-olds, but won’t start until next year. (Source: 1News)
"This is a small, hugely creative group of great businesses that are batting well above their weight. We want to keep them here in New Zealand and make the most of what it offers our economy."
The Government has said that it will review the rebate after four years to assess its effectiveness.
'Scrap corporate welfare' - ACT's Seymour
ACT leader David Seymour said the video game production rebates were as equally as unnecessary as subsidies for the international film industry.
"Not content just giving billions of taxpayer dollars to Hollywood elites through the screen production grant and visual effects grant, Labour is going to start doing the same to video game designers with a 20% rebate for game developers," he said.
"Every dollar spent on subsidies for television and movie productions is a dollar that can’t be spent elsewhere.
"We would be better off scrapping the Screen Production Grant, the Video Game rebate and other corporate welfare and allowing taxpayers to keep the money."
But Game Developers Association chair Chelsea Rapp was positive about the move, which it has spent months lobbying for, as was BusinessNZ.
The move comes to take advantage of new tax incentives. (Source: 1News)
"Clearly, the Government recognises the value of the sector’s contribution to New Zealand and that the Government is prepared to support us in the face of Australian subsidies that threatened our future," Rapp said in a media release.
"New Zealand’s game development sector has been a rising star of our digital economy. The sector grew by almost 50% last year, earned over $400 million in weightless exports and provided 1200 high-value jobs."
BusinessNZ chief executive Kirk Hope said: "This attention to an emerging industry is welcome and signals New Zealand is a competitive space for development."
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