August 2018
www.nzmanufacturer.co.nz
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MANUFACTURING TECHNOLOGY Kilwell celebrates success.
WOMEN IN ENGINEERING Alisha Baddock.
Government support for industry – hard to do Dieter Adam, Chief Executive,The Manufacturers’ Network
A significant proportion of these grants do go directly to overseas production companies to produce films here, or films containing (sometimes token) references to New Zealand. The argument for such support is around the pay-back in terms of contribution to the New Zealand economy through GDP and employment as well as some less tangible flow-on effects, such as impact on tourism and how New Zealand is viewed in the world. Another part of the argument is that such grants are commonplace around the world, and New Zealand needs to offer competitive rates to even be in the game in such a competitive industry. For context, the screen industry is estimated to be worth $1.1b to our economy and employ 14,000 people.
Critical issues pertaining to wealth creation need to be addressed, such as our low productivity. In a recent review commissioned by MBIE, the overall payback estimate was $2.04 returned on every dollar of film grants, but these estimates are always difficult to make and two MBIE-commissioned ‘reviews of the
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well without a plan The new Government has indicated that this support is likely to continue, having expressed some discontent around the cost and suggesting some changes may be considered in future, such as funding caps.
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review’ pointed to significant shortcomings in the original report. But that is not the point. The point here is that this Government, like its predecessors, is happy to ‘pick winners’ by heavily subsidising particular sectors of our economy. The film industry is one example, another is the recent commitment to spend over $600m on the eradication of Mycoplasma bovis, as just one example of the regular subsidies provided to our agricultural sector. And at the same time the Government is also subsidising other parts of our economy by providing favourable taxation (or none at all) on their profits.
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So, the obvious question from our perspective is – why not provide more support for manufacturing? If it is contribution to GDP and employment you want, manufacturing made up 12% of GDP and contributed $23b directly to GDP in 2017. Manufacturing is also one of our country’s largest employers, employing 241,100 people in 2017. Like the argument for ‘spill-over’ benefits of the film industry, manufacturing contribution to our economy also goes much further than just the direct impact on GDP and employment. A recent UK study can give us a rough idea of how these flow on impacts may look. The report called, “The True Impact of UK Manufacturing” breaks down the contribution of the sector into direct (output and employment) and indirect (support to other industries through supply chains). For the UK, manufacturing directly contributes 9% of GDP (less than our 12%) and has 2.6 million jobs. When including their measure of indirect impact, this jumps to 15% of GDP and over 5 million jobs. While the scale of these flow-on impacts will not be
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