Game Developers Engage Government To Prevent Fast-growing Sector Moving To Australia

They constitute one of New Zealand’s fastest-growing sectors, with combined revenues forecast to reach $1 billion by 20251, but now local gaming and interactive media companies are being enticed across the Tasman by new federal and state government incentives. The threat has prompted urgent talks between the industry and the New Zealand Government.

“We are engaging with the Government on finding an urgent solution to the challenge of retaining one of our greenest, most productive2 and fastest-growing sectors,” New Zealand Game Developers Association (NZGDA) Chairman Chelsea Rapp said today.

In Australia, from July 1, 2022, a 40%-plus incentive (30% Digital Games Tax Offset (DGTO)[1] plus 10-15% state rebates) are set to apply. Every $1 million of qualifying expenditure could see a $400,000 cash benefit to NZ companies that set up operations in Australia rather than expanding in New Zealand. More than 20 similar schemes with 25% to 40% rates exist worldwide.

“Existing government policies won’t stop New Zealand gaming and interactive media companies from choosing to expand in Australia instead of New Zealand,” warned Rapp. 

“Current R&D tax incentives are not fit for purpose and exclude most activities of the gaming and interactive media sector.

“The existing 20% Post Digital & Visual Effects Grant, part of the NZ Screen Production Grant, specifically excludes the gaming and interactive media sector.

“And we believe that new Callaghan Innovation funding – the Arohia/Innovation Trailblazer grant and the new R&D grant – will not provide enough support to prevent gaming and interactive media projects from moving across the Tasman.”

NZGDA met recently with David Clark, Minister for Digital Economy and Communications, to discuss the threats posed by the Australian incentives. Rapp described the meeting as “useful and constructive.”

“Because time is of the essence, we are suggesting Government implement a two-phased approach.

“First, enable game development studios to access the 20% Post Digital and Visual Effects component of the NZ Screen Production Grant or similar. This can be implemented quickly and easily by Government.

“Second, build on that initial policy change by considering a 30% interactive digital media grant and an Interactive Industry Development Programme, which could build on the successful Centre of Digital Excellence (CODE) pilot in Dunedin.

“We believe this phased approach would be a pragmatic and smart way for Government to progress, given the urgency of the situation.

“We all know and understand the problem. If the Minister and his Cabinet colleagues are serious about expanding our digital economy and retaining one of New Zealand’s fastest-growing sectors they need to take action now,” concluded Rapp.
 

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