Government inaction in the May Budget would be a strategic decision to consign the game development and interactive media sector to the dustbin, the New Zealand Game Developers Association (NZGDA) said today.

The suggestion to ask Australia to reverse its newly-minted gaming and interactive media sector policies to re-level the trans-Tasman playing field is simply unrealistic. Australia’s policy is in line with the global standard and it is New Zealand that remains behind the curve.

This follows the Australian Government introducing a 30% Digital Games Tax Offset (DGTO) from July 1, 2022, on top of 10-15% State rebates. This means that if New Zealand game developers shift their businesses to Australia, for eligible expenditure they can get a cash benefit of up to 45 cents in the dollar. So every $1 million of expenditure costs effectively $650,000, whereas if they stay in New Zealand it will cost $1 million.

An economist from the New Zealand Initiative (NZI) suggested in a recent NZ Herald article (April 24) that New Zealand should ask the Australian government to reverse its policy, rather than the New Zealand government taking action itself. Around 25 countries have some sort of incentive framework for their game development and interactive media sectors.

“Australia created the DGTO as a part of a wider investment in it’s technology sector, and it is a choice to invest in high-paying, low emission jobs. NZI’s suggestion is unrealistic and counter-productive,” said NZGDA Chairperson Chelsea Rapp.

“This isn’t a policy strategy that New Zealand business has tried to implement before. Such an approach simply won’t work.

“Make no mistake – if the New Zealand Government chooses to do nothing to level the playing field with our Closer Economic Relations (CER) partner in May’s Budget, then it is making a strategic decision to kill off one of New Zealand’s greenest and fastest-growing sectors, which earns nearly half a billion dollars in weightless exports and employs 1200 highly-skilled workers, and which is critical to our creative and digital economy ecosystem.

“The Government will be making an informed decision and will be saying New Zealand is better off strategically without the sector. We, and we think plenty of New Zealanders, disagree.

“This sector grew 47% last year, provides high-value full-time jobs, generates impressive returns for unique IP, pays more than $100 million in tax (a figure which is growing all the time), and earns more dollars than the wool sector. If we can be as successful as Finland – which has a similar-sized population – we could earn $5 billion a year.

“The sector ticks all the boxes that the government says it wants in documents like the Digital Technologies Industry Transformation Plan 2022-2032. And we know that if the New Zealand Government chooses to level the playing field with our CER partner, there will be plenty more tax to pay into New Zealand’s coffers, rather than Australia’s. We already do this for the film industry, this is no different and has significantly greater benefits for the New Zealand Economy. 

“Let's deal in the real world, not an ideological, theoretic one. Our Government needs to take action in the Budget – no other option is possible,” Ms Rapp concluded.
 

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