As someone who enjoys the fruits of New Zealand’s cinematic output, it might seem hypocritical to argue against Graeme Tuckett when he suggests we need to lift rebates on overseas film productions.

In a Dominion Post editorial, he argues our film industry is struggling to compete with some countries because they offer a rebate of 25 per cent on every dollar spent, while we only offer 15 per cent.

The net effect is that overseas countries such as the UK, South Africa, and Romania are winning big blockbuster business that would otherwise have ended up here, and furthermore, 75 per cent of something is better than 85 per cent of nothing (a bird in the hand, so to speak).

He also argues that a rebate is not really a subsidy, because it is paid after the money has been spent.

Respectfully, I disagree. It is not hypocritical for a Kiwi movie buff to resist lifting the rebate if it doesn’t make economic sense.

Firstly, let’s settle a matter of housekeeping. A rebate – despite Tuckett’s assertions – is a subsidy. It matters little whether the government pays the equivalent of 15 per cent of a $100 million production upfront as a subsidy, or rebates the same amount on the backend.

Secondly, whether we’re addressing the rebate or the bid to lift it to 25 per cent, it is important to take opportunity cost into consideration.

Based on the example above, might the extra $10 million rebated on this production (or for that matter the entire rebate itself) not be better spent in other areas of the economy, presumably where there are greater economies of scale that offer a higher return on the taxpayers’ investment?

It is also worth bearing in mind that the rebate differential is not the only reason why New Zealand is becoming less attractive to foreign film makers. The other is the currency.

Lifting the level of rebate by 10 percentage points may have no actual impact when you factor in currency fluctuations. The rand, for example, has declined by 13.4 per cent against the greenback over the last year, whereas the Kiwi dollar has remained largely stable (bar a few bumps).

Lastly, even if we did lift the rebate in a bid to win a greater slice of the global film business, what is stopping competing countries from upping their rebate in a race to the bottom?

The international movie industry is perfectly within its rights to ask for a rebate – it’s just savvy business. But fans of Middle Earth or not, we should be rational enough to decline when the basic figures don’t stack up.