Immediate action is needed to combat Australian tax incentives tempting video game companies in Tasman, says Digital Economy and Communications Minister David Clark.
Australia had courted the global video game industry with a tax refund of up to 40% on every dollar spent.
The New Zealand game industry shouted tothe government to take action to protect the industry by introducing a similar discount scheme, or risk losing a fast-growing domestic industry.
On Thursday, Clark said more “interventions were needed” to support the industry in light of Australia’s actions.
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Last week, Clark met with members of the New Zealand Game Developers Association to discuss options.
One long-term solution has been the government’s digital technology industry transformation plan, which aims to shift the economy towards a focus on “weightless exports,” such as game development.
But Clark said Australia’s actions had meant that short-term solutions were also needed to keep New Zealand competitive on the global stage.
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David Clark, Minister for Digital Economy and Communications, says Australia’s actions mean solutions are needed to keep New Zealand’s game development industry competitive on the global stage.
One option was to give game development studios access to the 20% Post, Digital and Visual Effects component of the NZ Screen Production Grant, or a similar grant.
Clark said details of the first support options would be provided this week, with a more detailed update expected in August.
The game development industry had total revenue of $276 million last year and a growth rate of 34%.
The Game Developers Association predicted the sector could become a multi-billion dollar industry if Australian tax incentives didn’t entice local businesses.
The association’s president, Chelsea Rapp, said the current tax incentives are not fit for purpose and exclude most of the gambling sector.
She said the meeting with Clark was “helpful and constructive” and that the association had recommended the government implement a two-stage approach.
The first step was to open up NZ Screen Production Grants to game development studios.
The second was to allow a 30% tax break, similar to what was offered in Australia.
She said she was pleased that the government recognizes 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 preserving one of New Zealand’s fastest growing sectors, they should act now,” Rapp said.
Rocketwerkz CEO Dean Hall said that if he started his company again he wouldn’t set up shop in New Zealand†
“If you started a business today, you would never do it in New Zealand. Why do that when Australia is out there with more talent, more money and a tax break that can give you back 40 cents on every dollar you spend,” Hall said.
Hall said he was in talks with the Australian government about moving parts of his business there.