ITP Techblog

 

New Zealand's fast growing computer games industry is coming under threat from a new tax incentive in Australia that could encourage companies based in New Zealand to relocate.

The New Zealand Game Developers Association chair, Chelsea Rapp, says the new tax incentive, which is worth around 30-40%, could halt the growth of the game industry in New Zealand unless it's matched or bettered by the New Zealand government.

"Our interactive industry can't access New Zealand's own screen incentives, which is bad enough, but now with this competition from Australia, we'll see a clear brain drain with investment following," says Rapp in a written statement.

The Australian scheme is similar to the New Zealand Screen Production Grant, says the NZGDA, which encourages producers to set up shop in New Zealand but which interactive media is unable to access. In its annual budget the Australian government announced a 30% refundable tax offset for video game productions from 2022. A number of Australian states have agreed to top this up by a further 10%. Similar incentives for games exist in Canada and Europe.

"While New Zealand has an incredibly talented and globally successful games industry, we can't compete when you could get a 40% discount to relocate to Australia. Any chance we had of attracting overseas studios to set up shop in New Zealand ends in 2022, and some New Zealand studios are already looking at expanding into Australia instead of expanding locally."

The NZGDA reports annually on the scale of the industry here in New Zealand which is often described as one of the best kept secrets in the tech sector.

Over the last decade New Zealand's video games industry has been our fastest growing creative industry and a major digital exporter. The sector earned $323.9 million in the year to 1 April 2020 and had been growing 42% annually.

"Film productions often leave town when they are finished, whereas a game studio is far more likely to remain in New Zealand, contributing to the local economy and helping to build lasting skills and communities," says Rapp. 

"I fear if this incentive is not met or better we will see a hollowing out of the gaming and esports industry in New Zealand. That will hamper innovation and job creation in related sectors including defence, medical tech, education technology and film."