VFX Guild’s Response to Government Announcement on Screen Production Grant Changes

Context

The Government announced a series of changes to the International Screen Production Rebate, aimed at attracting more global productions to New Zealand. Key updates include lowering the minimum spend threshold, extending the 5% uplift to post-production, digital and visual effects-only projects, and reducing the uplift eligibility from $30 million to $20 million. Read more here: https://www.beehive.govt.nz/release/boosting-new-zealand%E2%80%99s-film-industry

VFX Guild’s Response Summary

While the VFX Guild welcomes the Government’s announcement on adjustments to the New Zealand Screen Production Rebate, the specific benefits for visual effects and animation service businesses will depend entirely on the new PDV-specific policy settings that MBIE and the New Zealand Film Commission (NZFC) are now preparing. 

The VFX Guild sought clarification from MBIE that the PDV 5% uplift will have its own criteria and its own budget threshold, and will not follow the $20 million live-action threshold or its eligibility settings. This represents an important and positive step toward attracting PDV service work to New Zealand and ensuring that the new uplift benefits VFX, animation, and post-production businesses of all sizes.

Live-Action Budget Threshold Changes

It’s important not to conflate visual effects and animation services with providers supporting international live-action shoots. While New Zealand studios contribute to some of the productions that film here, the majority of our sub-sector’s work is attracted as VFX, animation, and post-production services only — projects that never shoot in New Zealand but choose to place their service work here. These are the productions the PDV rebate is intended to target. Any change to the scheme must be built with this reality in mind if it is to meaningfully support the VFX and animation industry.

However, the reduction in budget thresholds for live-action international productions to $4 million is a welcome change that may encourage more small to mid-tier shoots to choose New Zealand as a location. This could help retain some post-production services such as grading, editing, scoring, animation, and VFX clean-up. However, this change does not influence the attraction of the larger-budget, VFX-heavy productions that are essential to sustaining the visual effects and animation workforce and business ecosystem in New Zealand.

PDV 5% Uplift: New Policy Settings Are Now Being Developed (MBIE Clarification)

Ministry of Business Innovation and Employment (MBIE) has confirmed the following:

• The PDV 5% uplift will not follow the live-action uplift settings.
  The $20 million threshold and live-action eligibility criteria will not apply to PDV-only productions.

• The budget threshold and eligibility criteria for the PDV 5% uplift will be entirely new policy settings, developed specifically for post-production, VFX, and animation services.

• Screen industry organisations, screen businesses and NZFC have advised that these new settings must work for businesses of all sizes, and this guidance is now being carried forward.

• The Screen Policy Team will engage with the industry and the VFX Guild over the next month to gather feedback on the design of the new PDV uplift criteria and thresholds.

• As acknowledged by MBIE, the recent changes were implemented at unusual speed, reflecting recognition of both the urgency and economic value of the screen sector. The adjustments made this week represent what could be moved quickly through Treasury, with fuller policy refinement now underway.

VFXG Position on Threshold Design

With MBIE confirming that the PDV uplift will have its own dedicated threshold and criteria, the VFX Guild has already gathered data to support this next phase of policy development. Please full report here: https://www.vfxg.nz/reports. 

Our 2023/2024 industry survey shows that the vast majority of VFX and animation service production budgets sit below the $5m threshold:

• 55% of projects were under $250,000

• 15% between $250,000–$1 million

• 11% between $1–$5 million

• 18% at $5 million+

Of those surveyed for that period, 82% of the work undertaken by New Zealand VFX and animation studios had a PDV budget of $5 million or under. 

This data provides a clear foundation for designing PDV uplift settings that reflect the reality of post-production project sizes. Alongside an appropriate threshold, the uplift criteria must be practical, reliable, and simple. International experience shows the risks of over-complex rebate design — for example, New York’s 5% uplift, which clients found unreliable in practice. New Zealand’s opportunity now is to design a PDV uplift that is fit for purpose, responsive to real project scales, and structured in a way that gives international clients certainty.

Global Competitiveness

Competitor jurisdictions have now raised their PDV incentives to 30–40%, with Australia offering 40% in many states. While New Zealand’s proposed uplift to 25% is an important step forward and may help us re-enter some bidding conversations, we remain below the level required to be broadly competitive. Productions typically aim for a minimum blended rebate of 25% across their entire production, meaning that choosing New Zealand at 20% has often forced clients to pair NZ with much higher-rebate territories to reach their internal thresholds.

Increasing PDV to 25% will help in the short term, and we acknowledge this as an important step. However, 30% remains the benchmark for long-term competitiveness.

Conclusion

These adjustments represent positive movement and a genuine recognition of the importance of the post-production, VFX, and animation sectors. We welcome MBIE’s confirmation that the PDV uplift will be built with new, fit-for-purpose policy settings, and we look forward to working constructively with both MBIE and NZFC on the design.

Further work is still required to deliver a long-term solution that secures a competitive future for New Zealand’s world-class VFX, animation, and post-production industry. The VFX Guild will continue to engage closely with Government and policy makers throughout this next phase to ensure the settings are effective, inclusive, and aligned with global realities.