Budget 2021: Australia’s 30% video game tax offset will be ‘disastrous’ for NZ

Expert warns talented employees are going overseas for jobs in Australia

Budget 2021: Australia’s 30% video game tax offset will be ‘disastrous’ for NZ

Australia’s newly-announced tax offset for video game developers could be disastrous for jobs growth across the ditch in New Zealand, an industry expert has warned.

Announced last week as part of the Digital Economy Package in this year’s Budget, it’s the country’s first federal tax incentive for the industry after years of lobbying. It will offer game developers a 30% tax relief for projects that meet the qualifying threshold of $500k in spending and obtain a classification rating. The full details of the initiative are due to be laid out when the Budget is released on Tuesday.

Speaking to HRD, Chelsea Rapp, chairperson of the New Zealand Game Developers Association (NZGDA), said the measure could be disastrous for the interactive games sector – the fastest growing and most profitable part of New Zealand’s screen sector in recent years.

“Now, Australian studios will be better equipped to create new businesses, provide higher-paying jobs, improve sustainability, build their creative IP portfolios, and provide new options for work-life flexibility,” she said.

“How can NZ businesses in interactive media possibly compete with that?”

Read more: New Zealand gaming industry sees $121 million growth over 12 months

Rapp said studios in New Zealand have been losing staff to companies in Australia and two of the big developers have recently ramped up their hiring efforts. With the border open between the two countries, attracting talent from across the Tasman is now a viable option.

“If the New Zealand Government doesn't step up support for the game industry, we will watch a slow drain of our creative and experienced talent, followed by the relocation of decades-old businesses across the ditch,” she warned.

“We need the government to do more than just another 'feasibility study', we need more commitment than radio silence and inaction on the Screen Sector 2030 strategy.”

A recent report by the NZGDA found the gaming industry had a $121 million jump in profit over the last 12 months. Despite the global pandemic, the booming sector experienced 42% annual growth, posting $324 million in annual revenue for 2020. The growing demand from customers in Asia and the US, combined with the ability for developers to work from home, meant the industry was resilient in the face of COVID-19.

But to continue that growth, New Zealand’s industry desperately needs more funding to enable developers to get their ideas off the ground and to hire experienced workers who can train the next generation.

Read more: Hype & Dexter celebrates award win after efforts to transform male-dominated industry

Australia’s tax incentive was announced as part of the $1.2 billion Digital Economy Strategy which intends to capitalise on the industry’s booming growth and help to position Australia as a digital hub. The measure comes as a result of much lobbying from those within the industry, particularly after the Australian Interactive Games Fund was axed in 2014.

Frustratingly, Rapp said in New Zealand, government incentives for the film industry already exist – but do not include game development. Comparing the government’s rebates offered to the Lord of the Rings TV series, which is backed by Amazon, Rapp said that level of investment would cost less than the tax incentives for game developers over an entire year.

Amazon is estimated to be spending around $650 million (NZD) to film the first season and would be eligible for a rebate of about $162 million. The government said the cash incentive would reap economic and tourism benefits, as well as the employment of over 1,000 people. Rapp argued that similar investment in game development would be hugely beneficial for New Zealand’s economy.

“The revenue generated by our games would remain here in New Zealand, creating high-paying, skilled jobs, building our local communities, and bolstering the economy outside of just our urban centers with weightless, sustainable digital exports,” she said.

“Creating a similar incentive scheme for games isn't just a recommendation - it is an absolute requirement for the New Zealand interactive screen industry to survive in the future.”

Recent articles & video

Border worker fired after refusing COVID-19 vaccine lodges legal fight

Australia, NZ poised for post-COVID success: study

Use it or lose it! How to encourage taking PTO

Free Whitepaper: The Employee Expectations Report 2021

Most Read Articles

NZ restaurants turn out lights in protest over crippling skill shortage

Mental health: Are employees 'too busy' to seek help?

Ikea France fined $1.2M for snooping on staff