Immediate action is needed to combat Australian tax incentives tempting video gaming businesses across the Tasman, Digital Economy and Communications Minister David Clark says.
Australia had been courting the global video game industry with a tax-back incentives of up to 40% on every dollar spent.
On Thursday Clark said in light of the actions from Australia, more “interventions were needed” to support the industry.
* Video game sector growth is slowing due to talent shortage
* A million workers will need digital skills training next year, Amazon Web Services
* Six hundred border exemptions granted for tech workers
Last week Clark met with members of the New Zealand Game Developers Association to discuss options.
A long term solution was the Government’s Digital Technologies Industry Transformation Plan with an aim to transition the economy to a focus on “weightless exports” like game development.
But Clark said the actions of Australia had meant shorter term solutions were also needed, to keep New Zealand competitive on the global stage.
One option was to allow 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 initial support options would be provided this week, with a more detailed update expected in August.
The game development sector had total revenues of $276 million last year, and a growth rate of 34%.
The Game Developers Association forecasted the sector could be a billion-dollar industry, if Australian tax incentives did not tempt local businesses away.
Association chairperson Chelsea Rapp said current tax incentives were not fit for purpose, and excluded most of the gaming sector.
She said the meeting with Clark was “useful and constructive” and the association had recommended the Government implement a two-phased approach.
The first step was to open up NZ Screen Production Grants to game development studios.
The second was to allow a 30% tax incentive similar to what was being offered in Australia.
She said she was pleased to see the Government recognise 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 retaining one of New Zealand’s fastest-growing sectors they need to take action now,” Rapp said.
Rocketwerkz chief executive Dean Hall, said if he was to start his business over again he would not set up shop in New Zealand.
“If you were to start a company today there is no way you would do it in New Zealand. Why would you when there is Australia over there with more talent, more money and a tax incentive that can give you 40c back on every dollar you spend,” Hall said.
Hall said he was in conversations with the Australian government about moving parts his business across there.