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SocietyMarch 9, 2017

How government is killing New Zealand’s small towns – and Hollywood is helping


Residents of rural towns are facing astronomical bills to support basic infrastructure. In Glenorchy, a mecca for film and tourism, they’re mad as hell and not going to take it any more, writes Peter Newport.

User pays. Sounds fair doesn’t it? You use – you pay.

But for many small towns around New Zealand being able to afford what they use is becoming increasingly impossible.

Take Glenorchy for instance. It’s a tiny town with only around 350 residents. And yet each household may soon have to accept paying up to $30,000 – yep, that’s up to thirty thousand dollars per household – to get their sewerage system up to scratch, at a total cost of around $10 million. Plus there’s some more big bills on the horizon that could force people to leave town. It’s unlikely that any new residents will arrive to take their place with those sort of liabilities attached to every property.

A similar story can be seen all over the country as the government cuts back on subsidies that historically have allowed our small towns to survive and even thrive.

Ironically many of these small towns in the Deep South are supporting hundreds of tourist visits each day and playing host to movies and TV commercials that have budgets that run to tens of millions of dollars. Increasingly the residents of these towns are saying “Show us the Money!”

And the councils who are having to provide infrastructure are running out of ideas on how to fund rapidly escalating costs.

In Glenorchy’s case there’s rebellion in the wind. More than 70 residents met last Saturday to vent their frustration at visiting Queenstown Lakes District Council managers and experts from the Otago Regional Council.

Niki Glading of Sustainable Glenorchy

Niki Gladding is part of Sustainable Glenorchy. She argues that $10 million is not only way too much for the residents to pay for but that it’s probably not the right solution anyway. Many residents have already paid $20,000 or more for top of the range septic tank systems and Gladding says that the Otago Regional Council has not figured out nearly enough about how the town’s waste water needs to be treated.

In fact the Otago Regional Council is being accused of not only failing to understand Glenorchy’s wastewater needs, but failing to fund proper investigations into many Southern Lakes now becoming clogged with a mystery weed. New Central Otago resident and Otago Regional Council member Michael Laws (the former Whanganui Mayor) has labelled the Regional Council “useless” and accused them of sitting on a $50 million surplus and planning a new $25 million Dunedin office for themselves while some our best scenery gets polluted and degraded.

Not all Glenorchy residents are completely in accord with Niki Gladding but most agree $10 million is too much for the tiny town to fund. Community Association Chairperson Pete Reid agrees it’s a lot but he says there’s potentially worse to come. The government’s road agency NZTA is, according to Reid, planning to reduce subsidies for the incredibly scenic and busy Queenstown to Glenorchy road, leaving local ratepayers to pick up the tab.

Let’s be clear. Glenorchy is a kind of Mecca for both tourists and the movie industry. Hundreds visit each day to take photos, ride jet boats and horses, walk the Routeburn Track and get mesmerised by the stunning scenery.

Glenorchy was Top of the Lake for Jane Campion’s TV series, a massive undertaking for which “normal TV budgets had to be doubled”, according to the BBC, which produced the series. Glenorchy is the star of literally hundreds of TV commercials and the surrounding mountains are embedded in almost every international production that makes its way into New Zealand.

But where’s the external help for Glenorchy’s waste water and other infrastructure costs? Basically, there is nothing.

Queenstown Lakes District Council’s chief financial officer Stewart Burns admits it’s a challenge. He says that until the 80s and 90s the now defunct Ministry of Works did subsidise things like sewerage for small towns. The Ministry of Health confirmed to me that any sewerage subsidy schemes that did exist have now been stopped.

Stewart Burns says the Queenstown Council does try to give people time to pay – 15 years or more in the case of Glenorchy’s new sewerage system – but he says even the interest costs have to be passed on to the Glenorchy residents.

Queenstown Council’s Myles Lind is involved in the road funding issue and says that he is fighting to protect local ratepayers from having the support a bigger proportion of roads largely used by tourists. Lind is arguing that special circumstances exist to maintain the NZTA subsidy of around $400,000 – $500,000 a year for the Glenorchy Road, but if that battle is lost Queenstown Lakes ratepayers, including Glenorchy, will have to cover whatever amount NZTA removes.

NZTA confirmed to me that they are also looking at reducing the $1 million subsidy on the Crown Range, another local stretch of road heavily used by tourists.

The NZ tourism site showcases Glenorchy

CFO Stewart Burns acknowledges that more load is being put on local government to cover small town costs and nearby Clutha District Council chief executive Steve Hill agrees.

“It’s not by stealth” say Hill. “It’s fully declared.”

Steve Hill recently saw one of his small towns at the centre of a Disney production with a budget of just over $NZ 90 million.

Tapanui (pop. 744) became the town of Millhaven in the box office hit Pete’s Dragon. Stars including Robert Redford lived in Tapanui while the movie was shot but according to Hill, there was no formal location fee paid by Disney. The movie grossed over $NZ 200 million.

“There’s no doubt however that there were direct benefits to the town” says Hill. In fact some residents reportedly moved to Bali while their Tapanui houses were rented out to the Disney actors and crew.

I visited Tapanui recently and it was still glorying in the afterglow of Pete’s Dragon, but somebody still has to pay the bills and keep the town running. Clutha District Council has taken a different path to Queenstown and recently decided to share water costs, including sewerage, across the entire district rather than leave places like Tapanui to manage on their own.

Kevin “KJ” Jennings is the man that helps bring many of the big budget movies and TV commercials to Otago and Southland. He heads Film Otago Southland which gets funding from the Queenstown Lakes District Council. “In New Zealand we are focused on the tourism and indirect economic benefits that these productions generate” says KJ. He agrees that the production budgets look big but denies that we are missing an opportunity to charge more. “Sure the budgets might be big, but every single dollar is tight and its an extremely competitive international market.” KJ explains that even a half a per cent difference in tax breaks or local support can see a major production lost from New Zealand in favour of Finland, Ireland, Scotland or even some smaller non-Hollywood states in the US where productions get big concessions and generous support.

To control costs many big movies and commercials are shot on private land, and supported by specialist catering companies, leaving the nearby towns scrabbling for any tiny crumbs that might fall off the production table.

There’s no doubt that the blockbuster movies shot in and around our small towns do generate tourism. But a bigger question is whether tourism itself is doing much more than produce minimum wage jobs, add a lot of camper vans to our roads and generate a whole bunch of GST that goes to Wellington. That’s the same Wellington that is reducing support and subsidies for the small towns at the centre of our booming tourism and movie industries.

In Queenstown tourism and property companies are managing to spend big on their own infrastructure including two new Gondola projects at $60 million and $50 million, $20 million for Walter Peak tourist development, tens of millions for new ski field facilities and the Council has somehow found $640,000 for a new cricket pitch. On the other hand the people to staff these new facilities are having to leave Queenstown for towns like Glenorchy because of an accommodation crisis that gets worse by the week.

New Zealand’s most iconic tourist location, Milford Sound, seems to be available for hire – as long as your name is Ridley Scott. The famous director of the upcoming Alien: Covenant movie got to truck in a few hundred crew and explode a mocked-up spaceship right in front of Mitre Peak last year in exchange for an undisclosed fee to the Department of Conservation. The new trailer for Alien: Covenant undeniably stars a brooding, moody Milford Sound and there’s little doubt that DOC could always do with some extra cash.

I asked DOC how much the Milford Sound fee was and what the money was used for but DOC said it wasn’t easy to access that information and it would take an Official Information Act request to potentially dig out the dollar figure. DOC told me that the money was treated as Crown revenue and goes into the government’s consolidated fund.

In nearby Te Anau the restaurants were certainly full of Alien production teams last April, but hey let’s be honest, they were already full of tourists anyway.

Ironically New Zealand missed out to Australia in terms of producing Ridley Scott’s latest Alien movie. The Aussies put up a reported $NZ 60 million in grants for a two movie deal (the other was Thor: Ragnarok) – so it was their money, in a sense, that was being spent with DOC in Milford Sound and Te Anau.

Top of the Lake

I can’t resist comparing our tourism and movie pricing with the wine industry. Our wine producers have had the guts to say our wine is extra good and they have doggedly stuck with premium pricing all over the world. It’s been very painful and tough – but they have done it. The Australians on the other hand have produced wine lakes and often been historically reduced to the international bargain basement of wine.

Maybe we need to start to be more bold with how we charge for access in terms of both movies and tourism? It’s the same premium pricing model our wine producers have pioneered, but we’d have to be prepared to lose a few deals and maybe have fewer tourists. At the moment our national Welcome Mat seems to be out for all comers, regardless of the small detail that our infrastructure can barely cope and we seem to be too embarrassed or insecure to include an invoice with our Thank You note.

Either we start invoicing realistically for access to our prime real estate or the Treasury in Wellington is going to have to get some GST and tax cash flooding back into these remote places before everybody declares themselves bankrupt and leaves town.

Maybe that would be good for international movies that feature ghost towns or tourists who want to literally get away from everything – including the New Zealanders who used to be able to afford to live here.

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