In a media statement on April 6th Gerry Brownlee, New Zealand Minister of Economic Development, announced the formation of the International Fund Services Development Group (IFSDG), a Government endorsed private-sector body charged with advising the Government on the establishment of a international funds service industry and turning New Zealand into a attractive funds domicile. The group will be chaired by Craig Stobo, private-sector entrepreneur and director.

The IFSDG is required to issue its final report to the New Zealand Government by June 2010, detailing the steps necessary to create and foster an international fund service sector within the New Zealand economy. According to Craig Stobo, research was initiated preemptively to identify the requirements of potential users of the proposed international funds service sector. Elaborating on the group’s research, the Chairman said “It is very important that we approach this from a needs perspective. There are some obvious changes identified which will enhance our attractiveness.”

According to Gerry Brownlee New Zealand could be turned into an ideal international funds service center, as it already holds several advantages like stability and neutrality in the legal system, a high quality legislative and tax environment, along with a unique time zone advantage.

Photo by nznationalparty

According to a press release issued by Gerry Brownlee, Economic Development Minister of New Zealand, on January 24th, the award winning film delivered millions of dollars in expenditure to the economy. He claimed that this boon would not have been possible without the government’s Large Budget Screen Production Grant (LBSPG) scheme, from which Avatar has already received NZD44.69 million in tax rebates.

The LBSPG was instituted in the Taxation (GST, Trans-Tasman Imputation and Miscellaneous Provisions) Act 2003 and originally provided a 12.5 percent tax rebate on aspects of productions that exceeded a preset expenditure level. In mid-2007 the grant was increased to 15 percent and also came to include post-production, digital and visual effects work, that exceeded NZD3 million.

The grant was instituted in the hopes of stimulating economic growth by creating incentive for international productions to be created in New Zealand. Gerry Brownlee expanding on this, said “Attracting large budget film productions here offers wider benefits to the economy, including increased opportunities for New Zealanders as well as tourism benefits from having New Zealand locations shown to an international audience.”

Photo by vancouverfilmschool

Gerry Brownlee made comment about oil being New Zealand’s third largest export in 2008, netting NZ$2.8 billion. He also said that the industry is experiencing heavy expansion with exploration projects being carried out in numerous possible fields across New Zealand. If conservative estimates of the oil potential of the explored fields are recognized, the petroleum export sector could see an extra NZ$30 billion per annum by 2025. According to Gerry Brownlee, this could translate to an extra NZ$10 billion in tax receipts for the government for the next 40 years. Such revenues, according to the Energy Minister, would be adequate to make a significant impact on the government’s deficits.

To attract investors into the New Zealand petroleum sector and make these estimates a reality, Gerry Brownlee revealed the Government’s new seven point “Action Plan”. First, the government will continue to explicitly support petroleum expansion. Secondly, the government will make large investments to research of petroleum industry efficiency. Thirdly, a review will be completed by May 2010, looking at the Crown’s capability to manage and resource the expanded petroleum estate. Fourth, a review is due by June 30th regarding the improvement of data quality provide by the petroleum industry to the Government. Fifth, another review will look at arrangements held for royalties, taxation, regulation and other arrangements for the petroleum industry. Sixth, improvements will be made to current legislature regarding petroleum. Lastly, work will also be done to improve New Zealand’s situation with gas hydrates.

The key concern of the speech was to repeal a Labour government passed law which stated that by the year 2012 2.5% of the petrol and diesel market be sourced from biofuel. Garry Brownlee said that although there were a number of exciting biofuel projects in New Zealand, the amount was not enough to meet the law requirement. Subsequently, this would require fuel companies to import increasing amounts of biofuels and as it is sourced from overseas there is no guarantee that it will be done so from renewable or sustainable resources.

The current implementation of some biofuel productions competes directly with the space needed for food production. This can have the effect of raising food prices, a move that the government does not want to support.

Gerry Brownlee stated that a more productive solution would the implementation of a tax-incentive, which would see reward for bio-fuels. Specifically the scheme would see a tax discount based on the percentage blend of bio-fuel, whereby a 10% blend in fuel would see a 10% drop in excise and road user charges.