John Armstrong: Mega-money yells, and NZ rolls over

Prime Minister John Key announces that the Hobbit movies will be filmed in New Zealand. Photo / NZPA

Money doesn't just talk. In the case of outfits the size of Warner Bros, it yells.

The obvious relief that the two Hobbit movies will be made in New Zealand will be somewhat tempered by the fact that the Government has buckled and increased tax write-offs for large-budget films, benefiting Warner Bros by up to $20 million.

On top of that, the company walks away from what insiders say were tough negotiations with another $13.4 million to offset the films' marketing costs.

Far more unseemly, however, is the Government's kowtowing to Warner Bros and agreeing to put legislation before Parliament as soon as today to clarify the distinction between "independent contractors" and "employees" as it relates to the local film industry.

Not only that. The legislation will be passed straight through all its stages, which means no select committee scrutiny.

Sources close to the negotiations say the spectre of industrial disputes stopping production was absolutely bottom-line for Warners.

The Government duly delivered a guarantee that would not happen.

What kind of a country, however, sells its democratic soul for 30 pieces of silver?

The answer is a small one. And one where the economy shows little sign of recovery in the short term.

Warner Bros apparently also wanted a lot more in terms of tax relief, although that was a secondary matter.

The Government has made the right decision for the film industry and for the wider economy.

But with Warner Bros holding a gun to its head, what other decision could it have made?

The Prime Minister and other ministers had to negotiate within that grim reality. Such high stakes bring out the money-trader best in John Key.

He may have sacrificed a small piece of New Zealand's sovereignty, but putting laws through Parliament does not cost any extra cold hard cash.

The exact dollar price of yesterday's deal may be relatively cheap.

What is important is that this fiasco does not set a precedent for a further flexing of industrial muscle - the commercial sort, not the trade union kind.