Key looks at bigger tax breaks to keep Hobbit

Kevin Tsujihara (nearest camera) leaves Premier House with other Warner Bros executives. Photo / Mark Mitchell

The Government is considering greater tax breaks to entice Warner Bros to keep The Hobbit in New Zealand, but Prime Minister John Key is ruling out matching foreign tax regimes that are up to twice as generous.

Warner executives - including New Line Cinema president Toby Emmerich and Kevin Tsujihara, Home Entertainment Group president for Warner - met ministers in Wellington last night to discuss the future of the $670 million film project.

The main problem, from Warners' standpoint, is the threat of further industrial disruption, despite assurances from unions that none will take place if the films are shot in New Zealand.

Mr Key said Warner executives had raised the disparity in tax rebates in different countries; New Zealand's rebate is 15 per cent on domestic spending, less than countries such as France and Hungary (20 per cent) and Ireland (up to 28 per cent).

"That is large and we can't match that," Mr Key said. "What I can't rule out is [that] we won't look at some things at the margins that might make the deal slightly better."

Warner Bros had not given an ultimatum, he said. "They're not coming here with a ransom note or trying to put a gun to our heads. The commercial reality is that the actions of the unions have encouraged them to look at other countries, and other countries have better deals at the moment."

The Government estimates that the tax breaks are worth $50 million to $60 million for Warner Bros.

Mr Key said a strong New Zealand dollar also did not favour the cause, but there were other incentives to keep the movies here, such as New Zealand's scenery and director Sir Peter Jackson's desire to shoot them here.

He said there was no question Warner would have made the movies in New Zealand before the boycott by international actors' unions, which began over the issue of standard terms and conditions for New Zealand actors.

Warner Bros still did not trust the unions, but the main concern was over industrial laws and the employment status of film workers as employees or contractors, he said.

"They want clarity in the law. They are making very large movies, even relative to what is being made in Hollywood. They are trying to take risks away."

Mr Key still felt the chances were 50/50 at best, but Warner Bros was likely to announce a decision by the end of the week.

Meanwhile, the group behind yesterday's rallies to keep The Hobbit in New Zealand is crying foul after its webpage was "arbitrarily removed" by social networking site Facebook.

Rally organiser and Auckland actor Mark Harrison said the Facebook page was removed on Sunday for violating Facebook's terms and conditions. More than 10,000 people had signed up as supporters before its removal.