October 28, 2010 / 12:12 AM / 8 years ago

New Zealand divided over govt deal to keep Hobbit

WELLINGTON (Reuters) - The New Zealand government began debate on changes to labor laws on Thursday, drawing both praise and outrage as it moved quickly to seal its bargain with Warner Bros. and keep the big-budget Hobbit movies.

Elijah Wood as Hobbit Frodo in a scene from "The Lord of The Rings: The Fellowship of The Ring". REUTERS/Handout

Fearing the loss of the estimated $500 million two-film project and damage to the reputation of New Zealand’s fledgling film industry, Prime Minister John Key negotiated a deal announced late on Wednesday.

A short-lived union boycott brought Warner Bros. representatives to New Zealand, part of a review of its decision to shoot Peter Jackson’s two-part adaptation of J.R.R. Tolkien’s fantasy there.

Included in the agreement was an offer of $25 million, some $15 million of that in tax breaks, and the law changes, which are being pushed through without the normal process of referral to a parliamentary committee and public submissions.

“(It is) a solution that will enable Warner Bros and the international film community to restore their confidence in the New Zealand screen production environment,” said Penelope Borland, chief executive of the Screen Production and Development Association of NZ.

Jackson, whose adaptation of Tolkien’s “Lord of the Rings” trilogy was shot in his native country and garnered major international publicity for New Zealand, as well as winning him and his team 11 Oscars, said he was thrilled and grateful.

But union officials, who had given assurances that the films would not be hit by industrial action, were outraged.

“That a foreign corporation can come into this country and demand that workers’ rights in this industry be removed...that’s effectively what’s going to happen today,” said Helen Kelly, the head of the Council of Trade Unions.

The dispute erupted over moves by actors’ unions to negotiate a minimum wage and working conditions.

“Not only are we now handing over wads of extra cash, the government is now ramming through unnecessary industrial legislation at the direction of Warners,” said Trevor Mallard, a lawmaker from the Labour Party, in a statement.

“It’s a move that sets a dangerous precedent.”

Warner Bros declined several requests for comment.


The threatened loss of the movies, which economists said could cost New Zealand $1.5 billion, drew thousands to the streets in protest earlier this week.

As part of the overall package, New Zealand is giving extra tax rebates for each “Hobbit” movie on top of the usual 15 percent, and will partly offset the costs of a joint marketing deal with Warner Bros., a Time Warner Inc unit, to promote the country as a filmmaking and tourism destination.

Opinion in Wellington, which is home to Jackson’s production company was divided.

“The Hobbit” is based on the adventures of Bilbo Baggins, a hobbit who lives in the land of Middle-earth that is filled with wizards, elves and other fantasy creatures.

Reporting by Gyles Beckford, editing by Elaine Lies

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