Only a new law will give the American film studio Warner Bros the guarantee it wants on labour laws to keep The Hobbit in New Zealand, an employment law expert says.
A decision on where Warner Bros will make the movies is expected by the end of the week, and last night Government advisers were looking at how they could clarify the law covering film workers - specifically on their legal status as contractors or employees.
A meeting last night between Warner executives and senior Government ministers pinpointed labour laws as the greatest issue.
Mr Key said the "paramount" problem was that film workers on independent contracts could be legally seen as employees, even if their contracts specifically called them contractors.
That followed a Supreme Court ruling in 2005 on James Bryson, a model maker on the Lord of the Rings movies, who was deemed an employee, even though he was hired as a contractor.
"They're not arguing people can't be employees," Mr Key said.
"They're just saying that if someone is engaged by their production company as a contractor, they want to know if that's how it's going to end up, and if it doesn't, that has other economic consequences for them.
"They're out of here, if we can't give them the clarity. There's no question about that."
Employment law specialist Jane Latimer said it was impossible to give that guarantee without changing the law.
"The current law cannot give them that assurance, because every person who works for any organisation is entitled to apply to the Employment Relations Authority or the court for a declaration as to their status employee or contractor.
Under current law, it did not matter what the contract said.
What mattered was "what the parties intended and what the true nature of the relationship is".
A new law would have to be introduced to ensure film workers hired as contractors would retain that as their legal status.
"It would almost have to be The Hobbit Amendment Act. It would have to be a special amendment to the law just for this case. Then that is a guarantee," Ms Latimer said.
Mr Key said all options were on the table, including looking at a special law for this project, or a special law for all film workers.