Prime Minister John Key has emerged from crisis talks with Warner Brothers executives over the filming of The Hobbit, saying there is still no decision on where filming will take place.
Meetings at Premier House have now finished but more meetings are expected to be held tonight and tomorrow in an effort to break a deadlock which threatens to see the the film shot in a foreign location.
Mr Key, who emerged from this evening's meeting with up to 10 Warners Brothers executives, including New Line Cinema boss Toby Emmerich, initially said he was expecting a decision "later this week" but then said it was likely to be made within the next 24 to 36 hours.
The Prime Minister said the talks this evening were constructive, but the likelihood of the films remaining in New Zealand was still no greater than 50-50.
"They were very open and honest," said Mr Key, but the big issue centred "unquestionably" around uncertainty in industrial relations.
"They[the executives] have a lot of goodwill towards New Zealand, but there's no question that the industrial action caused concern on their side.
"If it wasn't for the industrial action, they [Warner Bros] were good to go," he said.
Government advisors will tonight be discussing how, if at all, the Government can provide Warner Brothers with assurances regarding labour laws.
Mr Key said one of the possibilities was to make changes to labour laws.
"We wouldn't want to say we could definitely do that, but we also wouldn't want to rule it out," he said.
Mr Key also said Warner Brothers didn't have much faith in assurances made by the Council of Trade Unions (CTU), which has guaranteed there would be no further industrial action taken.
Mr Key said greater tax incentives would be considered, but said the gap between New Zealand's 15 per cent tax rebate and those offered by other countries such as Ireland - 28 per cent - could not be bridged.
"We're not prepared to do that and I don't think the New Zealand taxpayer would want us to do that," he said.
"We are not going buy these movies in New Zealand. If they don't stack up, they'll have to go some place else.
"It's not just about money. If it was just about money we'd have to walk away from it because there's a very big difference."
The crunch meeting, which included senior Government ministers and top American movie studio executives, started around 4pm.
Also at the meeting were Economic Development Minister Gerry Brownlee, Transport Minister Steven Joyce, and Arts, Heritage and Culture Minister Chris Finlayson.
Union stands firm
Simon Whipp, assistant director of the Australia-based Media, Entertainment & Arts Alliance, this evening told Campbell Live he had no regrets in standing up for New Zealander performers.
"It's always nice to have a scapegoat," Mr Whipp said.
"I don't regret standing up with New Zealand performers for their rights.
"It's very clear that it's New Zealand performers who wanted change."
But he admitted, with hindsight, his organisation might have acted differently.
"If we have known that production wouldn't meet with us we would not have gone down this track.
"But how would we have known that the production company would not agree to meet?"
He said he would feel no guilt if the Hobbit ended up being made elsewhere.
Govt rejects exchange rate fears
Earlier, the Government brushed off suggestions a high New Zealand dollar against the United State greenback might be luring The Hobbit's filmmakers away from this country.
Labour MP Trevor Mallard said the film's main producer Warner Brothers had raised concerns over the exchange rate between New Zealand and the United States while he was a minister in the previous government.
"There was a lot of discussion about the dollar. One of the discussions was if the dollar went past 50 cents it might be uneconomic for them to make films there," he said.
Mr Mallard said he expected the exchange rate would come up for discussion in today's meeting.
"I'm sure the level of the dollar is what Warner Bros will tell the Prime Minister is one of the factors he should consider in the financial arrangements for the film industry."
But Mr Key said today the issue of where the films would be shot went beyond the exchange rate.
"This is about a long-term relationship with Warner Bros, and continuing that long-term relationship. It's not just about what the exchange rate is today," he said.
"The problem has been that two years ago, when they first looked at making The Hobbit movies, the US exchange rate was approximately 55 cents. Today it's 75 cents so that has a big financial impact on Warner Bros. But that's also true of our exporters - it's one of the real challenges they face."
Economic Development Minister Mr Brownlee said the exchange rate issue was not unique to New Zealand's film industry.
"The US currency is falling, but it has to be remembered it's falling against every other currency in the world as well. So it's not something that's unique to New Zealand."
Mr Brownlee said lifting the Government's 15 percent subsidy for filmmakers would not be on the table at the meeting.
The subsidy was comparable to what other countries were offering.
"We think what we're offering is a good arrangement, and it is competitive."By Derek Cheng Email Derek, NZPA, NZ Herald staff