Ian Mune is an elder statesman of New Zealand acting who happens to know quite a bit about hobbits.

He's been one.

Mune played Bounder in Lord of the Rings, Peter Jackson's Oscar-hauling trilogy of films which captured the hearts and minds of J.R.R. Tolkien fans everywhere and launched New Zealand film-making into Hollywood in a way never seen before.

Mune also knows a fair bit about orcs, given Jackson asked him to direct a scene of orcs ransacking the village of Hobbiton, located in the Middle-earth of Matamata.

So Mune is well-placed, as both actor, director and hobbit, to have a strong, gravelly-voiced opinion about the latest dispute afflicting Jackson's The Hobbit, a prequel to the LOTR films.

And what Mune has to say is: "bull-shit".

This is directed at Jackson's long responses against the New Zealand actors' objecting to sub-standard contracts, and at Chris Finlayson, the Minister for Arts, Culture and Heritage, also the Attorney General, who weighed in by writing to Jackson's Hollywood backers telling them New Zealand law ruled out a union-negotiated collective agreement for The Hobbit.

Finlayson, Mune says, should be ashamed of himself; Jackson (who he says was a terrific and amiable director in LOTR) is probably caught in the middle of some very strong forces.

"The truth, is all these actors have said is 'can we talk please?'," he says.

This furore, which has gone global, is simply the normal process of a union trying to talk to an employer who is refusing to talk back, he says.

"This is no different to any other union dispute. People are jumping up and down and saying 'for the greater good of the nation', and 'the actors should shut up and live in Third World conditions'.

"Now, that won't happen with doctors, it won't happen with electricians, it won't happen with politicians, why should it happen with actors?"

He says contracts for actors in New Zealand make bad reading and have since Pukemanu, the TV series about a North Island timber town which made Mune a star in the 1970s.

The issue, basically, is in New Zealand you get contracts which say, among other things, you can be fired for no reason - "they take the right to have your testicles if they feel like it".

When told that Jackson's latest statement says Spada (the Screen Production and Development Association) has been trying to meet both the New Zealand and Australian actors' unions (NZ Equity and MEAA) for 18 months only to be rebuffed, Mune replies, mystified, "Spada is dealing with this?" It's the first he'd heard of it.

He thinks both sides are now saying "I tried to talk to him but he won't talk to me".

Certainly, Jackson is miffed with the actors, but that's because they are making life uncomfortable for him with his studios, Mune thinks.

But it could also be because The Hobbit has already been beset with problems and still doesn't have the official green light.

In 2007, there was the proud announcement that Academy Award-winner Peter Jackson and New Line Cinema were joining with MGM to produce The Hobbit, an "eagerly-anticipated fantasy adventure epic". New Line and MGM would co-produce and share worldwide distribution rights and Jackson and his wife Fran Walsh would executive-produce two films based on The Hobbit. This was soon after Jackson finally settled a lawsuit with New Line over payments for Lord of the Rings. Since then issues keep on emerging.

MGM is in billions of dollars of debt, the film's first director Guillermo del Toro pulled out in May this year because of delays (replaced as director by Jackson), and last September, a lawsuit between the Tolkien Trust, New Line and HarperCollins was finally settled.

And now this, the actors in Jackson's own country who, he says, he has been consistently fair and generous with, are being, in his view, used by the Australian actors' union in a membership drive. He has threatened that the film will be taken out of New Zealand by Warner Bros, the US studio (New Line's parent company) "cash-flowing" the films to the tune of hundreds of millions of dollars, and made in somewhere like Eastern Europe.

This is no idle threat. The Czech Republic has all the scenery necessary for a Hobbit film, plus it currently has better incentives than we do to get foreign films on board. Parts of the Narnia films were filmed there and in Poland.

The New Zealand actors, however, say they are only asking for what other international actors get - that they are the only English-speaking country in the world who don't have a minimum standards contract, so when they act in their own country they do so for lower conditions than their international counterparts.

The fight is over minimum fees, conditions of engagement, professional protections and residuals, which are the profits which come later from merchandise and DVDs and which they say they don't get.

Jackson explained in his first statement that the Screen Actor's Guild (SAG, the powerful US actors' union) members in The Hobbit will get what is called a residual - a small pot of money where an agreed-upon percentage of profits is shared among them.

He said normally if an actor is not a member of SAG they did not share the pot, but most Kiwi actors were not lucky enough to be SAG members and this was unfair.

"For The Hobbit, Warner Bros have agreed to create a separate pot of profit participation which will be divided up among non-SAG actors who are cast in the film."

This was not because of union pressure, he said, it was just Warner Bros doing the decent thing.

In his second statement, he said this was the first time New Zealand actors had had residuals and "we are proud that it's being introduced in our movie".

To this, Mune responds, "What are we, a charity?".

"They have done this without reference to the people they are doing it for. Why not just talk to us?"

Jackson wrote in his second statement that Eastern Europe was only one of six locales Warner Bros were investigating as alternatives to set up the production.

Nobody wanted to take The Hobbit offshore "but every day we are blacklisted costs Warner Bros money and the studio is now moving to protect its investment.

"It's very naive to think that we have much say in what happens from this point on. Warner Bros gave us an opportunity to set the film up in New Zealand and we have been unable to do that successfully."

However Mune says losing The Hobbit will not be the end of the world.

"It just means that of the US$200 million ($271 million) budget, US$100 million or so will not swill around New Zealand to be taxed by our Government and spent in our restaurants. And though some New Zealanders think they have an emotional connection to LOTR, an ownership even, Mune doesn't think it will matter to our national psyche if the film goes to Eastern Europe.

"I don't think it is as substantial a piece of the New Zealand heart as some people would like to make out.

"I think it was terrific, fantastic, but hey, come on, it was a movie ..."

The village of Hobbiton could absolutely be rebuilt in the Czech Republic, he says.

"I mean, they could shoot it in South Africa, they could shoot it in [the Czech Republic], Romania, or somewhere deep in the heart of Kazakhstan, or if they weren't having a war they could probably shoot the thing in bloody Afghanistan.

"When the crunch comes, they'll shoot it anywhere they can get a good exchange rate on the dollar."

Neither will the dispute be all that damaging to the New Zealand film industry and our actors, he thinks, because every country in the world has these disputes.

"What do you do? Do you say let's not ask for anything, let's just take what we're given and say thank you in case somebody sitting in a bar with a cigar and a martini in LA says [Mune goes into an American drawl here] 'hey, those New Zealanders are starting to go on strike. It's okay Charlie, it's okay, we'll move to Peru'."

And back in his New Zealand accent he says, "I mean, for fear of what might happen if we allow ourselves to be walked over - it's ridiculous."

A tough way to make a crust

Gamling's face is ruddy and his hair is wild; he's wearing heavy armour and so is his horse.

He is a commander of the armies of Rohan - they're human, by the way - so all the special effects Bruce Hopkins had to wear in the Lord of the Rings films was a wig and makeup and learn to ride a horse.

Hopkins, when we talk, was about to go and paint the outside of someone's house.

Since the heyday of LOTR, his best year ever, he's not worked much in acting and says because of the haphazard nature of jobs in New Zealand unless you're a core cast member of Shortland Street, 99 per cent of Kiwi actors have to take work where they find it.

Hopkins has a "massive" regard for Peter Jackson and wife Fran Walsh and the rest of the LOTR team.

"It's a very weird situation to be in but there are principles at stake here, values you need to stand to."

Jackson got LOTR finished through love and sweat and Hopkins understands this dispute might feel like people are biting the hand that feeds them. But in a way the success of LOTR has created this situation.

"It's an unfortunate spin-off from what they managed to create ... they exposed New Zealand to the world."

The talent, skill and craft of New Zealand film-makers held their own against the world, but are second-best in terms of pay and conditions.

New Zealand actors do not get regular work and are often hanging out between jobs, he says.

"You have no secure income so you can't take on a mortgage because you don't know if you're going to be earning any money."

Magic numbers

A study by PricewaterhouseCoopers last year found the New Zealand screen industry had a significant economic impact. It found that in 2008:

22,000 jobs were created

$2.5 billion was contributed to the New Zealand economy.

$63,000 average salaries generated. In the post-production area, the figure was $91,000. The 2008 national average salary was $39,000.

$133,000: the average direct value added per employee in the film and television sector.

Invaluable: raised international awareness of the New Zealand "brand", which the report said boosts tourism, heightens positive perceptions of New Zealand products and contributes to an enhanced sense of national identity.