The Hobbit

is slipping away from New Zealand despite the best efforts of its producers, the film's co-writer Philippa Boyens says.

The producers of the

Lord of the Rings

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prequel overnight issued a statement saying preparations were being made to move the film off-shore.

Peter Jackson and Fran Walsh said industrial action by NZ Actors' Equity and Australian union Media Entertainment and Arts Alliance had "undermined [Warner Brothers'] confidence in New Zealand as a stable employment environment."

Ms Boyens and the film co-producer Fran Walsh later delivered a stark assessment of the production's future to National Radio.

"We can literally feel it slipping through our hands," said Ms Boyens.

"We've had it. We've fought as hard as we can. We are in a situation where we are fighting to save it.

"Unfortunately it feels to us like this conversation is already done. We don't know how far we have to go to retrieve the situation."

Fran Walsh said the film's loss would be an "absolute tragedy".

Delays to shooting as the result of industrial action had already lost the studio millions of dollars, she said.

Ms Walsh and Ms Boyens told Radio New Zealand an actors' blacklist on the film had not been lifted.

NZ Government being 'bullied'

But Council of Trade Unions president Helen Kelly, who has been involved in union talks, said the industrial issues were on their way to being resolved and the blacklist was lifted last Sunday.

"Warner is aware of that. Jackson is aware of that," she told Radio New Zealand.

Ms Kelly said other countries had offered a deal that was double New Zealand's 15 per cent tax rebate for films.

"There is a theory that this whole thing has been blown up, that the genuine request by performers to negotiate the terms and conditions has been used to put pressure on the Government to change the terms in which this film will be made in New Zealand," she said.

"It's an international corporation bullying our government to match conditions that are available in other countries."

Finance Minister Bill English did not comment on whether the Government had offered a tax rebate of 30 per cent to Warner Brothers when asked about the issue by the

Herald

this morning.

"There is always generous assistance to the film industry and there would be pretty generous support for this film if it's done in New Zealand."

NZ Equity member Robyn Malcolm said she wondered how asking for better conditions could have derailed a multi-million movie in New Zealand.

"I feel there is an enormous amount of inflammatory and dramatic language" and the dispute could have been solved by a mature conversation about a month ago," she said.

Financial impact

Economic Development Minister Gerry Brownlee told TVNZ's

Breakfast

this morning he had hoped some of the achievements Sir Peter and Ms Walsh had made for New Zealand could have led to a situation where production of

The Hobbit

was in much better shape.

"It's utterly appalling that they have been treated like this, and it's worse, I think, that we've got an Australian union purporting to represent the industry here in New Zealand," he said.

"The moment we had the `don't work' order on

The Hobbit

issued through the Australian union, we were cast into the uncertainty that a lot of the film world through other countries operates in," Mr Brownlee said.

"It's a dreadful situation and it's going to take a bit of work to even get future productions into good shape."

The Employers' Chamber of Commerce Central's president Jo Bransgrove said there would be a huge economic loss if the filming was lost abroad.

"The filming of

The Hobbit

provides an opportunity for the creation of thousands of jobs and the injection of millions of dollars into the local economy.

"The economic momentum generated from the success of the

Lord of the Rings

trilogy would be lost if it does not go ahead," she said.

"The stakes are high. The film industry is crucial to both the Wellington and New Zealand economies. But our reputation as a good place to make films is at risk.

SPADA chief Penelope Borland told National Radio the production was "100 per cent on track until the boycott".

"The boycott will be totally responsible if it goes off-shore," she said. "It is a case ... of the union not understanding this was real that it could have gone off-shore."

- With NZPA