Warner Brothers have confirmed that they are considering alternative locations in which to film the two Hobbit films.

The production company's spokesperson Candice McDonough refuted reports the boycott of the films by NZ Actor's Equity and other unions had been lifted days ago and that the studio had asked for the delay of the announcement.

"It was not until last night that we received confirmation of the retraction from SAG, NZ Equity and AFTRA through press reports," Ms McDonough said.

"While we have been attempting to receive an unconditional retraction of the improper 'Do Not Work Orders' for almost a month, NZ Equity/MEAA continued to demand, as a condition of the retractions, that we participate in union negotiations with the independent contractor performers, which negotiations are illegal in the opinion of the New Zealand Attorney General.

"We have refused to do so, and will continue to refuse to do so."

"The actions of these unions have caused us substantial damage and disruption and forced us to consider other filming locations for the first time."

Rise in rebate not ruled out

Prime Minister John Key and Economic Development Minister Gerry Brownlee will meet Warner Bros executives next week in a bid to keep the $670 million production here.

Lifting the current tax rebate of 15 per cent for two Hobbit films has so far not been on the agenda, but Finance Minister Bill English refused to rule it out yesterday.

"The Government is taking an interest in the issue and the Government will collectively make a decision about that."

He said it was possible Warner Bros was using the industrial dispute to push an agenda for more tax breaks, which are estimated to be worth $50 million to $60 million.

The situation remained tense after exchanges of insults and clashes in the streets between union and non-union film workers.

Last night, NZ Actors' Equity, which has about 600 members, cancelled its Auckland meetings for safety reasons, and the previous night actor Robyn Malcolm was reportedly abused as she left a Wellington restaurant and had to be escorted to safety by police.

Producers blame unions

Sir Peter waded into the debate, calling the Equity union gutless and self-centred.

In a statement with co-producer Fran Walsh, he said Warner Bros executives were coming next week to "make arrangements to move the production offshore".

They blamed Equity, which is a branch of the Australian-based Media and Entertainment Arts Alliance and an affiliate of the Council of Trade Unions, for targeting The Hobbit and putting the New Zealand film industry in "dire jeopardy".

"NZ Equity's unjustified industrial action against The Hobbit has undermined Warner Bros' confidence in New Zealand as a stable employment environment, and they are now, quite rightly, very concerned about the security of their US$500 million ($667 million) investment.

"This will be the start of a domino effect, as word of New Zealand's unstable employment environment registers with film investors and studios worldwide."

He said the lifting of the boycott was irrelevant, because our reputation as a stable working environment was already in tatters.

Sir Peter 'spoiled brat'

CTU president Helen Kelly hit back, calling the publicity a "no holds barred fight for public opinion" and Sir Peter a "spoiled brat" who had blocked talks with the union.

"There comes a point when you have to call a spade a spade," Ms Kelly said.

"We were making progress. Why would he stop it? He's trying to maximise his reputation against the reputation of performers."

Sir Peter responded by saying that Ms Kelly did not have a clue, and that a month ago no one thought the films were going to be made anywhere but in New Zealand.

Ms Kelly pointed to the review of the Film Commission, co-authored by Sir Peter, which noted that publicly-listed film companies always looked to maximise profit and the level of tax rebate New Zealand offered should reflect that.

"We may think our landscape is unique, but a publicly traded multinational conglomerate won't hesitate to substitute the mountains of Canada, the black forests of Germany or the lush green of Ireland if the numbers point that way," the review said.

Currently the tax rebate is less in other countries such as France and Hungary (20 per cent) and Ireland, where it is up to 28 per cent.

Mr Brownlee said Warner Bros had not asked for more tax breaks.

"You can offer all the [tax] advantages you like. If you can't offer stable industrial relations, they won't come."

NZ Actors Equity president Jennifer Ward-Lealand said the union had given an unequivocal guarantee that there were no union barriers to The Hobbit.

She questioned whether the prospect of losing The Hobbit were a beat-up.

"We find this perplexing when we know that flights for overseas actors are already being booked to New Zealand, and their contracts have the filming clearly located here. The production office is already issuing contracts to New Zealand performers and crew."

Meanwhile the Actors Equity Facebook group has censored its page because of abusive posts. The group has also deleted all posts that do not support the union's position.

* Sir Peter Jackson and the Government say the issue is industrial relations, and instability in the workforce will drive Warner Bros to take the film overseas, damaging the future of the industry.
* Unions say industrial action is off the table and the only obstacle to the film being made here is the level of tax incentives, which are far less than in other countries.