By MONIQUE DEVEREUX and KATHERINE HOBY

Double Oscar winner Richard Taylor says New Zealand might lose out as a film location if the Government refuses to reinstate tax incentives for visiting film productions.

Early this year, Prime Minister Helen Clark indicated she wanted an assessment of the impact of tax breaks on film production. Her comments followed criticism from Lord of the Rings director Peter Jackson that the abolition of the tax breaks two years ago would stop New Zealand being used as a location.

Taylor picked up the two Oscars at this week's Academy Awards for make-up and visual effects in Lord of the Rings: Fellowship of the Ring which were done by his special effects company, Weta.

Taylor, partner Tania Rodger and Jackson set up Weta in 1994.

Back in Auckland yesterday, Taylor said not having tax breaks could impact significantly on film crews coming to New Zealand.

"If they are out there looking for somewhere affordable and beautiful to film, and Australia is offering tax breaks, I have no doubt where they will go."

Taylor said he had appreciated the level of Government support for LOTR, and film-making in New Zealand, and hoped it would continue.

"We have to appreciate that this is a global industry and that if we want to play, we have to play with the big boys."

This week, Finance Minister Michael Cullen said reinstating tax incentives for movie-makers, which the National Government abolished, had potentially very large fiscal consequences.

The Government was looking at the broad issue of how to attract more film-making.

"But my suspicion will be that tax incentives will not play any significant role. What seems to be looked for in these circumstances is the taxpayer taking the full risk of losses, which can be very substantial in the film industry," he said.

"Any other business can make the same argument. If we were prepared to look at a tax situation where we took all the losses for any productive enterprise, we would probably have a big inflow of productive capacity from around the world into New Zealand and wonder why we were very poor at the end of the day."

Dr Cullen said there were various things the Government could look at in terms of planning procedures, similar to what happened with the Lord of the Rings.

He acknowledged that New Zealand offered location, talent and low production costs.

"So there are lots of different ways of providing assistance which do not expose us to the very large risks that some artificial forms of financing through the tax system can imply."

For Weta and its 50 staff, business continues despite the end of the Rings trilogy.

Before the Oscars, Taylor was in New York promoting Weta's line in Muppet figurine collectibles, a contract it gained from the Jim Henson company. Weta is also producing LOTR collectibles and it has plans to set up a children's television production company.

Oscar nominees and winners (full list)

nzherald.co.nz/oscars