New Zealand law passed to keep 'Hobbit' amid protests

The New Zealand government on Friday passed legislation clearing the way for two "Hobbit" films to be made in the country despite stiff protest by opposition lawmakers, who said it was a "day of shame."

The government's decision to rush through amended labor laws, part of the deal made with Warner Bros. Pictures to keep director Peter Jackson's lucrative project in his native New Zealand, has split public opinion.

Some union officials reportedly received death threats in the wake of a short-lived international boycott over working conditions.

Warner Bros. executives said they would consider moving the production elsewhere, a move that could have cost the country $1.5 billion and damaged the reputation of its fledgling film industry. They flew down to New Zealand earlier this week to negotiate with a delegation led by Prime Minister John Key.

The government said announced a deal on Wednesday to keep the films in New Zealand, although it was forced to hand over tens of millions of dollars for the privilege.

"We were not prepared to see thousands of Kiwi jobs disappear and we were not prepared to see the hard work of the many talented New Zealanders who built our film industry from scratch put at risk," Labor Minister Kate Wilkinson told parliament during the debate.

Included in the deal was an offer of $25 million, some $15 million of that in tax breaks, and the law changes, which were pushed through without the normal process of referral to a parliamentary committee and public submissions.

"What is the government going to do next -- give in to any multi-national that asks for a labor standard to be diluted in return for some form of investment?" said opposition lawmaker Charles Chauvel.

"This is a government which, in the words of the Financial Times today, has reduced New Zealand to client status of an American film studio."

Another opposition lawmaker held up a redesigned national flag with the Warner Bros. logo in one corner.

Warner Bros., a Time Warner Inc unit, has declined several requests for comment, but Jackson said he was thrilled.

JACKSON GRATEFUL

"We are grateful to the government for introducing legislation which shall give everyone in the film industry certainty as to their employment status," Jackson and his wife/collaborator Fran Walsh said in a statement.

Jackson's adaptation of Tolkien's "Lord of the Rings" trilogy was shot in New Zealand and amassed billions of dollars at the box office, giving a kick start to the local film industry, which has since contributed heavily to "King Kong" and "Avatar."

The threatened loss of the movies drew thousands to the streets in protest earlier this week.

As part of the overall package, New Zealand is giving extra tax rebates for each "Hobbit" movie on top of the usual 15 percent, and will partly offset the costs of a joint marketing deal with Warner Bros. to promote the country as a film production and tourism destination.

"The Hobbit" is based on the adventures of Bilbo Baggins, a hobbit who lives in the land of Middle-earth that is filled with wizards, elves and other fantasy creatures. Bilbo goes on a quest to find treasure guarded by a dragon.

The book, first published in 1937, is the precursor to the "Lord of the Rings" trilogy which also takes place in Middle-earth.