Prime Minister John Key says a bidding war with other countries on tax incentives for films would do nothing to help ensure future big budget films are made in New Zealand.
Director Sir Peter Jackson told Radio New Zealand's Morning Report programme on Tuesday that if New Zealand wants to be in the business of making films, the Government has to be aware of what other countries and American states are offering as incentives.
He made the comments the day before his latest movie, The Hobbit: An Unexpected Journey, has its world premiere in Wellington.
The Hobbit films have already received $67 million in tax rebates under the existing incentive scheme.
In September 2010, Mr Key had agreed to make another $30 million available, as well as change employment laws to appease Warner Bros, which was threatening to make the movies elsewhere.
Sir Peter suggests more might need to be done to attract future movie deals, but John Key says the Government has no intention of increasing the incentives it already offers.
"You can always have a race to the biggest incentive, but actually we've got to back ourselves on the quality of people we have, the flexibility of our crews, the nature of our scenery and the capacity for us to produce world class movies. I don't think getting into some bidding war would help us."
However, the Prime Minister hinted that the Government is more likely to increase its support for big budget television series being made in New Zealand.
Labour Party leader David Shearer has also ruled out offering more money to Hollywood studios, saying the exchange rate has a greater bearing on whether films are made in this country, and a strong New Zealand dollar lessens the effectiveness of incentives.
Mr Shearer says Labour supports the movie, even though it opposed the employment law change the Government made to Warner Bros.
But Green Party co-leader Russel Norman has asked why only the film industry gets support.
"If the Government's willing to pay $50,000 a job for a Hobbit job, then it does beg the question why they won't give any support whatsoever to the manufacturing sector and are happy to see us lose tens of thousands of jobs there and do nothing about it.
"When you think about the numbers employed, far more New Zealanders are employed in manufacturing than in either mining or the film industry."
Lawyer disputes movies at risk of being made in UK
A US entertainment lawyer is disputing comments by Sir Peter Jackson that the Hobbit movies may not have been shot in New Zealand if the Government hadn't stepped in with tax breaks and law changes for the producers.
The director's company, Wingnut Films Productions, and the New Zealand Actors' Equity union were at loggerheads two years ago over a collective pay agreement, prompting Warner Bros to consider filming in the United Kingdom instead.
Sir Peter says the studio wouldn't have allowed him to film in this country just for sentimental reasons.
But US entertainment lawyer Jonathan Handel says the movies were never at risk of being shot elsewhere because the cost of moving and the impact on the film's schedule would have been too great.
"They had a release date set and these schedules are very tight, the amount of work to be done on a huge movie like this is a lot - those (factors) really mitigate against any possibility of moving the film."
Mr Handel says if Sir Peter and his team had refused to film overseas, the producers would have listened.
Incentives crucial, says Donaldson
Expatriate director Roger Donaldson says if New Zealand does not keep track with incentives being offered by other countries for films, the film-makers will soon go away.
Mr Donaldson has directed a string of big-name movies including The World's Fastest Indian, which he also produced.
He told Radio New Zealand's Checkpoint programme on Tuesday that New Zealand has proved it has the talent to make great films with the quality of the technicians, locations and facilities available.
"But it is a reality that how movies are financed these days, it's very difficult to get any movie together. They're all out there shopping where's the best place to make them."
Mr Donaldson says countries such as China are very competitive, Australia is probably even more competitive than New Zealand, and many American states are offering incentives.
