Director James Cameron says increased film rebates were critical to the decision to make three sequels to Avatar in New Zealand.
On Monday, the Government announced a rise in the rebates that big-budget productions can claim from 15% up to 25%.
It also increased the incentives that can be claimed by medium-size productions, with budgets between $15 million and $50 million.
Mr Cameron said on Wednesday he wanted to make the Avatar sequels in New Zealand, but would not have been able to convince 20th Century Fox to do so without the rebate increase.
He told Radio New Zealand's Nine to Noon programme that domestic films need to reach an audience beyond New Zealand to be financially viable and the domestic industry can do that by fostering relationships with big international studios.