Mr Finlayson announced today that the Qualifying New Zealand Production Expenditure (QNZPE) threshold for feature films to qualify for the Screen Production Incentive Fund (SPIF) has been lowered from $4 million per production to $2.5 million.

“This means there will be more opportunities for New Zealand film makers to see their projects through to completion, and more opportunities for the industry to showcase its diverse creativity, talent and originality,” Mr Finlayson said.

As well as enabling more films to be made, the lower threshold also ensures SPIF remains competitive with the Australian Producer Offset screen incentive.

SPIF was set up in 2008 to encourage investment in the New Zealand film industry by increasing support for production of medium and larger scale films.

The fund was allocated $68.5 million over five years and was established to ensure the New Zealand industry remained competitive with offshore film incentives.

So far nine feature films have received SPIF funding, including Boy, Separation City and Love Birds. About $20 million remains in the fund and is available for the next two years.

Successful recipients of SPIF grants receive 40 percent of their qualifying expenditure for feature films or 20 percent for television or other formats. SPIF is administered by the New Zealand Film Commission (NZFC).

Mr Finlayson said the lower threshold was being introduced as a response to a continuing global and local recession leading to reduced international and NZFC investment.

The new criteria will not require any additional funding.

The new threshold will apply to feature film productions that have started principal photography after 1 September 2011, and includes QNZPE incurred by these productions since 1 July 2008. Further details about the criteria change can be found on the NZFC website: www.nzfilm.co.nz.

The NZFC is holding a series of meetings with the industry to update the sector on recent changes to its funding criteria and the SPIF scheme. These meetings will be held in Auckland (10 October) and Wellington (11 October).

Meanwhile, the SPIF scheme is currently being evaluated and a report is expected to go to Cabinet in June next year with recommendations on the future of the scheme. The threshold for formats other than feature films, such as television programmes including documentaries and animation will be included in the evaluation.

The announcement comes after protracted negotiations, a discussion that saw the country’s Economic Development Minister Gerry Brownlee and Arts, Culture and Heritage Minister Chris Finlayson, together with Warner Bros executives locked in negotiations all day. The Prime Minister’s announcement now erases concerns regarding the filming of the movies; after speculation was rife there might be a possible change of location to another country.

Key reiterated his delight, stating the agreement to film in New Zealand marks an important outcome for the country. Making the two Hobbit movies here will not only safeguard work for thousands of New Zealanders, but also follow the success of the Lord Of The Rings trilogy in once again promoting NZ on the world stage, he said. The Government will introduce legislation tomorrow to clarify the distinction between independent contractors and employees as it relates to the film industry only.

As such, Key said industrial issues that have arisen in the past several weeks have highlighted a significant set of concerns for the way in which the international film industry operates, adding that the government will take measures to ensure that the country’s law regarding film is settled to give film producers like Warner Bros the confidence they need to produce their movies in New Zealand. This will guarantee the movies are made in New Zealand, he said.

The move will see Tax rebates changed for Warner Bros, which will mean up to an extra US$7.5m per movie for Warner Bros, subject to the success of the movies. From their negotiations, the government and Warner Bros agreed to work together in a long-term strategic partnership for the promotion of New Zealand as both a film production and tourism destination, said Mr. Key.

The government is determined to use the opportunity that the Hobbit movies present to highlight New Zealand as a great place to visit, as well as a great place to do business,” he added. It will offset US$10 million of Warner Bros’ marketing costs as part of the strategic partnership.

The agreement, signed last week during the Pusan International Film Festival is expected to benefit the Auckland film industry in the long run, in terms of the fresh co-production markets it will open up. The annual Pusan International Film Festival is the biggest such event in Asia. The MOU signing comes in the wake of lobbying and activism that Film Auckland has been intensely engaged in over the last three years.

The efforts are geared at developing opportunities for joint New Zealand and North Korea productions. However, it was preceded by the co-production agreements signed between the Korean and the New Zealand governments two years. The 2008 signing was followed by a number of other several exchanges of film industry delegations between the two states in an effort to cement the relations.

Michael Brook, Film Auckland executive manager said the agency has established the groundwork to enable increased cooperation amongst the two countries’ film industry. He noted however that as it stands currently, there haven’t been any co-productions yet, but various projects are in development. The Auckland film industry had some great North American clients but to get some really good growth, the need for new markets is crucial, he said.

Co-productions are a defined structure that allocates creative and investment elements of a project between two nations. The movie becomes an official film of both countries, meaning financial incentives can apply in both places. New Zealand has also just signed a co-production treaty with China.

Pusan is a sister city to Auckland and Brook said that relationship had played a “huge” role in helping to develop links. Auckland City Council had been proactive in providing funding and logistical assistance, he said.

The Korean box office is worth $1 billion a year with 50 per cent of that being local productions, so the Korean market in itself is lucrative, Brook says. The South Korean relationship is part of a wider strategy to develop co-production markets in North Asia.

The New Zealand Herald reported Thursday Sir Peter Jackson, Hobbit producer may film the movie in the country after talks between Jackson and actors and producers resulted in an agreement. The New Zealand government has vowed it will sustain efforts to make the country an attractive destination for film making.

As it is, the chances that the movie may be filmed in New Zealand after all have greatly improved, noted the paper. But even as signs are that Hobbit may be shot in New Zealand, the final decision on where the two Hobbit films will be shot still remains with Warner Brothers, the giant Hollywood production house based in the US. It is expected that Warner Brothers will be announcing its decision on the location of the filming in a period of two weeks.

The odds of the Hobbit being produced in New Zealand showed signs of improving as the Screen  Production and Development Association, Actors’ Equity, the Council of Trade Unions and Economic Development Minister Gerry Brownlee met in Auckland Wednesday to discuss employment issues that Sir Peter has said could see production of the films moved abroad.

The actors’ union has advised members not to accept work on the Hobbit films as the filmmakers have refused to enter a union-negotiated agreement. Gerry Brownlee later reiterated the meeting had been “useful and productive.”  According to the Economic Development Minister, the parties had agreed “to work together to update the conditions of engagement” for performers in the local film and television industry.

Controversy had arisen earlier over the amount in taxes major Hollywood films attract with arguments that the amounts such productions leave for the country don’t benefit it in any way. There had been proposals to change the amount, a move that would see Hollywood producers keen on using New Zealand as a location for their films part with considerable amounts of money. To date, New Zealand has served as an attractive location for the filming of major Hollywood blockbusters, from King Kong to the Lord of the Rings of Trilogy amongst others.

According to the general manager, Oktober, Bruce Everett, the Animation studios begins operations with about 30 staff but targets about 100 employees by 2010 September. However, the company plans to increase the number of employees to about 300 in a period of four years and subsequently, it is hoped that it will make the company, Oktober Animation, the biggest purpose-built CG studios in the country, to be defeated in size by Weta Digital operation only.

According to Mr. Everett, the recruitment of the planned staff numbers would not pose any challenges to the company, saying that, given the many NZQA, that it, the number of institutions with certifications that offer courses and studies in animation, there exists a surplus of individuals with expertise in the CG field.

As such, Oktober Animation said it would work with institutions offering CG animation courses for about 120 to 140 contract jobs for their graduates. Everett said however reiterated that the animation company would not compete one-on-one for Weta with staff, given the fact that their projects are complementary and will draw from varying talent pools. Even so, the official ribbon-cutting event for the event is expected in a few months time, according to Everett.

Oktobor is New Zealand’s leading visual effects, animation, and motion design studio. They are globally renowned company combine a brilliant creative team and top of the line in-house facilities to produce original, cutting-edge content for TV commercials, feature films, and digital media. Their mission is always to create the most beautiful solutions for the challenges at hand, to deliver the best possible product to their clients, and to push the forums of design and visual effects into new territory. Formed in California in 1997 as a CG studio, Backyard has provided narrative content and services for clients including 20th Century Fox, EMI, Classic Media, and CCI and interactive content for some of the largest publishers in the world such as Electronic Arts and Activision.