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Wellington - New Zealand Prime Minister John Key said Hollywood executives were playing "hardball" in talks over "The Hobbit" Wednesday but the country would not write a blank cheque to keep the movies.
Key said senior Warner Bros. executives were pushing for large financial incentives during negotiations in Wellington to keep the $500 million production in New Zealand.
The prime minister, who has personally led the talks to prevent a union row forcing Peter Jackson's latest Tolkien epic offshore, said Warner was asking for "lots, and we're not offering lots".
"It's fair to say on the financial side there's a fair bit of hardball being played on both sides," he told reporters.
"We have the capacity to move a little bit but we don't have the capacity to write out cheques that we can't afford to cash."
New Zealand's rugged scenery was a key element in The Lord of the Rings but a row over union representation has cast doubt on the shooting location for The Hobbit, a two-part prequel to the original trilogy.
In response, top studio executives, including the head of Warner's New Line production house Toby Emmerich, flew to Wellington this week to examine whether the Middle Earth movies should be shot elsewhere.
With discussions still deadlocked after two days, Key said he had offered to change industrial laws to ensure The Hobbit could meet production deadlines without the threat of union action.
But he said New Zealand could not afford to match the financial incentives offered by international rivals, although he still rated New Zealand's chances of hosting the production as 50-50.
"They've got movies to make and in the end money talks in Hollywood," he said.
A frustrated Jackson launched a fresh broadside at the actors' union behind the dispute, NZ Equity, saying he was "incredibly angry" it threatened his project without properly consulting its members.
The Oscar-winning director also disputed NZ Equity's assertion that it called for an international boycott of The Hobbit last month after he refused to negotiate with it on minimum conditions for actors on the set.
Jackson said the union called the ban, which has since been lifted, before contacting him about its concerns.
"They are attempting to characterise their actions as an innocent request for a meeting, but the truth is they kept a loaded gun to our heads the entire time," he said in a statement.
Opposition industrial relations spokesman Trevor Mallard said Warner was using the union row as leverage to gain more taxpayer funds for the project.
"I don't want to characterise them as shaking the government down but they're clearly trying to get every last dollar that they can," Mallard told Radio NZ.
Council of Trade Unions president Helen Kelly said the conservative government's offer to change industrial laws to suit Hollywood studios set a dangerous precedent for workers in New Zealand.
"It's unjustified. It's opportunistic of the government to chuck this in as a result of this dispute," she said.
