The government will no longer proceed with part of the deal to support The Lord of the Rings TV series, following the decision by Amazon Studios to shift production of future seasons to the United Kingdom.
Minister for Economic Development Stuart Nash said the government was informed of the decision yesterday, which he described as disappointing.
New Zealand had agreed to an extra 5 percent incentive, on top of the standard 20 percent rebate on qualifying production spending in this country, under the terms of the International Screen Production Grant.
Amazon Studios has told the government post-production work on season one will continue here till June 2022, however, season two will be filmed in the UK.
In a statement, Amazon said: "The shift from New Zealand to the UK aligns with the studio's strategy of expanding its production footprint and investing in studio space across the UK, with many of Amazon Studios' tentpole series and films already calling the UK home".
"We want to thank the people and the government of New Zealand for their hospitality and dedication and for providing The Lord of the Rings series with an incredible place to begin this epic journey," Vernon Sanders, VP and Co-Head of TV, Amazon Studios said.
"We are grateful to the New Zealand Film Commission, the Ministry of Business, Innovation and Employment, Tourism New Zealand, Auckland Unlimited, and others for their tremendous collaboration that supported the New Zealand film sector and the local economy during the production of Season One."
Nash told Midday Report the decision had no reflection on the talent and ability of the local industry and that it was a business decision, rather than an artistic one.
"We've got the most amazing people who work in it, we've got some world-leading technology companies, but unfortunately this is just a large multinational that's made a decision to locate to one of the major film centres in the world," he said.
"My understanding is that it really is just a very very large company that has a base in London anyway, they're looking to develop studios there, it's just them deciding to consolidate."
Nash said that although it was disappointing that further seasons of the TV show would not be filmed here, Amazon Studios had spent an estimated $650 million while in New Zealand and had created 2000 jobs during a Covid-hit year.
"That was a lot of money at a time when we were pretty precarious to be honest," he said. "We didn't know what was going to happen with our economy in terms of Covid, unemployment had gone up, there was a great deal of uncertainty and here was a company spending a lot of money across a lot of sectors."
He believed that New Zealand would continue to attract international film productions and denied that the move had anything to do with pandemic rules and compulsory MIQ stays.
"We're still a very attractive destination for the film sector anyway and we'll continue to work hard to attract international productions," he said. "But it does show that this is the nature of the industry."
However, the National Party has slammed the government over Amazon's decision.
National MP Todd McLay said Nash fumbled negotiations and failed to ask the company to commit to filming a second season in New Zealand.
"Stuart Nash has shown a lack of interest in negotiating with Amazon, despite the huge impact the production could have on our economy."
He said the New Zealand economy has missed out because the Minister was asleep at the wheel.
Film Otago Southland chair Brad Hurndell warned New Zealand risks losing more productions unless greater clarity and confidence is provided around the border.
Hurndell said the decision leaves a significant hole in New Zealand's film sector.
"The border is creating a significant challenge for TV commercials, for drama etc. getting people in and out and I definitely know that's affecting the region in a negative way."
He said the UK - with its relatively open environment and high vaccination rate - will be appealing in contrast.