29 October 2010 Last updated at 04:23 ET

Hobbit legislation passed in New Zealand

Many New Zealanders had campaigned hard for the movies to be made in their country

New Zealand's parliament has passed legislation that will keep the production of two Hobbit films in the country.

The government agreed to amend labour laws as part of a deal with Warner Bros to retain the $500m (£315m) project.

Warner had threatened to move production elsewhere because of a dispute with acting unions.

The labour minister said the government had not been willing to see thousands of jobs lost because of the row.

"We were not prepared to see the hard work of the many talented New Zealanders who built our film industry from scratch put at risk," Kate Wilkinson told parliament

But the opposition has criticised the deal.

"What is the government going to do next - give in to any multi-national that asks for a labour standard to be diluted in return for some form of investment?" said Labour Party lawmaker Charles Chauvel.

Tax breaks

Last month, acting unions threatened to boycott New Zealand director Peter Jackson's films in a row over terms and conditions.

Top government officials then held crisis talks with film executives after they said the films - prequels to the Lord of the Rings - could be made elsewhere.

Earlier this week, they reached a deal which offers additional tax breaks to the movie-makers plus help with marketing costs, as well as the labour law change.

The legislation clarifies that film industry workers are independent contractors rather than employees.

The union had wanted local actors and other production workers to be hired as full-fledged employees on union contracts.

The legislation was passed by 66 votes to 50.