It was a hobbit-hole, and that didn't mean comfort

Thanks to his considerable political nous, his out-and-out pragmatism and his canny ability to strike a deal in the least favourable of circumstances, John Key largely escaped being the latest victim of what the film industry - from Hollywood to Wellywood - is calling the Curse of the Hobbit.

Any political damage incurred by National from Wednesday's negotiated agreement with Warner Bros to keep production of the two-film adaptation of J. R. R. Tolkien's great fantasy novel in New Zealand is likely to be minimal.

Not so in Labour's case. It is quietly seething over the misguided behaviour of its trade union allies which backfired and ultimately resulted in National rushing a piece of anti-union law through Parliament to keep Warner Bros sweet.

Labour was confronted with an ugly lose-lose scenario.

Had it supported National's Bill clarifying the status of independent contractors in the film industry, it would have been accused of selling out on workers' rights.

In opposing the Bill, Labour has been accused of selling out the local film industry. Little wonder that Phil Goff wisely kept his head down and left Trevor Mallard, his labour issues spokesman, to front the debate in Parliament.

So relieved were Mr Key and his senior Cabinet colleagues at hammering out a deal with Warner Bros, they probably did not ask themselves the obvious question: what will go wrong next?

The Hobbit has been jinxed from the start.

There has been a legal wrangle involving Tolkien's descendants over the film rights.

Massive financial losses at MGM, the studio which previously held those rights, caused further delay.

The original director walked away from the project despite its $650 million budget being the largest in movie history. Fire struck Sir Peter Jackson's Weta workshops in Wellington.

The production has been further clouded by the Australian-driven bid to get collective bargaining for actors and crew working on the movie.

Curse or not, this saga - perhaps worthy of a movie in its own right - has followed the script which always applies in New Zealand politics.

When something goes badly wrong, the problem more often than not ends up on the relevant minister's desk, no matter how tenuous a political connection.

In this case, Hobbit-mania has seen a King Kong-sized loss of perspective in some quarters.

The normal rules of politics have consequently been turned on their head.

Labour is taking a political hit for staying staunch to its fundamental principles regarding industrial relations law.

In contrast, National has won kudos for securing a deal which flouts its own rules on the spending of taxpayer dollars and amounts to corporate welfare.

National is giving a large handout to a foreign company which has a $6 billion turnover and which has reported record gains in revenue this year, much of it from DVD sales of the highly successful Sherlock Holmes movie.

It does not need a super sleuth to conclude the public is split over the merits of Wednesday's agreement. The more pertinent question is in what proportions.

The Prime Minister will have assumed (probably correctly) that most people, while not happy with the concessions to Warner Bros, will willingly accept National had no choice in the matter.

A further portion of voters would argue the Government actually got an advantageous deal and that the extra tax sweeteners handed to Warner Bros will be recouped by the flow-on benefits to the economy and the marketing partnership with the mega-corporate.

However, a significant minority is accusing Mr Key of failing to uphold New Zealand's sovereignty (economic or otherwise), instead behaving in craven fashion in meeting the demands of a foreign company.

It is a fair punt that view is held by many middle-class voters who lean towards Labour. The combination of those voters plus the need to come in behind the CTU and its union base, despite their being responsible for the whole debacle, has left Labour very much in the minority.

For National, the critical factor behind the position it took was the counter-factual. What would have happened had the Government failed to strike a deal? Such an outcome would have been a massive setback for the local film industry and would have drastically eroded what little confidence remains that the economy is going to shift into recovery mode any time soon.

With Warner Bros already feeling the pinch from the rising New Zealand dollar and the Australian-based Media, Entertainment and Arts Alliance in cahoots with Actors Equity, the New Zealand Council of Trade Unions could not have picked a worse target or time to try to force the industry's hand on collective bargaining.

It is not particularly important to know whether the belligerent tone of the unions was simply the last straw for Warner Bros or provided it with the excuse the conglomerate was looking for to threaten to pull the production from New Zealand and start a downward international bidding war.

Warner Bros had the Government over a barrel, pure and simple.

Mr Key had to be pragmatic and interventionist in his response. But that suited other purposes.

Less than two weeks after Labour flagged just such an approach to economic management, the party has been gazumped by the old foe.

Labour could have been audacious and weighed in behind Mr Key's deal, arguing it was the perfect illustration of how it would do things differently if it wins next year's election.

In the end, however, Labour could not realistically have backed a Bill so hostile to the unions.

Labour instead stuck to the line that National has mismanaged the crisis over The Hobbit - a line that is not very convincing, but one Labour hopes might just be sufficient to tide it over until the front pages are Hobbit-free.

- John Armstrong is The New Zealand Herald political correspondent.

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