Significant improvements have been made to the financial incentives available to foreign producers taking advantage of New Zealand's locations and filmmaking skills, the Government announced today.

Films that spend over $11.9m (NZ$15m) in New Zealand on production can now claim back 15 percent, instead of the previous 12.5 percent, and the incentive has also been extended to cover post-production and digital visual effects, providing that local companies invoice the visitors for at least $2.37m (NZ$3m) worth of work.

The news was announced today by the Minister for Economic Development, Trevor Mallard, and is a clear case of keeping up with Australia's very similar incentives which were made more attractive in early May.

New Zealand has gone several steps further than Australia, however: it has abolished the requirement to spend at least 70 percent of the total production budget in the country, will allow several smaller-budget productions to be bundled together, and will offer producers the option of setting an exchange rate at the start of production to offset currency shifts.

'The only thing that the 70 percent rule did was exclude productions,' said Film New Zealand chief executive Judith McCann, 'and, besides that, our exit surveys show that the average spend in New Zealand was 80 percent of the budget and sometimes as high as 90 percent. We will keep tracking and see if the average goes down.'

The 70 per ent rule was always part of the incentives introduced by Australia in 2001, and more-or-less adopted by New Zealand. Its aim was to encourage US producers to stay in the country to do post-production and it never applied to productions spending more than $55.4m (NZ$70m) in New Zealand. The rule still exists in Australia.

New Zealand's new bundling rules apply to foreign producers who combine productions that each spend at least $2.37m (NZ$3m) in New Zealand, providing total expenditure reaches $23.8m (NZ$30m) and the projects are finished in the same two-year period.

James Cameron is currently using New Zealand extensively for the production of Avatar. Andrew Adamson has been making Chronicles of Narnia: Prince Caspian in the country of his birth but the production has moved on to Prague. Film New Zealand has also been given extra funds for servicing such filmmakers.

Australia has considered but rejected bundling. It also increased its production incentive to 15 percent, and expanded it to cover post-production - the Australian expenditure threshold is $4.4m (A$5m).