The screen industry is confident increased rebates for international productions will have almost immediate results.
For months, the industry has been warning of total collapse unless New Zealand matched other countries' bigger incentives.
A character from 'Avatar' shown at a 3D exhibition in Paris. Photo: AFP
The Government announced on Monday that from April, the rebate for international screen projects will increase from 15% to 20% in an effort to help the film industry. Large-scale projects could also get a further 5% reduction if they deliver significant economic benefits.
As a result of the change, a deal has been signed for the next three Avatar movies to be made in New Zealand.
The incentives for medium-sized productions that feature significant New Zealand content or creative control will also rise.
Film producer Tim Coddington has worked on some of New Zealand's biggest co-productions including the Chronicles of Narnia series and Mr Pip.
He says the effects could be felt within months one of the projects he is working on with Hollywood studios.
South Pacific Pictures chief executive John Barnett told Radio New Zealand's Morning Report programme the Film Commission did a good job convincing the Government to make the move.
"They really brought home to Government the economic benefit, not just the fact that the sector in Auckland was disappearing - and it is true that many, many people were both leaving the country and leaving the industry."
He said producers could start start early pre-production in February next year confident in the knowledge that they would be able to access the funding in April.
"By the time people come back from their holidays there'll be quite a bit on the drawing board."
Felicity Letcher, co-owner of props and prosthetics studio Main Reactor, says the increased incentives make New Zealand more competitive and will get producers back in the door with international production companies.
The Council of Trade Unions said higher rebates to the film industry is a positive step, but other industries should get similar help from the Government.
CTU secretary Peter Conway said high value manufacturers should get more support from the taxpayer, including more Government investment, joint ventures, or help with infrastructure developments.
Listen to John Barnett
Not unusual to ignore Treasury - PM
Prime Minister John Key is defending the Government's going against Treasury advice with its increase in financial incentives for the film industry.
The Treasury told Cabinet it did not support any further subsidies, saying they would bring, at best, small economic benefits.
However, Mr Key says the Government has to make a wider judgement about what is in the national interest, and the adjustments to the film incentives were the right call.
Without the changes, he says the next three Avatar movies would not be being made here.
"It's not unusual for Cabinet to provide Treasury with advice that says they shouldn't spend money. They do that pretty much on a weekly basis," Mr Key said.
"But we have to make a wider judgement about what we think is in the national interest. And in our view the adjustments we made yesterday to the film incentives that will allow the three Avatar movies to be made in New Zealand were the right call."