After a long series of unfortunate roadblocks, we heard the welcome news a couple of weeks ago that The Hobbit had been given the official greenl ight, with Lord of the Rings director Peter Jackson officially on board to helm the two-part saga.

Casting forThe Hobbit has already been announced, including the confirmation of Martin Freeman to play Bilbo Baggins, as well as several members of the Company of Dwarves that join Bilbo on his epic journey being cast.

The only problem that was left to sort out was the issue of whether or not The Hobbit would shoot in Jackson’s native New Zealand, to preserve continuity with the LOTR films. Even though disputes with the New Zealand Actor’s Equity were sorted out, Jackson claimed that it was too late and that The Hobbit would have to shoot elsewhere.

Well, Tolkien movie fans can now breath easy, as it’s being reported that The Hobbit will be staying in New Zealand after all.

The Hollywood Reporter reports that Warner Bros./New Line has reached a deal with the New Zealand government to keep The Hobbit in New Zealand.  As part of the agreement, the government will “introduce in parliament legislation sought by Warners that would clarify the employment status of film industry workers.” It is being presumed that the intended effect is to, “make unionization of the film industry more difficult or impossible.”

Ever since Jackson’s LOTR trilogy put New Zealand on the map, so to speak, the country has benefited greatly from the rise in tourists. Indeed that has been factored into a “long-term strategic partnership” the country has struck with WB which will see joint promotion of New Zealand as a film production and tourism destination.

New Zealand Prime Minister John Key, who made the announcement, had this to say:

“I am delighted we have achieved this result… Making the two Hobbit movies here will not only safeguard work for thousands of New Zealanders, but it will also follow the success of the Lord Of The Rings trilogy in once again promoting New Zealand on the world stage.”

As well as broadening the criteria for its large-budget incentive program – which will give WB an additionally rebate of up to US$15 million – the NZ government will also provide up to US$10 million for marketing costs. On top of the obvious benefit of keeping The Hobbit on home ground, New Zealand will also host one of the world premieres for one of the films.

All this just goes to show just how important The Hobbit is for New Zealand. It has been said that the production will pump U.S.$200 million into NZ’s economy – nothing to sneeze at for a country with a population that’s only 1.4% of the U.S. population (4.4 million compared to 310 million)!

Peter Jackson - happy where he is.

The Hobbit staying in New Zealand obviously means Jackson and Co. don’t have the hassle of finding a new shooting location. There was word of places like Canada, Ireland and (my native) Scotland serving as that new location, but evidently those countries will have to wait for another mammoth project like this to swing their way.

Barring any unforeseen new obstacles, it appears that everything has been sorted out on The Hobbit front. So let’s just try and forget about all those troubles and look forward to the movies themselves, shall we?

Part 1 of The Hobbit is scheduled to hit theaters on December 19th, 2012, with Part 2 following a year later in December, 2013.

Source: The Hollywood Reporter and BBC News