Mayor tells Govt to take action on Tiwai

COLLETTE DEVLIN
Last updated 05:00 31/10/2012
Tim Shadbolt
The Southland Times
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Invercargill Mayor Tim Shadbolt is rallying community and industry leaders and calling on the Government to show leadership over the Tiwai Point smelter's uncertain future.

Mr Shadbolt has voiced his concerns in a letter sent to hundreds of Government, community and industry leaders.

In the letter, he outlines the importance of the smelter to Southland, saying the electricity negotiations between Meridian Energy and Rio Tinto highlighted that, without some proactive leadership from Government, New Zealand's ability to host value-added industries and to add value to its primary sector was coming to an end.

"Without such leadership New Zealand is destined to become a primary sector, low-value, price-taking, commodity-trading nation".

Reforms of the electricity sector had not delivered the promised benefits to consumers, but had instead delivered increasing profits to Government at the expense of consumers, the letter says.

Those profits were a further tax on the productive sectors of the economy but the Government needed to provide an environment conducive to business investment and opportunity, the letter says.

"However, the actions of the electricity state-owned enterprises run counter to this wider objective."

Reliable and affordable electricity were crucial in the future development of value-added production and processing within New Zealand and, if New Zealand was to experience an export-led recovery, businesses such as the smelter needed to be retained and the Government needed to lead the restructuring of the electricity industry, the letter says.

Mr Shadbolt yesterday said closure of the smelter would be devastating to the region.

"I am trying to outline our position and deliver the message to everyone concerned by showing people the impact the closure would have," he said.

He urged the Government to read the attached summary report, covering the social and economic impacts of the smelter on the Southland economy, before making decisions relating to the future of such industries.

The report was commissioned by Venture Southland and investigated the contribution the smelter made to Southland.

It also highlights the impact closure would have on the Southland economy.

Without the smelter, 2 to 3 per cent of Southland's population could move away from the region, there would be a permanent loss in Southland's GDP of 7 to 8 per cent and a reduction in cargo through South Port of 45 per cent, the report says.

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About 1600 children with parents employed at the smelter lived in the region.

If the population decreased 2.2 per cent, health and education funding would drop by $8.1 million, the report says.

About 15 key suppliers to New Zealand Aluminium Smelters Limited employ 393 fulltime staff because of its contracts. Of those, 25 to 30 per cent would be at risk of redundancy if the smelter closed, the report says.

Smelter representatives could not be reached for comment yesterday.

Tim Shadbolt's letter

THE SOCIAL AND ECONOMIC IMPACTS OF NEW ZEALAND ALUMINIUM SMELTERS LIMITED

 

Please find attached a summary report on the social and economic impacts of New Zealand Aluminium Smelters (NZAS) on the Southland economy. NZAS is based at Tiwai Point, Southland. This report was commissioned by Venture Southland and undertaken by Infometrics Limited earlier this year.

Recent publicity surrounding the Meridian Energy - Pacific Aluminium (part of the Rio Tinto group) electricity negotiations concerning the Tiwai Point Aluminium Smelter has highlighted that without some proactive leadership from Government, New Zealand's ability to host value-added industries and to add value to our primary sector is quickly coming to an end.
Without such leadership, New Zealand is destined to become a primary sector, low-value, price-taking, commodity trading nation.

A key problem is that the reforms of the electricity sector have not delivered the promised benefits to consumers. Rather, they have delivered increasing profits to Government at the expense of consumers. The ever increasing profits of the sector act as a further tax on the productive sectors of the economy. The Government has an important role to improve social welfare through providing an environment that is conducive to business investment and business continuity. However, the actions of the electricity State-Owned Enterprises run counter to this wider objective.

Reliable and affordable electricity is a critical factor in the future development of value-added production and processing within New Zealand. Industries such as New Zealand Aluminium Smelters provide significant economic and social benefits at both a regional and national level. 'Best practice,' high-value industrial process plants, such as the Tiwai Point Aluminium Smelter, demonstrate to the world that New Zealand is an excellent location for innovation and value-added production. The loss of such industries has the opposite effect.

If New Zealand is to experience an export-lead economic recovery then we need to retain businesses like the Tiwai Point Aluminium Smelter and Government needs to lead the restructuring of our electricity industry to drive market efficiency and global competitiveness in electricity pricing.

I urge you to read the attached summary of the report and, if needs be, seek additional information prior to making decisions relating to the future of such industries to ensure that all relevant factors are taken into consideration.

If you have any queries please email: info@venturesouthland.co.nz or contact me at 03 211 1777 or mayor@icc.govt.nz

Yours faithfully

Tim Shadbolt
MAYOR

 

- The Southland Times

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