Payroll may recoup $30m sweetener
Wages and taxes from the Tiwai Pt aluminium smelter employees could rapidly recoup the $30 million one-off Government payout to the New Zealand Aluminium Smelter, a Southland business leader says.
Documents released yesterday show that Treasury officials had advised the Government to reject any request for a taxpayer-funded hand-out to keep the Tiwai Pt smelter open.
However, a year later the Government stumped up a $30m sweetener to stop the Bluff plant closing before 2017 with NZAS announcing it had signed a reduced power deal with state-owned Meridian Energy.
Southland Chamber of Commerce president Sean Woodward said direct and indirect tax revenues from wages earnt by the smelter emloyees and contractors could rapidly recoup the Government's $30m payment.
The smelter was an integral part of the Southland economy and the chamber supported any initiative that ensured it stayed open, he said.
"In my opinion, it ($30m) represented more of a goodwill payment to recognise the importance of the NZAS activity to the national economy and to assist the business in the short to medium term."
However, Southland could not rely on the smelter being around forever, he said.
"To ensure a successful future we need to actively encourage more economic growth and a diversified Southland economy . . . this should be a goal for the five- to 10-year plan for the region."
Venture Southland enterprise and strategic projects group manager Steve Canny said he believed some information provided in the Treasury documents distracted from the real issue of global competitive electricity pricing for the value-added export industry.
Some of the Treasury information did not reflect the true economic and social impact of the smelter and its recurring benefits were not taken into account, he said.
"This is surprising, given the impact of the smelter has been independently researched, published and well documented."
A Treasury document says NZAS accounts directly for 1.5 per cent of the regional labour force and provides approximately $60m of revenue to local suppliers, but Mr Canny said the overall effect on Southland's economy was much greater than that.
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