The Government was warned not to give money to the Tiwai
Point aluminum smelter owner. Photo by Stephen Jaquiery.
Treasury papers reveal it warned the Government not to
give Tiwai Point aluminium plant owner mining giant Rio Tinto
financial assistance - but the Government went ahead and gave
it $30 million anyway.
The payment was made almost six weeks ago, and Rio signed a
new electricity deal with Meridian Energy, but the move was
criticised as the Government shoring up Meridian for its
sharemarket float, rather than any concern over saving 3500
direct and indirect Southland jobs.
Labour and the Green Party launched into National, following
Treasury's release of documents yesterday, both saying the
$30 million was to prop up Meridian's forthcoming float, at
the expense of jobs, tax and transparency for the taxpayer.
The 43 documents span correspondence between Treasury, the
ministers of finance and state-owned enterprises, Rio Tinto,
Meridian Energy and Cabinet's economic growth and
The documents begin from July last year to last month. Many
sentences have been blanked out for privacy or
confidentiality reasons, under the Official Information Act.
The electricity charge to Rio Tinto, which uses 12% of the
country's electricity supply, remains unknown and references
are repeatedly blanked out.
Labour's state-owned enterprises spokesman Clayton Cosgrove
said Treasury did not want the deal to go ahead, and said
there was `no economic justification' for the subsidy.
''The Government was desperate to get a deal over the line
before Meridian was sold, they didn't even have time to get
the tax sorted with IRD, so Rio Tinto got a tax indemnity,''
he said in a statement.
The Government was ''so desperate to stitch up a deal''
before it sold Meridian, that it ignored Treasury's advice
and made the subsidy tax free.
''We already knew Rio Tinto was the winner in this deal but
it gets worse.
''Rio Tinto gets $30 million, its notice period halved, and
cheaper electricity. Now we find out the multinational
doesn't even pay tax on the subsidy,'' Mr Cosgrove said.
Green Party energy spokesperson Gareth Hughes said National
''handed over'' $30 million in a desperate attempt to keep
its asset sales programme afloat.
Treasury said ''the potential impacts on the Government share
offers are clearly significant''.
A report summary says ''The sale proceeds for the Crown would
be lower than previously estimated ... [blank], but this
would genuinely reflect the fact that the companies were
worth less due to the significant change in market
Mr Hughes highlighted that in the papers released Treasury
advised the Government that ''any request by PA [Pacific
Aluminium] for Government assistance should be rejected
because it would result in a significant transfer of value
from New Zealanders to PA and Rio Tinto shareholders''.
''National handed over $30 million of public money to Rio
Tinto, against official advice, in a desperate attempt to
save its asset sales agenda,'' Mr Hughes said.
Another summary said: ''Cabinet noted that following a year
of negotiation, a revised agreement has been reached between
the NZAS and Meridian that significantly reduces the price
paid for electricity by the smelter from approximately
[blank] to [blank].''
Mr Hughes said ''Again and again the supposed financial
geniuses in National find themselves backed into a corner
when negotiating with a big corporation, and the public ends
up paying the price.''