John Key. Photo by Getty
Prime Minister John Key has denied that the Solid Energy
crisis and Telecom job cuts are a black mark against the
Government's handling of the economy.
A Government bailout of state-owned enterprise Solid Energy
appears likely as Mr Key today described the situation as
"extremely serious'' and one that the Government will have to
get involved in.
But he distanced himself from news that Telecom will slash
hundreds of jobs as it seeks to reduce costs across its
"Telecom is going through it's own set of issues,'' he said.
A decision to cut jobs by the telecommunication giant's new
chief executive was "not really an issue in any way related
to the Government,'' Mr Key said.
But the Government will back Solid Energy, he confirmed.
He supported Finance Minister Bill English who yesterday
would not rule out a Government bailout, saying it would not
let the company fall into receivership.
The debt-ridden coal mining company has revealed being in
talks with its banks and the Government over its future,
after its debt rose to $389 million and a it would report a
further "significant loss'' in its half-year result.
"The situation is obviously extremely serious with Solid
Energy,'' Mr Key said.
"Exactly what's required and what happens next is a matter we
need to work our way through, but it's fair to say we're very
concerned by what we see. The Government will have to get
The threat of job losses and mine closures could not be
ignored, Mr Key said, but he stressed that the Government was
committed to the mining sector.
"Solid Energy, in its past, has been a very good company and
has got some very valuable assets as part of its portfolio,
and that's the reason why we're working alongside the
company,'' he said.
"Let's see what happens next, but there's a process to go
Solid Energy's woes were not indicative of troubles in other
SOEs, Mr Key said.
Its problems were "quite unique", given they were impacted by
a collapse in coal prices, along with a number of investments
that haven't paid off.
Asked if former chief executive Don Elder is at fault for the
problems, Mr Key said there was little to be gained from
"There'll be plenty of forensic work that will be done over
the next few months as we look at what went wrong at Solid
Energy, who's to blame and why.''
Whether Mr Elder should have received a golden handshake, or
how much he received, was a matter for the board of
directors, Mr Key said, while also saying he couldn't yet
answer how much a potential bailout would be.
He also said the double-blow of Solid Energy and Telecom
wasn't indicative of an ailing economy. New Zealand's labour
market was "very flexible", with around 100,000 jobs lost and
another 100,000 jobs created in any three-month period, he
All of the economic indicators look positive, Mr Key claimed,
with confidence being restored, and now comparing favourably
with other similar countries.
``Our job can only be, as the Government, to try and lay out
a platform which encourages employers and businesses to both
establish and to employ people. And if you look at our
record, that's what is happening.''