Just how spineless a government can be in the face of corporate bullying was on show last Thursday as State Owned Enterprise Minister Tony Ryall announced the government was stepping in with the offer of more subsidies for the Rio Tinto aluminium smelter at Tiwai point in Southand.
Ryall’s commitment came after negotiations between the smelter and Meridian Energy failed to reach agreement over the company’s demand for even cheaper electricity.
Meridian chief executive Mark Binns said just the day before that “there remains a major gap between us on number of issues, such that we believe that it is unlikely a new agreement can be reached”.
With Rio Tinto threatening to close the smelter in rushed Ryall with bagloads of our money to placate this largest of corporate bullies.
Rio Tinto wants to renegotiate with Meridian because it says the world price for aluminium has dropped and it could close the smelter unless we agree to an even cheaper price for electricity than it already enjoys, courtesy of other New Zealand electricity users – you and me.
It knows it has the government over a barrel because John Key is determined to privatize our electricity sector. However if the smelter closes the price of electricity will drop dramatically (the smelter uses over 14% of our electricity supply) and the government’s flagship sale of Mighty River Power would be a disastrous flop.
To keep this house of cards standing the government will cave in to Rio Tinto. Instead of spine we will see the political equivalent of gelatinous cartilage.
Even the government knows the Rio Tinto posturing is corporate opportunism. Ryall admitted this saying “they’re pretty tough negotiators and I’m sure they look at what else is happening in the economy when they make their various decisions”.
The “what else is happening in the economy” is the sale of Mighty River Power.
The government should call Rio Tinto’s bluff and tell them to bugger off. The company claims to make a contribution of around $1 billion to the New Zealand economy but an independent financial analysis shows the real figure is closer to $200 million.
In fact we’d probably be better off as a country if the government closed the smelter and paid the current smelter workers their salaries for the rest of their lives. That’s how bad this corporate junkie is addicted to taxpayer subsidies. But instead of cutting the dependency cord the government is widening it with more taxpayer sustenance.
CAFCA (Campaign Against Foreign Control of Aotearoa) has described the Rio Tinto situation as “the textbook example of corporate welfare in New Zealand.”
Rio Tinto won the 2011 Roger Award for the worst foreign multi-national company operating in New Zealand. At the time the company was using bullying threats to close the smelter if the Emissions Trading Scheme came into force. The judges’ report at the time concluded the company had a 50-year history of “suborning, blackmailing and conning successive New Zealand governments into paying massive subsidies on the smelter’s electricity; dodging tax, and running a brilliantly effective PR machine to present a friendly, socially responsible and thoroughly green-washed face to the media and the public.”
Whether its Warner Brothers, Skycity or Rio Tinto we have our gutless government pumping taxpayer money hand over fist into corporate coffers.
It’s another embarrassing week to be a New Zealander.