Sometimes it’s an embarrassment to be a New Zealander


corporate welfare

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.

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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.


  1. It would take someone like Chavez to tell global corporations to bugger off.

    Shonkey is the corporation’s man, put there by corporations and money-lenders to ensure the raiding of commons by corporations and money-lenders continues.

    The fact that present industrialism will render the Earth uninhabitable for humans within one generation is of no interest to corporations and money-lenders. Or our bought-and-paid-for leaders. And, apparently, death-of-the-planet-in-one- generation of no interest to the bulk of the populace, who have been fed lies almost from the moment of birth, so they believe the lies.

    Only environmental collapse and severe energy depletion will bring the corrupt economic-political system we endure to an end. And it will be too late then.

  2. Bill Gates wants ideas. He made his millions from just ideas. Whats wrong with us that we let people like Politicians affect us to where we end up pointing finger instead of pointing our Waka in the direction we need to go. Bill Gates has nothing on us and neither has Tony Ryall or his colleagues. We are better than that, or are we going to make a career out of Professional Whingeing. (not aimed at you John).

  3. I’ve just spent a good few hours researching the State Owned Enterprises and The Companies Acts and I cannot find any reason why Ryall, Key & Co shouldn’t be liable to court action for Tortious Interference, or why the Board of Meridian Energy Ltd would not be liable to prosecution for failing in their duties as directors if they fail to take such an action against them. Any body with legal training care to comment ?

    • That doesn’t get the state assets sold to Nationals rich mates for prices that any NZer would consider good which will get them thrown out. National has to keep power prices high to keep the profits high so as to keep the share price up (Although the prices are already depressed due to the GFC and National promising to dump all of them onto the share market).

      • That was exactly what I was thinking. They NEED the Mighty River share float to be successful, because this Government is 100% bereft of ideas on how to make ends meet (i.e. reach a balanced budget based on CURRENT tax revenues), but not alienate the party faithful. Without the cash injection of the SoE sales (which are mostly energy companies) they know they can’t meet budgetary demands and risk exposing the public to the facts of the country’s REAL fiscal problems. Subsidising Rio Tinto (irrespective of cost) is simply a requirement to keep the ponzi going. The alternative (i.e. the TRUTH) is far worse.

  4. I think the Government is looking at this from the wrong angle completely. We as a Nation have a excellent opportunity to purchase outright the smelter ‘as is, where is’.

    • A good idea but this government won’t do it. It’s that ideology about private companies doing it better.

      Either that or they really are just governing for the rich and making sure that our wealth goes to them ASAP. That’s not ideology – that’s sociopathy.

  5. I’d say it’s a no-win for the Key Govt either way. Cave in to Rio Tinto, and Meridian Energy won’t be worth as much when/if it’s sold off because Rio Tinto will keep the prices down. Play hardball with Rio Tinto, and the surplus power that results from the smelter’s closure will also drive down Meridian’s sale value – not to mention it’ll turn the local mayor Tim Shadbolt against the Govt if the laid-off workers are thrown on the scrapheap.

  6. There is one point I diverge from Mr Minto. I don’t feel embarrassed to be a New Zealander. It is embarrassing to think that the likes of John Key the Donkey, ‘Invoice’ English, ‘Bill-Birch-the-Second’ Ryall, and ‘I’m-all-right-Jack-so-stop-whingeing’ Brownlee, ‘Let’s-improve-education-quality-by-increasing-class-sizes’ Parata, ‘Let-’em-eat-dirt’ Bennett, and ‘We’ll-show-them-we’re-the-bold’ Collins – it is embarrassing to think this gallery of kleptocratic clowns and comediennes are New Zealanders. The suspicion is growing that they are really pod people from the planet Zod, softening up the natives (us) for invasion, conquest and enslavement. The more canny among us are certain that that programme has already been carried out.

  7. A point about the Mighty River sale. I’ve expressed my interest in buying, and I’ll tell you why. It is because I am opposed to the sale: public assets ought never in this world be in any government’s gift to sell. But it seems to me that if the thing were to go ahead, then what leverage would we have to reverse that dumbarse decision?

    My hope is that there is at least one major political Party that is committed to re-nationalization of the asset, whereat I would be willing to return the shares to public ownership for what I paid for them – or possibly less, depending upon circumstances. That commitment has to be real and unconditional – I’m not over worried about the timetable.

    But I seriously doubt that any Party will make that commitment. But there is another potential use, depending upon what rights and voice a share-holder might have in the company’s operations. Not a lot I dare say. But when you are pissing inside the tent, chances are you can see who to aim at.

    Of course the manner in which the Government has gone about this looks on the surface quite teasonable: offering the chance to express interest ahead of time, which will make buying the easier (bearing in mind the minimum commitment is $1000- and how many households can raise that?). New Zealanders get the inside running at this point as well – in fact it looks as though there is a specific exclusion of American buyers in particular.

    How sincere all this is I don’t know. But I do know it won’t work. It is of a piece with the European peasants’ centuries old demand for land reform, or the thematic land-for-military-service in the Byzantine Empire, or even sinking your savings into gold or property. It will all end up in the hands of the Fat Cats, eventually. It is as inevitable as death and taxes – the Third Inevitability, shall we call it.

    The reason for this goes, I think, to demonstrate the utter folly, if not criminal malice aforethought, in selling public assets to private interests. Eventually, your property, your savings, your assets get broken up, in order to defray unexpected expenses, tide you over tough times, or (more likely these days) to see you through retirement (and this is without the Government planning wholesale theft of private savings in order to finance the fraudulent mismanagement of banks and financiers).

    To whom will you sell your assets when times are tough? To whom can afford it, that’s whom. And that is likely to be a fatter cat than you are. And so you gradually find, as did the Byzantine Emperors, as Gracchus Babeuf knew, that these assets – real property, gold, asset shares, will graduate into the hands of fatter and fatter cats.

    Informed by Neo-Classical Economic drivel, this Government’s pig ignorance is a disaster to us, just as the Chicago School has been for the entire planet these past thirty and more years. The value John Key places upon New Zealand’s sovereignty makes the deal Esau struck for his birthright look like a bargain.

  8. “It is a sad state of affairs” going back to the roots of all this upheavel we would not be in this position if the government just got it right from the start. The mess that they have made should not fall on any New Zealand soil or New Zealander for that fact! Though they have gone ahead and made decisions suitable and taylor made for themselves and have forgotten Aotearoa as a whole. Look at the bigger picture the infrastructure is foreign, so is the unitary plan hence the TPPA has a foot hold on our beautiful country; thanks to a Prime Minister that is egocentric and ethnocentric which is evident in the National Party!

    We need real leaders, leaders that will care for our people look after our people and make sure all New Zealanders are treated fairly and equally. Not discriminated or segregated and left aside for leftovers, while others get the best seats in the house! It does not take rocket science, to see what is happening in our own backyard.

  9. Typical of the left to look at an issue with blinkered eyes. John Key had and has no wish to offer corporate welfare to Rio. He, as any politician would have, made a (tepid) effort to help but secretly he’s delighted Rio has declined and won’t have to hand over our money to Rio. So John M’s thesis that John K would suck up to Rio and spend our money to protect the MRP float has, within a few days, proven to be 100% wrong.
    Meanwhile, we’ve heard nothing from the left on how to save the jobs? Maybe David S and David P are talking to Rio right now promising them money – if Rio hangs around until next year and a change of government. No doubt the left will rejoice their wisdom in spending our money so well.

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