Fri 1 November 2010

Rotorua sawmill needed just $5 million to keep buzzing

Just five million dollars of working capital was needed for the Tachikawa sawmill in stay in business, filling its forward orders and making a vibrant contribution to the Rotorua economy.

An independent report obtained by independent MP Brendan Horan shows negative economic impact to Rotorua likely to be well in excess of $10 million annually.

“Instead the sawmill is silent, over 120 people are out of work, and the Government is looking at a negative direct economic impact of at least $8.5 million a year,” said Brendan Horan.

“John Key and Steven Joyce should face the facts. A one-off Government intervention of $5 million can be used to create a partnership with the Rotorua community and ensure that everyone has a job and money in their pocket.

“The sawmill had a strong forward order book. It has work and is a viable going concern,” said Brendan Horan.

Brendan Horan has obtained an independent analysis by the Parliamentary Library’s Economics Research team which shows that there is a direct economic impact in lost wages and salaries, lost income tax, and added costs of WINZ support, conservatively estimated at $8.5 million per annum.

When the downstream effects are added in, the economic impact will be much higher. Forestry workers and truck operators are affected. There is a multiplier effect as mortgage payments are not met and money is not spent with local businesses.

“The longer term social effects are much harsher. Consider the workers who mortgages and no income, facing a standdown with WINZ, and long delays in redundancy payouts. The emotional impact has been made worse by WINZ being totally unprepared.

“In the coming week I am meeting Rotorua MP and Minister Todd McClay and Tachikawa workers will be one matter I will be raising.

“Government should do the maths. The working capital needed will be recouped in just seven months as economic activity continues with a working sawmill.

“It is not good enough that they are paying a $30 million subsidy to keep Tiwai open for less than four years - over $7.5m a year - because that briefly propped up the Meridian share price. They are prepared to pump $250million into Canterbury University. <

“Ministers must consider investing in the Rotorua community,” said Brendan Horan.

ends

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