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‘No economic justification’ for Tiwai subsidy



SOE Spokesperson
12 September 2013 MEDIA STATEMENT
‘No economic justification’ for Tiwai subsidy

The Government was so desperate to stitch up a deal with Rio Tinto over the Tiwai Point smelter before it sold Meridian that it ignored Treasury’s advice and made the subsidy tax free, says Labour’s SOEs spokesperson Clayton Cosgrove.

“This was a huge stitch up – all so that the Government could sell off its assets. Even Treasury didn’t want the deal to go ahead and said there was ‘no economic justification’ for the subsidy.

“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.

“And what did the Government get in return? Within days of the deal Rio Tinto said it was looking at cutting jobs. Bill English admitted he didn’t even ask for a jobs guarantee. His inept negotiations mean that Rio Tinto can announce it is walking away in mid-2015. That’s no guarantee of jobs at all.

“This was short term thinking and a rushed job. 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.

“This is corporate welfare pure and simple and desperation to get their assets sold, no matter what the cost,” says Clayton Cosgrove.


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