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Let the “Too Big to Fail” Smelter Fail

Chief Reporter

Let the “Too Big to Fail” Smelter Fail

“Too big to fail” was the mantra of the robber banks and other transnational financial sharks during the Global Financial Crisis, which remains ongoing. This left the victims to pay for the costs of the crime, while the corporate criminals walked away scotfree and kept their loot. The people of Cyprus are the latest to experience firsthand just how this works.

In this country, Rio Tinto’s Bluff smelter was decades ahead of the fashion. Every time that Rio Tinto feels that its charmed existence in New Zealand is going to become less cushy, it threatens to pull the plug, close the smelter and walk away. It does so in the knowledge that it has always been deemed “too big to fail” by the succession of Governments, both National and Labour, that it has effortlessly outmanoeuvred for more than 40 years. This time it is trying it on as a tactic to try to pressure Meridian over its power price contract, on which the ink is barely dry and which only took effect in January.

Campaign Against Foreign Control of Aotearoa (CAFCA) calls Rio Tinto’s bluff (pun intended). Stop crying wolf, stop using your New Zealand workers as disposable pawns in your cynical game, stop holding Southland and the country to ransom. Go ahead and close the smelter and bugger off. See if we care, the country will be much better off without you. The smelter is the country’s single biggest user of electricity, consuming one sixth of the total, 24/7 for more than 40 years. It pays a top secret super cheap price that is not available for any other user and all it does is export electricity from NZ in the form of alumina, while being subsidised by all other electricity users. The smelter is the textbook example of corporate welfare in New Zealand. It is the biggest bludger in the country.

How ironic that Rio Tinto has rejected the Government’s offer of a short term subsidy. It wants a long term one, preferably indefinitely. Presumably, this is in addition to the massive taxpayer subsidy it has been receiving continuously for more than 40 years, in the form of the Manapouri power station built with public money for its exclusive use (and let’s never forget that men died building that); and the cheapest and most secret power price rate in the country bar none. Not good enough apparently, it still wants more.

Rio Tinto won the 2011 Roger Award for the Worst Transnational Corporation Operating In Aotearoa/New Zealand (and was runner up in both 2009 and 08). It was nominated for lobbying two Governments “over several years to secure excessive allocations of free emissions units under the NZ Emissions Trading Scheme”.

The Roger Award judges agreed, concluding: “It appears therefore, that the New Zealand taxpayer is subsidising a transnational corporate rort of the emissions trading scheme… The significance of this stance cannot be underestimated; a major transnational player within New Zealand materially benefits from its non-compliance with a strategy to reduce global climate change and its ecological effects”.

The Judges’ Report concludes that the company has 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 greenwashed face to the media and the public. Its milking of the Emissions Trading Scheme is entirely in character”.

The extremely detailed Financial Analysis reveals that the smelter’s claimed benefits to NZ, namely annual export earnings of “around $1 billion” are, in fact, overstated by four fifths.

The full, damning, 2011 Roger Award Judges’ Report can be read at http://canterbury.cyberplace.co.nz/community/CAFCA/publications/Roger/Roger2011.pdf

Rio Tinto is, once again, a finalist in the 2012 Roger Award, the winner of which will be announced in Wellington on May 1 (http://www.watchblogaotearoa.blogspot.co.nz/)

In short, it is a liability to New Zealand, not an asset.

What about the people who work for the smelter, directly or indirectly? Indisputably, the smelter closing would have a negative impact on Invercargill and Southland. But let’s keep a sense of proportion – in disaster terms it doesn’t compete with Christchurch having lost 185 lives, 50,000 jobs, and sustained $30 billion worth of damage in a matter of seconds on February 22, 2011. If Christchurch can get back in the saddle after that, Invercargill should be able to handle the smelter closure and its attendant job losses. As a plus, the city will be able to shake off its unhealthily dependent situation as a company town with its local government at the beck and call of this transnational bludger.

The tobacco industry used to employ a lot of people here, but that was deemed to be no longer in the public interest. Lacing lollywater with booze and selling it to kids supports a lot of jobs too but there’s plenty of public demand to get rid of that particular industry as well. The P industry provides an income for thousands of people too, but we don’t hear any demand for that insidious trade to be kept going to keep them in a job. History is full of examples of horrible industries that kept people in jobs (such as the slave trade) but which were banned and/or abolished for the greater good.

This smelter constitutes a crime against the people of New Zealand and has done for its entire existence.

In the national interest, it must be closed and the sooner the better.

It would be a great bonus to have 15% of the country’s electricity suddenly available and no longer committed to one smelter. There would no excuse for the moneygrabbing power companies not to cut their prices (we’ve been falsely promised lower power prices since the “electricity reforms” of the 1990s). And, we’re told, it would drive down Meridian’s attractiveness to would be buyers as part of the Government’s assets sale process. How ironic that the selfishness and ruthlessness of one transnational corporation could bugger up the plans to flog off more of our public assets to transnational corporations.
ends

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