Why John Key handed $30 million of your money to Rio Tinto

13/09/2013

By Gareth Hughes, Green Party energy spokesperson

Last month, the Government announced that they had given Rio Tinto $30 million of public money in return for a promise that the company would keep the Tiwai Point aluminium smelter open for at least another 18 months.

Yesterday, we finally managed to wrestle from the National Party the emails and briefings and other documents that led to that deal. They don’t paint a pretty picture.

Right from the start, when Rio Tinto told publicly-owned electricity company Meridian that it wanted a lower electricity price, it was clear that this was all about National’s asset sales agenda. Rio Tinto knew that National would be desperate to get a good price for the shares it’s selling and, with the smelter consuming 14% of the country’s power, Rio Tinto could hold the Government to ransom.

Treasury told National right from the start ‘don’t give them any money’ – it just means every corporation will have its hand out for public money whenever they have any leverage over the Government. Treasury also said that ministers should stay out of the talks and, if they did get involved they should play hardball with a ‘take it or leave it’ approach.

But John Key didn’t listen; Rio Tinto had him over a barrel. If they didn’t get what they wanted they could close the smelter, costing jobs but also lowering the price of wholesale electricity by 10%, which would slash the value of the power companies that Mr Key is so obsessed with selling.

So John Key rang up Rio Tinto and said ‘we’ll give you some cash if you play nice and give us the appearance of a stable electricity market while I’m selling these shares’. After a bit of haggling, National and Rio Tinto settled on a $30 million payment.

Is that how you want your government to govern? Do you want your government playing fast and loose with public money; using your cash as a bargaining chip to cut deals over the phone with multi-nationals every time it finds itself backed into a corner?

No. National should never have gotten itself into this situation in the first place. It should never have tried to sell our assets against the will of Kiwis. And when the question of the future of the smelter came up, it should have been handled independently and rationally by weighing up the benefits to the economy of the smelter against the benefits of cheaper electricity if it closes.

But the political imperative – National’s obsession with asset sales – overrode good governance and common sense.

Once again, New Zealand has seen the John Key-led Government back itself into a corner when negotiating with a big corporation, and it is the public that ends up paying the price.

source: data archive