6 Sep 2012

Government breaks jobs pledge, says CTU

1:51 pm on 6 September 2012

The president of the Council of Trade Unions says the Government has broken a pledge to create more jobs.

New Zealand Aluminium Smelters on Wednesday announced that a total of 100 jobs at its Tiwai Point plant near Bluff in Southland will be cut by November, rather than over five years as it had previously planned. Thirty-five jobs have gone since August last year

Last month state-owned Solid Energy made staffing cuts in Huntly and suspended operations at its Spring Creek mine on the West Coast.

And job losses are likely at Norske Skog which plans to halve production at its Kawerau newsprint mill.

Council of Trade Unions president Helen Kelly told Radio New Zealand's Morning Report programme the Government could do more to cushion the economy from the global financial crisis.

"The Government is a major player because it buys things, because it employs people, because it owns things. It should have a plan using all of those things to generate a jobs-led growth strategy.

"The economy is collapsing and (Finance Minister) Bill English in July this year promised 20,000 - 30,000 new jobs a year."

Labour accuses Govt of forgetting need for jobs

The Labour Party says the Government is so consumed by its plan to sell off state-owned assets that it's forgetting about the need to create jobs in the economy.

After a $20 million loss by Tiwai Point and falling international aluminium prices, New Zealand Aluminium Smelters has said it needs to cut costs or there is a risk it might have to shut the factory down.

Labour leader David Shearer says closure would be tragic for Southland.

He says financial difficulties at the smelter also put a dent in the Government's plan to sell shares in state-owned power company Meridian.

The smelter is Meridian's biggest customer, and if Tiwai Point succeeds in its attempt to negotiate a lower electricity price, Mr Shearer says, the power company's revenue - and eventual share price - will fall.

Green Party co-leader Russel Norman says New Zealand Aluminium Smelters' parent company Rio Tinto could be using the announcement on fast-tracking staff redundancies as a way of negotiating a cheaper electricity deal.

Tiwai plant secure, says PM

Prime Minister John Key is confident the smelter will not close. He says the job losses at Tiwai Point reflect current trading conditions and lower international aluminium prices.

"There are a number of ways in which the company might be be able to accommodate the changes. Some of those are changes to its overall cost structure itself, and that's partly what the company is doing here."

Mr Key says the company's electricity negotiations with Meridian are sewn up for the next three years.

Electricity analysts also say the smelter is unlikely to be shut down, despite its financial problems, but believe Meridian will be under great pressure to agree to cut its prices.

This is because the transmission system in the far south does not have enough capacity to get power from Manapouri to the rest of the country so if the smelter shut down, Meridian would get almost nothing from its Manapouri project.

Transpower confirms a transmission upgrade would take three years to build and is at present on hold.

Milford Asset Management executive director Brian Gaynor says Rio Tinto is looking at all parts of its operation around the world and is not singling out New Zealand.

Mr Gaynor told Radio New Zealand's Nine to Noon programme that where it has unfavourable countracts it is trying to renegotiate them. "It's a company under pressure because its profits are falling.

Craigs Investment Partners' head of research Grant Swanepoel expects the smelter's contract with Meridian, signed in 2007, will be changed and the duration shortened.