23 Jul 2020

Why NZ First scuppered government's $100m Southland jobs announcement

4:14 pm on 23 July 2020

New Zealand First says it is refusing to back a $100 million jobs package for Southland because the case does not yet stack up.

A general view of the Tiwai Point aluminium smelter.

NZ First wants a government buyout of the Tiwai Point aluminium smelter explored as an option. Photo: Getty Images

Prime Minister Jacinda Ardern was forced at the 11th hour to scrap her plan to announce the package late last week, because agreement had not been reached with Labour's coalition partner.

A week ago, Ardern, minister of finance Grant Robertson, and minister for regional economic development, Shane Jones, visited Invercargill where they met with Southland mayors to discuss future job opportunities in the region.

That was a week after the Tiwai Point aluminium smelter announced production would end in August 2021, putting more than 2500 jobs on the line.

Senior Labour and New Zealand First officials have been discussing a draft cabinet paper that sets out the package for Southland, based loosely on the "Just Transition" money given to Taranaki.

RNZ understands the original price tag was just over $42m, but was then doubled to $100m.

New Zealand First said it was unhappy with the lack of options besides the jobs package, and a lack of Treasury analysis.

It wanted a government buyout of the smelter explored as an option.

A spokesperson said more time should be taken to settle on the best option, as the government had some time before the smelter closed.

Any money that goes to Southland will not come out of Covid-19 recovery funds, but will have to be found elsewhere.

That leaves Labour and the Greens keen to progress the "Just Transition" package - but they don't have the necessary backing of New Zealand First, which wants more analysis of the pros and cons.

Robertson said nationalising the smelter was not on the table for this government as it would not be a "sensible investment".

The "Just Transition" package was the best option from Labour's point of view, he said, but there were still negotiations between Meridian and Rio Tinto about extending the power contract, which the government was not involved with.

He denied work on the package had been rushed, saying government had been working with the Southland community "for some time" around alternative industries, like aquaculture and high value manufacturing.

Climate Change minister and Greens co-leader James Shaw said it would be "a shame for the people of Southland" if they had missed out on cash starting to flow into the region because politicians could not agree.

"If there was actual cash that could have been on the table to set up a Just Transitions Unit down there that got blocked, apparently, if I was in Southland I'd be feeling pretty upset about that," he told reporters.

Shane Jones denied the people of Southland were missing out because parties were playing politics.

"These things are going to be contested politically over the next several weeks, and there's 14 months according to Rio [Tinto] before they bail out so there's no shortage of opportunity for either the market to derive solutions or a future government."

If the government was asking workers to "transition" to other industries, Jones said, "we've got to actually work to create a new destination for the 3000 workers, not just hope that the vagaries of the market will sort the problem out".

The loss of Tiwai Point would cost the equivalent of 6 percent of GDP, significantly more than the sum total of the proposed jobs package, he said.

Southland District mayor, Gary Tong, said he was "disappointed on behalf of the Southlanders".

He'd been in touch with New Zealand First "representatives" and "made it clear that we need to have these opportunities down here, create these opportunities and I hope that the paper, the Cabinet paper, hasn't disappeared or is going to sit on a bookshelf for a while - we need this help."

A government package would provide the certainty the region needed ahead of the likely closure, to create alternative job opportunities, he said.

"That's what I understand part of this package was. I wish I really knew what was in there because I was surprised that there weren't some other shovel ready announcements last week...but it is what it is for the moment."

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