8 Aug 2013

Labour calls Tiwai deal quick fix

3:38 pm on 8 August 2013

The Labour Party is accusing the Government of doing a short-term deal over the Tiwai Point smelter so it can proceed with the sale of shares in Meridian Energy.

Clayton Cosgrove.

Clayton Cosgrove. Photo: RNZ

The state-owned electricity supplier announced on Thursday it had reached a deal with New Zealand Aluminium Smelters on the cost of electricity, after more than a year of negotiations.

The Government is paying a one-off $30 million as part of the deal, saying the smelter was important for the stability of the New Zealand electricity market.

However Labour's State-Owned Enterprises spokesperson Clayton Cosgrove says the deal is all about paving the way for the sale of Meridian shares.

"This is a short term fix, this is about getting past an election, this is about getting a sale of Meridian away."

Bill English.

Bill English. Photo: RNZ

Mr Cosgrove says in return for taxpayers' money the smelter owner has to keep the operation open for only three-and-a-half years, and NZAS majority owner Rio Tinto could "wait and spring the trap again" in 2017.

But Finance Minister Bill English says the deal gives certainty to Southland and the electricity system, and that will help the sale of shares in Meridian.

"In the context, though, of the sale of Meridian shares, it does mean that Meridian can now say that issue has been finalised and there is a new agreement and they can describe that in the offer document."

Greens' co-leader Russel Norman says the deal has only been done because of the looming sale of shares in Meridian Energy.

"It's very clear that Rio Tinto had the New Zealand Government over a barrel. Because the National Party's so committed to the privatisation process, and had Tiwai Point announced it was going to close, it would've undermined and basically thrown the privatisation project off the rails."

Dr Norman says not only do taxpayers have to spend $30 million dollars but under the deal, Rio Tinto can close the smelter faster than it can at the moment.

Bill English says a final decision on the sale will be made within the next three to four weeks.