Another $30 Million to prop up Meridian sale

Written By: - Date published: 10:08 am, August 8th, 2013 - 55 comments
Categories: capitalism, economy, energy, john key, national - Tags: , ,

John Key just spent another $30 Million of tax payer’s money to prop up his privatisation ideology:

Tiwai Pt power deal done – Meridian

Meridian Energy has resolved its negotiations with Rio Tinto subsidiary New Zealand Aluminium Smelters locking in the Tiwai smelter until at least January 2017 – with the help of a $30 million subsidy from the New Zealand government.

The deal, which has been a year in the making, will help clear the way for Meridian’s $5 billion float on the stock exchange – expected to go ahead before the end of the year. …

The smelter firm will also be able to terminate the contract completely from January 2017 provided it gives 15 months notice. …

The New Zealand government will chip in $30 million to secure the medium-term future of the smelter and provide greater certainty for the electricity market.

Who would buy shares in a company that needs to be propped up like this?

55 comments on “Another $30 Million to prop up Meridian sale ”

  1. Pete 1

    I’m in two minds about this. On the one hand I’m pleased that the jobs there have been saved, on the other hand I don’t want any more asset sales. I don’t know if there was a genuine crisis at the smelter, or if Rio Tinto was just playing brinksmanship at an opportune time for them.

    • tc 1.1

      Add up the subsidies over the decades V paying the workers out and you’ll see this has never been a great deal for the NZ power consumer/taxpayer.

      A manufactured crises so Shonkey can spoon more taxpayer money down Rio Tinto’s throat.

      The smelter’s way out of date, Rio aren’t going to upgrade it and the elephant in the room is China who dominate the market with state supplied electricity to their modern smelters.

      Transpower have finally hooked manipouri up to the grid so Shonkey had to jump in there quickly before logic prevailed as Tiwai is no longer it’s sole consumer.

      • Jenny 1.1.1

        The elephant in the room is climate change. Tiwai on its own is an emitter of Green house gases.

        But apart from this, the amount of electricity that the giant smelter at Tiwai consumes, if freed up, would have made New Zealand the first industrialised country in the world with a totally fossil fuel free electricity grid.

        Which should have become the first historically recognised step on the way to a fossil fuel free future.

        Humanity are in a desperate war to save our climate. The people responsible for this decision are nothing but climate war criminals of the lowest type. Those who support them are quislings and cowards and should be ashamed of themselves. They have greedily put their narrow self interest above the welfare of humanity. In their unprincipled cowardice they are scabbing on future generations even their own children and grandchildren.

        If they live to be old enough to see the economy wrecked and agriculture destroyed, they will earn the contempt that all scabs eventually get, even from their own families.

        The tragedy is that if they weren’t so gutless they could have achieved so much more.

        We are all being held hostage to the lowlife climate war criminals who are using our taxes to help a huge multinational $billion company continue to pollute. They are spending our hard won state treasure paying an incredibly rich multinational to trash the climate. As well as this Rio Tinto has been given a 20% discount on its electricity price, which is already heavily discounted and subsidised. So much so, that the price per unit that Tiwai pays is a closely guarded secret.

        No doubt some quisling will say but the government has spent this money to save 800 jobs. Rubbish whenever has this government ever worried about workers jobs, this is just another grubby example of welfare for the rich.

        If instead of giving this $30million to their rich bosses it was given to the workers this would have seen each worker get a redundancy package of well over $37,000.

        With this sort of money these productive people would have invested it in their communities and families protecting their and their family’s futures in a more sustainable way. As it is now eventually they will still lose their jobs at a time that suits Rio Tinto, to find themselves left not just unemployed but having to survive in a greatly degraded environment where survival will be much harder.

        Of course this subsidy to RTZ and Sumitomo to destroy the climate will pale into insignificance beside the $billion dollars needed to bail out Solid Energy to help them to continue to trash the climate.

  2. BLiP 2

    A $30 million hand out for foreign-owned multinational mates which the National Ltd™ government will reap a handsome return on by maintaining artificially high electricity prices in a contrived market based on secondary school economic text book explanations of supply and demand.

    • yeshe 2.1

      yes, and we can certain the gubbmint negotiating skills were as uselss as on the Sky City deal, where they, and now Rio Tinto held all the cards. Key et al are useless at everything, even at the things they are supposed to be good at !! All done with glittery mirrors …. and what a waste of more money just so they can sell off another asset.

      • BLiP 2.1.1

        Its looking a bit like that, fer sure. The last thing National Ltd™ wants is for those brand new participants in the New Zealand Stock Market Casino reeled in with the Mighty River scam to lose any (more) money before the next election with any sort over-supply problem in the electricty market.

        Still, its a tricky one, this Tiwai Point issue. If the PR fluff is true, the plant employs 750 people and supports an additional 3000 jobs in the Southland. Not to be sneezed at. I would hate to do the figures in working out the dole payments for 750 people, plus, what, say, another 1000 collateral job losses. And then you have to factor in the increasing costs in health and crime which inevitably comes with growing unemployment. Plus there’s the social impact to Southland, such a loss could turn Invercargill into a ghost town. Then again, even if I had the correct digits to do a half-accurate guesstimate, I wonder what the positive result to the economy might be if there’s suddenly a 15% increase in electricity suddenly available. Presumably, prices would have to drop, both businesses and private consumers would have more money in their pocket to spend or, ideally, reduce debt. Would the reduction in the cost of electricity offset the cost of closing Tiwai?

        And then there’s the whole foreign-owned multinational thing. If I was King of New Zealand I would charge Rio Tinto a hefty premium for using our electricity and, if it doesn’t like it, it can fuck off back to where it came from, and take the Sumitomo Chemical Company with it. I’m getting a bit pissed off with these multi-nationals bossing us around and Rio Tinto has been at it a while. Remember back in 2008 when Chris Trotter wrote . . .

        Once again the masks have slipped. Once again we have caught a glimpse of the true faces of our masters. Once again, New Zealand’s acute vulnerability to the power of vast transnational corporations has been brutally revealed.

        As an exercise in raw economic coercion, Rio Tinto’s submission to the parliamentary select committee scrutinising our Government’s proposed emissions trading scheme (ETS) was chilling.

        . . . and this sort of political interference in the affairs of Aotearoa is only going to get worse. Especially under the TPPA which, alas, Labour is as committed to and deceptive about as National Ltd™.

        Labour does seem to be listening and thinking along more sensible lines lately. The housing policy looks good, as does the electricity price control mechanisms. National Ltd™, though, remain blinded to their ideology. Their short-term ashpurirrational “rolling maul” is closing in on Meridian. No time to sit and think about what might happen in ten years from now. Such PC-woolly-woofta-softcock-academic-navel gazing isn’t going to garner a one-off multi-billion dollar boost to the economy. Why make the promotion and sales process more difficult by annoying Meridian’s biggest customer. Rio Tinto has already shown its willingness to play the political game so $30 million is probably cheap if it keeps its mouth shut for the next 18 months or so. At least, that’s what a money trader with mates waiting to clip the ticket on a few billion might think.

  3. vto 3

    ha ha ha ha ha ha ha

    corporate welfare

    bludgers, they need to be drug-tested

    free market – ha the biggest joke of them all.

    Hands-off government – that is the last thing this lot do

    Picking winners

    Nanny state for business

    The failings of the neoliberal approach of the last 30 years are coming thick and fast. Pretty much one a day at the moment……… wonder if its disciples have woken up yet…

    • Draco T Bastard 3.1

      +1

      The failings of the neoliberal approach of the last 30 years are coming thick and fast. Pretty much one a day at the moment……… wonder if its disciples have woken up yet…

      The neo-liberal approach was proven to be a dog back in the 19th century. Sure, there’s a been a few changes to classical economics but the underlying assumptions are the same and they’re just as wrong today as they were then. And, no, the disciples in both politicians and economics won’t “wake up” to these facts because the people who pay them benefit from them being wrong.

  4. tricledrown 4

    Then theirs the redived income and profit tjat will reduce tje value of the asset sale further!

  5. tracey 5

    Meanwhile kiwirail gives contract to us company… not china this time. Any govt, including any future govt needs a written publicly viewable policy on what it will support and why.

  6. vto 6

    “The $30 million was a “one off incentive payment” to help secure agreement on the revised contract because of the importance of the smelter to the stability of the New Zealand electricity market,” English said. ” (from Stuff)

    should read “… because of the importance of the smelter to the high prices of the New Zealand electricity market, which artificially values Meridian higher than it should be and which will stop our asset sales process form falling apart. Sorry about that, people, you just have to pay higher prices for a while yet. There aint no way we will let the free market take control – it will ruin us”

    Bill English bullshit

    • yeshe 6.1

      nice one vto, thx.

    • fender 6.2

      Yes Bullshit Bill admits this is a scam when he says: “this subsidy will assist with the sale of Meridian shares”. Fucking disgrace!

      I’d like to see EVERY other Meridian customer band together and DEMAND the same subsidy….or else they will take their custom elsewhere.

      “insider” below at 9.0 suggests this is “hands-on economic management”, I see it as “hands-in” and “hand-out” corrupt behaviour.

  7. fender 7

    This was unexpected!

    What happened to the welfare reforms?

    • Draco T Bastard 7.1

      Going great according to National – the poor are being punished for being poor and the rich are being rewarded for being rich with money supplied by the poor.

      • srylands 7.1.1

        “with money supplied by the poor”

        The poor don’t pay any net income tax. (I guess they pay some GST). So it is (mostly) the rich subsidising the rich.

        The subsidy is a mistake. But so are all subsidies.

        • Draco T Bastard 7.1.1.1

          The poor don’t pay any net income tax.

          The wealth of the nation is sold in such a way so that the majority of people get little or no benefit from it. It is in this way that the poor subsidise the rich.

        • Colonial Viper 7.1.1.2

          The subsidy is a mistake. But so are all subsidies.

          Of course, I disagree with you. Industrial and tech giants have usually been gestated through lavish state subsidies or other support.

          How about wealth inequity, is wealth inequity a mistake?

        • KJT 7.1.1.3

          “The poor don’t pay any net INCOME tax.”

          Neither do a large proportion of the richest people and corporations in New Zealand, according to the IRD.

          However as the poor, those on low wages or welfare, have to spend all their income to survive.

          ALL THE POOR, pay 15% tax. GST.

          Then there are petrol taxes, excise and other taxes which they pay also.

          Not to mention the electricity TAX, the premium on power prices to make electricity company managers look good and keep their bonuses, paid either to the Government or shareholders in electricity companies.

          30 million, plus the extra money we will spend on power prices for the immediate future due to the smelter, could have been spent on capability building and developing future industry, in Southland, for when the smelter goes. Instead of prolonging the inevitable for a few more years, to prop up asset sale prices.

  8. Shane Gallagher 8

    No money for Dunedin businesses but plenty for Invercargill? Perhaps this also has to do with which party holds those respective seats?

  9. insider 9

    Isn’t this the kind of hands on economic management labour and strandedistas keep banging on about?

    not sure it’s a great thing myself but it gives the locals a bit of breathing space before the seeming inevitable closure.

    • Draco T Bastard 9.1

      Nope. I keep saying that these subsidies to private businesses need to be canned ASAP. Not the industries though, they should be kept going but under government ownership, control by the workers and demand supplied by vote.

      • RedLogix 9.1.1

        Exactly … this kind of corporate hand-out tends to rather wind up sticking to very few fingers indeed.

        Certainly nowhere near the tax-payers who fund them.

  10. Tim 10

    Kick the aluminium (or rather “aluminum”) can down the road again aye Johnny?
    Good thing I heard Maurice Williamson say on RNZ (talking about earthquake strengthening) that future governments can’t be held to the deals of their predecessors.
    Now all it’ll take is a Labour Party that returns to its roots. In the absence of that – those alternatives that are waiting in the wings. Should come to pass, one way or another around the time RioTinto come grovelling again.
    BTW … it’s never taken that much to get Tim Shadbolt exstatic.

    • North 10.1

      Shadbolt is a perennial incumbent. Indistinguishable really from the various officeholders or self-celebrated people who finish in one context then launch out into another. It’s always the self-analysis “I have much to offer…….” – the goat Maggie Barry for example.

      I suspect it’s more a matter of “I need you to need me…….”. Intimations of pathology really. Shadbolt is not different.

      Need indicators of that ? Have a look at the somewhat ugly, emperor with no clothes, silly old man rage he served up when someone had the temerity to put themselves forward as an alternative to him in Invercargill

      No big criticism here but you know, he ain’t God. Seems that the closer and closer people edge to being an institution the closer and closer they get to devising that they are God. Well, not God of course, but certainly indispensable……..”the people” incarnate wank. Gimme a break.

  11. vto 11

    Dunno what the fuck English is worried about the loss of jobs for…

    … there is a colossal dairy boom going on in southland – there should be jobs coming out their ears thanks to the way everything trickles down

    tinkle
    tinkle

  12. Tiresias 12

    Dishonesty of this nailed comprehensively at the well-known left-leaning:

    http://www.interest.co.nz/opinion/65788/opinion-there-was-certain-inevitability-long-suffering-taxpayer-would-be-invited-cough

    I noted English’s comment at Stuff, too. Interesting that the omnipotent invisible hand of the market needs to be helped with public money when it’s not making the ‘right’ decisions. Even more depressing is the fact that I can guarantee Bill English is totally blind to the, ah, irony.

    • Colonial Viper 12.1

      No, I think English knows the deal he had to make here, not for the sake of the smelter, but for the sake of the Meridian float.

      • North 12.1.1

        Well, possibly correct there CV but the notable thing is that these proponets of the “free market” don’t even blink, don’t even blush when the only answer to the “free market” fuck-up is to offer up public money. The handsome, unafraid hard-on but not without the Viagra of public money.

        This is typical of the right-wing non-thinkers, the dirty, dirty minds’ eyes, the unashamed (excited?) voyeurs, historically those who raved darkly about homosexual law reform. Yeah, dirty homos galavanting round seducing young straight boys and deliriously pigging out. Never happened of course. Just less young gay guys killing themselves.

        Did those sex crazed wierdos apologise when what they postulated was proven in the absolute reality years later to be utter shit ? Of course not. That is their nature. Instead, they saved their powder for their next busybody, sex craxed onslaught. Sweet young teenage girls turning into sluts when anyone suggested unimpeded access to contraception. “Woe is me……a nation of whores !”

        They’re scum. Demonstrably gross. Makes you want to punch them for their mindless arrogance, their social irresponsibility and deviance !

        Same story with the proponents of the wondrous “free market”. Unconscionable, entitled , bludgers, moral weaklings. Fuck them !

        • Colonial Viper 12.1.1.1

          Most of the righties are smart and practical enough to know that the aim is to move wealth to the already wealthy. So yes, of course they have no problem with it, they’re not stuck on silly issues of internal consistency and theoretical purity that the Left are.

  13. Draco T Bastard 13

    Who would buy shares in a company that needs to be propped up like this?

    The people who know damn well know that all their wealth comes from the taxpayers and not their own work. The biggest bludgers in the world – the rich.

  14. Wayne 14

    So what would Labour have done; let over 1000 jobs go. There were enough complaints on this site and Labour over a few dozen jobs at Hillside.

    I am certain Labour if it was currently the Govt would have done a deal, even if it just lasted to 2017, as is apparently the case.

    It is not just the jobs, it also reduces the need to immediately spend hundreds of millions upgrading the link from Manoupouri to the rest of the Grid. It will obviously be done but not quite as quickly.

    I guess it is likely the smelter will close in 2017, but 4 years is worth having. The alternative was the smelter closing in 2015 (I think).

    I know commenters on this site generally hate resource based multinationals, but this is about the jobs and Southland, not Rio.

    By the way I think Kiwiblog is wrong on this issue.

    I suspect Labour will play down this deal, or at least primarily tie it to privitisation, which I guess makes sense from their point of view.

    • lprent 14.1

      Surprisingly, I largely agree with you on this as to the effect on Southland. It doesn’t change the basic business case that the smelter is effectively uneconomic and that Southland desperately needs to wean itself from it. It is a stop-gap to allow time for the Southland economy to adapt for life without the smelter.

      Where we disagree probably is how this announcement has been made. It lacks the clear features that say that the government/Meridian are aware of that and are planning on it. Quite simply it is sending the signal that this government is hoping that the NZAS/Meridian tieup will look like hobbling on for more than just 4 years.

      What I don’t see is a clear statement that there will not be further prop-ups from this government. Nor that the government/Meridian are immediately starting to put in a better link from Manapouri to move power north. There are already links to the grid, but they are to the south, and limited in scale. The project lead times are likely to be out to 2018, so contingency planning would dictate that the project should start planning now with a construction start time over the next couple of years.

      As the post points out this announcement has the side-effect/main-effect of making the purchase of Meridian shares to look less risky to suckers. Whereas smarter investors who are aware more aware of the risks underpinning this deal (like the half billion price tag for upgrading the grid to cope with it) are going to be looking for a substantially discounted price.

      Worse it also will allow Southland to drop back into the risky slumber of hoping that somehow the economics of the smelter will somehow magically change. But for the government to do the responsible thing and clearly warn Southlanders of that will scare off the “punters’ even further. That to my mind probably explains the way that this announcement has been handled.

      The comparison with the Hillside workshops is a bit inane. The smelter doesn’t offer virtually any strategic skills to the NZ economy, as for us it is largely a way to sell some power. Whereas we’re more than a little light in organisations capable of training people in heavy engineering fabrication skills anywhere throughout NZ. That is a very hard to replace strategic skill loss.

      • Pascal's bookie 14.1.1

        Also interseting to compare the differences between the treatment Southland jobs are given, and those in Dunedin. What could the difference be I wonder, can’t quite put, oh that’s right. Voters’ ‘poor choices’.

  15. Dv 15

    So let me understand this.

    We have given $30million to an Aussie company so that we can sell the Meridian to a bunch of Aussies.

  16. Jellytussle 16

    How about the idea of thirty million divided by 750 jobs……….being the same as 750 people paid $40000 each to work for a pretend company that actually does nothing.
    Surely (except for the ‘dignity’ of work and and the benefit to downstream companies) the result is the same……750 families being supported by the state.

  17. Descendant Of Sssmith 17

    It’s inevitable that it will close at some point as the plant nears it use by date.

    We were talking the other day about cleaning up the site and how in Nevada companies walked away from billion dollar bonds because the clean upm costs of the mines they operated was higher than that.

    The companies were simply collapsed with no assets to chase.

    Surprise surprise look what appears just one day after the deal:

    Rio would want to sell because it would not want to carry the liability for cleaning up the site when it finally closed, which could be more than $200m. But the price a new buyer would pay would depend on whether they thought they could “get away with murder” when the plant shuts.

    http://www.stuff.co.nz/business/industries/9020341/Rio-tipped-to-fast-track-smelter-sale

    Yeah sell the plant to a new “company” and leave the Southerners and the taxpayer with the mess. Another subsidy.

    Bet this government didn’t have as any part of this deal responsibility by Rio to decommission the smelter and clean it up.

    The government should have legislated their responsibility regardless of who they sell it to.

  18. Walt 18

    And if they didn’t Help keep it open the left would cry foul about that. ( Hillside)

    The problem with labour is they have no creditable policy on increasing jobs and reducing the amount of kiwis on a benefit.

    • Descendant Of Sssmith 18.1

      Yeah all the righties were on here saying “but what about the jobs” and supporting work going to Hillside.

      The difference with Hillside was that the work being done was going to be paid for anyway. That’s not the same thing as a lump sum gift to a company that makes a billion dollar profit.

      (Note the points about an aging plant and selling it to avoid responsibility for decommissioning as well).

      Increasing jobs is done quite easily by re-distributing wealth from those who take excessive profit through taxation and redistribution. If we want wealth and jobs in this country money has to circulate.

      When the benefits were cut by Ruth Richardson and her ilk with six months I know 40 businesses that closed within the following nine months in my local area.

      Money circulating allows small business to function, money not circulating allows corporate business to extract more wealth.

      You are right though in that Labour have no plans to create jobs.

      Increasing the minimum wage and increasing benefit rates would be a good start. Increasing taxation would also help.

      Tell me when you see these companies making multi-million dollar profits continuously laying off staff, reducing wages, and sending the profit off-shore, outsourcing to overseas countries, do you really, really, really think that when they say let us pay less tax their motivation is more jobs for people in New Zealand?

      Think Fonterra, think banking, think fast food, think Ryman…….

      Name one employer who after company tax rates were reduced employed 10 more people, 30, 50 because they now had more money in their pocket.

      These companies are pretty good at PR. You’d think after the lobbying they did for lower taxes they’d send out a press release.

      • srylands 18.1.1

        “Name one employer who after company tax rates were reduced employed 10 more people, 30, 50 because they now had more money in their pocket.”

        No because that would be both stupid, and bad for the firm and bad for the economy.

        You state that like it is a surprising, or bad thing. That is not how employment decisions are made. People are employed if they increase profit. It is not like hey we are paying less tax we have some spare cash, lets go employ 30 people.

        • felix 18.1.1.1

          You should explain that to every other neoliberal fuckjob on the planet.

          • srylands 18.1.1.1.1

            “You should explain that to every other neoliberal fuckjob on the planet.”

            I will ignore the gratuitous rudeness as usual. (BTW Why does the Left have a disproportionate share of nasty, bitter losers who are just plain rude? I imagine you frothing at the mouth “fuckjob fuckjob” “fuck neoliberal fuckjob” in a dingy basement somewhere, surrounded by your homebrew gear.)

            Lower company taxes can attract investment which will lead to higher employment. The point I was making is that increasing employment for the sake of employing people is damaging. Lifting productivity, and reducing employment to achieve the same output (and reducing labour costs) is a good thing. It is our inability to sufficiently lift productivity that has been our problem in NZ.

            • Colonial Viper 18.1.1.1.1.1

              To a right winger swear words are rude.

              But closing down entire communities and making generations of workers redundant is just economics.

              Fuck off mate.

              Lower company taxes can attract investment which will lead to higher employment.

              Nah, lower taxes is just capitalists wanting more profits in the pocket for no extra work. Besides, that shit you just spat out is an economic fairytale which doesn’t work, and has been shown not to work for decades.

            • One Anonymous Knucklehead 18.1.1.1.1.2

              Whereas the Left has always lifted NZ’s productivity more than the Right, whose dogmas fail every single place, every single time they are implemented, causing untold misery and disease.

              That might give you a clue as to the source of the rudeness. People tend to despise advocates for misery and disease.

            • Rosetinted 18.1.1.1.1.3

              wrylands
              Do feel free to take off for some blog of higher thought and use your time usefully in calm and rational discourse as if at a Gentlemen”s Club. It would be wise to get away from the rude mechanicals with their horrid use of four letter words and high talk of impossible principles and low, scurrilous and constant disagreements with anything you or other bloated numbies say.

            • Descendant Of Sssmith 18.1.1.1.1.4

              And the difference between swear words and this “nasty, bitter losers” is what?

              By the way when the smelter is de-comissioned who do you think should pick up the cost of cleaning it up?

              • srylands

                “By the way when the smelter is de-comissioned who do you think should pick up the cost of cleaning it up?”

                The owner.

                • Descendant Of Sssmith

                  The current owner getting the tax payer subsidy and the cheap power or do you think they should be allowed to sell it to another company who then goes bust and has no money?

                  Given the inevitability of it’s closure should Rio Tinto be putting money into an administrated fund in preparation for it’s decommissioning so we can be confident that they will meet this cost?

                  • srylands

                    “Given the inevitability of it’s closure should Rio Tinto be putting money into an administrated fund in preparation for it’s decommissioning so we can be confident that they will meet this cost?”

                    Yes

        • Descendant Of Sssmith 18.1.1.2

          So these people are liars. I’ve heard for years companies and neo-liberals we can’t afford to employ more people cause tax rates are too high.

          http://www.theage.com.au/federal-politics/federal-election-2013/abbott-vows-to-cut-company-tax-rate-20130806-2rdwl.html

          http://www.beehive.govt.nz/release/fact-sheet-company-tax-cut

          What is changing?
          The company tax rate will fall from 30 per cent to 28 per cent from the 2011/12 income year. For most companies, this will apply from 1 April 2011.
          The Government will allow dividends issued after the new company rate takes effect to be imputed at the existing 30 per cent rate for two years if company tax has been paid at the 30 per cent rate.
          Why?
          A lower company tax rate encourages productive investment in New Zealand, thereby increasing productivity, raising wages and creating jobs.

          Here’s a nice little graph from the US showing unemployment rate against corporate tax rate

          http://corporatetax.procon.org/view.resource.php?resourceID=005137

          The theory you espouse doesn’t match up with reality.

          “No because that would be both stupid, and bad for the firm and bad for the economy.”

          Actually employing more people and taking less profit would be good for the people who would now be employed, good for the firm as they would have more trained and skilled people ready for any increase in production needed and others would be under less pressure and good for the economy because that money would be circulating – being spent in shops, etc. We would spend less on welfare, less on crime, more people would have dignity and self worth, and so on.

          In the end what you are reinforcing is the neo-liberal notion that companies should be and are only about profit. That is stupid!

          Of course if that is the case we know the private sector will never supply employment for everybody and therefore the state has to intervene. The alternative is to let people starve or rely on charity.

          The state should therefore be supported and applauded for intervening and those who espouse that only profit matters in their decision making should contribute to the low employment consequences of that ideology.

          • RedLogix 18.1.1.2.1

            Excellent comment DSS. Personally I’m utterly fed-up with this endless small-minded whining from the right that somehow the public sector is non-productive, inefficient and must be “drowned in a bath-tub” in order for our economies to grow. It’s a childish nonsense.

            The simple, stark and obvious truth is that all real economies are an intertwined symbiosis between both the public and private sectors. Both need each other.

            All the most successful and stable nations run a strong public sector that is somewhere between 40-50% of GDP. Indeed if you really want growth, prosperity and a strong private sector, I'd suggest that ramping up tax rates across the board and expanding the public sector is the most reliable way to go. Government doesn't need to 'pick winners' …. that's a job the private sector does best …. but it is very good at providing the physical, economic, legal and social infrastructure upon which the private sector is entirely dependent for it's success.

            • srylands 18.1.1.2.1.1

              There is no strong correlation between the size of the public sector and prosperity. The government’s focus is on increasing public sector productivity. There is plenty of scope.

  19. Poission 19

    Now lets see.The NZ government (read taxpayer) has to subsidize an Australian multinational for gross incompetence ( fuelled by greed) in its governance.ie doing everything wrong.

    it paid a massive 65 per cent premium.
    Got involved in a bidding war with other giants.
    Bought at a 20-year peak in aluminium prices .
    Increased its debt from $2.4 billion to $46.3 billion, constraining it for years to come.

    http://www.businessinsider.com.au/rio-tinto-alcan-deal-writedown-2013-2

    This GVT only rewards losers.

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