Latest / Best of Business / Kerre Woodham: A one-off payment is not going to fix the problem

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Kerre Woodham: A one-off payment is not going to fix the problem · Best of Business

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  Speaker 1: You're listening to a podcast from NEWSTALKSTB. Follow this and
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  Speaker 2: I have so many questions around the government bailout of
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  Speaker 2: Golden Bay Cement, which is not in fact manufactured in
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  Speaker 2: Golden Bay but in Northland. Fletcher owns the company and
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  Speaker 2: they said Golden Bay Cement operates New Zealand's only domestic
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  Speaker 2: cement manufacturing facility at Portland near Fanga Ay. It supplies
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  Speaker 2: nearly sixty percent of the cement used in New Zealand.
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  Speaker 2: About ninety five percent of its output is sold domestically.
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  Speaker 2: Golden Bay Cement took a long hard look at the
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  Speaker 2: account books and participated in an independent assessment which confirmed
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  Speaker 2: that without support, rising costs, including carbon costs, would force
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  Speaker 2: the closure of the company and a shift to an
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  Speaker 2: import only model for cement from twenty thirty. So in
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  Speaker 2: steps the government with a sixty million dollar payout, they
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  Speaker 2: say a specific one time response to an exceptional set
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  Speaker 2: of circumstances to keep the plant open at least through
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  Speaker 2: to twenty forty. In return, Golden Based Cement has committed
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  Speaker 2: to continue producing cement at its Northland plant at least
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  Speaker 2: until twenty forty, and to invest at least one hundred
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  Speaker 2: and fifty million through to twenty forty, phased over time.
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  Speaker 2: Finance Minister Nicola Willis told hither to plic Ellen last night.
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  Speaker 2: The decision to offer a bail out was not made
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  Speaker 2: lightly and does not set a precedent.
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  Speaker 3: We went through three steps. One, this is quite different
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  Speaker 3: in that it is strategically so important that you can
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  Speaker 3: produce cement for your domestic economy that you're not exposed
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  Speaker 3: to not being able to have cement if there was
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  Speaker 3: an international trade disruption. Two, the financial case here is
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  Speaker 3: that actually this is a business that is working over all.
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  Speaker 3: The key thing is just that emission's cost. And three,
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  Speaker 3: we've set in place some really firm requirements that Golden
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  Speaker 3: Bay need to meet in order to get this cash,
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  Speaker 3: with clawbacks if they don't meet those requirements, and that
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  Speaker 3: includes keeping production going through to at least twenty forty,
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  Speaker 3: making one hundred and fifty million dollars worth of investments
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  Speaker 3: in that manufacturing capability, keeping the jobs at that factory going,
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  Speaker 3: and having an open book exercise with us the government,
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  Speaker 3: so that we can order that investment. So we set
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  Speaker 3: a very high bar. We took a very case by
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  Speaker 3: case approach. Believe you me, I did not want to
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  Speaker 3: be setting a precedent that we're going to keep doing this.
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  Speaker 2: Well, yeah, you kind of have set a president though,
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  Speaker 2: haven't you. Because when you boil out one company, that's precedent.
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  Speaker 2: Now other companies can say you've done it before, so
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  Speaker 2: it's a precedent. And Nikola Will has made the point that, oh,
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  Speaker 2: this is a thriving company. It's just that emission's cost.
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  Speaker 2: Here about that. That's one of those questions. If it's
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  Speaker 2: just that emissions cost, then that's not going to change
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  Speaker 2: unless you change our obligation to the Paris Agreement, and
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  Speaker 2: unless you do as other European countries have done and
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  Speaker 2: delayed the introduction of the ETES or scrap it all together.
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  Speaker 2: So just that emissions cost as what's snookering a whole
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  Speaker 2: lot of New Zealand companies. Fletcher says that New Zealand
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  Speaker 2: manufacturers face carbon costs that importers largely avoid. They want
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  Speaker 2: to see a carbon border adjustment mechanism, something they say
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  Speaker 2: addresses the structural and balanced directly and would let the
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  Speaker 2: ETES work as intended without exposing domestic manufacturers like golden
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  Speaker 2: bait ongoing domestic advantage, so ACBAM would apply a carbon
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  Speaker 2: charge to imported goods based on the emission's narrated during
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  Speaker 2: their production. So while we're all being hey, look at us,
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  Speaker 2: we've been so good and we're saving the Arctic shelf
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  Speaker 2: and we're snookering our own companies because we believe in
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  Speaker 2: the greater good of the of the planet in the universe,
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  Speaker 2: other countries go, yeah, no, not for us, not really.
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  Speaker 2: We don't buy into that whole ETS thing, so we're
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  Speaker 2: not going to do it. So they can make their
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  Speaker 2: goods a whole lot cheaper on so many levels without
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  Speaker 2: the et is even coming into it at the etes
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  Speaker 2: on that the fact that they're ignoring it completely, no
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  Speaker 2: wonder their goods are cheaper. So, as Fletcher says, why
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  Speaker 2: don't we bring in the carbon border adjustment mechanism so
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  Speaker 2: wherever it's made in the world, you have to pay
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  Speaker 2: your etes. If we're all going to buy into that,
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  Speaker 2: how is a one off payment going to help? Given
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  Speaker 2: the trading environment isn't changing, or it shows they've given
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  Speaker 2: no indication of the ETS obligations changing anytime soon, and
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  Speaker 2: they won't under labor and a greens of anything that
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  Speaker 2: go up. And if Golden Bay is so critical, why
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  Speaker 2: isn't Carter Holt Harvey's pulp and paper in Plywood. I
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  Speaker 2: would have thought that was pretty critical too, except, of
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  Speaker 2: course they closed down and it wasn't an election year.
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  Speaker 2: Perhaps that's the difference. Last year Carter Holt Harvey saw
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  Speaker 2: the closure of Kinleath and Eaves Valley Sawmill with the
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  Speaker 2: loss of hundreds of jobs. We had the closure of
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  Speaker 2: ravens Down, Smithfield and rual Pehu. Each of these towns
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  Speaker 2: and regions could argue that what they made was critical
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  Speaker 2: to the supply chain. It was certainly critical to the
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  Speaker 2: economic viability of their particular region, which is not a
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  Speaker 2: wash in situations vacant. Cameron Baggray has called the bailout
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  Speaker 2: of Golden Bay corporate welfare ism. Of course it is,
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  Speaker 2: Fletcher says it's not. The government says it's not. But
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  Speaker 2: if it's taxpayer money going to an entity that can't
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  Speaker 2: support itself, that's welfare ism. You know, Nikola Willis might
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  Speaker 2: not want to set a precedent, but she has, and
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  Speaker 2: a one off payment is not going to fix the problem.
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  Speaker 2: As Fletcher points out, we have signed up to the
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  Speaker 2: Paris Accord. We have said, oh yes, bring on the etes, please,
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  Speaker 2: let's cripple ourselves so we can maintain the moral high ground.
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  Speaker 2: And in the meantime, we're going to have to import
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  Speaker 2: goods that are made by other countries that have stuck
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  Speaker 2: two fingers to Paris and said we can't afford it.
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  Speaker 2: How does that work? How do we maintain the moral
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  Speaker 2: high ground by buying goods from countries that are ignoring
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  Speaker 2: their carbon obligation, their carbon offset obligations. We do our
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  Speaker 2: own companies out of business, we put people out of work,
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  Speaker 2: and we buy from countries that ignore the ears. It
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  Speaker 2: doesn't make any sense to me at all.
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