Parker David: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeParker David: Questions for Oral Answer — Questions to Ministers[Sitting date: 24 September 2013. Volume:693;Page:13600. Text is incorporated into the Bound Volume.]6.Hon DAVID PARKER (Deputy Leader—Labour) to theMinister of Finance: Did the July 2012 Treasury reportProject 14: Initial advice say that the closure of theTīwai smelter would reduce the market price for electricity by “roughly 10 percent” and why in his answer to Primary Question No. 4 on 21 August 2013 did he not disclose that advice to the House?Hon BILL ENGLISH (Minister of Finance): A fresh new look with the same old questions.Mr SPEAKER: Order! Answer the question.Hon BILL ENGLISH: The member is misusing the quote from the report. In answer to the first part of his question the report cited a tentative conclusion by the Ministry of Business Innovation and Employment to that effect against what it called a reference scenario over a 15-year period. The report’s conclusion was that the closure of the smelter would “likely lead to both positive and negative effects”. In answer to the second part of the question: for a very simple reason which is that that July 2012 report was about Meridian Energy’s electricity price negotiation with Pacific Aluminium. The member’s question last month was in respect of cost-benefit analysis on the $30 million payment made by the Government.Hon David Parker: Why did he omit to tell the people of New Zealand that the advice he had was that the market price for electricity could drop by 10 percent if he did not dole out the $30 million of corporate welfare and why does he pretend to cry crocodile tears over jobs when he did not even ask for a jobs guarantee?Hon BILL ENGLISH: Because there was not clear advice that the electricity price could change. The fact is that this was fundamentally a commercial negotiation between Meridian Energy and the smelter with Meridian Energy facing the incentive to keep a large customer and the smelter trying to get the most leverage possible off that incentive. The Government at the end of that negotiation then refused extensive subsidies asked for by RioTinto—Hon David Parker: Is $30 million not extensive?Hon BILL ENGLISH: —but made a $30 million payment which did enable the smelter to stay open. I am happy for the member to continue his campaign to close the smelter. He is free to go to Invercargill if he really wants to put a sharp edge on it.Hon David Parker: Is not the real reason he wanted to hide from the public the true cost of the $30 million corporate welfare deal for the RioTinto - owned smelter that this deal keeps electricity prices higher for all other New Zealand businesses and for all Kiwis’ bills at home?Hon BILL ENGLISH: No that is simply not correct. The core of the deal was a commercial negotiation between Meridian Energy and the aluminium smelter. I also do not agree with the member’s description of the payment. It is fascinating how it is called smart intervention if Labour does something about regional development and it is some kind of seedy deal if we take action that helps preserve 800 jobs in one of New Zealand’s most rapidly depopulating regions.Hon David Parker: How can he still pretend that the electricity market is competitive when the advice he had from the Ministry of Business Innovation and Employment and Treasury was that without his Government’s corporate welfare payment propping up RioTinto’s smelter the market price for electricity could have dropped by 10 percent?Hon BILL ENGLISH: I do not agree that that was the advice. The electricity market is competitive. It is—Hon Members: Oh!Hon BILL ENGLISH: Well that is pretty clearly demonstrated by the valuations of the partially floated companies. Whereas the Opposition regards them as cash cows with no commercial risks the market has made it quite clear that there are real commercial risks and it hasrevalued the companies appropriately. The member cannot have it both ways—that the deal that we have got will not keep the smelter going for very long but it would be a great thing if the smelter shut down.Hon David Parker: How can he disagree with those who say that in his desperation to proceed with the Meridian Energy sale he has provided yet more proof that the New Zealand electricity market is not competitive therefore providing even more justification for the need for robust intervention to bring electricity prices down?Hon BILL ENGLISH: The member is completely wrong. In this case there was a commercial negotiation between Meridian Energy and RioTinto which came to a commercial conclusion. That includes the ongoing usage of electricity by the smelter for a well-defined period. The Government then made a payment that has had no influence whatsoever on the electricity market. It was simply a cheque written out to ensure the completion of the contract. The member will have to put up better arguments than that for a scheme that is followed by only one developed economy in the world and that is a province in Canada.