New Zealand Executive Government Speech Archive

FRIDAY 31 MAY 1996
ADDRESS BY
RT HON J B BOLGER
PRIME MINISTER
OPENING OF COMALCO SMELTER UPGRADE
TIWAI POINT, INVERCARGILL

Terry and Marie Palmer, David Brewer, Kerry McDonald, Leigh Clifford, Dr and Mrs. Minamiura, ladies and gentlemen, guests, I am delighted to be here today. This week I have covered the length of New Zealand from the far north on Wednesday to the far south today. It is good to get out of the hot house of Parliament and partisan political debate to meet with and talk with a wide cross section of New Zealanders. The people who make things happen.

All New Zealanders are special to me and today I am pleased to have received the invitation to attend this function which recognises a very special project and a very ambitious upgrade here at Comalco Smelter. The Comalco experience is a story from which the whole country can take heart. You've proved your worth over a quarter of a century in New Zealand. This upgrade proves your confidence in the future. We're hearing a lot of debate just now about investment and the impulse from some quarters to try to quarantine the New Zealand economy from what is happening in the world.

Those issues will be at the heart of the rallying cries that some politicians will make as we approach the crucial October election. The first under MMP. To me the issue is clear cut. Does New Zealand have the confidence to be part of a global world economy or do we want to withdraw to fortress New Zealand? Do we seek our inspiration and energy for the future from our national success over the last few years or do we seek it from the 1930s depression? To me the suggestion that New Zealand should withdraw from world engagement is as silly as to suggest that our Silver Fern netballers or the All Blacks should withdraw from world competition.

A symbol of the extent to which New Zealand industry is linked to the global economy is Comalco. Here is a plant that uses renewable energy from New Zealand and raw materials from Australia and other parts of the world to supply markets across the globe. In the process, it generates jobs for hundreds of New Zealanders and makes a very substantial contribution to the economy of Invercargill, Southland and New Zealand. At times up to 840 workers have been engaged on the upgrade alone. A full 70 percent of them are from the Otago-Southland region. That is a huge injection to the local economy.

Repeated cost benefit studies have consistently shown Comalco's real annual rate of return to the national economy to be substantially above 10 percent. That sounds like good news to me. In the present political climate with many parties seeking a place in the political sun it was totally predictable that an attack would be made on foreign investment. The arguments are spurious. It is clearly in New Zealand's interest if investors wish to invest their savings in New Zealand, to create jobs and opportunities in New Zealand. Up to one third of working New Zealanders rely on jobs created directly or indirectly by foreign investment.

And the money stays here. Three quarters of foreign firms recently surveyed retain all their earnings in New Zealand, and on average, 97 cents in every dollar of sales revenue remains in New Zealand. The reality is this: New Zealand has been the winner from Comalco's involvement for a quarter of a century. With this upgrade, that will keep on happening. A smelter that started life 25 years ago as a joint venture between Comalco and two major Japanese companies is now 79 percent owned by Comalco New Zealand Limited and 21 percent owned by Sumitomo Chemical, of Japan.

Raw materials come not just from Australia but from countries including the United States, Korea and Japan. About 90 percent of the product is exported, to markets in Japan, Korea, Taiwan, Indonesia, Thailand and other countries. This truly is a global operation. Not a lot of New Zealanders know the smelter's reputation for high purity aluminium and the fact that in recent years it has been the single largest supplier of high purity aluminium to Japan's electronics industry. Nor do a lot of New Zealanders understand that the smelter represented a new venture for Japan just as it was a milestone in the development of our own infrastructure.

It was the first significant offshore development by the Japanese aluminium industry. And at the time it was second only to petroleum investments in the Middle East as an offshore development by Japanese interests. The opening of a smelter here was a true sea change for the world aluminium industry. Until then, production had been centred in the big northern hemisphere economies that were the main users of aluminium. This was the world's first true export smelter, with no protection in the domestic market and selling more than 90 percent of its production to markets that were huge distances away. For New Zealand, the plant allowed us to develop the Manapouri power scheme, which would have been impossible without the guarantee of a major baseload consumer nearby.

In recent years the smelter has been a successful illustration of other trends in the New Zealand economy. Since 1991 all of the workforce have been on individual contracts. Before many enterprises this size, the workers and management here recognised the potential of the Employment Contracts Act to secure better working arrangements. People see that the smelter is working more efficiently and that staff have new certainty about their jobs. The team approach you have put in place since the introduction of individual contracts is a far more effective and satisfying way of getting your job done.

Today you are marking a further step towards a strong and confident future for everyone concerned at the smelter. The new investment you have made, of some $465 million, reflects how important the smelter is to Southland and to the New Zealand economy. I congratulate you on the successful renegotiation of your power agreements, essentially bringing forward decisions that were pending for the near future. Until those agreements were sorted out, there was bound to be uncertainty and wariness among investors about spending a lot of money.

Your foresight in tackling those issues has provided greater certainty for the smelter and for electricity generators. It is worth noting that a huge component of your investment in this upgrade has not gone merely on increased production capacity. You have invested millions on environmental safeguards, on increasing operational productivity and on improving occupational health and safety services. This is a comprehensive investment in being a good corporate citizen and is welcomed. I also congratulate Comalco on their support for the Kakapo Recovery Project.

Your involvement for the past six years reflects a philosophy of involvement in community projects, particularly in education and the environment. There are many other measures of your involvement in the New Zealand economy. I've already mention the hundreds of jobs you have created. Within the $465 million you are investing on the upgrade, some $325 million is being spent around New Zealand on construction goods and services. These are real, unarguable facts. They are the sort of things that we, as a nation, must concentrate on in the next few months. That is concentrate on the real facts not on myths and innuendo. You are part of the story of the last difficult but highly­achieving decade.

It is a story which has seen over 200,000 new jobs created in the last four years. It is a story which has seen New Zealand establish sustainable levels of growth which will deliver a standard of living that is 50 percent higher than today's in just 15 years. What we now have in New Zealand is a sustainable economy which, with sound, stable leadership, will provide New Zealand with high levels of personal security. Security is important to individuals, to families and communities. This large expansion project has helped to provide much higher levels of job security here in the south and in New Zealand.

I congratulate you on this upgrade, and the confidence it exhibits in the future of New Zealand. I am pleased to declare your extended facilities open. I look forward to watching future progress of this great New Zealand enterprise. Ends

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