‘Better alternatives to smelter use’

Press, 23 September 1980, Page 2

‘Better alternatives to smelter use’

A- nuclear power station near Auckland and a second platform at Maui may have to be considered by 1990 if a second aluminium smelter is built, according to a Christchurch economist. Mr Brian Easton,' a lecturer in economics at the University of Canterbury, said yesterday that the issue of nuclear power might be raised again if the smelter went ahead — in spite of a Royal Commission report which has said that a firm decision is not needed until at least 1992 to 1996. Mr Easton said that planned metal smelters could also “crowd out” a number of 'smaller projects which could create jobs quickly and improve New Zealand’s balance of payments. The smelters and power station projects would mean higher power prices for domestic consumers to provide the investment for the construction works until the smelters started paying their own way in the 19905. They would also delay work on improvements to the transport network, land development and irrigation, thus reducing farm production for processing and export, Mr Easton told the annual meeting of the Secretaries’ Association of the Electrical Supply Authorities’ Association in Christchurch. He warned that higher power prices would hit small businesses, not necessarily putting them out of business but i educing their opportunities for export development and import substitution. Domestic prices could be pushed even higher if consumers switched to natural gas where it was available. Nobody had demonstrated that the smelter projects were better than smaller alternatives, Mr Easton said. “All the available evidence points to the contrary, that in economic terms we will make large economic losses

by not proceeding with the alternatives that the smelters will crowd out,” he said. Mr Easton said he did not condemn all the big projects proposed by supporters of a “Think Big” theory of New Zealand economics in the 1980 s. Projects based on Maui gas appeared to be economically feasible, although he had doubts about the proposed ammonia-urea manufacturing plant. “B.cau.e some of the big projects they propose are economically viable, it does not follow that all the projects are viable. On the contrary, . some are clearly not, but we have committed ourselves to them through an attack of megalomania.”

Mr Easton confirmed after his speech that he was concerned particularly about the second aluminium smelter. A third potline at the existing smelter at Tiwai Point might be viable, he said. He doubted that the big projects would solve New Zealand’s unemployment problem, which could involve finding an extra 500,000 jobs in the next 10 years. These vacancies would

consist of the present ..nemployment level, which he estimated was 100,000, plus an extra 20,000 jobs a year for increases in the labour force, as well as jobs destroyed by technological and economic change. “No one has calculated whether these big projects will create enough jobs directly and indirectly. We could find ourselves in the mid-1980s with only enough projects to earn, say, foreign exchange for half the jobs v.j require,” he said. Under the heading of “Small is Beautiful”, he listed alternative projects which could collectively add up to substantial foreign exchange earners. These included food preparations, honey, horticultural products, wine, feedstuffs, deer and goat products, wool scouring and woollen products, and solid wood products.

“What we need is moderation, and greater faith in the ability of New Zealanders to seize initiatives if the economic environment is right. If we have that failh I believe New Zealand vill finish the 1980 s as a prosperous and varied social democracy,” Mr Easton said.