Thumbs up turning into thumbs down for Bill Birch’s energy projects

Press, 15 January 1986, Page 17

Thumbs up turning into thumbs down for Bill Birch’s energy projects

1986 is likely to be the year of the political pay-offs for the shortcomings of the “Think Big” energy-based projects. First in the queue is the former National Minister of Energy, Mr Bill Birch. OLIVER RIDDELL looks at the career of the politician known as “Mister Think Big” and the campaign now being mounted against him.

The bale-out of the New Zealand Steel project by the Labour Government is the latest in a series of body blows delivered to the public reputation of the energy-based development projects of the former National Government. Allied to the 1981 Springbok Tour, these projects helped keep the National Government in office in that year’s general election.

But National has been paying the political costs ever since. When the Labour Government announced its

intention to take over more than $lOOO million worth of debts incurred by the expansion programme of New Zealand Steel, it released details of the agreements National signed. These showed New Zealand Steel to be another poor deal. It was significant that the performance of National was defended

by Sir Robert Muldoon and the former Minister of Energy, Bill Birch, and not by their then colleague and now new leader, Jim McLay. Mr Birch is the latest scapegoat found by National. Sir Robert was ditched six months after his election loss. Since then other-targets have been National’s president, Mrs Sue Wood; National’s chief executive, Barrie Leay; and indeed Mr McLay himself for his shortcomings during 1985. Now Mr Birch is joining them. As Mr McLay and Mrs Wood seek to move National away from its former image of being regulatory to a new image of being free enterprise, so does Mr Birch become more vulnerable. He is an obvious target. William Francis Birch was born in 1934 and was a consulting surveyor at Pukekohe, south of Auckland, before his election to Parliament for Franklin in 1972, the year of Labour’s landslide victory. He made an immediate impact in Parliament, sitting next to the equally impressive James Brendon Bolger, just elected for King Country. Today they are Nos. 2 and 3 in the National Party. Their careers have inter-twined since 1972 — and

they have much in common. They are almost the same age, both hard-working, both social conserva--tives, both place? a premium on loyalty, both are articulate, and both were aggressively Muldoon men during National’s years of power. By 1975, Sir Robert had recognised Mr Birch’s qualities and appointed him Opposition Junior Whip. After National’s 1975 election landslide, Mr Birch was Government Chief Whip and did an excellent job between 1975-78 manoeuvring National’s big majority in the House so that the mavericks did not step out of line. He was a prime candidate for promotion to Cabinet after National won in 1978, and was appointed to the major portfolio of Energy — which he held until National’s election loss in 1984.

Mr Birch was a very good administrator, but he was also very partisan. He became the chief advocate for Energy instead of just being itsjjead. The energy-based development strategy grew between 1978-81, soon dubbed “Think Big,” and Mr Birch became fused in the public mind with the strategy. As “Think Big’s” importance for National grew so did the career of Mr Birch prosper. He was steadfastly loyal to Sir Robert when the three so-called. “Colonels” — Derek Quigley, Jim McLay, and Jim

Bolger — tried to restrict Sir Robert as leader in 1980.

Then political frost began to blight his flowering. Although Sir Robert’s own private nominee to replace Mr Maclntyre, Mr Birch was seen by his colleagues as being too close to Sir Robert. Mr Bolger, also close to Sir Robert, but one of the .“Colonels,” was given a better chance but in the end the deputy prime ministership was won by Mr McLay. This was a clear indication at the start of the 1984 election year that closeness to Sir Robert was not the way to future advancement. It also signposted the stampede away from Sir Robert when National lost the snap election in a landslide to Labour in mid-year, and the eventual replacement of Sir Robert by Mr McLay at the end of the year. It also indicated that involvement with “Think Big” was seen even in the National Party as a liability. Mr McLay took Mr Birch out of Energy and made him one of three, if also the co-ordinator, in Finance.

Mr Birch remained as No. 3 in National. He retains his ability to speak in the House, and is effective in procedural matters. However, he

ihas not been effective in the Finance field. ' He suffers from the reputation he gained as Minister of Energy: that he was “unapproachable,” that he would not listen to advice, and of attacking critics of what he was doing rather than listening to their criticism. He has a poor television manner because, even though a fluent and persuasive speaker, he tends to smile at inappropriate

moments and so can seem insincere when being completely sincere. These disadvantages would scarcely matter if so much of the “Think Big” strategy he masterminded were not now in tatters. Here are several major examples of this, and they are not the only ones:—

• National promised that its strategy would produce 410,000 jobs. Where are they today? They are not there, and were never going to be there. Top officials in the Labour Department were saying privately, when National was in power and chopped officials who dared to disagree with it, that they had no idea from where their political masters had dreamed up that figure.

• National promised a second aluminium smelter at Aramoana outside Dunedin. Where is it today? Dunedin wanted it, but on the figures it was never a viable proposition. Even the aluminium industry could see that, unless it was virtually given electricity, and today that industry is deep in the doldrums. The country had a narrow escape. • National promised that the big projects would benefit the

engineering industry. Yet on the biggest project, the synthetic petrol plant at Motonui, National signed contracts that allowed 93 per cent of the off-site heavy engineering work to be done off-shore. That may have saved money, but it did nothing for the industry, or for employment generally. • New Zealand Steel is a commercial loser, as plenty of people have been saying all along. It is i also in Mr Birch’s Franklin electorate, a point over which he has j suffered much personal abuse. i Now that the Labour Govern'ment has released the details of National’s (and Mr Birch’s) agreement over the Glenbrook Steel Mill, it is apparent that only the Department of Trade and Industry of the Government’s advisers supported it. The Treasury was opposed, perhaps predictably, but even Mr Birch’s own Ministry of Energy opposed it because it would have to supply the coal. Coal prices have risen, but the $35 per tonne charged for State Coal Mines output in 1981 was woefully below any reasonable assessment of what it would cost to produce coal for Glenbrook. The Glenbrook agreement was extraordinary. The taxpayers were to provide 60 per cent of the equity of the company set up to undertake the expansion, and New Zealand Steel. As the project progressed, New Zealand Steel was to take increasing responsibility for the debt. But the National Government and Mr Birch undertook to guarantee the loans used to finance 97 per cent of the expansion costs. This agreement led inevitably on to the present situation. New Zealand Steel could not finance its very high debt level, and could not pay the interest bills. The guarantee meant the Labour Government had to assume responsibility for the $ll3B million debt. In return, it has been allocated four new shares for every old share that existed, greatly diluting the value of the shares, a - I More could be said about this project, and lots about some of the others too. Increasingly, they are adding up to possible political oblivion for Mr Birch. He has defended himself and scored some points, but the equation seems increasingly to be against him. Yet Mr Birch has much to offer National. He is a very able man. He has also been Mr McLay’s appointment as chairman of National’s strategy committee, where he is doing a good job picking his way through a .philosophical minefield. National’s economic strategy paper, published just before Christmas, tried to stake a dollar each way like most political documents — but it was also a tribute to Mr Birch’s political savyy. He has many colleagues within National’s caucus who will be very angry if a scapegoat is made of him. It will not be easy for those who find him an embarrassment to push him off the cliff. Making Mr Birch the scapegoat will only deepen those National’s philosophic conflicts, even if his involvement with “Think Big” is a political liability these days.