Muldoon decision ‘a SIB loss’

Press, 18 June 1986, Page 8

Muldoon decision ‘a SIB loss’

PA Wellington The Prime Minister, Mr Lange, has told Parliament the Government had to accept a $1 billion loss on NZ Steel because of a "snap decision” by a former Prime Minister. Speaking during an imprest supply debate yesterday, Mr Lange said the New Zealand Steel expansion project was authorised after a decision by Sir Robert Muldoon. Now New Zealand had to take a $1 billion loss. Mr Lange said a delegation representing a concern proposing to build the Aramoana aluminium smelter outside Dunedin was sent to Melbourne.

“Its costings were hopeless and not even that National Government could pursuade it to throw good money after bad,” Mr Lange said. When the delegation reported the smelter could not be built at Aramoana, Sir Robert said: “Oh well,

it is the NZ Steel expansion then.” That one statement by Sir Robert caused New Zealand to “blow” $1 billion. “We blew $1 billion knowing that it would always be the prospect that we would have to write it off,” Mr Lange said. The $1 billion was written off at New Zealand Steel and more than $3OO million would be lost at the Motunui synthetic fuel plant this year. Opening the debate, the Leader of the Opposition, Mr Bolger, attacked the Government’s economic performance, saying it failed “in every aspect of economic management.” Inflation, interest rates, economic growth, employment private sector investment, balance of trade and overseas debt had all worsened since Labour came to power.

“There is no area where it can claim success measured by its own

criteria of its own forecasts,” he said. Mr Bolger quoted comments by the Minister of Finance, Mr Douglas, in August, 1984, when the latter said: “There is no reason why we need to move into double-digit inflation.” However, inflation rose from 4.7 per cent at election time to 16.6 per cent and was now “resting temporarily” at 13 per cent.