Work on Luggate dam may be delayed — P.M.

Press, 4 November 1986, Page 3

Work on Luggate dam may be delayed — P.M.

The Government may delay the proposed hydro dam at Luggate on the upper Clutha in spite of last week’s Labour caucus resolution that the construction should start as soon as possible. The Prime Minister, Mr Lange, made it clear yesterday the future of the proposal was wide open and the Cabinet would make decisions only after careful scrutiny of the costs by one of its committees. That might cut across the caucus intention to have work at Luggate start as soon as possible to avoid dissipation of the workforce now employed on the Clyde dam after the phase-down of work on that project. After the Cabinet discussed that resolution, Mr Lange told reporters “as soon as possible” did not necessarily mean immediately after the Clyde phase-down. “I think it is important not to overstate what the caucus recommendation means ... the recommendation was to proceed as soon as possible.

“That would be consistent with what the Government’s view of it always

has been. It depends on what you consider are the parameters of possibility,” Mr Lange said.

The Prime Minister said the Cabinet hoped it was possible to arrange the Luggate project to provide continuity of jobs for the Clyde workers. However, while the argument that a workforce skilled in building dams should be maintained had a “certain attraction,” other economic factors had to be considered as well, Mr Lange said.

The dam would be built only if it had economic merits in terms of electricity generation, he said.

However, when and how the project proceeded could be adapted to meet the social objective of providing work.

“There are all sorts of variables you can use to buffer the costs and tolessen the social impacts, but in the end we have to marry two concerns,” Mr Lange said.

“There is the social concern of the workforce, their skills and the prospect of continuity when we ultimately build the dam. We have to balance that against the econo-

mics of having the dam (built) ahead of demand.” The Government had no timetable at the moment and the Cabinet committee would examine all alternatives.

For instance, Mr Lange suggested, it might be worth while to have the dam built before demand for its power existed “because the costs of having people doing nothing might actually exceed the extra costs of bringing it forward.” „ However, in such a case the Government would pick up that extra cost as an item of social welfare expenditure, he said. The new Electricity Corporation, eventually to own and run the Luggate dam, would not be required to deviate from the economic efficiency goal set for all State trading organisations. Mr Lange said the costs arising solely from arranging the project to meet “social purposes” would be funded by the taxpayer, not the electricity user. The Government has said previously that the main rundown of the workforce at Clyde is expected to start next June.