Treasury advised the Government not to pay the owners of the Tiwai Point aluminium smelter to keep the business running during negotiations over power prices with Meridian Energy, documents released this afternoon show.
Early last month the Government made a one-off payment of $30 million to New Zealand Aluminium Smelters' owners to help secure a revised contract with Meridian "because of the importance of the smelter to the stability of the New Zealand electricity market" and "because it offers investors more certainty" ahead of the Government's sale of Meridian, Finance Minister Bill English said at the time.
But a year earlier Treasury advised ministers that any request for "Government assistance" from the smelters' owners "should be rejected, because it would result in a significant transfer of value from New Zealanders to Pacific Aluminium and Rio Tinto shareholders".
Details of the level of assistance suggested and the "value transfer from New Zealanders" per smelter employee were redacted from the document.
Despite Treasury's advice, the documents show Prime Minister John Key phoned the smelters' owners in March this year with offer of payments over six years as talks with Meridian stalled.