Press Release – Waiareka Valley Preservation Society 29 May 2007

Holcim’s economic arguments do not stack up

Today Rodney Jones, Spokesman of the Waiareka Valley Preservation Society, commented:

Holcim’s economic arguments on the benefits of the proposal can be reduced to three key points, jobs, jobs and jobs. Such a simple argument may be appropriate for the developing world – where Holcim normally operates – but not for New Zealand, and certainly not for North Otago.

Holcim’s application is notable for the weak economic analysis contained in it. Given the clear adverse effects associated with the proposed cement plant, Holcim is beholden to produce a clear cost-benefit analysis. This they have not done. The economic report contained in the Holcim application merely lists out a few benefits, many of them highly speculative.

Today the Waiareka Valley Preservation Society released an economic report “Holcim and the Economic Outlook of the Waitaki District”, as well as an information sheet that will be provided to the public over the next few days.

This economic assessment shows that Holcim’s economic arguments are based on an artificially bleak assessment of the District’s economic prospects, with the available data being manipulated to reflect the District’s prospects in the worst possible light.

A brief examination of the economic data tells us that Holcim’s economic arguments are profoundly flawed.

Over the last 10 years the Waitaki economy has been performing well – in fact, better than the national average. A recent report prepared by BERL for the Waitaki Development Board shows that, that on a three-year average basis, over the last decade per capita GDP and productivity has been growing faster in the Waitaki District than the New Zealand average. The Waitaki District has been closing the gap.

Ultimately economic well-being is determined by the ability to generate persistent per capita income and productivity growth. On this measure, the Waitaki District is already a thriving community, with no need for the heavy industrial development that Holcim is proposing.

The Holcim cement plant will not provide the wealth accumulation that New Zealand now needs. Holcim’s recently released Annual Review shows that in 2006 Holcim retained just NZ$6m in the New Zealand business, while NZ$26m was returned to Switzerland. It is this failure to retain profits in New Zealand that inhibits our ability to grow – not a lack of jobs

One of the concerns in North Otago is a perceived lack of opportunity for young people. However, Holcim’s proposal will do not anything to address this. Holcim’s Annual Review shows that just 9% of Holcim New Zealand’s staff are aged between 15-29 years, well down on the 30% New Zealand average.

Working in the cement industry is clearly not an attractive option for New Zealand young people – and nor should it be. It is just fanciful to believe that having a cement plant will attract younger people to Oamaru.

Ultimately the risk for the Waitaki District is that the ‘adverse effects’ – or negative externalities - associated with the Holcim cement plant will more than offset any meagre gains from the cement plant.

It is inevitable that with so many adverse effects evident, there will be some unanticipated negative effects. In particular, we need to worry about what economists call ‘fat-tail risk’, that there is a small but significant risk of a very bad outcome – particularly with regard to heavy metal emissions.

It is clear that once everything is weighed up, Weston, the Waiareka Valley, and the Waitaki District stand to lose more from the Holcim cement plant than they will gain.

ends

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