Living in the new age of corporate welfare
Leaks around the secret text of the TPPA has revealed, that the TPPA seeks to enshrine the rights of bankers and investors, above national laws that protect the welfare and rights of the people and the environment.
The weakening of social welfare provision and the dismantling of the old Welfare State goes hand in hand in tandem with the rise of Corporate Welfare and the gestation of the new Corporate State. (and all that, that implies).
The bail out of Solid Energy and the new Corporate Welfare State (a cautionary tale)
Solid Energy’s investors like those of the other large corporate failures, South Canterbury Finance $1.7 billion, AMI $1 billion have been bailed out by the taxpayer to the loss of healthcare, education, the privatisation and contracting out of state housing and other social welfare providers.
The collapse of Solid Energy is a sordid tale of how the welfare of investors is put above the welfare of workers, the taxpayer and the environment.
In the age of climate change, in relation to the collapse of Solid Energy, nowhere in the official discourse will you hear the words “Stranded Assets”. In the new age of ‘Corporate Welfare’ (of which the TPPA is a part) there is no such thing as stranded assets. In the new age of Corporate Welfare, investors get their losses covered by governments and taxpayers.
In October 2013, the government announced that Solid Energy would be bailed out to the tune of $155 million, this first bailout was followed up in September 2013, with the announcement of a second bailout amount of $103 million. The first bailout was to cover the losses of the Australian and Japanese owned banks who were investors in Solid Energy. Following after the 2013 $155 million bailout, Solid Energy began a round of savage layoffs of their workforce, laying off hundreds of coal workers.
Despite this “restructuring” and because the bail out was to cover the investors, Solid Energy was still effectively insolvent.
(The bankers did not get their total losses covered by the taxpayer and still took what they called a “haircut”. Overcome by greed and feeling they were onto a good thing, the Japanese investment Bank, Tokyo Mitsubishi, took the government to court to get the full 100% of their losses covered by the taxpayer. This case, taken through the New Zealand High Court failed, but if it could have been taken to the secret overseas tribunals envisioned under the TPPA Investor State Dispute Settlements provisions, known as ISDS, this outrageous legal action would most likely have succeeded. Under the TPPA the taxpayer would have ended up covering for much more than the $155 million bailout. And quite possibly, have to cover not just for their actual losses, but for their projected losses as well.)
The second bailout of Solid Energy for $103 million may be even more controversial than the first.
In the second bail out of Solid Energy, the bailout was earmarked to cover the cost of Solid Energy’s old coal mine site remediation.
Under their resource management consents Solid Energy have a contractual obligation to rehabilitate their old abandoned mine workings, a contractual responsibility that Solid Energy were financially unable to meet.
With Solid Energy agreeing to go into voluntary administration, (whatever that means) the question needs to be asked; Will the $103 million earmarked for mine workings rehabilitation be hoovered up by Solid Energy’s creditors, and will the environment be left with the old polluting mine sites, just as the financial debt has been left with the taxpayers?
In the first bail out, the interests of the bankers was put above the interests of the workers and the taxpayer.
In the second bail out will the interest of the banksters be put before that of the environment?
“The Government has already bailed out the miner twice, including a contribution of up to NZ$155 million in October 2013 and an agreement in September 2014 to cover Solid Energy’s obligations to remediate old mines to the value of NZ$103 million.”
“The Government will provide cover worth $103 million to Solid Energy for restoring mining land and to avoid its technical insolvency.”
Solid Energy begins round of savage layoffs:
Stranded assets are “assets that have suffered from unanticipated or premature write-downs, devaluations or conversion to liabilities”.Stranded assets can be caused by a variety of factors and are a phenomenon inherent in the ‘creative destruction‘ of economic growth, transformation and innovation, as such they pose risks to individuals and firms and may have systemic implications. Coal and otherhydrocarbon resources may have the potential to become stranded.
A high court challenge to the debt restructure by Japan based bank of Tokyo-Mitsubisi fails.
The Corporate State
“a state governed by representatives not of geographical areas but of vocational corporations of the employers and employees in each trade, profession, or industry.”
South Canterbury Bailout bill $1.7 billion
The Government says the bailout of insurer AMI could expose taxpayers to a $1 billion bill.
Finance Minister Bill English this morning announced a back-up financial support package of up to $500 million for AMI but indicated the full cost could be double that amount.
“According to Southern Response, the company set up by the Government to administer AMI’s Christchurch earthquake liabilities, the Government’s total claim exposure is now $1.934 billion after EQC contributions, up from an estimated $1.8b.”
Pat O’Dea is the Mana Movement Spokesperson for climate change issues.