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Peters: An Energy Sector That Once Again Serves All NZers

Rt Hon Winston Peters
New Zealand First Leader
27 May 2014

Dunedin Public Meeting
Tuesday 27 May, 1pm
South Dunedin Community Hall, King Edward St, South Dunedin
ENERGY POLICY – AN ENERGY SECTOR THAT ONCE AGAIN SERVES ALL NEW ZEALANDERS

Thank you for the opportunity to speak to you today. It is always a pleasure to be visiting the city of Dunedin, with the best rugby stadium in Australasia, with the best game of this year’s Super 15 rugby played at the stadium last Saturday night.

The Highlanders, who are playing so well, deserved to get that final try.

Come to think of it, if they hadn’t tried the miss-out pass, and passed it along their back line, the winger would have been in with plenty to spare.

Moral of the story, when you’ve got players, use them!

On 15 May we heard the sixth Budget from this National Government.

The Budget is important because it shows us where a government is taking the country – and what it is choosing not to do.

What was starkly revealed by Bill English’s sixth budget is that National does not have the policies to lead New Zealand back to its rightful place as an economic world leader.

That was what we were, for a long time, and we could be so again but not with this policy prescription which has failed for the last three decades.

On so many issues the Budget failed to deliver – so much was just window dressing.

For Dunedin and Otago the Budget offered nothing.

For example, there was nothing about addressing a chronically overvalued exchange rate that has been undermining so much of our manufacturing and export sector.

In contrast, New Zealand First has legislation ready to go to reform the Reserve Bank to give it the broader mandate it needs to pursue a balanced economic policy that includes employment, exports and sustainable growth.

Under National, New Zealand’s manufacturing base will continue to shrink – and their inaction shows they simply do not care.

We have just had the latest of many setbacks to the Otago economy with the loss of 100 Otago timber industry jobs.

Because under National there is no regional policy - there is no plan for our important timber industry.

Major employers like Southern Cross Forest Products are now in receivership and being left to founder with all the economic damage that results.

A responsible government would leave no stone unturned to explore ways to keep them viable.
Government should be growing the forestry sector, not abandoning it.

Forestry, including sawmilling and remanufacturing is a vital industry where we have a real competitive advantage – New Zealand First’s policy is to build, not squander, that advantage.

Let us look at one of the many other areas of failure exposed in the Budget – the cost of living.

This is a glaring omission.

The Budget had nothing to offer on the rising cost of living for Kiwis struggling to make ends meet.
In Dunedin, keeping warm in winter is not a “nice to have” – it is a necessity.

Warm homes are fundamental to health and a decent standard of living.
But under National we all know that power prices only go one way; up!

The long suffering public are wondering what it will take for this National Government to admit the blindingly obvious.

The electricity and retail power sector in New Zealand has become utterly dysfunctional.

Looking for logic in the New Zealand electricity sector is like looking for unicorns!

In fact if anyone claims there is any logic to the way the New Zealand electricity sector is run they are either mad or one of those whose pay depends on the current structure.

The Chief Executive of Mighty River Power’s total remuneration in the 2013 financial year was $1.3 million. And he was not the only chief executive well above the $1 million a year prevailing benchmark for the energy sector.

They are the tip of an iceberg of management – with well over a thousand managers in the electricity industry getting over $100,000 a year.

And then of course there is the pay for those who sit on the boards.

There is now an air of complete unreality about the power sector.

As prices are constantly hiked there is a sick attempt to convince the public that this is somehow the result of a ‘market’.

As we all know, New Zealand has suffered grievously from the ‘free market’ model inflicted on New Zealand by Rogernomics and subsequent National governments.

The mantra that everything has to conform to a competitive market was allowed to permeate all aspects of the economy including the electricity sector.

Prior to this self-serving madness taking hold, New Zealand had a world class electricity system run by the state as a natural monopoly. Under this system, duplication of generation and transmission was avoided and costs minimised.

If you are going to have a monopoly, it is preferable that it be a state monopoly because at least a state monopoly can be made responsive to the taxpayers.

Today, the so called ‘electricity market’ exists only in the imagination of National Ministers - aided and abetted by the hundreds of managers and consultants who now gorge on the revenues looted from the public by way of electricity prices.

The spin and misinformation coming out of the electricity industry and Government is Kafkaesque in its absurdity.

What is patently clear is that thanks to misguided government policy, the electricity industry has become a self -serving structure that has imposed massive costs and delivered few benefits for New Zealand.

The electricity industry has turned into a gravy train of epic proportions at the expense of the public.

The government has also been helping itself to the public trough that is the electricity sector. In Parliament in March it was revealed that the government itself had extracted $610 million in dividends from Transpower alone since 2011.

This is a staggering sum and a stealth tax by any other name.

The electricity sector is now a baffling, bewildering, unfathomable mess with a myriad of quasi-monopolistic organisations and a regulatory body – the Electricity Authority - that simply rationalises and rubber stamps the status quo.

All this is perfect camouflage for justifying price hikes. Does the Electricity Authority serve any constructive use in holding down power prices? Clearly not – it should go!

In fact, New Zealand has moved from having relatively low electricity and power prices, when the system was run by the Electricity Department in the so-called bad old days, to some of the highest prices despite having the superb comparative advantage of significant hydro power as a source of sustainable generating capacity.

The electricity sector is a basic element of our infrastructure. It should exist to serve the public and underpin the economy.

Instead, thanks to National’s free market ideology it has been turned into a rapacious leach that is feasting on all New Zealanders, businesses and homes.

The chronic state of the New Zealand electricity sector demonstrates the extent to which the National Party and its mates and cronies in the business elite have disconnected from reality and are now in a conversation only with themselves.

Given the manifold failures, it is clear New Zealand has taken the wrong direction with the electricity sector.

What is an essential part of the national infrastructure has turned into a way of gouging the public. As a first and necessary step in bringing sanity and stable prices back to the electricity sector, New Zealand First will bring Meridian, Mighty River Power and Genesis back into full state ownership.

New Zealand First is committed to buying back the shares of the state owned energy companies sold by this National Government.

The power company floats were an insult to the public – selling back to two per cent of the public what generations of Kiwis had already paid for and benefited from.

Those sales were a direct attack on the investment and savings strategies of many generations and former governments that had the wisdom and sagacity to build these great assets in the first place.

Crudely these sales are an admission that there are many politicians who can’t stand to have their privatised ideology results compared unfavourably to an ideology that says the people and their governments can build to everyone’s advantage, and owned by everyone, great state assets.

When we are in a position to do so after the 2014 election, one our first acts will be to develop the detailed planning to implement this policy at the least cost.
It will not happen overnight but the current system is broken and must be fixed.

On 20 September you will have a choice.

A future of ever rising power prices, or supporting New Zealand First to end the madness and create an energy sector that, once again, serves all New Zealanders.

ENDS

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