Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search


The Cost of Power

The Cost of Power

By Dr Muriel Newman, New Zealand Centre for Political Research,


Our home used to be our castle, but eight years of intrusive new laws and regulations have put paid to that.

Under the new Building Act, DIY renovations have been all but banned and registered builders will be needed for almost any building job, big or small. The Government has signalled that a mandatory Home Energy Rating Scheme - requiring home owners to get an assessment by an accredited agency of the home’s energy efficiency at the time of sale – is on the way, and a Warrant of Fitness rating for houses is being trialed.

Old fridges, ordinary light bulbs and conventional water heaters look likely to soon be restricted because the Government has decided that they make an excessive contribution to global warming. In many parts of the country indoor fireplaces have already been banned, with outdoor fires now being targeted - this time because the Government claims that the smoke from fires is killing people.

If you are planning a housing development, the Government has just released details of new legislation that will effectively confiscate your property rights under the guise of ‘affordable housing’. Instead of addressing the causes of the increasing cost of building new houses - namely the burdens, costs and delays associated with the 2004 Building Act, the 2002 Local Government Act and the Resource Management Act - Labour has opted to create new market distortions by enabling local authorities to commandeer a proportion of a new subdivision for cheap council housing.

Another dubious scheme being foreshadowed by the Prime Minister is legislation to regulate “the operation of buildings over their entire life, covering the overall carbon cost of producing, maintaining and using new buildings – the so-called ‘embodied’ energy of a building. This would be a new measure for building codes internationally. Further work is being done on how embodied energy could be calculated and how the concept could work in practice”.

This climate change ‘religion’ is now influencing policy throughout the government sector. The Prime Minister set the ball rolling in February when she announced: “My annual statement to Parliament this year is a call to action on sustainability. Complacency will not do… I believe New Zealand can aim to be the first nation to be truly sustainable… I believe we can aspire to be carbon neutral in our economy and way of life. I believe that in the years to come, the pride we take in our quest for sustainability and carbon neutrality will define our nation”. That means that the traditional driving force of good government – namely raising living standards – has been sidelined.

Nowhere is this more evident than in the crucial energy sector where serious concerns exist over the impact on households and the economy of the Government’s new Energy Strategy. These concerns escalated last week with the Government’s surprise decision to place a 10-year moratorium on new thermal energy generation in its new Climate Change Emissions Trading Bill. This week’s NZCPR Guest Commentator, energy consultant Bryan Leyland, puts it this way:

“I have been involved in the electricity and energy business in New Zealand for the last fifty years. In all that time, I have never seen anything that is potentially so disastrous for electricity supply and for the economy as the New Zealand Energy Strategy and the Emissions Trading Scheme. Its central focus is climate change and political expediency not strategy and energy”.

Bryan explains: “A rational strategy must first establish the objective. For the energy sector it is, surely, the provision of a reliable and economic supply of electricity and other forms of energy for New Zealand. The next step is to establish what the demand will be and, having done that, evaluate all the resources available to us to meet that demand. Then it needs to match the resources and the demand to give the lowest possible cost of energy with reasonable security. Having done that, we have a firmly established and rational "base case". The next step is to consider alternatives to the base case. These can include variations in demand, and the cost and availability of, for instance indigenous oil and gas. Other options such as a belief that minimizing the emissions of greenhouse gases is important can also be factored in.

“A rational strategy would give us a comprehensive review of the options and their uncertainties and their costs and benefits. On the basis of this, a long-term strategy for pursuing what is determined to be the most attractive option can be developed. If circumstances change, then it is easy to repeat the whole exercise by changing the base case or the options as necessary.

He concludes: “But what we actually got is a political document that reflects, more than anything else, the government's obsession with the idea that man-made carbon dioxide causes dangerous global warming. It also seems that the government believes that if New Zealand reduces its emissions, it will have an effect on the climate. Yet there are scientific studies which show that even if Kyoto were adopted 100%, the world would be 0.07 degrees cooler in 2050 than it otherwise would be.” (To read Bryan’s opinion piece, click www.nzcpr.com)

The Government’s energy strategy is a dangerously political document that will seriously damage the New Zealand economy and erode disposable household income.

In November business leaders and industry groups banded together to expressly warn the Government that their plan to make New Zealand the only country in the world to limit new thermal generation, would result in higher electricity costs and greater risks to security of supply, as well as having a “chilling effect” on petroleum exploration. In a letter to Ministers they stated: “We should be aspiring to catch up to better performing countries GDP growth rates and any policy that might be a barrier to that goal, such as limiting new thermal generation, should be discounted”.

Common sense tells us that countries need a broad base of electricity generation capacity in order to avoid blackouts, shortages and escalating prices during peak demand periods. The moratorium, along with the unrealistic goal of having 90 percent New Zealand’s electricity produced from renewable sources, shows just how far Labour is prepared to extend its ideological reach. But when the effects of Labour’s new Emissions Trading strategy are factored in, the situation gets worse.

A comprehensive new report by Strategic Advisers Castalia warns of the danger of exposing New Zealand’s fragile economy to the massive volatile cost burden caused by pricing carbon on the unpredictable international market: “The current policy ignores economic and market realities and provides no mechanism for managing economic and social risks”.

So why would Labour knowingly introduce policies that will dramatically increase the cost of power and drive down living standards?

In an opinion piece in the Herald “Rich has become a four letter word” John Roughan casts some light on this conundrum. He explains how, in Parliament, Michael Cullen called John Key a "Rich prick": “Rich? What sort of mind regards "rich" as a term of abuse? Next month, when politics is on holiday and Cullen is lying in the sun somewhere, he will remember that remark and wince. Not because he has suddenly ceased to resent wealth but because he realises, too late, how revealing the comment was and how typical of his party these past few weeks. Somewhere high on a mountain, Helen Clark may be seized by the same thought. It may come to her with a sudden chill that Labour has let its contemptible side suffer too much exposure for the sake of the Electoral Finance Bill.”

Not only is Labour’s scorn for anyone striving for financial independence poisonous, but its loathing for the country’s wealth creators is destructive. That means that Labour doesn’t actually care if the Energy Strategy and Emissions Trading Scheme imposes excessive costs – it will find a way to give an election year power subsidy to potential voters. And as far as business is concerned, if the resulting costs are such a burden that it forces closures or relocation offshore, tough!

The Greenhouse Policy Coalition has published the results of a survey of 41 businesses across a wide range of industry sectors which shows that the government’s proposals will put at risk 3,000 existing jobs, 700 planned jobs, and will impose additional direct energy costs of over $250 million. Further, an estimated $1.6 billion of planned new investment will not go ahead, with much of it being redirected to countries like Australia which doesn’t plan to introduce an emissions trading scheme until 2012, compared to New Zealand’s which is scheduled to start in January 2008.

All of this means that householders will face a double whammy from Helen Clark’s desire to make New Zealand a world-leading ‘sustainable’ nation. Firstly, the cost of power - and everything else - will escalate as the government forces us to rely increasingly on expensive renewable energy. And secondly, once the emissions trading scheme is underway, power prices will rise even more as we are forced to pay through the nose for the price of carbon set on an exceedingly volatile international market.

The poll this week asks whether you believe that escalating power costs is a reasonable price to pay for New Zealand becoming a world-leading sustainable nation – to vote, visit www.nzcpr.com


© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines

Supreme Court: Worksafe Decision On Whittall Pike River Prosecution Unlawful

The question in issue on the appeal was whether WorkSafe New Zealand acted to give effect to an unlawful agreement of this nature when it offered no evidence on charges against Peter William Whittall for breaches of the Health and Safety in Employment Act 1992...

The Supreme Court... has found that the decision to offer no evidence was made under an unlawful agreement to stifle prosecution. It has granted a declaration to that effect. More>>


Cullen To Chair: Tax Working Group Terms Of Reference Announced

Finance Minister Grant Robertson and Revenue Minister Stuart Nash today announced the Terms of Reference for the Tax Working Group and that the Group will be chaired by Sir Michael Cullen. More>>


Gordon Campbell: On The New Pike River Agency (And The Air Strike Wing)

Much of the sympathy the public still feels for the families of the Pike River miners has been sustained by the sense that the previous government – let alone the mining company and the processes of receivership and litigation – has never dealt honestly, or fairly, with them. More>>


Not Going Swimmingly: Contractor Cut, New Dates For Christchurch Sports Centre

“As an incoming Minister, I have been conducting a thorough review of progress on the Anchor projects and to learn of a $75 million budget blowout on this project was very disappointing..." More>>


Tertiary: Allowances, Loan Living Costs To Get Boost

“From 1 January, student allowance base rates and the maximum amount students can borrow for living costs will rise by a net $50 a week,” says Education Minister Chris Hipkins... further adjusted from 1 April 2018 in line with any increase in the CPI. More>>


Foreign Affairs: Patrick Gower Interviews Jacinda Ardern

Prime Minister Jacinda Ardern says discussions have already begun on how to bring climate change refugees into New Zealand under a Pacific seasonal employment plan... More>>


Gordon Campbell: On The Centre Right’s Love Of ‘Nanny State’

You’d almost think it was 2005 again. That was a time when the rugged individualists of the centre-right were being beset by government regulations on the nature of light-bulbs, the size of shower heads, the junk food available at school tuck shops and other such essentials... More>>




Featured InfoPages

Opening the Election