Q+A: NZers are paying too much for power says Stuart Nash

New Zealanders are paying too much for power says Stuart Nash.

Labour’s Energy spokesperson Stuart Nash told TV One’s Q+A programme “let’s come back to the original problem that we were trying to solve, and that is we believe that New Zealanders are paying too much for their power.”

He also went on record to say that he was not ditching the Labour Party’s power policy but was doing a “very very in-depth review” of it instead.

“What I’ll do is I’ll come up with a series of recommendations. But we start with the fundamental premise that consumers are paying too much for their power, and then we work down from that and say, ‘Okay, what is the best policy to address the fundamental issue we’ve got?’”

Mr Nash wants to ensure that Labour’s future power policy looks at the elements of competition within both the generation market and the retail market.

“I think any policy needs to answer, is this – is the level of competition sufficient enough to deliver outcomes that are going to benefit all New Zealanders?”

Episode 17

STUART NASH

Interviewed by CORIN DANN

CORIN Before I come to energy, I might just ask you for your reaction to that interview with Anne Tolley. Do you think that is a revolutionary change – what she’s talking about?

STUART So, we want an overseas company making profit out of our most vulnerable people? To me, that interview showed a minister who has completely lost control of her ministry. She admitted on camera she had no idea about the stats or the outcomes that were happening in her ministry. If I was her CEO, I’d be sitting back and going, ‘Goodness me, what’s happening here?’ The minister obviously hasn’t communicated what she requires from her ministry.

CORIN But she’s coming up with new ideas, and that’s the criticism of Labour, isn’t it? That you haven’t got ideas, and here is a government that is actually producing some new ways to try and solve very difficult problems.

STUART Oh, what she has said is she has completely lost faith in the public service, therefore she wants to go private. Now, this is the difference between Labour and National – National believes you can leave things up to the market, and the government stands back, and the market will deliver the best results; Labour believes that there are certain sectors of our society and our economy where the government actually has a really important role to play. And that is the National Party ideology coming to the fore, and it’s about money, and I think this sort of stuff should be about people, really.

CORIN All right, let’s talk about your power policy, because that was a big policy before the last election. You’ve had a look at this. This would effectively put on a new bureaucracy, regulate the power industry, bring down people’s power prices.

STUART Mm-hm.

CORIN Sounds pretty good. Why are you ditching it?

STUART We’re not ditching it. What we’re doing at the moment is we’re doing a complete review of all the policies we took into the 2014 election.

CORIN You said on record that you’re keen to get rid of it.

STUART What I’ve said on record is that I’m doing a very very in-depth review of the power policy in my portfolio area, and what I’ll do is I’ll come up with a series of recommendations. But we start with the fundamental premise that consumers are paying too much for their power, and then we work down from that and say, ‘Okay, what is the best policy to address the fundamental issue we’ve got?’ And we’ve seen a lot of this, and there’s something called fuel poverty, and what fuel poverty is is the inability for people to pay for their power bill in the middle of winter. And we’ve seen two instances just very recently of this, where people have died in cold, damp state houses. It’s unacceptable.

CORIN How would your policy, though, stop the likes of an Emma-Lita Bourne dying?

STUART Well, that’s a very direct one, but what we want to do is drop the price of power. If you drop the price of power, then it goes without saying that people have the ability to afford power. What we’ve got at the moment is about 10,000 or 12,000 people every year who are disconnected because they can’t- When I say disconnect , their power’s disconnected cos they cannot afford power.

CORIN And how much would your new policy actually reduce the power bill for the average family across a year?

STUART It’s between about $300 and $500 a year.

CORIN A year?

STUART A year.

CORIN So not a huge amount.

STUART Well, $300 to $500 for a lot of people is actually-

CORIN For an entire year.

STUART But it’s a lot of money for a lot of people.

CORIN And how much would the new bureaucracy have cost that you have to put in to do that change?

STUART Well, it’s not about the cost of the bureaucracy; it’s about delivering results for consumers who absolutely need it. Let’s come back to the original problem that we were trying to solve, and that is we believe that New Zealanders are paying too much for their power. So you start with that premise, and you say, ‘Okay, what do we need to do to get that price down?’ And it’s not only an economic argument; it’s a social argument as well, because if people can’t afford power for basically the necessities of life-

CORIN No, no one disagrees with that. I just need to know – so is the policy going to be different? What’s happening to it?

STUART I’ll tell you what – as soon as we release the policy code, I’ll come on here-

CORIN So it’s not dead, then? You’re saying it’s not dead?

STUART What Andrew has said- And this isn’t just glib political speak. What Andrew has said is we’re going through every policy line by line to determine what we’re going to take into the 2017 election. And that process is underway at the moment.

CORIN But I know there are people in Labour who felt that policy did result in what we call capital flight, when businesses pulled money out; they were worried; they got nervous. It damaged you, didn’t it, in terms of the relationship you had with business?

STUART If New Zealand power was the thing that lost us the election, then you have an insight that I don’t have, mate. Look, there are a number of policies that Labour-

CORIN Did it hurt you, though, with business? Which you’re now trying to- you know, having meetings with and trying to get closer with.

STUART Mm. What we’re trying to do with business now is understand the variables that drive an economy. What Labour absolutely understands is that we need a strong economy if we’re going to deliver the sorts of social programmes that we believe are necessary.

CORIN But this was a market intervention.

STUART It was.

CORIN That’s what the business community didn’t like.

STUART Absolutely, it was. And what Labour has said, and I stand by this 100% - if we see monopolistic power going on, or if we see any sort of behaviour going on that is impacting on good, hard-working Kiwis, then we will intervene, and that is the difference between Labour and National. National stands back and says, ‘Let the market control this. Don’t worry about the social outcomes.’

CORIN Isn’t there competition in our power sector?

STUART Well, this is the thing. There are five gentailers at the moment. When I say gentailers, they are generators and retailers. They control about 91% of the generation market; they control about 92%, 93% of the retail market. So there is an element of competition, because there are those five big ones, and there’s a whole lot of smaller ones that are slowly entering. And the question that I need to answer, and I think any policy needs to answer, is this – is the level of competition sufficient enough to deliver outcomes that are going to benefit all New Zealanders? And that is, for example, what is happening with power prices? Or if you want to switch, or if I want to switch, can we actually switch to the point-? Or can demand be created to the point where power prices drop due to market interventions, or does the government need to intervene?

CORIN All right. Now, you have pushed some other, slightly more interesting ideas around solar. Can you tell us about that?

STUART Well, one of the things that I think this government has done really poorly is manage our global brand. Now, our global brand is clean, green and 100% pure. The Ministry of Economic Development valued that in 2005 at around about $20 billion a year, and about 80% of companies that head offshore admit that they leverage of this brand. So we’ve got to start living this brand. And at the moment, we don’t. I mean, I think it’s absolutely ridiculous that Crown Car One is this huge, big BMW. It should be an electric car. We need to start living our brand, because if we don’t, and that brand is devalued, then we become just another economy hawking commodities into a shrinking global market. So I’m not into subsidies, but I do think that what governments can do…

CORIN …is set an example.

STUART …is set an example but also create markets, create market outcomes by the use of buying power. Now, let me give you an example. There are 18,000 government cars in the government fleet, okay? Last year there were about 250 electric cars registered in New Zealand – nothing, might as well be nothing. Now, I would love to see a move where in two to three years’ time, or 2017, when we’re in, we go to an opt-out clause, so every government agency has to buy-

CORIN …has to be electric.

STUART Unless there’s a really good example, or reason, for them not to be.

CORIN Okay.

STUART So 18,000 cars. Let’s say they’re on a one by three-year lease. It’s a standard sort of commercial lease. So what you’re doing after three years is you’re creating a market of around about 5000 second-hand electric cars. And let’s say they’ve got a, you know, a life of, say, five years after that. So you’ve automatically created 25,000 electric cars in the market. That creates an economy of scale which allows the infrastructure to be put in place without any sort of subsidy, but with the government leading the way.

CORIN So this is interesting. This is a new idea, and you’re being criticised by the likes of Tau up there, who’s saying, you know, ‘Labour hasn’t got any new ideas.’ I wonder too – you’ve been linked with this new Labour think-tank Progress, which some argue is a right-wing faction of the Labour Party. Do you expect to see more of these types of ideas coming out of that?

STUART I can tell you, there’s a whole lot of ideas coming out of the Labour caucus, let alone Progressive.

CORIN A Labour caucus which, I understand, wasn’t particularly pleased with the idea of this think tank.

STUART Well, how the think tank was pitched to me was this is going to be a group of very engaged Labour supporters who are going to set up and independent think tank to bring people from overseas to come in just to basically facilitate debate.

CORIN And what’s your role in it?

STUART Oh, I’m just an MP. I have no formal role.

CORIN But you support the idea?

STUART Of an independent think tank coming up with a whole lot of great ideas, basically creating debate on the centre-left – I think it’s a fantastic idea.

CORIN What do you say to those who argue this is more signs of factionalism within Labour, that this represents a right-wing hub within the party and that there will be a left-wing hub that won’t like it? I mean, Andrew Little wasn’t particularly complimentary at caucus last Tuesday.

STUART Were you at caucus, mate?

CORIN Well, outside caucus he made a joke about it being- you know, whether it would think and whether it would tank.

STUART Well, look, it’s not up to me to determine if it’s going to be successful or not; it’s up to the members who are organising this to determine if they’re going to be successful. How politics works is we get advice from all over the place, and it’s up to the political party and the policy people and the portfolio people to determine what they do with that advice. Now, if Progress comes out with a whole lot of great policies that we think will drive the sort of outcomes we want, then we will absolutely look at adopting them. If they come up with a whole lot of policies that we think don’t fit into the way we want to do things, then we won’t. It’s as simple as that.

CORIN What about if it starts backing candidates and, you know, gets involved in that sense?

STUART Well, the way it’s been pitched to me is it doesn’t want to get involved in the internal mechanisms of the Labour Party. So we’ve got a whole lot of processes for that to go through, and in fact we’re on the game already. The party’s going through a big review; we all know that. And out of that I think you’ll find a stronger, more engaged Labour Party.

CORIN On that review, I mean, the big thing that came out of it was the money – the lack of money that the Labour Party has. You did manage to raise money. Is that something you can use to help the party?

STUART Absolutely.

CORIN How do you do it? How does Labour go out and raise money? Is it a matter of just actually convincing business that you’re going to win and so they have to back you?

STUART Well, you know, this sounds quite simple. How I raise money is I ask people. I said, you know, ‘This is what I’m doing in Napier; this is what I want to achieve. Can I have some money?’

CORIN So why isn’t the rest of the party doing that?

STUART Well, as a party we’re about to do this. But what we need to do is- There are two arguments here. First of all we need to prove that we’re a viable opposition and we create a viable alternative so that people can go, ‘The Nats – mm; labour – I see; they’re ready for the government.’ And I think we’re beginning to- we’re down that track. Still two and a half years till the next election. What we’ve also got to do is have a functioning democracy. I think it makes a whole lot of people uncomfortable, no matter where they sit on the political spectrum, to say we’ve got one absolutely dominant party and one party on the left which is a little disengaged, which was what happened in the last election. Our focus now is to start engaging again, and we’re doing that right across the spectrum. We had a function in parliament that I think you know about – you might have even been there, Corin – where we had a whole lot of businesspeople-

CORIN Briefly.

STUART We are engaging with all sections of society, as we need to do.

CORIN Stuart Nash, thank you very much for your time. We have to leave it there. Thanks a lot.

STUART Thanks, Corin. Much appreciated.

ENDS

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