Q+A’s Panel Discussions with Paul Holmes, Political Analyst Andrew Geddis, former Labour MP Peter Neilson and former National MP Katherine Rich

The full length video interviews and panel discussions from this morning’s Q+A can be seen on tvnz.co.nz at, http://tvnz.co.nz/q-and-a-news

PANEL DISCUSSIONS led by PAUL HOLMES


Response to GERRY BROWNLEE interview

PAUL Well, so what do our panel make of what Gerry Brownlee had to say about the electricity industry and the amount of money we pay for our power. So what do you make of that, do you get the feeling he's on top of halting the ridiculous electricity price rises – Mr Neilson.

PETER NEILSON – Former Labour MP
If I was one of those people that during this very cold winter has opened a power bill recently, you'd say, I want to know two things, one, is the power price going to come down, and secondly, am I going to have security of supply, and I doubt whether you would have been persuaded from that discussion that the government has it in hand.

ANDREW GEDDIS – Political Analyst
Well in fact to me he deliberately evaded or deliberately avoided saying I will bring prices down. The point was they will slowly increase but you know when it was put to him will prices come down he was very careful to make sure he didn’t make that promise.

KATHERINE RICH – Former National MP
Well I don’t think you're ever going to get a Minister who's ever going to go on camera and be able to deliver that message, but I think he performed very well, he's clearly on top of his portfolio, he campaigned on ensuring security of supply, and he's hinted at a few things that will do that today. The issue of the rebate to customers, I think that’s something that voters will be able to understand, but it may just be a cunning way of making sure that energy companies never come to you with a problem.

PAUL As a Minister.

PETER But the ten dollars doesn’t work does it, because basically what it says is the power prices go up when we have a shortage of hydro capacity, or diesel prices are very high. At that point you want people to use less not more, and at that point the Minister's saying we'll give you a cut in the price of electricity.

PAUL Can I just play what Gerry Brownlee said on this matter of the ten dollars rebate.

Gerry Brownlee: 'I'm pretty enamoured of the idea that if in fact those who supply the industry, come along to a Minister of Energy and say look it's really bad we're going to have to have a public conservation campaign, then we have a mandatory arrangement whereby consumers are paid out for the power saving. So you might start at something like ten dollars a week, direct rebate to consumers and so as the demand falls, the payment rises.'

PAUL Now I have a problem getting my head around that because if there's a power shortage, and the power generator is going to be punished ten dollars a week off my account, then I'm gonna use more power, which will increase the shortage of electricity.

ANDREW Listening to him again there, I'm not sure that’s what he's saying. I think he's saying if you reduce your power usage you'll be paid out for the reduction, so if you were using X amount one month and you use X minus something the month you'll be paid for the fact that you’ve saved on that month. That was my understanding.

PETER When it first came out it sounded as though he was giving the money, effectively asking the company to pay, what he's saying there in terms of the replay it looks as though it's going to be a reduction to the customer. That may have some impact. Effectively again the same issue comes back to, at that point when the prices spike, it's when we have a shortage of generation capacity. You want people to use less at that point. He saying he's going to reward them, which of course everybody's gotta have a smart meter in order to be able to respond to that, because how's the power company going to know you're actually reducing less, until your power bill gets checked maybe in three or four five months.

PAUL I've got to say to you, you said this is a Minister on top of his portfolio. I didn’t really get the impression this was a person motivated by getting power prices down or containing power prices really.

KATHERINE Well I think he's hinted at a number of things, I mean National campaigned on security of supply, environmental issues, and exploration of oil and gas, and he's hinted at changes to the Electricity Commission which many would ask what has it done to enhance the process. He's talked about – or he's hinted at reform in that area, we'll see tomorrow if there are any announcements relating to that. Bringing the Electricity Commission back to being just a regulator and not having overlapping roles which causes problems.

PETER But a few months ago the Minister was using the 4.3 billion dollar figure as if not without ever accepting it, and now he comes up and says have you got something that’s gonna take away the 4.3 billion – oh not really I'm doing some work on it.

PAUL Also the number's contestable.

KATHERINE I think he was being diplomatic about the 4.3 billion, he said it's a debate, but actually anybody who has looked at that figure knows that you can drive a bus through it.

PAUL How debilitating for New Zealand industry do you think our power prices are? How debilitating for the country?

ANDREW Well Gerry Brownlee didn’t seem to indicate it was the power price that was debilitating for industry, it was this question of security of supply, and the fear that you know you’ve set up an industry here and then next year there may not be enough power to run your machines, which is the uncertainty that business hates. So I think price is the problem for the consumer, supply seems to be more of a problem for industry.

PAUL Why haven't politicians really been able to get the power prices under control?

PETER Well partly the problem of course is that our system is basically hydro based, that’s where our core power goes. No politician can control the weather, no matter what they believe they could do, the reality if there's a shortage of water prices go up, that happens in any other market, it's not a failure of the market, it's just that politicians haven't got out there and said this is the reality of the market.

PAUL Do we have an over reliance on water?

PETER Well you could argue that what can politicians do in the long term, they probably could create more storage so there is more water available, less uncertainty about different years, you could talk about having more players in the industry, but you know in the UK they’ve only got one more player in the electricity market than we have here, so you would expect that there are economies of scale, but pretty hard to reproduce by having an increased number of players.

PAUL What's this newspaper article you’ve got, because people are mad about it aren’t they, people are mad about the power prices.

ANDREW Well this is the politics of it, this is Otago Daily Times that I was reading on aeroplane as I came up yesterday. Mad as Hell over Power Costs, the Central Otago Mayor complaining that his constituents who live right next to the dams on the Clutha and so on are having to pay what he regards as exorbitant prices for power, and I mean that’s the politics that’s really lying behind this, and people are starting to get very very angry about just the increase in cost that’s taking place.

PAUL It's so confusing though power isn't it? It doesn’t really have the capacity to really damage or upset a government does it?

KATHERINE Well there's no politics in power because I mean most people don’t want to and can't understand the complexity of transmission grids and other things, but they look at whether or not they can switch on a light, and the price of their bill, and that’s what I think any Minister has to react to.

PAUL Now another thing that I found most interesting that Gerry Brownlee was talking about was increasing the competitiveness of the structure by forcing a shorter time within which one can change power supplies. For example he said this.

Gerry Brownlee: 'On average 23 days, and it's too long, I agree with you we need to do something about that.

Guyon: What will you do about that?

Gerry: Well I would like to see it reduced depending on all the technicalities of how it happens and I'm not the engineer that works this out, but I think two or three days should be the norm that is aimed for.'

PAUL Two or three days of course it sexy and it makes it possible for one power supplier to do a great new deal, and for people to switch immediately.

PETER It's worthwhile having, but I think the reality, that’s the retail market. The underlying driver of what the electricity price will be, will be what's the availability of the fuel source. No hydro power, dams are not full, the price is going to increase.

PAUL Three of those power companies, is it three – three of them are SOEs aren’t they, of the power generators. So why not force them to use that social obligation thing that rests within the SOE legislation? Bring the prices down a bit, because then the suppliers will rip them.

PETER No doubt under the law that could be done, but of course what would happen is, if you hold prices down at the very point when you have a water shortage, demand is likely to increase, therefore you're then going to have a security of supply problem because you won't be able to meet the requirements. So effectively it sounds good but in the short term it doesn’t actually work on the problem at the point where it occurs.

KATHERINE Well under the SOE Act a business does have to act in a socially responsible manner, but they're more likely to do that for those customers who are poorer or can't pay their bills, and I mean they are able to do it, it's just if there's a will to do that.

ANDREW The other problem is really to build more supply costs a lot of money, and to build a new dam, to build a wind farm, I mean hundreds of millions of dollars investment and that’s gotta come from somewhere.

KATHERINE And this is where the RMA becomes a bit problem.

*****

Response to DR LOCKWOOD SMITH interview

PAUL Well he was very convincing Dr Smith, I felt like capitulating a couple of point there, giving it all away.

KATHERINE Well that’s right, I agreed with everything he said, it's a very hard one to argue cos people don’t want to hear about the sacrifices and the time away from family etc, etc. I mean this isn't a scandal like in Britain, and we haven't had MPs spending money on porn and moats and pet food.

PAUL Yes you haven't had to clean your moat.

KATHERINE This is an issue about following rules, and MPs have followed rules, and they’re being berated for it.

ANDREW There's a couple of points I think just need cleared up. A lot of the things you're talking about as being income for MPs actually isn't income, I mean the $14,000 expense allowance isn't money that they benefit from, it's to pay for things they do in the course of their job.

PAUL Well that’s a bit loose though, $14,000 a year before you have to produce one receipt, you can say I had five dinners the other night and you didn’t have any at all.

PETER But Paul I think you come back to the same point. Effectively the reason why we have these allowances so elaborate is simply because politicians have not been prepared to defend higher salaries, and the difference between the Minister of Finance's own salary $200,000 plus between him and his Chief Executive. The reality is we do have to lift the salaries, take out the personal expenditures, make those items that you pay for yourself, and make sure there's transparency in everything else. The problem with this is not they have broken the rules, in most cases they're all within the rules, the public don’t accept the rules though.

PAUL No the public don’t accept the rules, and the public have a great deal of trouble with somebody owing a flat in Wellington putting a tenant in it, getting revenue from that and then going and renting somewhere else in Wellington and claiming the accommodation subsidy. See that’s stretching it for most people.

KATHERINE But let's face it there's a chunk of the public that would like MPs to be unpaid, flagellants living in a shoe box in the middle of the road, and they’ve got to come to Wellington and live somewhere.

PETER But the reason why this is so damaging is basically the whiff of hypocrisy you know. A couple of weeks ago Paula Bennett, I think it's fair the full story be told. When you're talking about beneficiaries that’s one rule, a few weeks later you're saying oh no no we're within the rules. They could say they were within the rules as well.

PAUL It doesn’t work, that’s quite right, and some MPs are getting the same accommodation allowance as some people are earning.

PETER That’s right.

KATHERINE Lockwood Smith's introduced transparency, so the information's out there.

PAUL Lockwood Smith spoke very passionately didn’t he at one point about you know he'd been in Parliament what 20, 25 years and he was on the same salary as the person who's just been elected a week ago, and therefore perhaps we should have a little bit of private international travel. People can see the fairness of that, but then again many will not.

PETER But that’s an argument about lifting the salary is to recognise longer service, and basically saying if you want to do private travel do private travel, the question mark is basically what is the appropriate level of salaries, and effectively in New Zealand politicians have always said no I can't defend that publicly I won't do it, and therefore have wanted to be compensated by allowances.

ANDREW There's also problems though with – I mean take the Chris Carter example, the travel he did do, I mean some of that will be personal but a lot of it also will be work.

PAUL Wasn’t there a sustainability conference in Madrid?

ANDREW If they have a board – some sort of parliamentary board that okays certain amounts of travel and doesn’t others it's going to be very difficult to work out exactly what is work related and what isn't.

PETER You got to expect that he has to do some overseas travel, it just goes with the job.

PAUL Oh no, it was fine, but I think he made the very good point that really the whips may have to start being a big tougher

ANDREW Sure.

PAUL But then again he oversees them and maybe he's gonna have to be tougher. Should there be a wider inquiry, not just John Key's inquiry into the accommodation subsidy, but a wider inquiry, that the public can buy into and accept and understand.

PETER It's not just about allowances, I think that any inquiry has to address the issue about how do we give politicians adequate salaries to make sure they can be rewarded. You know the only other country that does something very dissimilar is Singapore, there they effectively pay their Cabinet Ministers the average of the top five accountants, lawyers, doctors, in the country. Now those are massive salaries, it's not popular, but it's a transparent formula by which it's set.

PAUL Why is the Deputy Prime Minister and you're in the private sector now so you see the world, what do you see differently in the private sector?

KATHERINE Well I see that some ministers are earning less than many of the Chief Executives they oversee. I don’t think in terms of raising salaries the public's ever going to agree to that, but I think in terms of the debate about accommodation, I mean I feel ashamed that the Deputy Prime Minister of our country is now having to subsidise his own accommodation, he could live in Vogel House, and I think that in terms of – take if it was America for example, I mean Joe Bidon wouldn’t get a Georgetown bedsit for a thousand dollars New Zealand.

PETER Those salaries have gotta recognise you’ve gotta maintain two households.

PAUL Well yes but hang on, we want restraint at the moment don’t we, gosh we're in a recession.

KATHERINE And that’s why MPs have said they don’t want their salaries to go up, just as the public servants have been told.

PETER Paul restraint, you know if Bill English had taken as normally entitled a ministerial house, the taxpayers would be paying a lot more for that than their current accommodation, they don’t understand it though.

PAUL No. Quick final word from you, the politics from this is it going to damage the government?

ANDREW Well the thing is there's enough dirt to go round everyone here, so the government ultimately has to make decisions on it, but everyone's going to get tarred.

PAUL Well that’s right, and there was many amongst the Labour camp also who wouldn’t appear this morning. So what are we anticipating this coming week – Mr Neilson.

PETER I think probably the big announcement for long term issues is probably going to be where the government's going to go in terms of the climate change commitment it takes to Bonn. Prime Minister's indicated a hint of it, round about 15%, I suspect he's going to be the subject of an incredible amount of lobbying and I suspect we'll probably get two numbers, one lower than that, that’s unilateral and one that’s a bit higher.

PAUL And of course he's going to be very taxed on top of everything this week by a meeting perhaps with Keisha Castle-Hughes. Andrew coming up this week.

ANDREW The decision on whether to send the SAS back to Afghanistan, I think is going to be quite a big one. Whether we are going to get embroiled in something that looks like it's going to last for quite a long time and whether eventually we might see body bags coming back.

PAUL Yes the signs really are that the government's doing its best not to send the SAS wouldn’t you say?

ANDREW I think the other way, I think they're probably likely to say yes.

KATHERINE Two things, I think there'll be a discussion about what Gerry has talked about today in terms of electricity, and of course the Labour Party's having its magical mystery bus tour to Wanganui. What the people of Wanganui have done to deserve this I don’t know, but it'll be interesting to see the clips from that.

PAUL Peter Neilson, Andrew Geddis, Katherine Rich, thank you all very much for coming on.

ENDS

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