Urgent Debates — Electricity Industry

I have received applications from the Leader of the Opposition and the Hon Ken Shirley seeking to debate under Standing Order 376 the Government’s announced changes for the electricity industry. This is a particular case of recent occurrence, involving ministerial responsibility, and notwithstanding that the Budget debate is still under way, I consider that it does require the immediate attention of the House by way of an urgent debate. I therefore accept the application. As I received the application from the Leader of the Opposition first, I call on him to move accordingly.

Hon BILL ENGLISH (Leader of the Opposition): I move, That the House take note of a matter of urgent public importance. We have heard today some Government announcements about changes to the electricity industry. Before we debate those changes, I want to put the announcements in context. The House should not be misled to the view that these changes deal in any way with the oncoming electricity crisis. [Interruption]

I raise a point of order, Mr Speaker. The senior Government whip makes a habit of continuous interjection whenever I am on my feet. I have tolerated that for any number of speeches over recent weeks, but I am not willing to tolerate it today.

The member said he wants to be heard in silence. He will be.

💬 Hon BILL ENGLISH: I did not say that.

The member has said that he does not want that sort of interjection. There will not be any more of it. I give him that assurance. I ask the senior Government whip not to interject again during this speech

💬 Hon BILL ENGLISH: I am just making the point that I am not willing to tolerate a continuous stream of interjections.

I have stopped him from interjecting. Carry on.

💬 Hon BILL ENGLISH: The House should not be misled by this announcement that it has anything to do with this year’s winter crisis, with the supply of electricity next winter, and probably the winter after that. The reason the Government has made this announcement today is that its mishandling of the electricity crisis has affected its public image so badly that it decided it ought to come up with something to make it look as if it is doing something.

I have been particularly disappointed in the attitude of the Prime Minister. She has tried to make out that it was only in recent months that this issue has come before the Government, at all. That is simply incorrect. Since before the 1999 election the Labour Party has campaigned intensively on the issue of electricity. It was doing deals before the 1999 election, in Opposition offices, with people involved in the electricity industry. That was followed by a stack of reports and reviews, and even policy statements. A Government policy was made before the 2001 electricity crisis. A review was done of that crisis. A subsequent policy statement was made, and it was amended according to the views that were taken from the industry throughout the crisis.

Helen Clark has sat as the chair of a Cabinet that has seen dozens of reports on the electricity industry. So the timing of this announcement is nothing to do with the matter coming to the attention of the Government. It has been before the Government for over 4 years. The timing today is to give the public the misleading impression that the Government is taking some action on the current electricity crisis, and that therefore the cold showers, the brownouts, and the blackouts are someone else’s fault. Well, they are not. This Government is responsible for the current electricity crisis, and today’s announcement makes not one bit of difference to that responsibility.

It is unlikely, when we look at this announcement, that it will make any difference in the future. The announcement today makes a big play of reserve generation. I say to the Minister of Energy, who is here today, that I hope he has informed his Prime Minister that there is plenty of reserve generation around right now. All over the countryside there is reserve generation—generation not being used, generation not turned on. It has been there in previous years. It is still there now, even with these high market prices for electricity. Going out and contracting for a bit more, actually will not make much difference, because it is already there.

So I invite the Government to tell us why, if there is reserve capacity now, it is not being used; why it is that going out and contracting for more, in 2 or 3 years’ time, will make any difference at all, today. Because it will not.

Let us get the picture clear. Lake levels are still low, and dropping. There is spare generation around the countryside right now that is not being used, and we still have the major problem that has afflicted this industry in recent years, and will continue to do so, despite any announcements today. I am talking about the problem of getting sufficient baseload generation up and going, to meet the needs of a growing economy—even if that growth slows down. Perhaps that is the best chance; that it will catch up—that is, if the growth slows down. That has always been the issue.

This Government, with a combination of confused policy and endless navel-gazing over what it is going to do with electricity, and a strong dose of political correctness, has made sure there is not enough new generation coming in the market to keep up with the economy.

Let us look at this distinction between renewal and non-renewable energy. At the same time as the Government is saying that it will make consumers pay a tax for reserve generation, it is actively promoting renewable energy over non-renewal energy—renewable energy being wind and rain. These are much less reliable sources of fuel than the non-renewable energy, which is coal. I would not mind betting that the kind of generating capacity the Government is going out to contract for will almost certainly be non-renewable. Because that is the only way that the person who is providing it can guarantee it is there to turn it on, in the years when there is not enough rain or wind to meet the demand.

This is a fundamental policy confusion, and it is being perpetuated with these announcements today. The Government has a strong ideological push to favour only renewable energy. The announcement today is actually an announcement that if this worked at all, it would be about solving that problem—namely, by making sure there is sufficient non-renewable energy available to the New Zealand electricity market. How stupid can one get! Why does the Government not just ditch the ideology? Why not just ditch the political correctness of saying that because we have signed the Kyoto Protocol, we cannot burn coal? Why not let both forms of energy develop; make the rules about carbon tax, if that is what the Government wants to do; and let the market sort it out? Who is going to pay the price for this stupidity? New Zealand consumers will pay.

💬 Stephen Franks: And New Zealand business.

💬 Hon BILL ENGLISH: And New Zealand businesses, households—indeed, everybody. What we have seen today is a new tax—“Helen Clark’s energy tax”. It cannot be called anything else. That is what it is. It is a new tax. I hope that United Future will have a harder think about this tax than it had about the Budget. Helen Clark has decided to impose a tax on all electricity users in New Zealand. So all pensioners; all students; all low-income families; all families, with children, who live on benefits and therefore below the poverty line, which is something that people keep telling this Government—in fact everyone who turns on a switch—will pay an energy tax because of the stupidity of the Labour Government.

We estimate that that tax is around $200 million a year—if we multiply half a cent per unit by the number of units. If people thought the “sherry tax” was controversial, wait until pensioners work out the electricity tax! But, of course, the Government will get tricky. It will say that it is not the Government that is putting the tax on, but the Electricity Commission—they are the ones who decided about the tax!

💬 Dr Lynda Scott: Blame the officials.

💬 Hon BILL ENGLISH: It will blame the officials, just like the Prime Minister when she said the only reason we had the energy crisis is that officials were too slow with their advice. She said she was outraged by how slow the officials were. She was referring to her trusted offsiders in the Department of the Prime Minister and Cabinet, the Ministry of Economic Development, and Treasury. I bet they are becoming a bit tired of being blamed for everything—ranging from the Government’s dishonesty, to the energy crisis. In this case the responsibility for the tax falls on the Government. It is a tax; a tax on electricity. No one has really thought of it before. We have always had electricity prices that go up and down, but no Government has imposed a tax on electricity.

I cannot help thinking that the announcements today are a solution when the Government has not quite worked out what the problem is. In fact, the closer I look at it the more it looks like the Government has pulled together—[Interruption] Well, it is; it is a solution when the Government has not worked out what the problem is. If the Minister does not know, the problem is not a lack of reserve generation. There is plenty of reserve generation. It is just that it is not switched on.

💬 Pansy Wong: Like the Minister.

💬 Hon BILL ENGLISH: Like the Minister! The current is not working!

💬 Hon Paul Swain: We’re all switched on over here.

💬 Hon BILL ENGLISH: There is something shorted out, particularly with that Minister. It is a tax. There is plenty of reserve generation. I look forward to the debate the Government is going to have with the electricity industry. The reserve generation that contracts through this process will be an overhang on the market. All the time, in all the years when there is plenty of fuel, there is going to be an overhang on the market and there is going to be a very substantial argument about what price that generating capacity should be switched on at. Is it going to be when the price gets to 10c, or 12c, or 50c? The investors in future generation are going to need to believe that this Government will not use it for its political convenience.

In election year, business comes along and says: “Look, the price has gone up, over 15c. You’ve got all this generating capacity sitting there. Why don’t you just switch it on and keep the price down?”. Of course this Government will do it. Otherwise, it will be attacked for having all this electricity generation that it refuses to use, and that is keeping the price up. Of course the Government will do it. The Electricity Commission legislation will almost certainly have ultimate ministerial control over its decisions. I ask the Minister of Energy to deny that. No, he will not.

I say to investors in the electricity industry that this is a tool that Labour will use to keep electricity prices as low as its political convenience requires. New Zealand consumers will have to pay a tax right across the board to finance it. The Government will go out and say that it is a little tax. Look at the fuss the Government got over the “sherry tax”. That was meant to be a little one—$50 a year, if that is what it is; $200 million across the country. Helen Clark has agreed and confirmed her view that a tax on electricity is a good idea. She knows full well that that is putting up electricity prices for the people who she believes support her, in particular the pensioners. I invite any MP to say to the next pensioner who comes into his or her electorate office: “Oh, don’t worry, it’s only $50 a year. Don’t worry, it’s only a little bit.” They will not accept that. They feel blamed for the electricity crisis. They feel they are being made to take responsibility for the shortage of energy, and now the Government is going to make them pay with a tax.

💬 Hon Roger Sowry: The Prime Minister’s on gas.

💬 Hon BILL ENGLISH: The Prime Minister says: “Don’t worry, I’ve got gas.” I say to the Prime Minister that she should be saving gas, because we are running out of that faster than we are running out of electricity. She did not know that. She did not know that we are meant to be saving gas, as well as electricity.

The consumers will pay twice. Look how the Government structured the deal. They pay the tax every year, in case there is a dry year, and when the dry year comes they have to pay a high price for the new stand-by generation. Why is that? Why should they have to pay a high price for the stand-by generation when they have already paid for it, many times over, through the “Clark energy tax”? I invite the Minister to tell us that. It is confused policy and more spin than a hydro-powered turbine.

That was abysmal. That was absolutely hopeless. That was the most lacklustre performance I have heard, even from that member, for a very long time. I hoped for better. I hoped that we would get a bit of passion out of the Leader of the Opposition. I hoped that we would have heard something that I could have got my teeth stuck into. Is that the best the Opposition can do? Is that the best the Leader of the Opposition can do?

What did he say? Can members remember? He has only just said it. Tell me what that member said. What is the National Party position? At the end of that 15 minutes, what was National’s clear line? Did the Leader of the Opposition just pass himself in the corridor? If so, what did he say? That is what I want to know. Did he say hello to himself as he passed himself in the corridors of power? Did the Leader of the Opposition say “Hi”?

What did characterise that remarkable lacklustre contribution from that remarkable lacklustre Leader of the Opposition is this. It was a straight parade of prejudice. We saw it all. We saw the National Party decide that renewables are bad, and fossils are good; and that Kyoto is bad, and polluting is good. We had “good old boy” behaviour, which the Leader of the Opposition himself does not believe in. We have had it for weeks. [Interruption] We have had it from that member. The member who calls himself the Opposition spokesperson on energy has railed for weeks that the Resource Management Act is the cause of the problem; not the rainfall, but the Resource Management Act; not the problems with the Maui reserves, but the Resource Management Act.

Leave aside the fact that since this Government has come to power more than 1,300 megawatts has been consented. That is enough consents, in the last 3½ years, for a total of 8 years. The Resource Management Act is not the problem, but the good old boys like to think that it is, because they can roll out their prejudices: “We do not care too much about planning. Big boys do not care too much about consultation. Rob Muldoon did not care, did he, with the National Development Act? Why should we? We are going to roll out the Resource Management Act and beat it up, even though it is a red herring; even though it is pure prejudice.”

We heard stuff from Bill English that said that renewables are not reliable. Well, he is right. It does not rain all the time. That is why the New Zealand electricity system is as it is. That is why we have thermal firming. That is why we have a mixture of renewable and thermal in this country. What the Leader of the Opposition seemed to say was that all the reserve generation will be thermal. Put a ring around it. He is absolutely right. But why would he make that comment? Because he thinks that fossil fuel burning is good, and that sustainable futures are bad. Why? Because he is a real boy—at least he pretends to be. He does not really believe it, but good old boys think that burning fossil fuels is good.

I will tell members how silly this got. Some members of this House thought that the Government was against burning coal. We even had a television programme about it. Guess what needs to be known about coal? Renewables are cheaper. That is what needs to be known about coal.

💬 Gerry Brownlee: You’ve got to tax them.

They are not taxed. [Interruption] Coal fuel is much more expensive than hydro—tax or no tax. Ken Shirley jumps in, by way of interjection, to get another prejudice thrown into the debate. It is wrong, again. The reason this Government is promoting renewables is that we do believe in a sustainable future. We do believe in making the best use of our resources. We do believe in having a range of electricity generation technology so that we can spread risk. We do believe that the Kyoto Protocol is important, because we do believe that this climate is the reason that we have our economy at all. We are intent on playing our part in making sure they do it.

Real boys do not have to do that—not good old boys. In the first two terms of this Government we will have a total of 1,420 megawatts, or thereabouts, of new generation going in, but the National Party wants another 60 out of the conservation estate. It does not want 1,420; it wants 1,480 and it wants to knock over a whole lot of trees to get the other 60, because that is what real boys do! That prejudice has been around this debate long enough, and I for one am heartily sick of it.

Then there is another strange bit of behaviour that has been going on from the Opposition parties, time and again. It goes like this: “Why didn’t you do anything before?”, and “You don’t have to do anything, anyway.” See how it goes. I shall say it again: “Why didn’t you do it before?”, and “You don’t have to do it, anyway.”

💬 Rod Donald: Don’t count us in there.

We certainly do not count the Greens in there. I most certainly do not count the Greens. Those comments are not aimed at New Zealand First, either. They are aimed at the National Party and the ACT party: “Why didn’t you do it earlier?”, and “You don’t have to do it.” We have had that sort of craziness going for weeks now. “2001 happened, didn’t it; why didn’t you respond? The market will fix it; you don’t need to respond. You’ve had enough time to change it; you don’t need to change it.”, and so on. We have had that outbreak of silliness for weeks and weeks.

If I go to the National Party and try to work out whether it would have acted, go to its statements, and try to work what its real position is, I do not get it easily, but it seems clear that it would not have intervened. I do know that the National Party would privatise the State-owned enterprises, just as it says: “You must send out statements of corporate intent to State-owned enterprises. You must ring them; you must send them out several statements of corporate intent. Send them out one a day. Ring them, have them in, beat them up, send them, but sell them. So, arrange them, organise them, manipulate them, make them take the losses, but sell them.” That is the position the National Party has on State-owned enterprises: “Please make sure that you use your ownership correctly, and then make sure that you have no ownership.” That is National’s position on State-owned enterprises. It is very garbled. It is what good old boys do when they want to privatise anything that moves, and beat up on anything that it thinks the Government should beat up on. That is real boys getting a bit confused about themselves.

So what do we do now? We go to the policies of the National Party and the ACT party. We will go to the ACT party first and find a lovely little idea from Ken Shirley on the website, about making sure that all householders are forcibly exposed to the spot price, which states: “Go to ACT’s energy policy.” We did that, and guess what happened? “No matching documents found.” came up on the screen. That meant that the ACT does not have one. The ACT party has no energy policy.

We then went to the National Party. The National Party is the largest small party in the House. It is bigger than New Zealand First. It is the largest small party in the House and is easily bigger than New Zealand First. One would expect National to have an energy policy. After all, New Zealand First has an energy policy, and the Greens have an energy policy. One would expect National, which is even bigger than New Zealand First, to have an energy policy. We went there and it did not have one. Even now it still has not made up an energy policy.

Then we had the tax stuff from Bill English in his address. His day began with a shrill and strident press statement banged out at about 1 o’clock, which is long before he could have understood what the Government was up to. We now know that he still does not. He banged out that shrill and strident press statement. I tell the Leader of the Opposition that he is unhappily the proud owner of a feral word processor. That was bewilderment. It was a series of unrelated statements. It was extremely noisy. It signified little, indeed. The Leader of the Opposition should get rid of his feral word processor; the country needs no more of it.

He came to the House and pulled out the dear old cliché about an electricity tax. He does not believe it himself. He knows enough about economics to know that that is not the right label. He knows that the label is wrong, but he decides to use it 46 times, or thereabouts, in order to make a point and in order to get a bit of attention. That guy needs attention. He needs to be noticed, and so he talks about the “Clark tax”, the “Hodgson tax”, the “electricity tax”, and the “Labour tax”, or whatever it is. He knows that it is a cross-insurance premium. That is actually what the market was designed to deliver—that is, a cross-insurance premium where one generator would go to another generator. The consumer pays for it, just like he or she pays for all electricity products. That is what one does when one buys electricity; one pays for it. That is how the market was designed.

Members should go to last Saturday’s paper. Do they remember Tony Baldwin at the select committee? He was the guy who put through the reforms. Max never did understand them. There was a very interesting article on Tony Baldwin, the guy who put through the reforms, in the paper. It was quite a good article and pointed out that the market was designed to have cross-insurance premiums. It had a flick at one or two companies for not doing so, and that was fair enough. The point is that the cross-insurance premium is what the Electricity Commission will do for the market, because the market has failed. The market did not do that. It had long enough. Members cannot accuse me of impatience. Then that option will be taken away from it, because it did not do that.

For Mr English to come to the House and label that a tax, when he knows that it is not, proves to me that that guy is desperate for attention. What has happened is that New Zealanders, as we enter the second winter in three having to save, have said that they have had enough. They have said that, and we have heard. We have said: “We as a country can have a higher level of security for an insurance premium. Today’s announcements were no more nor less than announcing what that security level will be. A security level will be set at a 1-in-60 dry-year risk, and that is the first thing. It was enough to get us through 1992 without conservation; enough to get us through 2001 without a conservation campaign; and, so far, enough to get us through 2003 without a conservation campaign. That is what the security level will be.

We also said what we thought the price would be, and that would be less than 80c per household per week. One cannot have security for nothing. It is not priceless. However, we have designed a system where one can have security for a low price. That is what a good Government should do. It seems that the National Party is intent on relying on the market in its purity, and that is all. That suggests to me that the National Party is the cold-showers party. This country says that reputational risk is more important. The idea of future investment, for example, from our forestry sector is more important. The idea of saying to New Zealanders that the way of life in New Zealand is to have conservation campaigns every 2 or 3 years does not rest well with us.

I finish by saying to the people of New Zealand that today we broke 6 percent for the first time. I thank and congratulate New Zealanders as they went through the 6 percent mark. I hope they are on the way to 7 percent, and then 8, 9, and 10. Because the changes we have announced today will not help us in time this winter. This winter we save. From now on we will have more security as a result of this Government’s interventions.

There speaks the Prince of Darkness—King Lear, Shakespeare. That is what we have just heard from Minister Hodgson in this Labour Government. We know that Nero fiddled while Rome burned; Hodgson fiddles while New Zealand freezes. That is the recipe for this coming year, and the next year, and nothing in this Government’s announcement today does anything to address that basic fact.

This Labour Government has been in office now for nearly 4 long, cold years. I invite the Minister to read the briefing papers to the incoming Minister in 1999 that made all the predictions about what needed to be done. That Minister has done absolutely nothing in 4 years. We are in the middle of a crisis, and what has the Government done? It has set up another bureaucratic committee—the Electricity Commission—with the power to levy over $200 million a year from New Zealanders. Who believes that that will address the basic problems? I invite this Government to read the briefing papers to the incoming Government that identified the problem, but it has done nothing.

The Government set up the Caygill committee 2 years ago. That committee finally reported last Friday, but the Government had already gazumped it. The Caygill committee’s thinking was to have a voluntary regulatory framework and use the market, but the Government did not want that. The Prime Minister’s announcement that she would go with the command-control regulatory framework really pulled the plug before that committee could report, and we see that in this announcement today. By the Government’s own admission, that does not address the problem. In the Government’s own press release at noon today, it said it will be 3 years before it can build up the necessary portfolio of reserve generation. I am sorry, but that is not good enough. The productive sector is stopping production, closing down factories, and laying people off. People have to go home to cold houses and cold showers, because this Government has absolutely failed to address the predictable energy crisis.

There are a number of problems in the energy sector. Perhaps the biggest problem is the dominance—

💬 David Benson-Pope: Give us the ACT policy!

I raise a point of order, Mr Speaker. Yet again, the Government whip is chirping continuously.

The ASSISTANT SPEAKER (Hon Clem Simich): I take the point. We should not have running commentaries. Brief and intelligent interjections are fine.

If we look at the energy sector in New Zealand, we can see that it is not a market-driven sector, at all. That is the problem—we need more market and less Government. If we look at generation, we see that 70 percent of it is controlled by Government-owned monopolies. What have those monopolies done under this Government? They have further entrenched their monopolies by buying up the consumer base—the energy companies—to match their production. There is no incentive for them to offer attractive contracts to those companies to take hedges against the volatile stock market. They have entrenched their regional monopolies. Is transmission a market? I do not think so—it is 100 percent owned by Government. The domestic consumer uses 40 or 50 percent of the total demand, but there are no pricing signals, because of our lack of application of new metering technologies. We still have 1930s technology in metering. It is simply not good enough.

We then look at the broad macro-policies of this Government, and the Kyoto Protocol it so enthusiastically rushed in to sign up to. New Zealand is the only country in the Southern Hemisphere that has ratified the Kyoto Protocol. The United States has not—

💬 Peter Brown: Chile?

No, Chile has not signed up to it. No Southern Hemisphere country has ratified the Kyoto Protocol—that is, no annexe one country that has binding commitments. There are plenty of non - annexe one countries that have no obligation to do anything, and they are only too happy to sign up. However, no annexe one country with commitments and obligations has signed up to that protocol except dear old New Zealand. This Government tripped over itself in its rush to sign up.

What does it mean? It means that one puts a big tax on coal, then confiscates the carbon sequestration right to the forest and nationalises that—that is, pinches it off the forest owners. Let me assure the House that the forestry sector of this country is outraged by that. I was at the Forest Research Institute last Friday where all the heads of New Zealand forestry were gathered. They said: “Investment will not take place in this country. Why would people invest in added value processing in New Zealand when they can go offshore? Firstly, the Government will confiscate people’s property rights by taking their carbon for growing the trees; secondly, it will whack people with a great big tax on processing their added value, which would have created jobs here. We would rather invest somewhere else.” That is coming from the big international corporates of the New Zealand forestry sector.

What does the Government do with that money? It taxes coal and subsidises windmills, then says that windmills are far more price-effective than coal. When the Government taxes one and gives the subsidy to the other, of course they are! Unfortunately, the socialists do not see that. They do not understand the market and how that might work.

Let us look at hydro. In a recent publication, Kerry McDonald, the former head of Comalco, identified 20,000 megawatts of untapped hydro potential development in this country. Of that, 10,000 megawatts is totally acceptable in an economic sense, and stacks up in an environmental sense. We have not had any investment in hydro in this country for over 20 years. This Government is denying access to those who are struggling to try to set it up—like the Arnold River scheme on the West Coast, which Mr Damien O’Connor knows all about. It is denying people access to that prime site by getting the Department of Conservation to say: “No, you can’t flood that small valley of broom and gorse, because that would be unacceptable to this ecologically minded country.” The Government cannot have it both ways. That Arnold River scheme is an excellent proposal. It increases generation from 15 megawatts to 65 megawatts, and it makes the West Coast and Nelson self-sufficient. This Government is totally blocking that scheme, and that is an outrage.

We have prime coal reserves in this country, but just try to get access to them! The Pike River coal development on the West Coast, which is also in Mr Damien O’Connor’s electorate, has been struggling to get access from the Department of Conservation for about 8 years. It has been stonewalled every which way it wants to go. What are we doing instead? This year we are to import 600,000 tons of coal from Indonesia and Australia to try to get sufficient fuel for the Huntly power station.

All of those problems were totally predictable. This Government sat on its hands, dragged its feet, did nothing for 4 years, then in a panic in the middle of a crisis has operated in a most inappropriate way. By the Government’s own admission, that initiative will not have any effect for 3 years. My prediction is that it will make the problem worse, because it does not address the basic problems. We need more competition between generators and retailers, and we are not getting that under State monopolies. We need to ensure that our national grid is operating in an optimum way, rather than in the interests of a dividend payment from a State-owned enterprise. We need to send clearer pricing signals to consumers, amongst other reasons, to encourage appropriate energy conservation. That is far better than running an advertisement on television about saving energy. Sending a pricing signal is a far more effective way of getting the message to consumers than engaging in public education, although I accept that there is a role for public education. A pricing signal is far more effective; it always has been, and always will be.

King Canute tried to turn back the tide. By signing up to the Kyoto Protocol, this Government is trying to change the climate. That is a bizarre and very foolish claim. Those macro-policies, and the Government’s total failure to confront the pressing needs of our energy sector and the basic infrastructure of this country, will do New Zealand huge damage.

Electricity is not a luxury, and to have 2 years out of the last 3 where the public and our businesses have been told to save electricity is not acceptable. It indicates that somewhere along the line our political policy is off the tracks by a country mile. New Zealanders are entitled to have electricity at the push of a button whenever they want it, and wherever they want it.

💬 Hon Ken Shirley: And all for free!

No, not all for free, but all at a reasonable price.

We have an abundance of sunshine in this country, and an abundance of wind. I do not know whether there is an abundance of gas, as we have yet to discover it. I suspect that it is in abundance, but yet to be tapped into. We have an abundance of coal. We are exporting close to 2 million tonnes of coal a year to places like China, Chile, India, Japan, and South Africa, and none of them are signed up to the Kyoto Protocol. We are in the daft state of exporting coal to nations that have no obligation to pay a carbon tax, or whatever, whilst we are prepared to punish ourselves for using coal. We have millions and millions of tonnes of it, and we regard it as a second-rate source of power. It just does not make sense. We should be developing coal-fired power stations to suit the needs of New Zealanders. There are 4 million people in this country, but on a world scale that is not terribly many.

My political party has concerns about the number of immigrants, but we have double the concerns when we cannot provide enough power for the current visitors to this country. It affects our businesses, our home lives, and our tourist industry. Who would want to come to a country as nice as this, when one is allowed to have only one light on in a hotel room? It is absolutely ridiculous. In a mild winter we are seeing people turning power off left, right, and centre. We are being asked to turn off the stand-by switches on our microwaves and televisions. That is the state we have got ourselves into with the power crisis in this country.

💬 Hon Damien O'Connor: It keeps you fit.

Yes, it keeps us fit all right! In the circumstances, the Government’s move today to set up the Electricity Commission is a move in the right direction.

💬 Hon Paul Swain: That’s the first bit of positive news!

The member is quite amazed. Two years ago when the Energy Efficiency and Conservation Bill went through—and I do not think he would deny this—I told the Minister of Energy that setting up a governance board made up of industry members would not work. One cannot have a competitive environment self-regulating itself. A competitive environment is the exact opposite of a regulated regime. It was ambitious to the point of almost being stupid to expect the industry to regulate itself in any worthwhile manner. We quite welcome the Minister putting in place an Electricity Commission that is independent of the people who participate in the industry. The market will not work in the sense of social deliverance. The market does not have a social conscience, nor does it have social responsibilities.

💬 Hon Ken Shirley: Why does it work for food?

It works for food only because there is an abundance of food. But here we are talking about a relative shortage of electricity, where it gets—

💬 Hon Paul Swain: It’s Economics 101, and you should tell him that!

💬 Hon Damien O'Connor: That’s right!

If I might just get this point out: the generation companies have an incentive to withhold producing electricity, because the price goes up. They can make more money from a lesser amount of electricity than opening the industry up to unlimited amounts.

💬 Hon Ken Shirley: You could have State-owned monopolies.

No, because there is a lack of controls. As I said at the outset of my contribution, electricity is not a luxury. The average New Zealander wants electrical power in abundance—[Interruption] A conversation is going on here that is not even involving me, and that is hurting my pride somewhat. I do not mind members heckling me, but when they are heckling across the alleyway, I think it is a little bit much.

This is a move in the right direction. I accept the Minister’s definition that it is insurance against a 1-year-in-60 drought, but we have had 2 years of drought in 3. New Zealand First questions whether 1 year in 60 is the appropriate level of concern. We believe that it should be a good deal less than that. However, a half-cent per unit increase in the average electricity bill to 80c a week is the price we will have to pay for that sort of insurance.

But more should be done. New Zealand First has concerns about both electrical lines companies and gas lines companies. We believe that the Minister should take a good hard look at how they operate, how they charge, and their stipulated values. There should be some fairly forceful legislation governing their activities.

💬 Hon Ken Shirley: More regulation.

Yes. We do not believe monopolies should exist in an unregulated environment—that is putting it in a nutshell. When one gets a monopoly in an unregulated environment, sooner or later someone pays through the nose. We are conscious of the charges that will fall on old-age pensioners on fixed incomes. We are not ashamed to say that where there is a monopoly, basically there should be some regulation.

We certainly believe that the Kyoto Protocol should be shelved. It is absolutely ridiculous to sign that protocol in these sorts of circumstances. We will be exporting 2 million tonnes of coal to nations that will burn it largely in their power stations. They will not be paying a carbon tax, and we will be charging ourselves a carbon tax. It sounds like a Monty Python type of policy.

We believe that we should look at solar energy. We should be giving tax incentives—favourable fiscal incentives—for people to install solar power in their houses, and not just hope that they will do so because they are suffering hardship. We believe that there is a lot of scope—and I am certain the Greens will agree with this—for wind power, although we would hate to see those windmill things stuck all over the skyline. That would cause us more visual environmental concern—

💬 Hon Brian Donnelly: Visual pollution!

My colleague calls it visual pollution. There is a limit to what we can do with windmills. They are quite ugly looking things—

💬 Rod Donald: They are relatively benign.

Mr Donald can have them stuck in his back garden as his scenic view, but I do not want to see any of them near me.

I should finally come back to coal. There is an argument, which I saw on a television programme, that one of the biggest disadvantages of coal is that it produces carbon dioxide. Let me tell this House that there is technology that will eliminate carbon dioxide from coal-burning power plants. It is fairly costly, but the cost is coming down in leaps and bounds. Therefore we should be developing coal-fired power stations, which ultimately will not be pumping out carbon dioxide at all. We should also be getting ahead of the act, not waiting for that technology to occur. It is better to have a power plant pushing out some carbon dioxide and feeding the public cheap electricity, instead of the public pushing it out with open coal or wood-burning fires.

To summarise, the Minister has moved somewhat in the right direction, but there is still a long way to go.

New Zealand faces two challenges in respect of energy. The first is to get through this winter. The second is to start being a lot smarter about both how we generate and how we use electricity and all forms of energy. This year we see a dry year and the depletion of the Maui gasfield coinciding. Neither of those events is a surprise. The National Institute of Water and Atmospheric Research warned several years ago that rainfalls were likely to be lower in the future than in the recent past. That is in part due to global climate change, and to our collective failure as a nation, and as a species, to take any action to lower carbon dioxide emissions in the last 15 years. The Greens warned 30 years ago that burning Maui gas to generate electricity wasted two-thirds of the energy value of that gas—one-third electricity, two-thirds waste heat. An asset that could have lasted a century has been burnt off in less than one-third of that time. It has warmed the planet needlessly and cooked a few fish in the Waikato River in the process.

Getting through this winter requires a collective effort to conserve electricity. It needs an extra effort by those who are wealthy and are large energy users to reduce their power consumption, so that those with little do not freeze in the dark. Squandering energy through conspicuous consumption is obscene at the best of times, and in today’s circumstances it is a crime. Either way, it is time for everyone to systematically reduce the energy demand through increased energy efficiency—that is, doing more with less for longer. Will today’s announcement achieve that goal? No it will not, and we are extremely disappointed in the Government for failing to tackle the essential challenge.

But we welcome the end of a very expensive 2-year experiment that was bound to fail. New Zealand is the only country in the world that has been trying to run an electricity market with no regulation other than an officially sanctioned cartel. That is the type of silliness that emerged from the 1990s, when one was either a central planner or a libertarian, and rational debate on economic management in different sectors was largely absent. Max Bradford and the previous National Government have a lot to answer for. One reason the Greens supported the Minister’s legislation in 2001—an attempt to fix up Max Bradford’s “more market” reforms—was that it contained the power to create a Crown board to regulate the industry if self-regulation failed. It has failed, and that power is now being used to create the Electricity Commission.

The electricity sector should operate for the public good. It should operate reliably, sustainably, and cost effectively. The Government issued a very good energy policy statement in 2000, setting out what it expected from the electricity industry: security of supply, the minimising of greenhouse gases, the minimising of spills of water from the dams, the encouragement of new renewable forms of energy, and the encouragement of participation from consumers in the market. We had input into that statement, and we support it. What we have lacked so far is anyone who is accountable for whether the system is delivering those outcomes. So we welcome the new board, which will have that responsibility. The provision that the Greens put in the 2001 legislation will now start to produce results.

Every year, the Auditor-General and the Parliamentary Commissioner for the Environment must report to Parliament on whether the electricity industry is meeting the requirements of the Government’s policy statement, and if not, what rules need to be changed so that it will. They will have the benefit of the best international expertise to help with that. From today’s announcement, there will be a board that can be held responsible for meeting those goals. The jury is still out on whether the new board will achieve those goals, but when the audit reports come in we will have the information to judge that. After the ideology and information vacuum in terms of energy policy since 1987, informed and relatively disinterested advice will be welcome.

That is the end of the good news. Today’s announcement by the Labour Government will not help us to get through this winter. It will not help the climate, and it will not help us to be smarter in using energy. For this winter, the only solution is to engage every business, every Government department, every family, every school, and every New Zealander in making sensible savings, to the extent that we can. For the future, we need an economy in which greater energy efficiency is seen as a better alternative to a new power station, and in which people and businesses are rewarded for saving every year—not just in a dry year—so we do not need large, idle power stations that we pay for but rarely use. Our country needs some dry-year capacity—we acknowledge that—but with the proper investment in renewables and energy efficiency, that could be provided from existing plant coupled with demand-side bids from the larger users.

In simple terms, buying the right to turn off a potline at Comalco, or the equivalent, for 3 months in a 1-in-60 dry-year is the equivalent of buying a new power station that can generate 5 percent more electricity in that dry year—and it is much, much cheaper. That is the least that Comalco should be asked to do, given that it gets its power for a fraction of what householders have to pay and for less than any other business user. Buying from the demand side would make better economic sense than having resources permanently tied up in a power station and everyone paying higher power prices for it. If the Electricity Governance Board is to tender for dry-year capacity it must call for demand-side bids, as well. Hopefully, innovative generators will join up with their large users and put in bids that combine some new capacity and some demand-side management. Even that would be better than nothing at all from the demand side.

Some people seem to think that the problem this winter is that we lack enough power stations. They blame the Resource Management Act, the occupational health and safety legislation, Māori, and whomever else they want to take a swipe at. The facts say otherwise. Since the electricity market began in 1996, New Zealand has built over 1,300 megawatts of new capacity. That is 1.3 Huntly power stations. That new capacity generates almost 10,000 gigawatt hours, or around one-quarter of our total electricity use in an average year. Around 120 megawatts of new wind capacity has been announced in the last couple of weeks, and two thermal power stations are just waiting for the gas to allow them to be built. The fundamental problem is that we use what we have so inefficiently. If electricity demand grows at 5 percent a year, we will have to double the whole system in 14 years and double it again 14 years later. That is four times our current generating capacity in 28 years from now. That is a path to disaster. That path is as predictable as the Maui gasfield’s depletion was 30 years ago.

Fortunately, there is an alternative. New Zealand can have an economy that develops without using more electricity per capita. Many European countries have done that for years, and some New Zealand regions are doing so now. For 30 years, the Greens have been promoting a whole host of measures, including the direct use of gas for heating rather than gas-fired electricity, the insulation of homes, water-heaters, and refrigeration in industry, compact fluorescent lights, the direct solar heating of homes and water, wind generation of electricity, properly sizing industrial motors to their loads, and wood-waste - fired boilers in the forestry industry. If the Governments of the 1970s, the 1980s, and the 1990s had done those things we would not be talking about an energy crisis today, and old people would not be worried about freezing in the dark this winter.

Thanks to the Greens, we have the Energy Efficiency and Conservation Act, an energy efficiency strategy, and renewables targets, yet the amount that the Government is putting into efficiency and conservation is miniscule—less than 1 percent of the cost of Project Aqua alone, and little more than the $7 million largely wasted by the industry governance board led by David Caygill. New Zealand had the opportunity to lead the world, yet the answers given in this House at times seem to be that we should dam all the rivers, pollute the skies, and sacrifice our biosecurity—do anything but turn out the light when one leaves the room. Do people seriously advocate a future in which our precious energy resources continue to be wasted and we build ever more power stations to feed that culture of waste?

Our children deserve a better legacy than that miserable “business as usual” approach. To borrow a quote from The Six Million Dollar Man 30 years ago, “we have the parts, we have the technology”, and we can rebuild an energy-efficient sustainable economy. What we have lacked for three decades is the political will to do so. As Labour said in 1972, at around the time that the Maui contracts were signed, it is time for a change. That change must be that the Government stops trying to fly on one wing. Instead of excluding demand-side management, it must give that more weight than supply-side measures. In fact, demand-side management provides both the insurance policy that the Government needs and the means to reduce the possibility of ever needing to make an insurance claim. If Labour will not adopt what 30 years’ experience tells us is the only common-sense solution to this ongoing crisis, then it is indeed time for a change.

It would be remiss of me to begin without taking a moment to congratulate the Minister of Energy on, at long last, taking some action on the very urgent problems that face this country in relation to electricity. For some years now we have had an unregulated electricity market, and we had piously hoped that an invisible hand would be there to prevent this kind of situation from arising. As Peter Brown pointed out, one cannot have a self-governing market that is, at one and the same time, a competitive market. I am therefore very, very pleased that we will at last have a visible hand: somebody who will actually be in charge of this extremely important sector. I therefore congratulate the Minister on the announcement that the Electricity Commission will be established.

I also believe that the Minister and the Government are right in putting before the people of New Zealand a soundly based and well-thought-through scheme to put aside reserve electricity generation capacity for those years when the rain does not fall and we have extremely dry conditions. It is all very well to criticise that action, but we need to come up with a solution by way of an alternative. I think the suggestion that has been put forward by the Government is a sensible one. It is compatible too with the free-market nature of the industry. I think people have thought simplistically that there is only one side to the issue—that we will just build new reserve capacity, take it out of the market, and set it to one side so that it will be there when required. That is partly valid—it is exactly what the Americans, for example, have done in relation to their strategic oil reserves. But, in fact, the issue is far more complex than that. Rod Donald mentioned the demand side, and that will also feature in this scheme, because, as I understand it, New Zealanders are being asked to buy an insurance premium to set aside reserve generating capacity. I think that is a very, very sensible thing to do.

However, I want to say immediately that my vision of the future of this country is very different from that of the previous speaker, Rod Donald of the Green Party. I believe that this country’s social and economic future is heavily dependent on our being able to continue to provide efficient, low-cost, and reliable energy not only to our households but also to our industries. Every facet of our life—be it cellphones, computers, or whatever—is dependent on electricity. We simply need the stuff to keep our society functioning and our economy growing. For example, we need $3 billion of new investment in the wood processing industry, and we cannot process that wood here without a reliable source of energy through electricity. It is therefore a real concern to me—as I know it is to every New Zealander—that we are in this unfortunate crisis right now.

We can sit here and apportion blame for the crisis, and in the eyes of New Zealanders blame will rest first with the Government. New Zealanders do elect Governments to foresee such problems and to solve them in advance, yet that clearly has not happened here. Some, of course, will then point the bone—as happened today—at Genesis Energy and say it should have had its stockpile of coal in place, so that we did not have to import the jolly stuff. I am sure that Genesis Energy will point the bone at Solid Energy, and say it would not give Genesis Energy the coal at the price it wanted to pay. Putting all that aside, the bottom line is that New Zealanders are angry and upset. They are asking how on earth we have got into this situation.

In every crisis there is a bit of a silver lining to the cloud, and in this case the crisis has made people focus on some issues that we have been ignoring. One of them is the reserve electricity generation that we have already mentioned, and I am pleased that action has been taken about that. The other thing is just to ask ourselves some big-picture questions. One of those big-picture questions must surely be why it is that in a nation with many lakes and rivers and much hydro capacity we have not, for many years, been building new hydro schemes. That has not applied just under this present Government; it also extends back to the previous National-led Government, and probably to the Government before that. We have put in place a whole lot of self-imposed rules to stop hydro schemes from being developed.

People have gone to the Department of Conservation with hydro scheme proposals around the Rotorua lakes, the Mohaka River, the Motu River, the Raukokere River, the Karamea River, the Ngakawau River, the Arnold River, and the Beaumont area on the Clutha River in Central Otago. Those people have all basically said they had a good scheme that should be allowed to go ahead because it would have fantastic environmental outcomes. They have been consistently told they could not go ahead, because the schemes involved the conservation estate. Some people tell me that as many as 38 potential schemes have not gone ahead because of the way in which the Conservation Act has been set up. We need to understand what has caused that problem, because it is a systemic problem that has cost this country dearly.

Instead of taking advantage of the natural resource that we have in hydro electricity, we have foolishly put a barrier in the way, so that we cannot use our own water. The simple problem is this: under the Conservation Act, the Minister of Conservation is set up to be an advocate for conservation values. That is a well-thought-through, proper function for a Minister of the Crown to have. Like every other New Zealander, I appreciate the wonderful environment that this country has, and I do not want to see our conservation estate damaged, either. But if the Minister is an advocate, we have to ask ourselves whom he advocates to. Normally, the function of an advocate is to put a case to a judge, who will look at the facts on both sides of an argument and come up with an adjudication that is in the interests of the nation. That is what is lacking under our present system.

We have no ability to take hydro scheme proposals to an independent judge—be it the Environment Court or a specially appointed arbitrator; it does not matter which it is. We are not able to take those proposals forward, and argue through, on the one hand, the conservation values, and, on the other hand, the need of this nation for efficient, low-cost, renewable, and sustainable electricity. We desperately need to make the very most of this country’s comparative competitive advantages, and electricity could, and should, be one of those for New Zealand. We really have only ourselves to blame for being in this situation. We have to get that right. United Future is therefore calling upon the Government to urgently undertake a review of the Conservation Act, and to address the problem to which I am alluding.

In many of these situations we can have genuine win-win situations. Yes, we can have a hydro dam, and we can also have a lake that is good for recreation. We can put an island in the lake and make it a sanctuary for birdlife. We can make sure that we put other pieces of land into the conservation estate to compensate for any loss of forests, and so on and so forth. That is not really rocket science.

The other thing that we need to recognise—and I asked the Minister a question about this today, but I am not sure that he understood the question—is that the Electricity Commission should also be charged with the task of minimising dry-risk conditions. I believe that that should be one of its basic terms of reference, because there are ways of doing that. First of all, we have already been told in this House that the forecast is for more rain on the western than on the eastern side of the main divide in the South Island. One therefore does not have to be a rocket scientist to figure out that we need to develop more hydro capacity on the west, which could offset the occurrence of a dry year when it kicks in. The second thing that we are overlooking is wind. New Zealand has enormous wind capacity. Some people estimate that we could have many, many thousands of megawatts of wind generation in this country. I heard my colleague Peter Brown talk about visual pollution from windmills—well, heck, there are plenty of places where we could build them where we would not even see the jolly things. Wind is a free, sustainable, and renewable energy source. In my view, we should have hydro and wind generation at the top of the pile.

I am not opposed to burning coal to make electricity, but it is a non-renewable fuel. It emits carbon dioxide into the atmosphere, and it could well be more expensive than wind or hydro. So what about some common sense and logic? We could have a national goal of saying that we want renewable, sustainable, low-cost electricity for the future of this nation, and all parties of this Parliament could collectively focus on coming up with some answers. I think that would be the only thing that would now mitigate the anger that New Zealanders feel about this matter.

Today’s announcements by the Government are nothing more than spin, and offer absolutely no solution. Not one person in this country will be spared power cuts, if they are needed later this winter, as a result of this announcement, and not one community will be spared hot water cuts, if they are needed later this winter, as a result of this announcement. But what we can be certain of is that the coffers of the Government will swell in the next 12 months by some $200 million levied against those shivering consumers.

It is amazing that we have just broken the Budget debate to talk about this new announcement. The Budget was hailed not only as a somewhat bland document but also as one that did not introduce any new taxes for New Zealanders. Well, what have we had in this House in the last couple of weeks? The first thing we had was the sherry tax—the tax levied on those elderly New Zealanders who like to have a glass of sherry in the evenings. That was levied by Helen Clark and her Government against those people. Today we have another $200 million tax levied against consumers of electricity, simply so that the Government can hold its head up, and say: “How clever we are! We’ve come up with some solution to this 1-in-60-years crisis.” Taxing people for future electricity needs is not an answer.

Today in the House the Minister of Energy stood up and said that some 1,400 megawatts of new generation would come on stream during his time as Minister. If that is the case, I think it begs the question: under what conditions were the investment decisions made for those 1,400 megawatts of generation to be commissioned? The reality is that those decisions were made in the current environment, without any suggestion that there might be some other Government body that would subsidise such investment in the future.

It seems just incredible to me that the Minister can say that the Government has all these proposals and expects them to come on stream over the next few years, but that it needs a bit extra, so it is going to make New Zealanders pay over the odds for that extra bit of generation. If, in fact, we need more generation, and if companies have, in the current environment, committed themselves to it, why do we need this new bureaucracy? Why do we need this new tax? Well, I think it is just a precursor to a whole range of changes coming into the electricity industry. I think today’s announcements, when they are fully published, will show in the detail the devil of this decision. It seems to me unrealistic to suggest that a Government can set up a bureaucracy—this new commission for electrical energy—and expect that body somehow to solve all the problems that exist in very unusual circumstances. All that that body can do is tax. That is the power that this authority is given today.

I am thinking about why no new generation to speak of has come on stream in New Zealand in the last few years. Between 1996 and 1999 some 1,250 megawatts of new generation were put in place, but since the year 2000 only 166 megawatts of new generation have come on stream, and more than 105 of those were from the second tail race at Manapouri, which was begun under the previous Government. So we have had massive under-investment in generating capacity, at a time when our economy has been growing strongly and the population of the country has been expanding. Who is to blame for that? Well, the blame lies squarely with the Government and the policies of the day that have prevented that investment.

Those policies include allowing the Resource Management Act to become so cumbersome that it now takes years and years, and millions of dollars, for anyone to get a new generation proposal off the ground. They also include the Conservation Act and the discretion it gives to Ministers, who would far rather protect patches of scrubby gorse than allow a development that might make some parts of the country more self-sufficient in hydro-electricity. They have also to do with the commitment this very bad Labour Government has made to the Kyoto Protocol. New Zealand has 1,000 years of current energy requirements stored in the ground as coal, yet can it be used? It can, but only if people are prepared to pay somewhere between $52 and $80 per tonne in Kyoto Protocol tax on top of the cost of extraction and sale. Effectively, that commitment doubled the cost of one of New Zealand’s few natural resources. Members can sit there shaking their heads. I would, too. Clearly, they are incredulous that their Minister could be so stupid as to so quickly sign us up to something that our near neighbours, our trading partners—Australia, the United States, and others—have yet to commit to.

It is also about the lack of gas supply in this country. We have a dreadful situation looming in 2004. If people think we have problems with hydro storage now, they should wait until about this time next year, when there will be a real scramble for the remaining Maui gas. It is evident that there is no large gasfield coming on stream before 2006 or 2007, so there will be a period when there is quite considerable constraint on the ability of generators to rely on gas supply, and that points to another crisis within, perhaps, 12 months. These decisions today will make no difference to that whatsoever.

It is also a little bit concerning that, despite the assurances of Helen Clark, the Waitangi Tribunal is now taking a rather unhealthy interest in the gas and oil reserves that this country may have. It simply begs the question: if we are already running short of supply in those areas because, over a period of years, there has not been the sort of exploration that there should have been, why would any private company come here to make substantial investments, when it would not know what the ultimate cost of extraction would be, because it might have to pay some sort of levy or royalty through the decisions of the Waitangi Tribunal? We cannot trust Helen Clark when she says it is not going to happen, because she is the same Prime Minister who said there would be no new taxes, and who, in the last 2 weeks, has had us here in the House inflicting new taxes on New Zealanders.

The way forward for New Zealand is quite clear. There needs to be a commitment to shorten the process of getting resource consent for these projects. Where a national interest like this is involved, there is a need for people to be able to go directly to the Environment Court—not in any way to get away from their environmental responsibilities, but simply to get a defining hearing much, much sooner than would normally be expected. There is also a need to recognise that, with so much coal in the ground, and with the capacity these days to burn that coal cleanly, with emission levels way below World Health Organization standards, perhaps it is time for us to say that maybe the Kyoto Protocol is not such a good idea for New Zealand. There is also a need to encourage much more gas and oil exploration in our potential offshore and onshore fields.

I am disappointed by the Government’s response today. This is a tax grab. It is a headline. It is nothing but spin. New Zealand consumers are going to pay $200 million a year, year after year, for reserve capacity that will not be in place any sooner than 2007 or 2008, if ever. Then, according to the Minister’s own press release, these reserves will be withheld from the market until those dry years, when they will be released into the market at a higher price. So New Zealanders are being asked to pay twice, and anyone who thinks that is a good idea does not deserve a place in this House. New Zealanders can be well disappointed with the way the Government has handled this crisis. It was evident from all the signals last December and January that we were heading for this. The Government did nothing and it has done nothing today.

The good thing about this debate is that it has now flushed out two “cold shower” parties. The National Party and the ACT party are in a grand “Cold Shower Coalition”. From that supposed spokesperson on energy for the National Party we heard that the way to fix the problem is to fix the Resource Management Act. That was the simple answer. Well, let us have a think about this. Which party introduced the Resource Management Act?

💬 Jill Pettis: Ah, I think it was National.

It was the National Party. That is right. That is indeed right.

💬 Gerry Brownlee: I raise a point of order, Mr Speaker. Just before the Minister gets too carried away, he should realise that the Resource Management Act was the brainchild of Sir Geoffrey Palmer.

The ASSISTANT SPEAKER (H V Ross Robertson): That is a debating issue.

It was jointly supported by the National Party, and passed under the National Party. That was the point I was about to make.

The second thing the member forgot to mention on his way through his ramble was that 1,300 megawatts of new generation have received resource consent since 2000. That is true. There has been an extra 1,300 megawatts since the year 2000, and the reason that they have not come on stream—

💬 Gerry Brownlee: We do these things in a timely fashion, and it is timely for me to seek leave of the House to table a parliamentary question answered by the Minister of Energy, telling me that fewer than 500 megawatts of new generation have been consented to since the year 2000.

Document not tabled.

The point of the matter is that the member said that if we fix the Resource Management Act, everything will be all right; if we fix the Act we will fix this problem.

One of the galling things for people on the Government side of the House is to be lectured about electricity by National Party members. What an outrage! It is absolutely unbelievable. Let us talk about Max Bradford. Shall we talk about Max Bradford? He was conveniently forgotten when the previous speaker wandered through his musings. What did Max Bradford do? He threw the entire industry into the air and created chaos and confusion. He split lines companies and power companies, and forced their sale. He privatised Contact Energy, then decided he would pray at the altar of the free market. He said that if all of that were done, power prices would come down. Well, one did not have to be an economist, an engineer, or a rocket scientist to work out that power prices went up. What should have come down went up, and what was up, and should have come down, went the other way. It is absolutely outrageous.

Then, of course, we had the ACT party—another “cold shower” party. What was the policy of Ken Shirley from the ACT party? There was no policy, actually. As the Minister of Energy said, if we were to look for the policy response from the ACT party, we would find there is nothing there. It is just a hollow shadow. I suppose that when push comes to shove and ACT members have to try to provide an answer, it is the market—the market will solve the problem. We have heard some absolute gems from a number of people in the ACT party. We have had Mr Prebble himself saying that if we were to have more market, it would solve the problem. This is a direct quote from Mr Prebble: “This regulation will remove the possibility of a market solution while distorting the energy sector further. What is wrong with the energy sector is that there is not enough market.” That is what Mr Prebble said, but he forgot to mention that the fact of the matter is the market has failed. The Government gave the energy sector a couple of years to sort itself out, because that sector had told it not to worry about regulating it—it would fix the problem. But it has not. Mr Peter Brown is absolutely right when he says that we cannot have a proper, organised electricity supply when big generators with confused interests are competing against each other. The problem is that there has been too much market.

If we ask the New Zealand public whether they would rather have cold showers and a market solution, or hot showers under the arrangements that have been announced by the Government today, we will learn that the vast majority of people in New Zealand tonight welcome what the Government has done, and are saying that, finally, it has fixed the problem. Those arrangements will cost roughly 80c a week, and are not a tax but an insurance policy. That is what people want—they want an insurance policy—and if we are to have an insurance policy for the dry year, we have to pay an insurance premium of the order of 80c per week to have security of supply.

Let us go through some of the provisions, because maybe a lot of people have not actually heard them. Listening to some of the speeches that have been made today, it is clear to me that a number of people on the Opposition benches have not even bothered to read the statement or the speech. Instead, they had a conversation with their keyboards about a week ago, and banged out a response to what the Government is doing. There are some really key elements of this initiative that I want to outline.

The first is that the new Electricity Commission will be established independent of the industry, and charged with maintaining security of supply to a 1-in-60 dry-year risk level without public conservation campaigns. This was the point that Gordon Copeland raised. It is precisely one of the terms of reference that the commission will have. It says to the industry that we need some insurance, that we need to have it sorted out and resolved, that we are not going to rely on the market to deliver it, and that we have to have an independent group that determines it and brings it on stream. How will it do that? It will do that by contracting with generators for reserve generation and fuel for use in very dry years. It will mean some planning. One of the things that is appalling about this situation is that there has been a lack of planning.

The reserve generation—in answer to a couple of comments from the Leader of the Opposition, who will not be there for long; one can see that when he makes a speech on energy—will be ring-fenced from the market, to ensure that enough ordinary new generation will continue to be built. So the reserve generation is ring-fenced away from the normal generation increases, to ensure it is there only in reserve. As I have said, the additional cost of the reserve generation, overall, will be less than half a cent a unit—around 80c a week—and spot price volatility in dry years will be significantly reduced. Some of the manufacturers and the big companies have been coming to us to say that, with the market arrangement, they have had difficulty in trying to plan, and difficulty in trying to get hedge contracts. How can they plan? Electricity spot prices are moving up and down to the point where they cannot plan.

It is fair to say that the National and ACT parties have no solution. They do not know what they are doing. They are the “cold shower” parties. The public will see today that, finally, we have a solution. It is to provide reserve capacity, and to make sure not only that companies have energy to be able to deliver the growth we need in New Zealand, but that ordinary New Zealanders are able to have the lifestyle they have become accustomed to. The public of New Zealand will congratulate the Government on the initiatives it has announced today.

The debate having concluded, the motion lapsed.