Urgent Debates — Energy—Project Aqua Cancellation

I have received letters from Gordon Copeland, Jeanette Fitzsimons, and the Hon Ken Shirley seeking to debate under Standing Order 373 the decision by Meridian Energy that it will not proceed with its planned Project Aqua development. This is a particular case of recent occurrence, and it involves ministerial responsibility. Given the significance of the decision, I consider that it requires the immediate attention of the House. I therefore give priority to the first application I received, that of Gordon Copeland. I call upon him to move the motion.

I move, That the House take note of a matter of urgent public importance. I move that motion because Meridian Energy’s bombshell announcement yesterday that it will not be proceeding with Project Aqua creates new and significant risks for the New Zealand economy, and, in consequence, for all New Zealanders and their households. A cheap and secure electricity supply is critical to all businesses and households in this country. I saw a graph, presented to me last year, that indicated that New Zealand could face a significant primary energy gap from around 2007, now just 3 years away—[Interruption]

💬 Mr SPEAKER: When the House grants leave for an urgent debate to take place, that indicates the matter is important. I am talking to Mr Mallard. I know that some members have to attend select committees, but I want to hear this speech in silence, apart from the usual sorts of comments. There can be the odd interjection, but there is too much noise. I have not deducted time from the member’s address.

I was making the very vital point that I was presented with a graph last year that indicated New Zealand could face a significant primary energy gap from around 2007, now just 3 years away, because of the rundown in gas from the Maui field and the problems associated with the use of Waikato coal for electricity generation. The graph presented to me was truly frightening. It illustrated that without Project Aqua, a gap between electricity supply and demand may begin in 2007 and rise to a massive 11,000 gigawatts by 2017. That forecast should be of concern to all New Zealanders, because it clearly indicates that unless we can bring additional generating capacity on stream within the next 3 years, we will face an electricity shortage.

Simply stated, the cancellation of Project Aqua is an issue of very critical importance to New Zealand businesses, going forward. We have a “wall of wood” to process and many new irrigation schemes coming on stream. We have new roads to build in Auckland, and growth in the dairying industry. All those situations, and all the other plans for expansion in the next few years of other New Zealand businesses—thus to grow the economy—are dependent upon electricity for that to happen. That is why I say this issue is of critical importance to our economy. Along with security of supply—that is, electricity being available when needed, businesses need cheap electricity. New Zealand is a long way from its markets, and at the moment, by world standards, we have a comparative competitive advantage from being able to use not just electricity but cheap electricity. The switch that I think we are now forced to make from renewable energy sources, such as hydroelectricity, to energy sources such as coal—a switch that seems inevitable, given the decision taken yesterday—means that we will not only go to something less environmentally friendly but also to something significantly more expensive. That has the capacity to erode New Zealand’s competitive economic position with regard to the rest of the world. My own vision, however, for the New Zealand economy is that it should grow, and grow quickly, so that we can deliver to New Zealanders and their households the material well-being and the good health and educational services we all desire, going forward.

I want at this point to address a few comments to Meridian Energy itself. I do so as a shareholder in that company, for all New Zealanders are shareholders in Meridian Energy. I ask the company to be open to the possibility of seeing at least a residual hydro scheme proceed on the Waitaki River. I ask the company at least to work through the new water allocation framework that will come into being as a result of the passage of the Waitaki catchment legislation. It seems to me that even if Meridian Energy were not successful in obtaining the amount of water flow it would have ideally liked for Project Aqua, it is still possible for it to see a smaller-scale project go ahead. If Meridian Energy is not willing to do that, I think other major electricity generators in New Zealand should step into its shoes and look at that possibility. At the end of the day, the situation that faces us as a nation is so critical that we cannot afford to say no to any significant low-cost way of generating electricity.

I will also address some comments to the Government itself. I hope it will take heed of this development and ensure that there are now no ideological or regulatory barriers to allowing hydroelectricity schemes in New Zealand of all shapes and sizes, together with schemes using steam, wind, coal, or whatever else, to proceed and proceed quickly, so that we can have some of them on stream in time for the projected electricity shortage from about 2007 onwards. I specifically ask the Government to look again at the Dobson hydro scheme on the West Coast of the South Island. The Government’s position on that scheme is that it should not proceed because it will do damage to the conservation estate of this country. The Government says that the scheme will reduce the area of the conservation estate. My response is that the people of Greymouth have offered the Government Mount Buckley by way of exchange—a larger area—so in actual fact the conservation estate would increase, not decrease, if the scheme went ahead.

The Government has said that the Dobson scheme would involve the loss of some kahikatea trees in the 500 hectares—and that is all we are talking about—that would be flooded by the new dam, which would create a beautiful lake in a bush setting. If the Government were to ask TrustPower, I believe that the company may well be prepared to buy some existing private kahikatea trees and gift them to the nation’s conservation estate. The Government says that there are birds living in the 500 hectares that would be flooded—an area, by the way, that is part of approximately 1.8 million hectares of conservation land on the West Coast, just to put it into some sort of perspective—that need to be protected. I agree entirely with that, and I say that if the Government were to speak to TrustPower it may well be that TrustPower would be prepared to cooperate with it, with the Department of Conservation, and with the people of Greymouth to create a bird sanctuary where our birds could flourish and increase in large numbers, instead of having to compete daily for their very survival under the gaze of rather hungry stoats, weasels, feral cats, and possums.

The Dobson hydro scheme has strong local support. A few minutes ago, in response to a question of mine, the Minister of Energy said that it would provide only about 5 months’ supply for New Zealand. I think that answer misses the point of what my party has been saying in relation to those kinds of schemes. We believe there is potential for a number of hydro schemes to be developed on the conservation estate throughout New Zealand. It is time to start to think outside the box, and for the Government to give away the false dichotomy that it has erected, for ideological reasons, between conservation on the one hand and hydroelectricity on the other hand. It is completely unnecessary. As I have pointed out, there is a way through the projected electricity shortage, and I was hoping very, very much that Dobson would become a prototype for many other similar schemes right up and down this country that would continue to supply electricity to this nation at an affordable price, using a source of energy that is renewable and sustainable in the long term. I say to the Government it is time to put aside the straitjacket. We can no longer afford the luxury of caving in to the kind of ideology that defies common sense.

I will also bring up another point at this time—again, something that I alluded to during question time—and it is the very strong submissions that the Electricity Networks Association of New Zealand has brought to my attention concerning the rules that presently prevent it from investing in new local electricity-generating projects. I think we need to give that matter very careful consideration. The situation arises from what I believe were the somewhat ill-advised reforms made by Max Bradford when the National Party was in Government. I cannot understand, therefore, why a Labour administration, coming into that situation, would be prepared to allow it to continue. The Minister makes the point, and I agree with him, that some new flexibility has been given. Local lines companies—and I want to stress here that those companies are owned by local communities, are sensitive to local needs, and are able to invest local money for the benefit of local communities within New Zealand—are saying we should take off the Max Bradford restraints, let them invest in new electricity generation, and give them the ability to supply that electricity directly to their customers. They want to know why they should be taken out of the retail loop, and I believe that is a legitimate question. I believe that the Bradford reforms did not correctly understand competition law or the way that competition works. Allowing local lines companies to invest in new electricity generation would indeed provide the major electricity generators with some much-needed competition. Apart from that, it simply makes sense. Why should we try to relay electricity all the way from Waitaki, say, to Whangarei, with the significant loss that occurs in the transmission process, when there is a lines company based in Whangarei that would love to get going and build a scheme to supply the people of Whangarei with electricity in their own backyard—with minimal loss on the way through.

In 2002 the people of this nation, by quite a significant majority, elected the Labour Party and the current Government to be our Government and to provide leadership for this nation. With the cancellation of Project Aqua, and given the critical issues I have outlined in my speech concerning not only the security of electricity supply but also the actual price of electricity and its importance in keeping the New Zealand economy going forward, we now look to the Government to provide some real leadership in this situation. If the Resource Management Act is holding things up, let us change it. If the Conservation Act is holding good schemes up, let us change it. If the Max Bradford package of so-called reforms to create competition within the electricity sector is not working correctly, let us change it. It will diminish the legacy of this Government in the eyes of future generations of New Zealanders and, in fact, of New Zealanders 3 years from now, should we—and I suggest today this is a very likely scenario—encounter situations where we have to close down our factories and switch off lights in our homes, which is beginning to happen. People will ask why on earth the Government did not act, and act more quickly.

But I want to go one step further than that, and make this point. We need those kinds of ideological and regulatory restraints to be removed, and removed now. It is now that alternative energy projects need to be planned, and it is now that decisions need to be made, because of the lead time it will take to construct the new electricity projects needed in New Zealand so that we can continue to grow our economy strongly, based on steady, reliable, cheap electricity, and can provide the living standards, going forward, that we all expect—and, indeed, should expect—from this Government or any other Government.

I want to thank the member who has just resumed his seat for what I thought was a really thoughtful contribution on what is an emerging issue of some consequence. There is no doubt that this country faces a challenge in the security of its electricity supply or, as the member more correctly puts it, its primary energy source of supply. That was created in part by the earlier rundown of Maui gas, and in part by the fact that for the past three decades this country has had an ability to rely on one of the largest gasfields in the country—and I am sorry to say, with the wisdom of hindsight, to squander that—and it is now augmented by the fact that Project Aqua will not go ahead.

As Minister of Energy for the past couple of years, I have lived with two possibilities—one that Project Aqua would proceed, and the other that it would not proceed. My position, the Government’s position—the position we held right through that time, until now, until we knew—was as follows. Firstly, if Project Aqua is to proceed, please let it proceed on time and not 5 years after the event. People need to know with certainty what new generation is coming on, and roughly in what new year. Secondly, if it is not to proceed, could we please know as soon as possible? Meridian’s somewhat surprising announcement yesterday has certainly achieved the second of those two aims.

We have the ability as a country to rearrange the generation projects that are on the drawing boards—to bring to the front-burner those projects that were on the back-burner until yesterday. I am sure that over the next 12 months—in fact, quite possibly over the next 24 hours—we will see various statements by various people as to what they intend to do. It is of critical importance to the economy that we have a reliable supply of electricity and a reliable supply of energy. It is critically important to any economy. The problem of not having a reliable supply has faced California, a number of South American countries, Western Australia, a number of European countries—including Germany, France, and Italy—North America, and Canada in recent months with a transmission outage, and so on. Modern economies require a modern, reliable, high-quality security of supply for energy, and for electricity in particular.

The member went on to say that this country needs cheap energy. I suggest to the member that cheap energy is a good idea, but it is not necessarily possible within the framework of security of supply. That is to say, it is not possible to continue to build electricity generation and not have the price go up, because the best sites and options have already been exploited. That is in the nature of the industry.

I do not think the member is suggesting that the taxpayer should subsidise the electricity user. No, he is shaking his head. I think we have to have fairly priced electricity. I do not think we should put up with anything that resembles overpricing of electricity, or even the possibility of overpricing, but I think we are starting to move beyond the idea of cheap electricity, which is something that existed in this country in earlier times—probably in the second half of last century.

In other words, we have seen an increase in the last 4 or 5 years of, from memory, a little under 10 percent real. I think we are likely to see an increase of that ilk over the next 10 years or so as we move from being the very lowest in the world to nearly the lowest. That would be my best guess. It may be that some states in Canada will come under us, that Queensland will come under us briefly as it moves into a relative oversupply situation, but cheap electricity over the long term is, I think, unlikely.

In respect of the Dobson scheme, I will make two brief comments to the member. First, it is an ecological area and the member needs to decide whether he thinks drowning ecological areas is a plausible idea. Secondly, the larger area that was offered up is itself not threatened. So there is no gain.

In respect of coal, I decided to front coal because I am sure every ACT party member, National Party member, and possibly New Zealand First Party member will want to know why we cannot be nice and bad and dig a whole lot of coal out of the ground and set fire to it. I say that we are burning a lot of coal in this country at the moment at Huntly. Thank goodness, because Maui has a shortfall. The Huntly power station is dual-fuelled, and I am grateful for the fact that we are able to burn coal when we need to, especially in wintertime.

Further, there are plans for more coal and electricity production all over the place. I have heard of them in Buller, Canterbury, Southland, at Marsden Point—in fact, I have heard of about three at Marsden Point—and in Huntly again. I say to members who will be asking why no new coal generation has been built that the answer lies in price. Generally speaking, South Island coal, which is a little cheaper than North Island coal, is none the less a little more expensive, with or without a carbon charge, than other alternatives. North Island coal, which we are using a little in extremis at the moment, is more expensive still.

It is true, and it needs to be said nice and openly, that some people disagree with the figures the Ministry of Economic Development has put out. Those people who have an interest in coal say that those figures are no good. I say: “Go and build the station.” We have very large amounts of coal in this country, but the truth of the matter is that renewables are cheaper. When the carbon charge comes on, that will put up the price of coal again by about 1.5c, but think about the flipside of that. The idea of having a carbon charge through the economy is that it augments renewables, but not only that, one can use carbon credits to augment them further.

Indeed, that has already happened. Later this week I will announce the results of 4 billion tonnes of carbon dioxide going out as carbon credits. In fact, I draw to the attention of the House that in the last Budget—for the first time—we had two currencies, one was the New Zealand dollar and one was carbon credits. Those 4 million carbon credits were used to bring on a lower carbon dioxide future—for example, through renewables—than we would otherwise have, using plants that would not otherwise have been built because they are not economic, because we have not internalised the externality of environmental damage. A great deal of generation will occur as a result of that project. I will announce the details later this week, but roughly speaking we are talking about one-third of Project Aqua from 4 million tonnes of carbon dioxide. What is more, we will do it again next year, because I hope to secure further tonnes of carbon dioxide in the form of carbon credits in the forthcoming Budget.

For those people who think that there is no energy resource in this country, I refer them again to New Zealand Energy Outlook to 2025, produced by the Ministry of Economic Development. It states that we have an awful lot of resource available—that is to say, not in conservation estates and in areas where one is unlikely to get the go-ahead. For example, in the hydro arena about 1,600 megawatts still remains to be developed, excluding Project Aqua, mostly in small hydro stations.

In the geothermal area, the estimate from the Ministry of Economic Development is 5,200 megawatts. We use only 8,000 now. Not all will go ahead—I acknowledge that this is potential. In the area of wind, a further 4,000 megawatts can go ahead, so this country can look forward to a renewable future without having to go to the new technologies of wave, tide, photovoltaics, and on it goes. There is no need to do that, at least no need yet. By the time those prices come down, this country will be able to augment its energy needs as necessary.

The other thing I want to talk about is electricity demand, and say in a fairly matter of fact way that California, which ran into very serious problems across two summers—with blackouts right across one of the most advanced pieces of civilisation on the planet—has, subsequent to that event, achieved all its gains by conservation, efficiency, and renewables. I am advised that not one non-renewable plant has been built in California since then. That is a really interesting prospect, because it means, as the leader of the Green Party said during question time, this country could improve its efficiency, we think, by about 20 percent. What is good about the inefficient use of energy? Is it remotely useful to waste the stuff? Regrettably, we do. Why is that? It is because of a lack of a regulatory framework, it has been cheap, and we have not paid attention. There are all sorts of reasons, so there are very significant gains to be made there.

That said, this country will always need more supply. Each year, for as long as I can foresee, there will need to be some supply. It is true that we currently think we need 150 megawatts. We should check the figures to see whether 150 megawatts a year is coming. In the 12 months ending this winter the new addition will be 220 megawatts. We need 150 megawatts, and 220 are coming. Before next winter we will need 300 megawatts and 350 will come. If we go out 4 years, we will need 600, and a total of 800—not including Aqua—will come, already consented, fuelled, and on the front-burner. We need not be concerned about the immediate future, but we should always think further out. If we think further out, this country has many resources. However, they will not be available cheaply.

In respect of the reforms by Max Bradford, I say to the member in relation to his comments that I have signalled, very clearly, that the threshold should come up. I have suggested five-fold. If the member wants to raise it ten-fold in the select committee, I am open to that. That would become a select committee decision. In respect of gas exploration, within a month this Government will answer the following question: should we, or should we not, further induce gas exploration? It is increasing quickly, but it probably needs to increase more.

This debate will no doubt degenerate before too long, so let me get under way. In relation to Project Aqua, Bill English said: “National cautiously supports Project Aqua.” Nick Smith said: “National opposes the special Project Aqua legislation.” Don Brash said: “No political party should be saying yes or no.” Those are the viewpoints of the National Party, none of which has come from Roger Sowry. I have pages of National Party quotations. I learn that the Opposition spokesperson on energy is Mr Sowry, but we do not have a quotation from him. We had hardly a question from him, and in case Mr Shirley decides to get to his feet later on, Mr Shirley said earlier that the Government’s “appalling” attempt at fast tracking the project was akin to its National Development Act Repeal Act. Believe it or not, Mr Shirley said yesterday that for political reasons shareholding Ministers had directed Meridian Energy to drop Project Aqua. What sort of a viewpoint does that member have that lasts for about 5 minutes? Not much at all! We are talking about a 180-degree turn.

I thank the member for introducing the debate to the House, and I thank Mr Speaker for allowing it. It is an important debate. The Government is aware that the energy future of this country needs to be paid close attention to. It is being paid close attention to, and I invite other members to take part in the debate—I hope without reaching for the calamity word, or the hoary old chestnuts that have dogged the debate so far. Hope does spring eternal.

Why is it that the Minister of Energy seems to be the only person with knowledge of the sector who thinks that everything is OK? He is the only person who says that it is all right. This morning on Morning Report I heard him say: “Well, Project Aqua has fallen over, but listen, Sean, we’ve got lots of little bits that will come together, and if you add up all the little bits, then we’ll be OK.” No one in the sector believes him—not a person, not an energy company, not the Government’s own State-owned enterprises, not the private sector, not the gas industry, and not the coal industry. No one believes this Minister.

This Minister is showing no leadership. He has absolutely no plan for the future supply of electricity or energy for this country. This Minister is being dragged along by the select committee. The National members on the select committee are saying: “Let’s have a serious look at some of the limits that the bill imposes on lines companies around generation”, and Minister is saying: “Well, if you want to double it, quadruple it, so be it. Make a decision.” There are no decisions from this Minister. He never makes any decisions, at all. He is being dragged along on gas exploration. After 4 years he has realised that no one is doing anything, so he is out there saying: “We might do some drilling. I’ll make an announcement next week, and we can have another look at it.”

It is the same with the Resource Management Act. This project was scuttled because of the Government’s own refusal to address the Resource Management Act and the constraints that that piece of legislation puts on any major project. The Government and the Prime Minister were in the House today. She got up and said: “No, it wasn’t the Resource Management Act; it was a whole lot of other reasons.” I went back to my office, and what did I see? I saw that there was a Government announcement today at 3.12, and it states that the Government has appointed a Minister to review the Resource Management Act. At 2.12 today, in response to question No. 1, we were told that it was all OK and that the Resource Management Act was not a problem. One hour later the Government had appointed a Minister to review the Resource Management Act. Unfortunately, the Government is not that serious about it—it has appointed David Benson-Pope. So it is not taking this issue very seriously, at all.

Mr Benson-Pope has been put in charge of the Resource Management Act matters specifically—not the Minister in charge of the Resource Management Act, the Minister for the Environment. The Government has not used her. This is another case of the girls not getting the jobs. They are using Mr Benson-Pope. They are putting him in charge of a Resource Management Act review when, just an hour beforehand, the Prime Minister had told the House that it was all OK, and that there was no problem with the Resource Management Act, at all.

Also, I want to tell this Government that the problem with energy supply will not be just around Project Aqua. This country is also facing a huge problem with the transmission of electricity around the country. Transpower is facing huge problems as it goes about trying to upgrade the lines around the country, because of the Resource Management Act. Transpower has been to the Government, and has talked about it at the select committee. It is a major issue, and the Government has done nothing. Today must be a happy day for Mr Parker. He is so strong—as the MP for Otago, he has been resolute for the last 12 months not to be on any side on this issue. He has been neither for it nor against it. That might have seemed really smart, but I have to tell Mr Parker that our polling shows it was pretty stupid, and the member will see that coming next year. There is a train coming down Mr Parker’s track. He will stand in the middle of the track not knowing whether he is for or against it, and it will bowl him over.

This is a serious situation. Project Aqua was going to meet somewhere between 4 to 6 years of growth in electricity demand in this country. Without that the Minister needs to come off the fence urgently and decide where we will get the electricity that we need to grow. The Government needs to be upfront and honest with New Zealanders about its plan. Is it the Government’s plan to get rid of Comalco and feed that 15 percent extra into the economy? Is that the plan? The scuttlebutt around the Government departments is that that is the unwritten agenda coming from this Minister and, ironically, from the Minister for Industry and Regional Development, Jim Anderton. Will Mark Peck’s last act be to see the Comalco contract not signed and that company leave this country, just like he is seeing his schools closed in that part of the country? Is that the grand plan for the future, or is there a grand plan around extra development and extra supply? If there is, we have not seen it. We are not seeing it with exploration.

The Government has said no to the Dobson hydro scheme, and the Minister reaffirmed that today. No, it will not allow that hydro scheme to be built. So companies are saying: “Well, the Minister was agreeing this morning on radio, saying we are going to see more boutique hydro.” Perhaps the Dobson scheme is too big to be boutique. Are we allowed only little, wee uneconomic hydro schemes now? Is that what will supply us? What about coal? The Minister has been very anti-coal when he talks to people around the industry—very anti-coal. He is adamant that it is not the way forward. Well, I say to the House that National will not be imposing any carbon tax on coal. National will repeal any carbon tax that Labour imposes because we do not believe that placing New Zealand industry at a disadvantage with artificial taxes, such as the carbon tax, is the way forward to encourage a strong, growing economy.

Is it any wonder that companies do not take up the Minister’s challenge when he says: “Go and build a station.”? That is what he said about coal in the House today. He said: “Go and build a station and see how uneconomic it is.” Well, of course, no one will build a station. The Government has not even determined the level of the tax. We are told it is about 1.5c. How can anyone plan 20 years out? They cannot even plan 2 years out in the energy sector, because the Government is determined that we will not have coal and the Minister is determined that he will make it uneconomic. So we come back, then, to a Government that is simply sitting there without a plan. It is putting all its eggs in the wind basket. It is basically saying that we need a lot more windmills around the country, and that will solve the problem. But everyone we talk to in the energy sector— even the State-owned enterprise Meridian Energy, at the breakfast it hosted a few weeks ago—was at pains to say that wind was not the answer. They are engaged in it, but they are at pains to say that it does not, will not, and will never provide for all the growth in demand.

💬 Hon Annette King: Who said that?

Keith Turner said that. The Minister of Health should listen a bit. She did not come to the breakfast. It was for Wellington MPs, but she was obviously far too busy to attend a breakfast like that, and it would have been useful. In fact, I do not think there were any Labour members at the breakfast, which just shows how contemptuous they are of the whole energy sector. They do not do anything at all to plan for the growth we need if we are to build a strong economy and have a reliable, reasonably costed source of energy. This Minister has done nothing to provide that for this country.

Just over a year ago New Zealand First, along with other parties in the House, wrote to every council, every chief executive officer of territorial and regional bodies, and several major institutions and businesses in New Zealand, seeking from them support for a review of the Resource Management Act. We in New Zealand First believed that after a decade of the Act, in law and in practice, the time had come to review it. The answer from the Government and its associated parties was: “No dice.”

I was therefore absolutely amazed when I picked up Mr Copeland’s press release, because last year, in committee and out of it, United Future stated unequivocally—and that was not the only occasion; I will mention another one later—that support was needed to reform and review many of the issues covered by the Resource Management Act. However, at that time we had no support from United Future. When I read the statement made by Mr Copeland that: “Not least, there is a very clear need for an urgent overhaul of the Resource Management Act.”, I was quite amazed. Last year, United Future members sat on the select committee and in this House and had the opportunity to be part of a renewal and rethinking of the Act for the next decade, but they did not take it.

Secondly, with regard to the Resource Management Act, I also found some problems with the recent comments made by the current Leader of the Opposition, Dr Don Brash, about the issue that has caused this debate—namely, the demise of Project Aqua and the associated power generation in the Waitaki valley, particularly the lower valley. When Dr Brash was down in that region on 10 March, he said he was very concerned that the Government was bypassing the normal consent process under the Resource Management Act. He said that a framework was needed so that competing demands for water could be evaluated, achieving a balance that would maximise the wealth of the country. That is what he said when he was down there at the beginning of this month. Over the last 1½ months I have seen from my friends on the right consistent swings in attitude to the Resource Management Act and Project Aqua. That statement made by National’s leader was but one.

The issue really is that the Resource Management Act should by now have been in the last stages of review. That Act was not the reason for the demise and fall over of the project. In fact, a month ago I was aware—and it has been mentioned in the statement made by Dr Turner—that the project, having recently completed geotechnical investigations, has provided information that requires design changes for the project, with an adverse impact on project economics. “Adverse” is the right word, because that is exactly what was being found down there about 6 weeks ago. But the real reason for the fall over is not that, and since about 10 past 3 yesterday there has been a rush of information from various people and parties about why the project fell over.

Let me state what the real reason is. People from the Aoraki Water Trust, and Mackenzie Country farmers, know the reason, and this one was volunteered yesterday to the Timaru Herald by Meridian Energy spokesperson, Alan Seay, who said: “The High Court action taken last week by the Aoraki Water Trust and the Timaru and the Mackenzie district councils was the catalyst for the canning of Project Aqua …”. Dr Turner said that the decisions made in the High Court last week, with regard to litigatory judgment sought by Meridian—and it was unsuccessful—highlighted the “significant uncertainty around the nature of water rights which could be battled on for years to come”. He said: “Either side of that case is likely to appeal the findings of the High Court and it could take years to resolve.” That is the reason, I was told in Otago last year, that this would go through two elections. The real issue that has caused the fall over, along with the other reasons enunciated by Dr Turner yesterday, is that the uncertainty of water-use rights on Lake Tekapo has produced a remarkable change of mind. One can understand that uncertainty. There are other reasons as well, all relating back to the economies, the timing, and the work already done.

I pause for a minute to pay tribute to that taxpayer-owned company, and to the fact that it has, in this case, exercised prudence and care, despite having spent millions and millions of dollars on investigative work on behalf of the New Zealand taxpayer and hydroelectricity consumer. Sometimes we in this House forget what that means. This project was not started yesterday; neither was it started last year. Meridian worked on this project and developed it over a long period. I commend, firstly, the board, which was headed by Dr Small, and, secondly, Dr Turner and his staff for the work they did. We have heard comments in recent weeks about the nature of Dr Turner’s work. We know that Dr Turner, having worked for ECNZ, and having found there was a need for certainty with regard to the central North Island supply—which had been made uncertain because of court decisions—made the very realistic and proper decision in 1990 to seek certainty for his company.

The next matter I would like to raise in the House, and which concerned the committee, my party, and me greatly, relates to the rights of existing consent holders. The bill we brought to the House last week properly reflected the need to recognise the rights of existing consent holders, and it set up a framework to examine and carefully consider the rights of all potential and present water users. In other words, the framework took into account the river. It took into account present users and potential future users. Contrary to what has been said about Mr Parker, that the committee—and particularly Mr Parker, the deputy chairperson of the committee—achieved, in relation to Project Aqua and its demands, a reasonable result for the people of the Waitaki catchment, that was not the impression I gained last week. It is not proper for it to be debated in the House, and my colleague Peter Brown will pick up on matters of energy, which were thought to be the matters for this debate. It is not proper for members in the House to maintain that the Resource Management Act was the answer. The Act applied in respect of the consents in Waitaki, and would have resulted in the priority right for Meridian Energy. That is the actual result. Whatever one has been told, that is what would have happened in practice, and that would have been particularly unfair to farmers in North Otago, and in the Mackenzie country and lower Waitaki valley, as well.

The approach we took on the matter—and I did not have time to say this last week so I am pleased to say now—is that the overall needs of the community in the Waitaki catchment area, particularly the farming community, and its ability and potential to reticulate and use water, was of prime concern to us. That is why New Zealand First, having worked alongside our friends from the National Party and ACT last year in relation to the potential form of the Act, took a stance along the middle line—that is, the framework, as enunciated, and the input of local authorities. It is very, very unfortunate that just a week later the prime catalyst for this whole operation—namely, Meridian Energy’s applications—is not being considered. However, 70 applications are still to be heard. Therefore, there is ample cause for this House to proceed with the bill.

Last of all, and most important, within the bill is the genesis of a potential change to the Resource Management Act. To that degree, although we commend a belated attempt by the Government to set up a junior minister in charge of the Resource Management Act, the power not being there is of concern.

New Zealand’s largest braided river has had a reprieve, and so have the people of the Waitaki valley. The Waitaki is one of our grand rivers. When one goes down it in a boat, one senses its awesome power. It is home to a number of species of endangered wildlife. It has considerable wetlands of ecological value along its margins. It is an international fishery, virtually the only one in New Zealand that has all species of trout and salmon in the same river, and tourists come from the other side of the world to fish it.

But there are some whose whole mission in life is taming nature. It is time we accepted that whenever we want more we cannot just carve another slice off the finite environment. Project Aqua would have taken 73 percent of the water in that river completely out of the river channel into a canal. It would have reduced it to a shingle bed with a trickle. The same runoff going into the river, diluted with 73 percent less water, would have seriously deteriorated water quality until it was unfit for human contact. Worst of all, Aqua would have produced nothing in a very dry winter, because there would have been nothing left to go into the canal, leaving us even more exposed on security of supply. We cannot continue to put all our eggs in the same basket of hydro from the same catchments. Aqua would have encouraged the building of back-up coal-fired power stations for winter at considerably increased cost and discouraged the building of wind generation, which needs to be able to sell its product year round. Aqua would have produced nothing at all, not a single unit, before 2009, and possibly much later.

Renewable energy is getting a better press these days than it used to, and that is good. However, the next step is to understand that although water that falls from the sky is renewable, braided rivers are not. The Green Party has been publicising this latest assault on a spectacular river, and later today I will seek to table 111 copies of our leaflet on Project Aqua and the Waitaki River, so that other members in the House may understand why it was important to stop this project, and the raft of other opportunities we have instead. So we celebrate its withdrawal. We congratulate Meridian, which has always prided itself on being a renewable generator, on its determination to seek other sustainable options that will come onstream much faster than Aqua could have.

It is said that Aqua fell over because of the Resource Management Act, but the Act had been in place for years before Aqua was ever planned. It is quite clear that Meridian Energy thought it could get Aqua though the Resource Management Act, and that is partly because of a loophole. There was no water plan, and therefore there was no minimum flow set for the river. It is clear that the Waitaki bill, as amended by the Local Government and Environment Committee, with a high level independent authority setting an environmental base flow to protect the river ecology and the values of the community, would never have allocated 73 percent to Aqua—nor should it.

I pay tribute to the local community, which generated more than 6,000 submissions on the applications of Meridian Energy to take water. I think that response may also have warned Meridian that this was a project that just did not have community support. Fortunately, Meridian has reacted quickly and it has happened in time for New Zealand to make other plans. We are facing serious issues of balancing electricity supply and demand, and I put it that way very deliberately. For 25 years we have relied, to meet all possible shortfalls, on very cheap energy from the Maui gasfield. Because it was cheap it was squandered on wasteful, inefficient uses, in just 30 years, when actually it was large enough to have lasted us for 100. We also face the prospect of reduced rainfall in the current hydro catchments.

This decision has, of course, been welcomed by the coal industry and by its cheerleaders—United, National, and ACT—as a green light for coal. It is not. The world has got enough accessible coal to raise the carbon dioxide content of the atmosphere tenfold. Scientists tell us that if the carbon dioxide content of the atmosphere even doubles, we are in for serious climate change. We have to get to grips with the idea that just because the coal is there, does not mean it is safe to burn it. New Zealand has got enough coal deposits to generate power for generations—if we turn a blind eye to the huge environmental damage it causes. We should not. Clean coal is a myth. Sure, one can reduce the sulphur and reduce the particulates, and that has been true for some time, but one cannot reduce the carbon dioxide; one cannot reduce the climate-change effects of coal. Just replacing Maui gas with coal, without any growth or increase, would double the greenhouse emissions from electricity. Meeting our current electricity growth with coal makes our Kyoto Protocol commitment unachievable, it holds back new technology for decades, and it positions us in the 19th century, instead of the 21st. But it is not just the emissions; it is the mining damage, the acid mine drainage, the land subsidence, and all the other environmental effects that go with coal mining.

The Green Party will continue to challenge the “Black parties” on coal. We will challenge the “Big Coal parties” of United, ACT, and National. We will challenge the “Little Coal Party” of Labour, and the Green Party will be the “No-new-coal Party”. New Zealand can meet its needs without either coal or Aqua.

I want to refer back to what I said about challenging the balance between electricity supply and demand. We know that for 30 years there has been the science of “gap-ology”—the gap that is always supposed to be opening up between demand and supply, because demand keeps on growing. We have to address both sides of the equation. Remember it was only back in the 1970s we were told that if we did not have a nuclear power-station built by the late 1980s we would be freezing in the dark in the 1990s. Well, it did not happen. One needs only live where one is responsible for generating power to realise fast that investment in efficient lights, fridges, and computers is far, far cheaper than investment in more supply. That is also true for the country.

New Zealand is rich with opportunities to invest in energy efficiency. Many assessments show that 20 percent of our total electricity can be saved—cost-effectively. When I put that question to the Minister at question time he interpreted that as a 20 percent improvement in the uptake of energy efficiency. That is the National Energy Efficiency and Conservation Strategy target—but I have never supported it—that gives us only 2 percent a year. Instead we should aim at a 20 percent reduction in the energy per unit of gross domestic product.

The opportunities in commercial lighting and air conditioning are huge. Energy audits of businesses like sawmills regularly find that 30 percent savings are possible. How many motorways out in the country, miles from anywhere—no houses, no pedestrians, no cyclists—have full-scale lighting down both sides of the motorway for miles and miles? Yet motorcars have lights. Some end uses of electricity are simply not worth the environmental cost they cause. Then there are all the supply options, when we have dealt with demand—for example, direct solar use of heat in new buildings, direct use of solar heat for water heating. The Minister said that wind generation could provide another 4,000 megawatts. That is a huge proportion—about 50 percent of our current electricity. It is much faster than Aqua and it is cost-effective. The “wall of wood” coming towards us from the maturing pine forests contains within it enough waste, not usable by the forestry industry, which contains energy equivalent to half a Maui gasfield—80 petajoules a year. That is useful in industry for co-generation of heat and electricity.

The options are there. Cheap energy is a myth. Cheap energy is like a flat earth. Cheap energy we have had for decades, and because of cheap energy we have wasted it and we have built up a culture of energy inefficiency. It is not actually cheap at all. We have paid for it in sickness. We have paid for it in loss of our environment. We have paid for it in climate change. It is time we changed our pricing structures. It is time we changed our balance of supply and demand. It is time we went for a sustainable energy future, and, although I do not agree with the current Minister on everything, I congratulate him on being the first one New Zealand has ever had to try to tackle that challenge.

Meridian Energy’s announcement yesterday to can Project Aqua has certainly focused the attention of most New Zealanders and highlighted the looming energy crisis that this country is facing. Project Aqua represented the first significant investment in new generation since the Clyde Dam some 20 years ago. We know, and the experts remind us increasingly often, that our demand is expanding at over 2 percent per year. That is, as has been pointed out, not 150 megawatts; it is actually more like 200 to even 300 megawatts per year, and that is just to keep up with the expanding demand of a growing economy.

I believe that New Zealand has three comparative advantages over our global trading partners. The first is our temperate cool climate and abundant rainfall. That allows us to be a major, efficient agricultural producer, and the key factor is the relatively benign climate that we enjoy in our temperate region. The second key factor, though, and one often forgotten, is a reliable supply of internationally competitive energy—specifically, electricity. In terms of all our production, we often forget that we are not so much exporting milk-powder and wood product; there is often more energy, in the form of electricity, in those added-value finished products—which create the wealth for this country and the jobs for our people—than raw product. A particular example is a tonne of milk-power. To dry that takes more value in electricity than the value of the milk input. The Whirinaki mill in Napier is an example. We are actually exporting electricity there. There is more value in the electricity in that finished pulp than there is in the wood going into it.

We must continue to have an abundant, readily satisfactory supply of appropriately priced electricity. I am not talking necessarily about cheap electricity, but it must be cheap relative to our trading partners. That is what concerns me about the policies of this Government. It is going down a path whereby it is abandoning our key comparative advantages and it wants, for its own mantra, to drive up the price of electricity, so it can justify the winners that it sees in terms of wind generation and what it calls “renewables”.

Regarding wind generation, the point has already been made that the most efficient, state-of-the-art wind generator does 0.8 megawatts. To meet our expanding annual demand, we would need to build 200 to 300 such windmills every year, forever. What the Danish, who have become heavily dependent on wind generators, have found is that the wind sometimes does not blow. Denmark finds that 37 percent of the time there is no generation. At least water, although it can be unreliable, is seasonal and can be predicted. Wind is totally unpredictable, and although it may be part of our future mix, it is certainly not the answer this Government pretends it could be.

The other disturbing thing with this Government’s policy is its foolish adherence to the fundamentally flawed Kyoto Protocol. New Zealand is the only Southern Hemisphere country to have ratified with an obligation. Our key trading partners, Australia and the United States, have had the sense and presence of mind not to bind themselves into that fundamentally flawed process. But, oh no, this Minister sees it as a way of driving up the price. He would put a carbon tax on things like coal and fossil fuels so that his precious little windmills would then become more efficient. That is nuts. It is taxing the most efficient and lowest-cost option in favour of a higher cost option, and somehow pretending it is now a cheap option because one has taxed its competitors. That is “loony tune” economics, but they are the messages we are getting from this Government.

I am deeply alarmed with the process the select committee got into over Project Aqua, and the Resource Management Act amendment, which was the allocation model, because, on the one hand, the Government was at pains to say it was not rushing through this “think big”, national development - lookalike legislation specifically for Project Aqua. “Not at all”, it was saying. Yet, on the other hand, the Government said the legislation had to go through urgently, there was a very truncated select committee process, and during the second reading, just last week, Minister Marian Hobbs said: “It is essential that we pass this legislation as soon as possible.” My question to the House is: why is it not on the Order Paper for the urgency motion this Government will take later this afternoon? If it was true last week that the Government had to pass this legislation as soon as possible, why will it not include it in the urgency motion so it can go through its final stages this week? It makes one think that perhaps the Government knew that Project Aqua would have the plug pulled on it this week. It certainly raises that question. Could it be that the real concern of the Government was political, and that we are seeing all this incredible crashing of gears and U-turns as it screeches to a halt to try to pretend that everything will change? There has been a whole run of U-turns this past month.

Project Aqua was looming to be another Save Manapouri campaign. Those of us who are old enough will remember the Save Manapouri campaign and the political fallout from that. I predict that this Government saw it was heading for a Save Manapouri type of situation at next year’s election, so it directed those shareholding Ministers to give a direction for Meridian Energy to pack it all up and pull the can on that project, even though it had already spent $45 million or $50 million on all the scoping for it. One would have to think there has been political intervention to get that extraordinary result, because, unquestionably, we need the energy Project Aqua would have brought. It could have produced energy at about 4c a kilowatt hour, which is way below the average, and certainly would have added to New Zealand’s energy mix.

There have been other extraordinary policies from this Government. Mention has already been made in this debate of the Arnold River power scheme, where TrustPower wanted to upgrade an existing dam and generator from a small 5 megawatt station to a 65 megawatt station. It was not a big block of energy relative to Project Aqua, but it was certainly very significant, and sited on the West Coast within a rain-abundant area. It made sense. It would have made the West Coast self-sufficient in power. It would have obviated the need to put two large upgraded transmission lines into the West Coast, and there would have been additional power available for export to the national grid. But what did this Government do? It said it could not upgrade a small alpine valley, add to the dam size, and flood a small area, which was substantially broom and gorse, because the Department of Conservation would not approve. That is the nonsense of this Government.

This Government has no strategy for energy planning. It has nationalised our generators, instead of allowing market principles to operate, so that about 70 percent of our electricity is now in State regional monopolies, with Genesis Power, Mighty River Power, and Meridian Energy. Our national grid is totally nationalised and run by the Government. It is not the market causing the problem; it is actually a lack of market and too much Government. That is the problem. I predict that, as this energy crisis deepens, this Government will continue with its panic policies and we will end up in an incredible mess, which will be bad news for the New Zealand economy.

There was a foolish decision in recent months from the Minister of Energy. He threw $150 million of taxpayers’ money at a Whirinaki site for a single-cycle gas generator, in the hope that we never have to use it, and in the knowledge that if we ever do, it will be the most power we ever use. It is essentially a 747 jet engine that is bolted down on a stand and requires its own storage bunker of fuel at Napier wharf to supply it. It was a foolish decision, but the Minister did it for political reasons. What we are seeing across the board in the energy sector is an increasing politicisation and bad decisions coming out of that process.

This is a project that was never going to fly. We have all heard the different price tags. As little as 6 months ago, it was reported that Project Aqua was to be built for about $0.9 billion, and now the last report has said there is a price tag of about $1.2 billion. When I quizzed Mr Turner about this at the select committee a couple of weeks ago, he confirmed that it would not be built for $1.2 billion. He had no confidence that it would be built for that price tag, at all. He did not say it, but my best guess is it would be more like $2 billion - plus. The project was not even tendered internationally, and the reasons are either that it could not be built for $1.2 billion and the Government knew it or—and this is probably more likely—that no international bidder would look at it for that type of money, in particular under the types of constraints that Meridian Energy would be putting them under through this Government. Much has been made of the fact that Project Aqua would provide cheap power. But I put it to the House that if the cost model was wrong, then the price model must also have been wrong, because the cost of capital must flow through into the price model. What that suggests to me is that, at $1.2 billion, this project was so marginally priced that, in the end, not only could it not be built for that figure but Meridian Energy just said “No way!”.

There is absolutely no doubt that this country needs more electricity generation. That has never been in doubt, and the National Party has never argued that Project Aqua was not worth its merits on the basis of generating more electricity. What we were concerned about was the way it was being cherry-picked by this Government to rush through legislation, because it would not address the real issue of the Resource Management Act. In my view, Project Aqua, notwithstanding the fact that it would have solved a short-term problem, was not going to be a long-term solution, and there is no doubt that it would have done damage to one of our last great rivers. One year in three there would still have been a crisis, given that that is when there would be dry years. Given that the project would have taken at least 5 years to build—if it ever got consent in the first place—demand would have already outgrown supply by then, and the question would be: “What do we do now—dam another river?”. Well, I for one was not keen on that, nor was the Government, despite the fact that there was a reasonable alternative on the West Coast.

The Minister took a call before and told us that Dobson was not a goer because it was a pristine environment. The reality is that what has been protected is not a pristine environment, but is gorse, scrub, and lupin. That is what the Minister is trying to protect, and that is why he would not even look at this area.

💬 Hon Brian Donnelly: Wouldn’t even look at it.

Would not even look at it—would not even go there. He did not even leave his Wellington office. He is just too petty to consider this even on a commercial basis. What are the alternatives? Wind? Mr Shirley has already addressed that issue and exposed some of the shortcomings. I would add that some of the technology is still to be proven. Gas? The supplies of gas are limited. Coal? It is really the only other alternative. The Minister knows that, which is why he tried to steer the conversation away from coal in the first instance.

New Zealand has over 1,000 years of coal reserves, and we will simply have to use them. Burning coal, using new technology, is doable. Yes, there are some emissions, but we can reduce those dramatically. If we want a secure, profitable, cohesive nation, then we must guarantee generation supply, and this is the only way we can do it. Better still, if we burn coal, we can site the constructions exactly where we need them, and we will not lose huge amounts of coal from transmission losses. For example, the Christchurch to West Coast railway line—and we have huge amounts of coal on the West Coast—is only 36 percent utilised. The infrastructure for getting coal where we need it is already in place in some places. Coal is affordable. If we backed out of the stupidity of the carbon tax that this Government imposed on us by rushing in to sign and ratify the Kyoto Protocol, then coal would be affordable and, more important, would guarantee a constant supply of generation.

Let us be clear. The real reason, besides the cost, that Project Aqua fell over is the Resource Management Act. Meridian Energy said in its own press release that one of the reasons it walked away from this project was uncertainty concerning resource consents—in particular, whether Meridian Energy could secure a consent, what the conditions of any consent might be, when the consent might be available, and how much water the consent would provide. Meridian Energy had absolutely no surety that the Resource Management Act would deliver this project for it. The Government has belatedly accepted that it has to do something about it. At least, I thought it would do something about it. It transpired that the Government put Mr Benson-Pope in charge of this. People will stop in their tracks when they hear that press release. When that goes over the sound waves of New Zealand, people will stop, think about it, and say: “Wow, electricity issues are solved now. Bring it on!”. I can tell members that this Government has suddenly lost all semblance of credibility.

The other person in the House who has been a big winner today, the person who is most relieved, is—wait for it—Mr Parker. He has showed absolutely no leadership whatsoever on this issue. In fact, people in the Waitaki valley can never find him to take on a leadership role, or to ask his opinion on this. They have actually coined a nickname for him. They call him the “Parker pimpernel”. That is what they call him. They search for him here, they search for him there, but they can never find that dastardly “Parker pimpernel”. That is what they are saying about him down there. I am relieved because he is in the House, and I know that he will get up, take a call, and tell us exactly what we need to do now in this country to guarantee a constant supply of electricity generation. If we believe his press releases, we know he is the one with all the answers. I cannot wait to see this guy get on his feet to take a call.

The other reason that Project Aqua fell over was the attitude that Meridian Energy displayed toward the local community. It really adopted a “bull in a china shop” mentality, and, in particular, its attitude towards local farmers was nothing less than appalling. Meridian Energy wanted all the water for itself. That should have told us something in the first place about how marginal this project was. Meridian Energy would have us believe that of the 73 percent of water that needed to be diverted down those canals, it needed at least 95 to 97 percent to make the project fly. The local farming community had news for Meridian Energy. By Order in Council the community protected 15 cumecs of water that were guaranteed for irrigation.

Meridian Energy thought it could thumb its nose at those folk, so the people got coordinated. They got organised. They got a legal opinion from one of the leading legal firms in the country, which said: “You guys have a very strong position.” Meridian Energy was essentially outmanoeuvred. In the end, Meridian Energy, because of the costs, the Resource Management Act, and its attitude to the local farming community around Kurow—the community said it had to be more reasonable—threw up its hands and said it was all too hard.

That we must secure a supply of energy is not in doubt. It is absolutely essential, but we need to plan for it long term. We need to use a strategic approach and look at the resources we have in abundance—which is coal. I cannot abide the fact that we will continue to dam rivers willy-nilly. We need to use a strategic approach, use our resources, and use the technologies available to us if the electricity crisis that we are now facing is to be avoided.

Mr Connell has done it again. Whenever he or other National members get up to talk about this issue, do they deal with the substance of it? No, they attack me. I hold the electorate of Otago—having taken that formerly safe National seat at the last election—because the electorate knew that the Labour Party would treat it fairly, and so it does. We have had two contributions from National members today. First of all we had Roger Sowry, who, amongst his inventions, suggested that he first learnt today that the Government appointed David Benson-Pope responsible for a review of the Resource Management Act. All the rest of us in the House know that that was tabled on 26 February, when Mr Benson-Pope was appointed Minister, and his delegations announced. Sorry, Roger Sowry, wrong again!

Then we heard from Mr Connell again. Mr Connell last rose to attack me, soon after he had put out a press release claiming that I had not been to any of the meetings in the electorate that Ministers had called in relation to these Project Aqua issues. I actually chaired the meetings. Obviously, he was not there. Obviously, he did not read the newspapers either, because they reported that I chaired the meetings.

Then, on the one hand, we heard that Mr Connell thought the project had been pulled because the cost had, in his opinion, ballooned to $2 billion, yet 30 seconds later we heard him say that it was all because of Resource Management Act problems. What a load of cobblers! Project Aqua was a massive project. It was a $1.2 billion project, would have had a 60-kilometre canal—virtually all of which would have been in my electorate—and would have had six hydro stations about the size of the Beehive. The 60-kilometre canal would have been as wide as this building, including the batter. Up to 70 percent of the Waitaki River would have been put through the canal, and 32 million cubic metres of earth would have had to be moved. This was a big project.

💬 John Key: So?

So Resource Management Act principles ought to be applied to decisions like this. I am absolutely proud of the position the Government has taken. The Prime Minister said it well yesterday. She said we are not in an era when Governments legislate for specific projects. We do not “think big” them. Who would? Despite its claims to the contrary recently, National would. Last year Gerry Brownlee said the Resource Management Act ought to be truncated so that there were no delays before Project Aqua went ahead. So did Gerry Eckhoff from ACT.

💬 John Key: That’s true.

Mr Key says that that is quite true. So they do now acknowledge that, despite the seriousness of this project, they would have truncated proper Resource Management Act processes and let the interests of my electorate just be overridden in favour of the national interest. I am proud my Government did not do that.

I pay tribute to the members of the community who have participated in processes to date. Small communities facing applications like this are always challenged. There is an element of unfairness in that, which is in the nature of any big decision. I take my hat off to those who stood up and shouldered those responsibilities on behalf of their community. Many in my electorate are pleased that Project Aqua is off. Some are disappointed, but the vast majority of people—be they for or against it—are satisfied that the Government listened to their concerns and did not override due process. They are grateful that the Government did not “think big” this project—as National at times proposed it should.

In terms of the decision to call Project Aqua off, the Otago Daily Times summed it up pretty well today when it stated that, basically, Meridian’s hand has been forced by growing uncertainty about the project and increasing costs—costs that Meridian, understandably, did not foresee when it began its investigations. Then it went to state something that I would like to record: “To give Meridian its due, it has usually played with a straight bat.” That is true, and I agree with Mr Jim Peters’ comments earlier that Meridian has behaved honourably throughout this, and that it has complied with its obligations at law.

I also say that I defend and applaud its decision to take a decision now to proceed no further. It has spent $45 million on the project, in addition to some of the land acquisition costs—it will largely get the land acquisition costs back when it sells the land, if it does. The $45 million spent on planning the project and engineering advice etc. is equivalent to 3 percent, at most, of the project cost. That 3 percent was wisely spent, and I ask listeners and members to consider that, compared with the last time a Government approached a big project, which was the Clyde Dam. Hundreds of millions of dollars of taxpayers’ money was wasted because there was inadequate planning at the time, in addition to years of delay in the commissioning of the dam, which had consequences in terms of the availability of electricity from the project.

The Minister of Energy is being totally upfront when he says that the most important thing to him, in terms of energy planning, was getting a decision early rather than late, so that alternatives could be pursued in the event that Project Aqua did not proceed. The worst outcome here would have been 2 further years of planning for Project Aqua, and then Meridian deciding not to proceed with it because of the costs at that stage. Had that happened, we would have lost 2 years in terms of the creation of other sources of generating capacity.

I want to say something about energy generally in New Zealand. When the Hon Pete Hodgson took over this portfolio about 4 years ago, we had come through Max Bradford’s so-called reforms. Since then, of course, the Government has had to intervene through the regulation of natural monopolies—the lines companies—and we have also had to intervene in terms of reserve capacity. We have also done some central planning of likely demand for electricity. There is a very good document that is available to people on the web, at www.med.govt.nz, under the energy section, which looks at the New Zealand energy outlook to 2025.

Reading that document dispels a few myths. Firstly, we are not yet at crisis point for electricity generation. Secondly, there are a number of alternatives. Thirdly, coal is one of those alternatives that is being considered but, at the moment, it is more expensive. No one is prevented in New Zealand from building a coal-fired power station. A company can apply for and get a resource consent, if it thinks it can make money from doing so. Companies do not think they can make money from doing so, as evidenced by the fact that there have been no applications for such stations. It is not the fault of the Resource Management Act that Project Aqua, or other coal stations, have not proceeded.

That is evidenced by some of the large consents that have been granted under the Resource Management Act. For example, there are gas plants at Stratford and Otahuhu C that have been consented under the Resource Management Act. Various smaller hydro stations have been consented in my own electorate. There is also the wind farm near Palmerston North that has recently been consented. There is the Tauranga bridge and the pipeline. So it is not the Resource Management Act that has got in the way of Project Aqua, it is the underlying economics and risks—as Meridian has said—in the upper catchment, concerning whether other people can get some of the water that is already going through those dams, which would threaten the viability not only of those dams, according to Meridian, but also of Project Aqua. Those are uncertainties that were not created by the legislation recently promoted to try to deal with planning deficiencies in the Waitaki, but were consequences of the underlying law.

In terms of the question that has been asked of me as to whether we will see any large-scale hydro in the future, I think the jury is out on that. One of the things that became evident from Project Aqua was that there is change in the relative value of water for hydro, compared with other uses like irrigation. For the first time in New Zealand, we have a widespread water shortage. Produce prices have pushed up land prices. The economics of irrigation, in comparison, have improved. Technologies have changed through the likes of K Line irrigation, making irrigation of rolling country now permitted. At the same time, we have seen a narrowing of the gap between hydro and other sources of electricity like wind, which has meant that there are choices for renewables that were not there 10 years ago.

I am absolutely confident that the Government has the future energy needs of our country under control. I am sure that the Minister is dealing competently with managing demand-side issues so that we do not waste our energy, as evidenced by the fact that we have a target over the next decade of increasing energy efficiency by 20 percent. I am confident that we will not have blackouts or brownouts. I am confident that this Government has properly protected the interests of my electorate against the calls for “think bigging” Project Aqua that were made by other parties.

The debate having concluded, the motion lapsed.