Electricity Industry Bill

Part 2 sets up the electricity industry governance and creates a new authority called the Electricity Authority, which effectively replaces the Electricity Commission. We should not fool ourselves that this makes a substantial difference to competition in the market. It does make a difference, in that it takes away some of the functions that one would think need to have some governance, like how clean our electricity is, a focus on renewables, and a focus on the efficiency of use. Those sorts of functions are stripped out of what used to be called the Electricity Commission and, by and large, they are not replaced in the new authority called the Electricity Authority. I cannot understand the logic for that step backwards, and I ask the Minister in the chair, the Hon Georgina te Heuheu, to explain why the Government calls that progress.

But, more particularly, I am interested in what the Electricity Authority will be doing that the Electricity Commission could not do, in respect of setting market rules that will improve competition in the market. That is what the Hon Gerry Brownlee told us from the chair, just some minutes ago. He said that these changes will reduce the pressure on prices by improving competition. I cannot understand how that can be. I cannot see anything in Part 2 that materially changes the authority’s powers from those of the existing commission. I come back to the issue that I started to address in the discussion in the first part of the debate: how can the Minister do anything but conclude that we do not have real competition in the electricity markets?

I refer again to the example that we have not had a response from the Government on yet, in respect of Alexandra power consumers. I expect this issue will have been raised by Jacqui Dean, who I see is in the Chamber.

💬 Jacqui Dean: Because they sell to Transpower. The member knows how the market works.

That is not right. No, that is not how the market works, I say to Jacqui Dean. Transpower does not buy any power; not one kilowatt, except for the power in its head office, mainly. Maybe Transpower has a wee bit of power in its head office, but it does not trade in power. I say that Ms Dean has that completely wrong. Transpower transmits power. People buy services from Transpower, which provides the grid, and electricity companies use that grid to transmit power. I am afraid the member knows absolutely nothing about the way the electricity market works. It is no wonder her constituents come to me, instead of to her, and complain about the ridiculously high tariff that they have to pay in Alexandra.

The reality is that Alexandra sits next to the Clutha River. Nearby is one of the biggest dams in New Zealand, the Clyde Dam, and 10 kilometres in the opposite direction the Roxburgh Dam generates probably 100 times the electricity demand of Alexandra, yet Alexandra residents pay amongst the highest tariffs in the country for each kilowatt hour of power that they use. I ask Ms Dean to explain that to me. If the market works, why do Alexandra residents, who are so close to the resource that generates the electricity, pay such a high tariff for their electricity?

When I was the Minister of Energy, this issue used to vex me. I used to ask the officials to explain why the tariff per unit of electricity is higher in Alexandra than it is in other places that are further away from hydro dams. An adequate explanation was never given. I was always nervous that the reforms from Max Bradford did not produce a sufficiently competitive market to constrain electricity prices, as evidenced by the fact that residents in Alexandra, which is next to the hydro stations, pay more for their electricity. I am not talking about their lines charges; that is a different issue. They pay really high lines charges as well, partly because they are a geographically spread population. But in respect of their energy use, they pay more. What in this part will constrain that problem?

💬 Jacqui Dean: What did Labour do about that? What did the previous Minister do about that, in his 9 years?

I say to Ms Dean that I am ready to conclude that nothing in this legislation will constrain that. In fact, what is happening here is smoke and mirrors, to cover the National Government’s demand for higher dividends from the State-owned enterprises. There is no real constraint on power prices.

I have lodged Supplementary Order Paper 163, which has a particular emphasis on the role of the Electricity Authority. I draw the Committee’s attention to the Supplementary Order Paper and its intention. My amendment to clause 17 of the Electricity Industry Bill would insert the words “and environmental sustainability” after the words “efficient operation”. The intent of clause 17 as it stands is missing looking at how environmental sustainability can be taken into account in terms of the work and role of the authority. The authority can play an important role, and from what we have heard from the Minister of Energy and Resources, other than citing an intention to have increased investment in geothermal energy, we need to look at the whole investment landscape of non-thermal energy sources and what can be done about leadership in that area. I believe that by including that amendment the Government would be sending a positive signal of leadership in that it would be looking at the whole integrated way in which energy is generated from mainly non-renewable sources. That is certainly my intention going forward.

My amendment to clause 18(1) would add other functions to the Electricity Authority, first inserting paragraph (k): “to ensure that electricity is produced and delivered to all classes of consumers in a fair manner:”. My intention in tabling that amendment is to ensure greater fairness across the sector. There have been a number of contributions from members about price differentials between residential or domestic users vis à vis industrial users. The authority can play a strong role to ensure that there is greater fairness in price setting, and Labour believes that the Committee could give its attention to that in making amendments to the bill.

Second, paragraph (l) requires the authority “to undertake monitoring of environmental impacts of electricity generation and ensure that an environmentally sustainable approach is taken in the development of electricity generation.” That amendment refers, in part, to the point that I made earlier. When we think about how energy is generated in our country, we see that there is far too much reliance on the thermal generation landscape. Certainly, Labour believes that renewables are the way forward, that leadership must be given by the Government, and that it needs to be clearly set out in a bill like this one. It is Labour’s intention to go through, in some detail, the various debates and outline the reasons why we believe that the Government must give leadership.

I was heartened to hear the Minister say that increased investment in geothermal is a good thing, but we cannot leave it to chance. We have to be really firm that the Government should direct greater geothermal investment. In fact, we can be the leading edge in the international landscape in terms of our contribution in geothermal energy; that is what the Government should do. More important, with regard to our natural resources we can play a key role in increasing our commitment to renewable energy generation and leading-edge technology in that area. That is a bigger debate than is afforded by this bill, but it is the type of future and vision that Labour sees going forward. It is simply not correct for the Minister to say that Labour wants to go back to the position that we were in. The world has moved on; Labour has recognised that. We know that the future requires a stronger emphasis on environmental sustainability, and that energy generation has to take greater account of renewable sources of generation. That is the future. Leadership must be shown in that area; the Government cannot simply leave it to chance. The role of the Energy Authority, if it is to be as the Minister has outlined, should be to ensure environmental sustainability in the setting of the electricity generation market.

I want to speak briefly with regard to the authority, given that the previous speaker, David Parker, eloquently raised a number of issues about the role of the authority. I want to come back to a number of other Supplementary Order Papers, but for the purpose of these clauses in Part 2, I just highlight that the role and function of the authority is somewhat narrow, and I believe that including the amendments in my Supplementary Order Paper will set the authority on a landscape of looking at where New Zealand is best headed in terms of energy generation. That is the kind of future that New Zealanders want to see, and they know that it requires leadership. We cannot leave the State-owned enterprises to their own devices to go down a path without some direct guidance from the Government and the Minister in charge. The role of the authority will be paramount to that, given that the Minister has delegated to the authority a number of roles and responsibilities.

For that purpose, I am hopeful that the Committee will consider those particular amendments to clause 17 and 18 to be positive ones that will achieve that objective. Kia ora.

I am happy to take a call on Part 2, “Electricity industry governance”, and, in particular, I want to talk about the establishment of the Electricity Authority and the regulatory arrangements that are in place. I start by acknowledging the comments the Minister made about what Labour would do and whether we think that everything is perfect as it is operating now. The clear answer is that it is absolutely not. Generally speaking, we agree that the electricity market has not lived up to expectations set about 12 or 14 years ago when Max Bradford first established the market through the Electricity Industry Reform Act 1998. So, definitely, it does not work. The issue therefore relates to the fact that the electricity market did not live up to expectations, and it raises the question of what we can do to make sure that it operates more effectively, given that we cannot go back. There is no way to go back to what we had before, so we must ask what we can do and where we can go from here.

The previous Labour Government decided that the establishment of the Electricity Commission to provide much more oversight to the electricity industry was the way to go, and Labour still believes that. We still believe that the electricity market needs to have a body that provides much wider oversight, and that deals not just with the pure functioning of the mechanics of the market but also with issues of affordability, sustainability, and security of supply. So the three planks that Labour put forward are security of supply, sustainability, and affordability of pricing. Does Labour think that the Electricity Authority, as constituted by this bill, will deliver on those things? The clear answer is no.

Under this bill, the Electricity Authority’s objective is to promote competition in, reliable supply by, and efficient operation of the electricity market for the long-term benefit of consumers, but I do not think the Electricity Authority will be able to do all of those things.

This bill transfers the approval of Transpower’s grid upgrade plans away from the Electricity Commission, as it is now, to the Commerce Commission. I think that is quite a significant move. One of the reasons that I am concerned about that is that we need overall coordination and an overall approach to the electricity industry. This bill continues to fragment everything in the same way that the Electricity Industry Reform Act deregulated the market in the late 1990s. I do not think that this legislation will lead to a more effective operation of the electricity market. When it comes to the grid upgrade, we have to consider the alternatives to approving a grid upgrade. We can do that effectively only if we consider all of the other elements of electricity generation, like greater efficiency in the use of electricity, and demand-side reduction, which relates not just to efficiency but to reducing demand. We need more effective distribution of electricity generation, so that we do not have to rely on transmitting electricity from the South Island to the North Island when it is raining a lot, or the other way when it is not. We need to consider all of the alternatives to a grid upgrade. The Commerce Commission will not be able to do that; it will have a much narrower focus. So I am concerned that transferring that authority from a body that has a wide overview of the electricity sector to one that is very narrowly focused will not help the Government to meet the objectives that it is setting out.

The promotion of energy efficiency is transferred to the Energy Efficiency and Conservation Authority. Once again, I come back to the idea that electricity efficiency cannot be addressed on its own without reference to other parts of the puzzle, like transmission, distribution, pricing, and effective operation of the market. We need to consider efficiency as part of a wider, overall package. One of the concerns I have is that the Energy Efficiency and Conservation Authority will become a small body on one side that deals with electricity efficiency, and the rest of the electricity sector, including the Electricity Authority, will therefore think it is not part of their purview. Actually, electricity efficiency and the efficient use of energy has to be integral all the way through the electricity system. It cannot simply be parked off to one side with the Energy Efficiency and Conservation Authority. I agree that some streamlining could be done, but this bill goes far too far by transferring all of that responsibility purely to the Energy Efficiency and Conservation Authority.

Another part of the bill that I am concerned about relates to the Minister of Energy and Resources and the Minister of Consumer Affairs being the final arbiters on all issues of fairness. That is concerning, because, ultimately, it will mean that for consumers who are concerned that the market is not operating fairly, in that power price increases are not fair, the only people they will be able to go to under this legislation are the Minister of Energy and Resources or the Minister of Consumer Affairs. That places a huge burden on the Ministers. It also means that a consumer who wants to complain is less likely to make any traction. Ministers are notoriously difficult to pin down at the best of times. They will not have the time or the resources—and the public will not have access to the Ministers—in order for the system to operate effectively.

The Electricity Authority established under this bill will not have any responsibility for environmental sustainability. The Government says that it is still committed to the target put in place by the previous Labour administration to have 90 percent renewable electricity in New Zealand. This bill states that the Electricity Authority will have no regard to that and no role in ensuring that happens. So when will it happen? It will not simply happen miraculously. It will not happen by being aspirational and talking about it. We have to put some incentives in place if we want there to be more renewable electricity, which was one of the things that the previous Labour Government was focused on. We were focused on ensuring that our electricity system was more sustainable and that there was a higher reliance on renewable electricity. The Minister of Energy and Resources acknowledged that fact in the brief contribution he made just a moment ago. He talked about the fact that there was more renewable energy generation. He talked about geothermal energy generation in particular. When the previous Labour Government was in office, there was a big investment in wind generation and geothermal energy.

In New Zealand we rely on and take for granted our hydro system. It is the backbone of our entire electricity system. We are very fortunate that over the last year or two, it has rained quite a lot, so we have not had any risk of electricity shortages. Gerry Brownlee, I am sure, like all Ministers in the previous Government, gets the hydrology summary on a daily basis and goes through the changes in lake levels overnight to see whether they are tracking up or tracking down. For all of the time that he has been the Minister of Energy and Resources, the hydro levels have been fine. He has had a dream run in that regard, whereas Pete Hodgson and David Parker had a bit of a nightmare scenario when it came to rain not making it to the right places in the country. That was a key contributor to why we had those energy savings campaigns from, I think, 2001 to 2003.

Overall, we cannot ignore the environment when it comes to our electricity system. The Electricity Authority not needing to have any regard to the environment whatsoever is a very retrograde step, because we are dependent on the environment when it comes to our electricity generation. If we want to focus much more on renewable energy, and if we want to hit that 90 percent target of renewable energy generation, which the Government talks about, then obviously we will need to continue to focus on the environment and on making sure that our electricity comes from renewable sources.

I want to talk about the issue of stability of power prices, which the Minister raised. Under this legislation, the Electricity Authority will have no responsibility for considering issues of power prices at all. Gerry Brownlee’s response to that is that if power prices are going up, people can just switch power companies. In Gerry Brownlee’s world, when it howls with rain, people go outside to look at their meters to see how much electricity they have used, and then they go back inside and look on the Internet to see which power company will give them the best price. In Gerry Brownlee’s little fantasyland, consumers are supposed to be doing that on a daily or weekly basis. In reality, I ask who is going to do that. I ask who will actually monitor their electricity price on a daily or a weekly basis. It is not realistic. In fact, it is realistic only if we move to the type of model set up by Meridian Energy’s subsidiary Powershop, where people engage in the market and buy electricity on a “pay as you go” basis. The Powershop people thought that this bill was a bad idea until they were muzzled by Gerry Brownlee and told that they were not allowed to speak about it any more. They had to take down blog posts that criticised Gerry Brownlee and this legislation. The Powershop model is actually quite innovative and provides additional choice for consumers, but we should not overlook the fact that for most consumers the idea that they will be checking their meters reading every day or every week, going on the web, finding out what the lowest power price is, and then switching power companies all the time is simply not realistic. It is a joke.

I stand to add further fuel to our words of opposition to the Electricity Industry Bill. Part 2 of this bill reminds one of moving electrical deck chairs on the base of a waka that is going to sink. Despite these changes in institutional positions, deep down the underlying question that every New Zealander is bedevilled by remains unanswered. This bill will not lessen the differential between what we as garden-variety Kiwis pay for power and what manufacturers and a host of other industrial users pay for power. Neither will it lessen the cost, the burden that every New Zealander faces in relation to their power bills.

The restructuring options that Mr Brownlee has brought to the Chamber began with his musings in the Commerce Committee back between 2005 and 2008. He organised a body of work to take place to find whether there was a better way to squeeze more dough and efficiencies out of the State-owned enterprises. He focused on the energy State-owned enterprises. I suffered for a short period of time with my presence on that committee whilst he was the chair. He is a jolly fellow; however, he completely misunderstands the deep problem here. The problem is that we have reached a point in New Zealand at which these institutional changes of a filigree nature are not going to resolve the underlying problem. The underlying problem is that the notion of competition for this essential service has not worked since the time of the 1990s. I personally look forward to the day when power is surrendered back in this direction away from the bureaucrats and away from the staff who run the State-owned enterprises, who are largely beholden to no one. It is an actual fact that there is more accountability and more interest in the career of an ordinary civil servant than either responsibility or responsiveness from the people who run those companies, the chief executive officers, the staff members—I will not comment on the boards of directors, because they have recently changed as a consequence of Mr Brownlee’s purge. I might give them an opportunity, brief though I hope it is, to prove themselves. But the real force blocking the types of changes that my colleagues refer to are the people who man—or should I say people—the positions inside these institutions.

There will be no change to price. There will be no change in relation to the quality or the volume of competition, which these sets of changes are based on. Will this organisation be more efficient? Will the existence of two quangos improve upon what the earlier organisation is doing? No. Why? Because, broadly speaking, we have always had at least two options: keeping the old model, which was destroyed by Max Bradford, or going far right out, as the kaumātua of the House, the Hon Roger Douglas, whose hair has turned from grey to white over the last week or three, would say—a complete sale of those assets into private hands, and in that way achieving the sorts of efficiency outcomes we require. Naturally, we will never agree to that.

So the test is not so much about the effectiveness of each provision; it is about whether this rearrangement actually delivers a cheaper service. No, it will not. Will it make the institutions more responsive not only to the consumers but to their proxy—this House? Unfortunately for the people of the land, their interests are being mangled and mediated through the Government over there, and I hope, after recent events, that it does not last too much longer. The push that we had, which has unfortunately been marginalised in this bill, was to enhance the importance of ensuring that the supply of energy, and the pace at which it is used, is used at a level of greater efficiency, thus reducing the level of burden and impact on the sources from which we draw our energy. This is not going to change that. I repeat again that the level of interest and motivation within the bureaucracy of the various energy companies for achieving those kinds of outcomes is somewhere near zero.

I confess to not having been on the Finance and Expenditure Committee, but I think that anyone who picks up the Electricity Industry Bill, which is quite a substantive one, has to have an interest in it. The industry and electricity itself affect each and every New Zealander, whether they be in industry, a pensioner, or someone who just wants the comfort of nice underfloor heating in their bach by the sea. Whatever it is, it is really important to get this legislation right.

Clause 9 of Part 2 lists the industry participants. Back in the good old days, people understood that we had increases in electricity prices—there was no doubt about that—but there was security of supply, and we had an integrated system. There was, basically, ECNZ, and people had a local lines company that they dealt with. They knew what they paid, and some of them had to guarantee the price because they had had a line extended to their place. We have now moved into the new era of user-pays and the market, etc., and if people read through the list of industry participants they will start to get worried. For example, industry service providers are industry participants, and the layers of people who will be in this new electricity system—this wonderful new market that National is trying to create here—are listed in clause 9(2) as being: “(a) a market operation service provider: (b) a metering equipment provider: (ba) a metering equipment owner: (c) an ancillary service agent: (d) a person that operates an approved test house: (e) a load aggregator: (f) a trader in electricity:”. The list goes on and on. I guess all of those people will take a little slice, in terms of costs or profit, and ultimately the consumer will pay. The more complex we make a system—and this is exactly what is going on here—the more costly it will be.

There is, of course, an industry code, and clause 11(1) states that industry participants must register and comply with the code. We understand the need for a code for the building industry, given that the National Government’s attempts to deregulate it back in the early 1990s led to leaky homes in this country. It did not have an adequate code because it thought that the market would deliver, and the market failed to do so. I say to National members that this is another classic example of tinkering around with a failed model.

Industry participants have to register and they have to comply with the code, unless they are exempt from the obligation to register as set out in clause 12. Clause 12(1A) states: “The Authority may grant an individual exemption to an industry participant only if the Authority is satisfied that … (b) exempting the participant will reduce overall administration and compliance costs.” What a bizarre statement that is. I hope that the Minister in the chair can answer our concerns about that, because exempting anyone from any code would reduce compliance costs. If that is a qualification for a person to seek an exemption, then will everyone be exempt? Most people would probably say the authority would have its costs reduced, which is what, I think, the intent is here. But I thought we had a user-pays regime here: if we had a code and people were obliged to commit to it, then they would keep to the costs of doing that, and in that way make sure that the costs were kept low.

This is complex legislation. It is a band-aid to try to patch up a failed structure in electricity in this country, and most New Zealanders understand that. It does not matter where we go, and it does not matter whom we speak to, because most people understand that the electricity structure in this country needs major reform. We have acknowledged that. We have to make some major changes, and tinkering, as Minister Brownlee has done here, in my view will just lead to a more complex, more costly, and more ineffective way of governing electricity supply, generation, and efficiency. The one goal that we should all focus on is making better use of energy and electricity in this country. I do not think that this bill will help in that direction at all, and it would be great to hear an explanation of the reason for that.

I want to spend a little time talking about some of the interesting statements we have had across the Chamber. Mr Jones, who did not sit on the select committee when the Electricity Industry Bill was being considered, talked about the fear and loathing of this bill, and the worries about it. I think Mr Jones is a very good member of the Parliamentary Rugby Team, but that shows he knows nothing about electricity. Mr O’Connor, whom we have just heard from, was also not on the select committee and is also a wonderful member of the Parliamentary Rugby Team, but also showed that he did not know much about this bill. We heard from Mr Hipkins, who talked of worries about the environment, concerns about the new part, and issues of the authority not having a role to do with the environment. That shows that Mr Hipkins has not read the bill either, and it is beholden upon me to correct a few people on some of the misapprehensions that exist.

Clause 20 allows a power to come forward for the Minister to give requests to the authority to do anything that he or she may like, which might be environmentally related or related to pricing or another review. Another key aspect is the change in the role of the authority. I have had the misfortune of working in the energy sector both as an adviser and as a supplier to the industry in terms of cables, in particular. I worked for a major supplier to the energy industry that was one of the major players. One of the issues in the energy sector is the big confusion that we used to have with the commission. The commission grew from about 20 staff to huge numbers over a very short period of time, and the budget grew to about $50 million, as I understood it. There was $50 million for the bureaucracy. People were writing reports for the sake of writing reports to give to the person in the next department to justify quality or price. To me that was pretty much a waste of time and effort, and we saw that.

What we have now is a greater focus by an authority. We will have the Electricity Authority, which will have some aspects of environmental oversight. Indeed, there will also be more detail around the use of the Resource Management Act. But the promotion of energy, the issue that members on the other side of the Chamber seem to be worried about—those energy ads that we see on TV and such things—lo and behold will now be done by the Energy Efficiency and Conservation Authority, because that is what it was set up to do. We have taken that away from the Electricity Authority, and we have focused it more and given more control over what those roles will be. I think that is a better way to do things, because we do not have the left hand and the right hand arguing with each other; we have an entity set up to focus on what makes sense. One focuses on energy efficiency and one focuses on the governance and administration of the industry.

One of the factors that we are worried about, and we have talked about some of the roles and aspects under Part 2, is the issue of security of supply, and the fact that we have not had enough generation capacity built in the last few years. In the last 2 years there has been a bow wave of new generation build, but for many years we had a focus on not having new generation build approved, because it got stuck in those huge infrastructure bottlenecks commonly called the Resource Management Act and the Electricity Commission. What we have done is refocus the Electricity Authority to separate out what it is good at and what it is not good at. That will allow and help new generation plant to be built quickly.

It will lead to a lower price rise path over the next few years as the issues around promotion are being separated off, and instead of being one big, massive amalgam of bureaucracy, roles and tasks will be broken up into those entities that make sense. And that is an absolutely critical aspect.

Under Labour, prices went up by 72 percent.

💬 Hon Nathan Guy: How much?

By 72 percent in 9 years. Do members know what prices have done in the last 2 years?

💬 Hon Nathan Guy: What?

They have gone up by about 4 percent. That shows that some of the things we are doing are working. The intention is to sort out the bureaucracy and allow more building of generation plant, in particular geothermal plant to put thermal generation back on the curve and put in place greater incentives and money. Today we announced the investment into new marine energy arrangements, and that is a good thing. It is future technology, as we bring on the new curve of technology for the energy sector. That is an important role for the Electricity Authority to take.

All that members on the other side of Chamber tend to worry about is creating more bureaucracy. We have heard that a Supplementary Order Paper has been put forward by the Hon Nanaia Mahuta, which will mean more bureaucracy and control on the Electricity Authority, and that is the last thing we need. We know, after 9 years of Labour, that more bureaucracy did not work, prices went up, renewable energy went down, and carbon emissions went up. It did not work. All we want to see is that this bill, after a long review process, is put forward. We want a very tightly focused Electricity Authority with a very tightly focused role that separates out those things. I think that is a good thing.

There was far too much material in that speech from Aaron Gilmore on the Electricity Industry Bill; I do not think I will be able to get through all of it. I was interested to hear Aaron Gilmore describe himself as a major player in the electricity industry. I think the State-owned enterprises regard themselves as major players in the electricity industry; I am not sure that anybody would ever have regarded Mr Gilmore as a major player in the electricity industry. I know, of course, that in his little world he invented electricity, and we congratulate him on that! We are most grateful to the people of Christchurch for delivering him to this House so we can all benefit from the huge knowledge he brings!

I will talk about a few of the things that Aaron Gilmore spoke about before I talk about the Electricity Authority. Mr Gilmore talked about new generation getting stuck in the Resource Management Act. I wonder whether he could give us an example of an electricity generation project that has been stopped by the Resource Management Act.

💬 Aaron Gilmore: I can give you many.

There are none. He cannot come up with a single one. I have plenty of time. I ask the member to name one—any one will do.

💬 Aaron Gilmore: I can give you many.

Come on, then. Name one. Aaron Gilmore says the Resource Management Act is responsible for bogging down all the electricity generation, but he cannot name a single project that was delayed by the Resource Management Act.

Let us be clear about what the Resource Management Act does when it comes to electricity generation. It means that if a generator wants to dam a river or build a wind farm in someone’s backyard, the people who will be affected get a chance to have a say. Aaron Gilmore thinks that is a bad idea; I do not. I happen to think that if there is to be a major infrastructural development that will impact on rivers, on people’s backyards, or on the environment, New Zealanders should have a chance to have a say on that. It is a disappointment that the National Government and people like Aaron Gilmore do not seem to think that is the case.

Aaron Gilmore talked about a lower price rise path. Is that not a major turn-round from National’s pre-election rhetoric about lowering power prices for New Zealanders? At meet the candidates meetings up and down the country, National candidates gave people the impression that if they elected a National Government that was ambitious for New Zealand, somehow the power prices would come down. They are not talking about that any more now that they are on the Treasury benches and are driving around in their BMWs. Nowadays they are talking about a lower power price path.

Aaron Gilmore claims, of course, that power prices have not increased as much under the National Government. There are two reasons for that—two big reasons. The first is that it has rained quite a lot. When the hydro lakes are full, the power price does not go up as much. If there is lots of water, hydroelectricity is actually quite cheap. National is claiming credit for the rain. These days Gerry Brownlee tries to claim responsibility for an awful lot of things, but I do not think he can claim credit for the rain.

The second reason is that the Māui gas issue has largely been addressed. The Māui gas price was kept artificially low by a long-term contract entered into many decades ago.

💬 Aaron Gilmore: Before you were born.

I am almost certain it was before I was born. That artificial restriction on the price of gas has now come off. As the field diminished, the restrictions came off. New gas is coming online and that is a good thing, but the new gas is more expensive than Māui gas. That has been one of the biggest contributors to the increase in electricity prices over the past decade. That issue had largely been dealt with, and the flow-on effect had largely come in, by the time National took office. National members cannot claim credit for the fact that that issue was all dealt with under the previous Labour Government.

I come back to the Electricity Authority and to some of the mechanics of the authority. Then I will talk about the code and, in particular, some of the issues that could be addressed. The first thing I want to talk about is the make-up of the Electricity Authority. One thing I am concerned about is that the way the authority has been established and will function means that consumers, particularly domestic consumers, do not get a look-in anywhere. Nowhere in the make-up of the Electricity Authority—or in its functions, really—will the views of domestic consumers be sought. They will not have an avenue to complain or to go back to the authority when they think the electricity market is behaving unfairly. That is one thing we think is wrong.

The domestic consumers are the ones who are being done over. Let us look at the power price path. There have been massive increases for domestic consumers in the last decade or so, but the price for commercial and industrial users has not gone up by as much. Domestic consumers have been done over with power price increases, but for commercial and industrial users the price increases have been nowhere near as much. The Electricity Authority will not be able to do anything about that.

There are some ironies in this bill, as well. Gerry Brownlee came to the Chamber and told us that the bill is all about increasing competition. One of the things this bill does is entrench Transpower’s role as the system operator. Currently, Transpower is the system operator on contract with the Electricity Commission, but the Electricity Commission could change the system operator if it chose to do so. This bill effectively entrenches Transpower, as a monopoly, as the system operator. In a bill that is supposed to increase competition, the Government is entrenching the monopoly Transpower has as the system operator.

💬 Hon David Parker: What sort of incentive is that to reduce costs?

That is a very, very good point made by my colleague David Parker. There will now be no oversight by a Government body of Transpower in its role as the system operator. There will not be the drive for efficiencies that there could have been. The Electricity Commission will not be leaning on the market operator to make sure that there are increases in efficiency. That is another problem I have with the bill.

I will talk now particularly about the industry participation code. The relevant clause that deals with the industry participation code is clause 35. It talks about what the code may contain. Clause 35(1) states: “The Code may contain any provisions that … are necessary or desirable to promote any or all of the following: (a) competition in the electricity industry: (b) the reliable supply of electricity to consumers: (c) the efficient operation of the electricity industry: (d) the performance by the Authority of its functions: (e) any other matter …”, etc.

One of the things that submitters argued was that the Electricity Authority—the Electricity Commission, as it is now; the Government, effectively—should be taking a much more proactive position when it comes to smart meters. The Government has dragged its heels on this issue. I think that everybody at home will be asking why they should have any confidence that the Government will use this code to deliver a better deal for consumers when there is a really obvious issue that it could pick up right now and deal with—

💬 Hon David Parker: The Parliamentary Commissioner for the Environment has reported on it.

The Parliamentary Commissioner for the Environment has already given the Government the report telling it how it could be done, and the Government is ignoring it. The Government could pick up the issue of smart meters and immediately deliver something of real benefit to consumers. Instead, it is turning its back on it. Gerry Brownlee is ignoring that issue altogether.

As a result, electricity companies up and down the country are installing dumb smart meters that do not have the technology that they could have if a standard was in place. Also, they are installing smart meters that are unique to individual suppliers, and that is a major problem. At my house, which I moved into a year ago, the meter was installed by Genesis, but I have my power with Meridian Energy. Meridian Energy cannot access the technology in the smart meter that is in my house. It still sends somebody to my house once every 2 months to do a manual power reading, because the technology being installed is not universal. There is no universal standard. If Gerry Brownlee wants to promote the ability of consumers to switch power companies and reduce costs, clearly that is something he could do straight away. It would mean that if I decided that Genesis, Meridian Energy, or whoever I was with was not the best company for me, I could switch to another company. It could still tap into the smart meter technology that I had, and it would not need to send someone around to my house to read the meter manually every 2 months.

That is a bugbear as well. My electricity usage changes from month to month, as it does for many New Zealand households. The estimate reading is never anywhere close to what I have used. It is either wildly over or wildly under the electricity I have used. New Zealanders up and down the country face that problem when they have estimate readings every second month. All of that can be done away with if a smart metering system is put in place and properly regulated. But instead the Government is not doing anything about it, so the electricity companies are installing dumb smart meters where the system behind them is proprietary to the company that installed the meter, which will dampen down competition.

What faith should New Zealanders have that the electricity industry participation code that will be legislated for in this bill will be effective, when the Government has already turned its back on a major issue on which it could have delivered some real benefit to New Zealanders?

💬 Hon Shane Jones: Copped out.

It has chosen to cop out on that and not follow up on it. Smart meters are the way of the future. The Government could do that now.

My colleague Chris Hipkins raised some very important issues—

💬 Hon Shane Jones: As always!

—as always, about some of the technical issues in relation to smart meters and the tools that will be available, or not available, and used, or not used, in the future. We hope that they will be used.

I want to focus on the issue of structure. The Electricity Authority will be a key player in whatever may happen in the future. Mr Gilmore said earlier that this will mean there will be better control on prices in the future. I would like to go back and refer to a submission made to the Finance and Expenditure Committee. I was not at the committee, but Contact Energy—a major player—confirmed in its evidence that it will need to continue to raise its retail prices by up to 5 percent per annum if it is to continue to invest profitably in new generation capacity. That is what it said. Five percent per annum is scary for New Zealanders on a fixed income who face a cold winter. So where do they go?

The major players might say, if we pick up on that issue, that they could make reasonable profits and do not have to make huge profits, so maybe they do not have to go to 5 percent. But this National Government has said to each and every State-owned enterprise that it must lift the level of return on its investments. What does that mean? It means that the State-owned enterprises have been instructed to make more profit for return to the consolidated account. So any kind of vain hope that we will see moderate levels of profits is just that—a hope. Contact Energy itself said at the select committee that it would probably raise prices by up to 5 percent. I hope that does not occur.

I will move back to the authority—

💬 Hon Shane Jones: We have to go forward; we never go back.

My colleague says we should never go back, and that is right, but the National Government does need to look at the mistakes it made in the late 1990s and learn from those mistakes, so that it can go forward and improve matters in the future. When National was in Opposition, it railed against the Electricity Commission. National members opposed it in every speech in this Chamber on every piece of legislation. They said it was unnecessary interference, but now we have an authority. What is the key difference between the commission and the authority? I looked at the objective set out in clause 17 in Part 2, and I saw it states: “The objective of the Authority is to promote competition in, reliable supply by, and the efficient operation of, the electricity industry for the long-term benefit of consumers.” Those fairly laudable, honourable, and useful objectives are not too different from those of the Electricity Commission.

Of course, the previous Labour Government attempted to control the market, and we did a fair job of bringing in some necessary regulation. But we did not do what we had hoped to do, and I do not think that the authority will do it here. If we go back to the independence of the members of the authority, the previous speaker, Chris Hipkins, said we would not have a guaranteed consumer advocate here. That is true. Reference was made in terms of membership to someone who might raise consumer issues, but the bill clearly states that no one on that authority will be able to act on behalf of any particular organisation or industry group. That means that New Zealanders on a fixed income, be they members of Grey Power or beneficiaries, will not be able to have a champion on the authority, because the legislation prevents that.

What we have seen in the past through the market is that the big players have been able to negotiate lower rates for electricity, so their increases have been moderate. But the little players, the average New Zealanders, the people who do not have a lot of muscle or leverage other than through fair representation in this House through the Labour Party, will not have a say. The price increases for those people, as quoted by Mr Gilmore and the Minister time and time again, have been very high. We do not want to see a repeat of that, whereby the industry players effectively ratchet up the cost to the small players, because they do not have the ability to do anything about that. This authority will not give them any better representation or ability to reduce the price increases.

In Part 2 we have clause 9, which states that we will have statements of Government policy that the authority must have regard to. What statements of Government policy have we had since the election? We had one arm of the Government apparatus—I forget whether it was Mr Whitehead at Treasury or Dr Bollard at the Reserve Bank—say that on the basis of the recession there was a need to have decreased profit expectations on the part of the big power companies. There were to be decreased profit expectations on the part of the major infrastructure companies, including—and I think they were named—the power companies. Of course, the Government owns the power companies, because they are State-owned enterprises. If the Government had wanted to achieve less pressure on power prices it could have explicitly said to those State-owned enterprises that it wanted lower dividends; that it did not want them to pay as much money into the Government coffers. Did it? No, it did not, and that shows how hollow its rhetoric is about its desire to control power prices, because that is all it needed to do. It could have said to Genesis, or Meridian, or Mighty River Power, or all of them, exactly what the Labour Government had already said to Transpower, which was that it did not want as much dividend. The Labour Government did do that in respect of Transpower, and the National Government could do that in respect of the major generators if it wants to take pressure off power prices. So all this talk about having a statement of Government policy that the authority must have regard to when undertaking its functions is not worth a tin of fish. We know that the Government had the lever. We know that the advisers to the Government at the highest level—and, from memory, I am pretty sure it was Dr Bollard at the Reserve Bank—said that the Government needed to take pressure off consumers by not ramping up prices, profits, and dividend flows to the Government.

The Government has control of two-thirds to three-quarters of the electricity market. The Government-owned State-owned enterprises—Genesis, Meridian, and Mighty River Power—produce two-thirds to three-quarters, depending on the year, of New Zealand’s electricity. They are dominant. If the Government had just given them the direction that it did not want as big a dividend, then electricity prices would not have gone up as much. I still call on the Minister in the chair, the Hon Phil Heatley, to take a call and explain how it is that this authority will control prices in a way that the existing commission does not, because that is what Gerry Brownlee says is its purpose. He says that the authority will be more effective at controlling price. Well, how? It is not apparent from the legislation. We know that the Government has ignored this opportunity to say that it does not want more dividends. In fact, it has said the opposite. The Minister for State Owned Enterprises, Simon Power, has said to these companies that the Government wants greater efficiency and higher dividends. In reality the only way we can get significantly higher dividends from the electricity State-owned enterprises is through price increases. They do not have very high variable costs in terms of their labour inputs, so a change to their salaries policy does not make much of a difference to their profitability. The only way they can increase their profitability and dividends is by increasing prices.

So I ask the Minister to explain how this new authority is going to have a different outcome in respect of market competition from what the Electricity Commission has had. If it is not going to have any difference, I cannot see how the Government can rely upon it to control prices any more than the existing commission can, and the Minister is already on record over many years as saying that the existing arrangements were not sufficiently controlling price increases. So if there was not sufficient price control through the market mechanisms that were operationalised under the Electricity Commission, and if we are moving to a new authority, what is it that is different that changes that status quo? The answer—because we will not hear a call from the Minister on this, because there is no answer—is that there is no change to the powers of the authority compared with those of the commission, in terms of market outcomes.

I ask the Minister in the chair to stand on his feet and explain how it is that different rules pertain to the authority and give them more powers than the Electricity Commission had to constrain prices. The answer, of course, is that there are no extra powers. The answer is that this legislation will not properly constrain price increases.

The one Government member, Aaron Gilmore, who got to his feet and made a few comments needs to be challenged on a number of fronts. First of all, that member said that Labour increased the amount of bureaucracy in the system. Well, we had an Electricity Commission, and it will be replaced by an Electricity Authority, a Security and Reliability Council, and other advisory groups. If that is not more bureaucracy, I do not know what is. But that member clearly did not read the bill. In fact, what the Government has done is get rid of the Electricity Commission and replace it with an authority, a Security and Reliability Council, and other advisory groups—more bureaucracy. That member was Aaron Gilmore. Furthermore, he went on to say that the Resource Management Act stopped a number of projects. The Resource Management Act under Labour gave community groups the right to have a say on developments near them, and I certainly support that. But the Government of that member, Mr Aaron Gilmore, has, through its streamlining legislation, removed the opportunity for some community groups to have a say when they otherwise would have had that opportunity. That is what that member is actually supporting, so he needs to be challenged on those two issues, because I think he was erroneous in his presentation of those issues to the Committee.

But I have concerns about the authority as well. I have concerns in terms of its limited scope; I have said previously in the Chamber that the Supplementary Order Paper I am bringing to the Committee is to ensure that the scope of its consideration can be broadened to include environmental sustainability. I do not think that that is more bureaucracy. In fact, I think that that is more responsibility, in terms of the nature and role of what the agencies are there to do. I do not believe that the authority in its current scope is adequately equipped for looking at the whole landscape of electricity generation, or for ensuring that greater leadership is given on that front.

My colleague Chris Hipkins raised a number of very good points, especially about the smart meters initiative, which points to another amendment I have in my Supplementary Order Paper. I have had a presentation from my local lines company, WEL Energy, that talks about smart meters that not only talk to the customer but also enable better management of electricity use across the grid. In time, this is what the future will look like. I certainly endorse the report of the Parliamentary Commissioner for the Environment, and what she promoted in terms of smart meters. That is the technology that we need to look towards.

I believe that Chris Hipkins is absolutely correct in saying that the Minister should give direction on this front: we should have a smart grid, we should be promoting smart meters, and we should start now and not wait, albeit what we have now are dumb meters, and some lines companies, like WEL Energy, that I believe are taking an innovative and positive step forward in this area because they know what the future landscape will look like. I hope the amendment I have put forward will be considered in that light and will be supported, because we know that consumers want to be able to regulate the amount of electricity they use by having better information.

Some appliances are smart appliances, and we are learning from what is happening in Australia where they are already developing smart appliances. It will be only a matter of time until those appliances come here to New Zealand. So having a smart meter in the house, where consumers can look at the amount of power they are consuming and regulate themselves, I think is a good thing. I think it is really positive when that information is given back, and when the utilisation of energy across the grid can be better managed at another level. It is real-time information that is critical in order to make this a great success.

A number of other matters have been raised in the Committee that I think the Minister in the chair, the Hon Phil Heatley, needs to take a call on. He has stood only once, to respond to some very serious questions that have been raised by members of the Labour team; they deserve to be answered but, sadly, they have not been.

These speeches are focused on Part 2 of the Electricity Industry Bill, unlike the earlier contribution, which was both unwise and irrelevant, from that member residing in—

💬 Aaron Gilmore: Canterbury, my friend.

Ōtautahi. I will not repeat the foolishness of what he said, in the sense that he is blaming all sorts of ills on the Resource Management Act. No, if any applicant wants to dam a river and gain further access to what is rapidly becoming a Māori resource, that of geothermal energy, then the process has been laid out. We would not know that from the Māori Party, whose members are busily lost talking about pearly shells on the seashore—the seashore that they will never ever own, despite having misled our iwi—but I will say more on that at a later time.

If any applicant wants to come forward and seek statutory consent, I say that the process has been laid out. Indeed, members on this side of the Chamber agree that there was worth in improving the ability of central government to handle consent applications that related to resources that might have cut across multiple catchments. However, that does not overcome a number of the weaknesses in this bill. I will direct our attention to what my colleague Mr Parker was talking about, which are the statements of Government policy. It seems to me that the Minister of Energy and Resources, with his booming rhetoric, left the impression with his colleagues that these changes would significantly improve the ability of industry participants to offer power in a more sustainable fashion and at a more efficient price. But this bill is inversely related to his rhetoric. In addition to that, the legislation goes on to say that the Minister may request a review. Part 20(2) states that the Minister, upon requesting a review, “must consult the Authority”. That got me thinking about who would be on that authority. Who will be the individuals deemed fit, proper, and suitably skilled—

💬 Aaron Gilmore: Shane, are you looking for a job?

I can assure the member that after the meltdown of ACT and the taint that will attach to his party, the tail-enders on his list will be looking for a shovel to dig up the offal in Christchurch and he will be in the queue. I daresay that the level of interest he shows in this bill should be improved, as he may be fortunate enough—in the unfortunate event that this bill is passed—to be looked upon by the Minister for State Owned Enterprises.

The membership of the authority says that people must have electricity industry experience, consumer issues experience, and experience in business generally. Given that the Electricity Authority will be a pivotal feature in the new infrastructure, it seems to me that this may be an important issue for the Minister. Labour would not use this process, because we would repeal this wretched legislation. We would not allow this legislation to continue. It has been brought into this House on the strength of loud rhetoric, but it changes nothing in terms of the underlying causes. Those causes are causing a great deal of discontent amongst the voting public, whether they be of a manufacturing or a residential nature.

When the Minister of Energy and Resources makes a request for a review, he or she—whoever it is; it is unlikely to be the current Minister for much longer—must consult the authority. Will the authority have staff or a governance board that will be capable of pointing out the obvious foolishness, as we have seen earlier in terms of this Minister and what he has tried to do? Will it be independent? No, the legislation sets up a seemingly independent board, but this board can be crushed on a whim—driven, no doubt, by politics or vested interests—that may have set upon the Minister. Although the Minister may consult the authority, that Minister will get his or her way. How will the authority carry out any level of independence if, indeed, the actual members who are on the authority are not independent? Therein lies the difficulty with this restructuring, because several organisations will require appointees.

We have a history where people with conflict of interests have riddled this sector. That is why, as I said earlier, I personally look forward to the day where we no longer have this failed model of competition, the constant gouging of monopoly rents, and the ongoing calls from the ACT Party, discredited though it may be. However, I must say that the member from the ACT Party who sits in the Chamber this evening, Heather Roy, is not a discredited member. She is proof that her party members should stop reading books by Frederick Forsyth and should start watching Kill Bill, because in that movie the blonde came back.

I ask how independent the authority will be and what sorts of qualities this board of governors will show. Although it will be necessary for the Minister to seek appointees, we have to reflect on a deep concern that the direction this organisation will head in will depend on the blend and mix of skill of the appointees. If there is absolutely no one on the board who is either intellectually strong enough or capable of being a good advocate for mitigating measures in relation to carbon footprints, fairness, and sustainability measures, then we will have the same tired group of people who see these energy companies as their private playground. In that sense, we will not see an improvement in either price or sustainability. As members of the Committee said earlier, that is why a great opportunity has been squandered here.

I will carry on—perish the thought that anyone should think that Labour had not studied this bill to an exhaustive degree—by referring to clause 22, which pertains not to the Security and Reliability Council but, rather, to advisory groups. I imagine that the advisory groups will include people who have a genuine and longstanding concern about the quality of the resources that we are continually drawing upon. It will also increase the importance for Māori groups—iwi, and, indeed, other Māori environmental organisations—to pay close attention. They are unlikely to be considered an advisory group. Quite frankly, if our colleagues in the Māori Party had not been surfing on the seabed and foreshore and had focused on this incredibly important area of the development of our Māori people—the utilisation of those natural resource groups, which are used for energy generation purposes—then we would have seen a specific reference regarding those hapū and those iwi whose territories are proximate either to the geothermal fields or to the rivers and lakes. Of course, I would have included the wind in that list, but it is being consumed by the current Minister of Energy and Resources.

The absence of any of those Māori groups shows not only that there was delinquency and neglect on the part of our Māori colleagues in the Māori Party—and none of that comes as a great surprise to us—but also that these advisory groups are likely to be rendered useless and marginalised. There is no guarantee for the people who treat stewardship, the environment, and the connection between tangata whenua and their historical resources as their primary raison d’être. Those people have been written out of the script. They ought to have been included explicitly here. There lay an important distinction between our approach to energy policy and the Government’s approach. We suffered no doubts and there was no cavil on our side as to whether there should be a marriage between hard economic decision-making and broad sustainability considerations. That lay at the pith of the approach that we brought to natural resource management, especially towards the end of that great reign of energy policy. It may be said that these groups, the tangata whenua etc., can fit in in a generic sense, but it is very important that it goes on record that the architects have failed.

I think it is not time to talk about blondes and Kill Bill or anything like that, particularly coming from that member who has just resumed his seat, Shane Jones, but to answer some of the questions that have been raised. We are talking about Part 2 of the Electricity Industry Bill. A review was set up and it found that there were problems with the electricity governance arrangements. We found that the dual regulation of Transpower was not working. We found that there was a lack of independence, that Ministers were meddling in governance arrangements in the electricity sector, and that there was very slow progress on rule-making. So what have we got? Part 2 is about replacing the Electricity Commission with an independent authority as an independent Crown entity. It is about the establishment of a Security and Reliability Council. That is what Part 2 is all about.

I will touch on two particular things. Firstly, I will touch on the issue of smart meters, which we heard about from the Opposition, and the worrying fear that this bill should do more with smart meters. Well, I tell members that in Christchurch where I live there are 140,000 smart meters in homes as we speak, with the ability to do all the swinging, singing things that those members want them to do in the future when the technology is ready, which I think is appropriate. We have had this debate in the House before and we decided that the best thing to do was set up the governance arrangements to allow that to occur in the future, not now. The technology is not yet ready. It is an idea whose time has not yet come.

The other good things in Part 2 are some of the changes and governance arrangements on lines companies, particularly the standardisation of tariffs and the ability for less bureaucracy and how that will work. I think that is a good thing. We heard from Nanaia Mahuta the issues about bureaucracy. I understand that at its last count the Electricity Commission had about 300 staff in relation to its management. I do not think that is a good use of taxpayers’ money in terms of the spend that was occurring. That was all funded by a levy on electricity users. So electricity users were paying more money in order to set up a bureaucracy to oversee the governance of the electricity industry, but, effectively, all it did was shuffle paper back and forth from the left hand to the right hand. We do not think that was a good idea and that is one of the reasons why Part 2 has been put into place: to tidy up the governance arrangements and make the sector work a bit smarter and more efficiently.

I want to also quickly touch on another aspect that the previous speaker spoke about, which is the issue of the appointments to the authority and the skills and expertise required. One of the issues we have is that the current governance arrangements are not independent. Effectively, the Electricity Commission is not an independent Crown entity. The new Electricity Authority will be an independent Crown entity—

💬 Chris Hipkins: Where’s your proof of that?

It is in the bill, I say to Mr Hipkins. The bill states that it will be an independent Crown entity. Mr Hipkins should actually read the bill, and maybe get his head around what the bill says. It says that the Electricity Authority will be an independent Crown entity. It will be independent of Ministers and independent of some of the meddling that has occurred. That was one of the reasons why electricity prices went up 72 percent under 9 years of Labour. That is one of the major reasons why we have put in this thing.

Briefly, I want to touch on some of the price changes that have occurred in the marketplace to date that this bill will help enhance. Where I live in Christchurch, Genesis Power is going around actively campaigning for people to sign up with it, giving people $200 or $300 price discounts on the expectation of this bill coming into effect. The governance arrangements that are in this bill are more efficient and will allow more competition, so that the likes of Genesis in Christchurch can compete for customers. Genesis told the select committee during the select committee process when these issues came up that it could not do a competitive continuation of those price discounts if this bill did not go ahead. That is the proof in the pudding that this bill will bring in lower price path increases, and that is what this Government is all about—reducing bureaucracy, reducing the price path for consumers, and putting in place less bureaucracy and more certainty for those companies out there that want to invest in new generation, whether it be renewable, which is what we have seen in many cases in terms of geothermal and wind generation, or whether it be in terms of other thermal support situations. I think that is a good thing.

If the previous speaker, Aaron Gilmore, insists on getting up and making a contribution on the Electricity Industry Bill, I wish he would keep it accurate. He made two assertions. One was that the Resource Management Act hindered and stopped development of electricity projects, but he could not name one example. He was wrong. He then got up and said that the previous Government’s Ministers were interfering in the electricity market, but he could not name one incident. In fact, there are many of us who wished we had interfered a hell of a lot more, because that is probably what it needed. He went on about bureaucracy, reducing compliance costs, blah-blah-blah. I tell that member to look at what is in this bill. It sets up an authority, then a code, then it says that companies can be exempt from the code if they can prove that it will cost the authority less to implement, which pretty much means anyone.

Part 2, which we are discussing here, sets up a rulings panel. What does the rulings panel do? This is from the Government that has made so much noise and such a song and dance about reducing compliance and regulation, yet it will set up an authority and a rulings panel. What does the rulings panel do? It will “assist in the enforcement of the Code by—(i) hearing and determining complaints about breaches and possible breaches of the code;”. Let us ask why we should have this. Firstly, a company can be exempt from the code. If a company is exempt from the code, is it subject to the rulings panel? Does it have access to the rulings panel to take a complaint? There is no answer. The Government does not know.

Then there is the issue of whether the Commerce Commission or the rulings panel has priority in terms of a ruling over commercial negotiations or failure in commercial negotiations. Will the Securities Commission have a part to play in this or will the rulings panel override all of that? Mr Gilmore does not know and he cannot explain that, because the Government does not know, either. It is setting up a bureaucracy, a level of compliance, and a nightmare that will just further exacerbate the failings of the market structure that National set up in the late 1990s. This is just piling bad practice after bad practice—that is, the underlying belief that the market will deliver, but we need all of these other institutions and structures, such as the authority, for a start. Never mind that National thought the commission was unnecessary; it now needs an authority, then it needs a rulings panel. I ask Mr Gilmore whether, if he gets up and explains what the rulings panel will do, he can be more accurate than his assertion that previous Labour Ministers were interfering in the market or that the Resource Management Act was stopping or hindering the development of energy projects.

The facts are that there were some energy projects that were subject to the Minister of Conservation’s approval, and that is the way it should be. I know the National Government has indicated that it wants to take the Environmental Protection Agency’s projects of national significance and just run them through, which puts at risk a whole lot of rivers in this country. Maybe that member should go to the Wild Rivers presentation at Parliament tomorrow night. We are in favour of sustainable hydro generation, but if that National Government, as indicated, will railroad straight through all the processes for any big projects, then we may see the demise of many, many wild rivers in this country. That is not what the majority of New Zealanders want. We want good, sustainable hydro generation, geothermal, wind power—renewable sources of energy.

I come back to the bill. Having set up and got some generation, we now have a belief that many generators, many players in the market, will deliver the most efficient and effective electricity for consumers, be they big or small. I say that this legislation is basically flawed. That is why we do not support it. That is why we will continue to object and point out its failings, and point out the inaccuracies when those members get up and speak on this bill.

Tēnā koe, Mr Chairman. I am thankful for the opportunity to address the Electricity Industry Bill. First of all, I would like to acknowledge the members of the Finance and Expenditure Committee for the work they did in bringing this legislation back to the House, and those select committee personnel who also did such a sterling job. Scrapping the Electricity Commission is a move by the Government to improve efficiency. That is a laudable and commendable thing to do, but I have to say that I have seen it all before in the pursuit of productivity and best practice. It happens about every 20 years. The synopsis basically is that after a certain amount of time, the officials in charge—especially if everything is based in Wellington—say: “Let’s put things out into the community, where we get more direct contact and we can actually improve the efficiency of the resource we have back in head office.” Then about 20 years later they say: “Oh, things have got out of control. We have to pull it all back to Wellington so we know what’s going on.” It goes on and on.

The commentary to this bill states: “The Electricity Industry Bill seeks to reform various areas of the electricity sector, and is intended to increase competition in the electricity market and ensure security of supply.” There is nothing wrong with that; it is commendable. It goes on: “The bill would modify governance arrangements in the industry, provide for specific regulatory changes, and alter the overall structure of the electricity sector. Specifically, the bill would disestablish the Electricity Commission and replace it with an Electricity Authority,”. That comes back to the whole issue of the fact that it is about productivity and the pursuit of excellence in all we do. That is important, but this will not be the end. I guarantee members that in a number of years, maybe another 10 or 15, we will get changes again, because that is what happens.

I want to put a number of questions to the Minister in the chair, the Hon Phil Heatley. I ask the Minister what analysis has been done on the costs or benefits of the proposed relocation of roles amongst the authority, the Commerce Commission, Transpower, the Security and Reliability Council, the Ministry of Economic Development, and the Minister. What analysis? I tell the Minister in the chair to get up on his hind legs and take a call, instead of just sitting there and ignoring the Opposition. That is what the Minister is doing. He is refusing to acknowledge the concerns of the Opposition on this side of the Chamber, who have genuine concerns and want to know why the Electricity Commission is being done the way it is. What analysis? If the Government is going to scrap the Electricity Commission and replace it with two new quangos, that in itself can be seen as being inefficient. I ask the Minister to justify that to the Committee, to the country, and to the Opposition, who want to know. What research has the Minister carried out, what cost-benefit analysis has been done, and what benefits are there to the consumer? Surely, we want to see that we govern in the best interests of our consumers, our voters, because after all, as members of Parliament, we are supposed to be here to serve the public. I want to know whether the Minister in the chair will take a call and answer any of the questions that I have asked. I am asking those questions on behalf of my voters, my people, and I would appreciate the Minister taking a call, because they are important issues for members on this side of the Chamber—very important issues.

I will just finish with this, because I think it is important that we read it in. We on this side of the Chamber believe that the Electricity Industry Bill fails to address the major issues facing the electricity sector. It will not deliver even on the priorities that the Government has set out for itself. In fact, it is likely to exacerbate the problems we have, putting pressures on supply and electricity affordability. As Opposition members looking to become a future Labour Government, we are saying that we will repeal this legislation and replace it with a legislative framework that ensures New Zealanders have a secure supply that, one, is affordable; two, is price-predictable; and, three, can be produced and used sustainably. Those are the concerns we have, and I would appreciate the Minister taking a call and answering those questions on behalf of the people whom I represent in Manukau, South Auckland.

The CHAIRPERSON (Lindsay Tisch): The question is that Part 2 stand part, but before we do that, we have a number of amendments—

H V Ross Robertson: Take a call.

The CHAIRPERSON (Lindsay Tisch): I am going for the vote. The member should know that votes are taken in silence. He is a former Assistant Speaker; he should know what the rules are.

The question was put that the amendment set out on Supplementary Order Paper 163 in the name of the Hon Nanaia Mahuta to clause 17 be agreed to.