Debate on Crown Entities, Public Organisations, and State Enterprises — Solid Energy New Zealand

I am pleased to take a brief call on the financial review of Solid Energy. The way in which we define and measure the success of companies like Solid Energy goes to the heart of how we run our economy. In the 2010-11 financial year, Solid Energy generated $828 million and recorded a net profit after tax of $87.2 million. But that profit does not take account of externalities. It does not take account of the environmental costs of the company’s coalmining at Stockton, and the acid mine-drainage into the Ngākawau River and other waterways. It does not take account of the increased greenhouse gas emissions from the company’s increase in coal exports. Solid Energy is a creature of our traditional economic model and our system of Government accounts, where we measure economic success by the financial bottom line and the focus is on growing GDP.

That is what the Green Party would like to change through Dr Kennedy Graham’s Public Finance (Sustainable Development Indicators) Amendment Bill—

💬 Hon Trevor Mallard: Where is he? Let him speak.

He is in New York. That is why that bill is so important, because we would be discussing different questions here tonight in this financial review if we had the 39 environmental indicators of prosperity in our national set of accounts, and if Solid Energy’s performance was evaluated in terms of those indicators. The profit line for Solid Energy conceals the death of hundreds of rare Powelliphanta augustus snails frozen to death in the fridges of the Department of Conservation in Hokitika because Solid Energy insisted on removing them from their natural habitat so that it could take the top off Mount Augustus. The Green Party wants these externalities to be taken into account in both the company’s balance sheet and its annual report, and in our national accounts.

One of the most serious externalities, which cannot be adequately considered in this financial review, is the impact of the company’s lignite mining in Southland. The large profits that Solid Energy has made have allowed it to experiment with untried technology. It is proposing to convert low-quality lignite into briquettes, into urea, and into diesel.

💬 Hon Trevor Mallard: That’s just stupid.

It is just stupid. Thank you, Mr Mallard. The Parliamentary Commissioner for the Environment says that the proposed lignite plant would be responsible for the single biggest increase in carbon emissions in New Zealand’s history. The Government went to Rio, but it should not have been proud to be at Rio, because shareholding Ministers should have seen the irresponsibility in Solid Energy being allowed to proceed with lignite mining in Southland.

In 2009 New Zealand in Copenhagen took responsibility for reducing our annual greenhouse gas emissions to between 10 to 20 percent below 1990 levels by 2020, yet our greenhouse gas emissions are on track to be 30 percent above the 1990 level by 2020. Solid Energy is making a major contribution to that. It makes no sense for New Zealanders to subsidise new investment in the carbon-intensive technology that Solid Energy is undertaking in Southland. It makes no sense to allocate free carbon credits that will equate to billions of dollars of taxpayer subsidies to this company.

It made interesting reading looking at the Commerce Committee’s report and the transcripts, because there is a whole issue, too, around lack of accountability and lack of transparency. There was an issue that the shareholding Ministers—the Minister of Finance and the Minister for State Owned Enterprises—should have pushed the organisation on. It will certainly get worse with the mixed-ownership model, because there is no ability for Ministers to seek information from the mixed-ownership model companies and there is no ability for the Official Information Act to apply. Solid Energy declined, despite questions from members of the select committee, to release the business case for its Southland lignite conversion projects. It also declined to release the results of its annual public opinion surveys, which it claims substantiate its view that the majority of New Zealanders believe that our coal should be developed if our environment is protected. There is no ability, with that business case not being released and the public opinion surveys not being released—not being able to see the questions that Solid Energy is asking—to actually look properly at the operations of the company. So there has been very limited accountability and transparency in the way that Solid Energy does its business. Thank you.

Report noted.

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