Third Readings

I move, That the Electricity Amendment Bill (No 2), the Electricity Industry Reform Amendment Bill, the Commerce Amendment Bill (No 3), the Gas Amendment Bill (No 2), and the Crown Minerals Amendment Bill (No 2) be now read a third time. These bills, arising out of the Electricity and Gas Industries Bill 2003, reflect a need to replace the failing electricity governance regime, security of supply problems with electricity, and the need to provide for governance of the gas industry. This legislation reflects the Government’s objectives to have electricity supplied in an efficient, reliable, and environmentally sustainable manner to all consumers.

More recently, security of supply has been a particular concern. The Electricity Amendment Bill (No 2) provides the Electricity Commission with an enhanced tool-box of powers across security of supply, enabling the commission to contract for reserve energy in dry years. This legislation gives the commission a full tool-box of necessary powers—the judicious and effective use of which will help the market model function better.

The legislation extends the commission’s remit to deal with demand side management and energy efficiency. The commission now has the ability to consider both the demand and supply sides when considering security of supply and transmission upgrade issues. The legislation also extends the commission’s brief to cover consumer protection, the promotion of retail competition, improved information from market participants, and development of distributed generation.

The legislation provides a similar set of powers for the gas industry and enables the establishment of a co-regulatory body. Gas industry co-regulation represents a collaborative approach being taken by the Government with industry—an approach developed with and supported by the industry itself. That this body be established and functions effectively is especially important as the sector deals with the challenge of transition to the post-Māui era. The Government looks forward to working with the industry to ensure that co-regulation is successful.

Another key provision in the legislation relates to changes to the Crown Minerals Act to promote enhanced disclosure of petroleum reserves and production information. That should encourage increased levels of exploration, which in turn may yield new discoveries to help the security of supply concerns.

The legislation was referred to the Commerce Committee, which considered submissions from a wide range of interested parties. The committee subjected the legislation to close scrutiny. I believe that the committee did a great job in further refining it, and I fully support the committee’s recommendations.

Few technical changes have been made to this legislation. They represent general tidy-ups, and enhance clarification and consistency across electricity and gas rather than any wholesale change in policy direction.

I take this opportunity to comment on a couple of major issues of debate surrounding the legislation. Firstly, many submitters, particularly from the National Party, have tried to argue that the Electricity Commission lacks independence, and has mixed objectives and conflicting goals. They still do not get it. The Government, properly, has multiple goals for the electricity sector—reliability, efficiency, environmental sustainability, and fairness to consumers. It is not clear which of those National thinks is unimportant. The commission does have a wide brief, and for good reason. I am confident that it can carry it through and make sensible judgment calls when necessary.

National is also unrealistic in saying that the commission should be left wholly to its own devices. That would be to suggest that the Government wash its hands of its responsibility for the electricity market—a policy that led to the failure of sector governance and the need to establish the commission in the first place. The public expects the Government to be accountable for electricity outcomes. The Electricity Commission’s establishment, the scope of its mandate, and its being responsible for delivering the Government’s policy objectives in electricity all show how serious this Government is about the sector performing properly for the good of consumers and the wider economy. So although the commission is responsible for the day-to-day and longer term application of Government policy, it is the Government itself that remains responsible for setting its direction, therefore retaining ultimate responsibility for electricity outcomes.

Arguments for full independence akin to that of the Commerce Commission are also misguided. The Commerce Commission has a vital but relatively narrow role of administering and enforcing existing competition and consumer law. The Electricity Commission has the wider role of regulating a key sector, and has a direct mandate to be involved in many facets of the sector’s operation.

Conflict of interest arguments are also unfounded. The commission and commissioners have no commercial interest in outcomes. Many checks and balances exist to ensure that good processes are followed. For example, the commission is required to evaluate options, assess costs and benefits, and consult affected parties before making recommendations. It is also subject to the same judicial review and accountability requirements as all Crown entities. Its role as an agent for the contracting of reserve energy also hardly qualifies as a conflict of interest. Across all of their brief, the commission and the commissioners have no commercial interest in outcomes. Some critics contend that different bodies should perform different parts of the commission’s brief. That would simply lead to a proliferation of bodies, unnecessary duplication of costs and effort, and coordination problems. It makes no sense.

National is also pushing for the reversal of legislation it introduced, divorcing lines companies from generation ownership. The limit has been raised to 50 megawatts, or 20 percent of network load, and the ability of lines companies to own and operate renewables remains uncapped. It has been so for 3 years. It is my view, and that of the Commerce Committee, that it would be unwise to lift all restrictions without full consideration and consultation on the issues involved.

The electricity and gas sectors are critical to New Zealand’s economic growth. The need for the proper management of the market is clear. This legislation will ensure certainty and stability for the energy sector, and further shapes the future of those sectors. It will result in better electricity and gas arrangements and outcomes for New Zealand, which is something that all New Zealanders deserve.

The Minister of Energy showed no enthusiasm for the legislation in that speech. One does not have to look very far to see why he is not enthusiastic about it. One has only to look at the submissions made to the Commerce Committee to see that every single energy company—the Government owns the majority of them and appoints the directors—actually opposes the legislation. Energy companies like Genesis—the Labour Party Government put Mike Williams, the President of the Labour Party, on the board of Genesis—made a submission opposing the legislation. It would have been interesting if the Minister could point to one energy company that supported it, but he could not.

If we look at the groups that made submissions, we see that the Orion lines company totally opposed the legislation. It was highly unusual for Transpower to come before a select committee to argue that Government legislation should be changed. I could go through a range of other groups. I can understand why the Minister would not want to stay in the Chamber to hear about the TrustPower submission. TrustPower, one of the private companies in the energy sector, said that if the Minister passed this legislation, it would not solve any of the issues, and that TrustPower would have to re-examine its role in the New Zealand market. It said it would have to “put weight on, and seriously consider, exiting the retail market if this bill is passed”.

How much more serious can one get? How much more arrogant can a Government be? It just says: “To hell with all of their views; we know best.” The Minister thinks he knows better than any of the submissioners.

Hon Ken Shirley: And we know that’s not true.

Hon ROGER SOWRY: Exactly. Effectively, he instructed the Labour MPs on the committee to roll over, and they did. The legislation was meant to be rushed through, but was slowed up by the committee. It now emerges in the House for its third reading in a way that has TrustPower saying it will seriously consider exiting the New Zealand retail market if it goes through—and it will. Mighty River Power is opposing this legislation. It is a State-owned enterprise. Genesis, the company I started with, which has the Labour Party president on its board, is opposing the legislation. Energy Trusts of New Zealand is opposing it. Vector is opposing the legislation. And the list goes on and on.

One of the contentious parts of the legislation is the structure of the Electricity Commission. That was what most of the submitters were saying. We tried to amend it in the Committee stage— unsuccessfully, because Labour has decided that the structure of the commission is to stay as the Minister has deemed it to be. The commission is responsible to the Minister, and has to get ministerial sign-off of its plan and work programme. Effectively, it becomes liable to the dictates of the Minister. It has no independence. The Minister appoints people on to the commission. The commission then appoints its own committees to look at and examine issues. We have already seen the commission make decisions and recommendations around reserve energy without even consulting its own committee. So the Minister appoints the commission and approves its work programme, and it has independent committees to look at things like reserve energy—how much energy we should have sitting there ready to be turned on if the rain does not fall. The commission has decided we need no extra reserve energy for the next 2 years, but did it consult its own independent committee on that? No, it just made the decision.

That is arrogance from the Electricity Commission, but one has to go one step further to see the ultimate in arrogance, and that is the Minister deciding that the Government will underwrite a new generation facility by Genesis. The Government will do the deal with Genesis, underwrite it, and bypass the Electricity Commission, which the Minister is establishing in this legislation. Why does he do that? Why does the Minister decide to ignore the commission? The commission is obviously angry at being snubbed on the first decision of major importance to the energy sector. In the biggest decision made this year in respect of the energy sector, the vehicle that the Minister has established to look at energy was ignored. The commission came out and said: “Hey, what about us? We weren’t consulted.” The Minister said: “Oh no, and I wouldn’t want to make a habit of not consulting you.”

What does that mean? It means that he will consult the industry only when he wants to. We have set up a puppet organisation. It is an organisation that is in no way independent, and the Minister has shown in his first act in respect of the sector that he does not take it seriously—just like he does not take the House seriously. He wandered in, read his speech, then left, ignoring the debate and letting everybody else get on with it. That is the arrogance he displays all the time around the sector. People in the sector talk about it all the time.

Hon Ken Shirley: They don’t like him.

Hon ROGER SOWRY: They do not like him. They do not like the arrogance. They do not like being treated like this, the commission does not like being treated like this, and soon, I believe, we will see that New Zealanders do not like that degree of arrogance, either.

In the speech the Minister read to the House he talked about the new 50 megawatt limit on the amount that lines companies could generate. He said it was wonderful and we would not want to go any further without consultation. Well, the amount was doubled, and that is significant if one is a tiny or small lines company, but the issue is why it was doubled. Mr Copeland, with much chest-beating, will no doubt tell us later on that it was doubled because he wrote a letter to the select committee on it. No, that is not why the amount was doubled. National announced in March our policy of not having any restriction on it, at all, and that was greeted with unanimous applause from the sector. I think there was one critic, whose name escapes me at the moment. The rest of the people totally agreed with it, as did the political parties of the centre-right. I know that ACT is of the same view—[Interruption] That is right; they think we went a tad too far in the first place, they are happy with where we have ended up now, and we agree with them. That was why the Minister, following National’s announcement, went to the conference and told people not to worry, because the Government would make some movement on the limit—just a little step.

A little step, to the Minister, was to double the limit. Why does he not get rid of it completely? Why not allow the lines companies to invest in the retail and generation sectors—in particular, the generation sector? Vector is now buying the National Gas Corporation. Powerco is investing in Australia. Those lines companies will invest in New Zealand, if they are given the opportunity.

First, I would like to thank the Commerce Committee for all the work it did in reporting the legislation back. I note that significant changes were made during the Committee stage as a result of a Supplementary Order Paper.

I want to take a moment to look at why we are in the position we are in. As the honourable Peter Brown said on the occasions I talked to him about it, it is a case of taking steps along the way. Why do we need to make these steps along the way? The reason is simply that what had been pretty well provided through electrical supply authorities was deregulated by the Max Bradford reforms. One cannot get away from that. The deregulation of the energy market and the consequent issues that arise from it came from those reforms.

Hon Ken Shirley: 1989.

MARK PECK: I disagree with the member—

Brian Connell: Are you supporting us?

MARK PECK: No, not at all. I am indicating that the issues that need to be tidied up are a result of playing around with putting together a market. We cannot completely walk away from the market concept without there being serious ramifications for our nation’s economy. There are people who are interested in investing in the energy market in New Zealand, and if they were to believe that the Government was going to do away with the market as it is now, then we would lose that particular investment; it would no longer be attracted to New Zealand. That is too serious an issue to play petty politics with.

I am sure that Roger Sowry and Brian Connell can get very good headlines out of saying they would go to complete vertical reintegration—maybe keeping some form of accounting separation—but that does not answer the question, at all. The question is still there, and it is how we deal with the reality of what we have, which is a number of energy companies in the lines and retail areas in particular—I put to one side for a moment the issues concerning Transpower, because they are of another nature. And there is the gas industry, which has its own significant problems. Essentially, in setting up the market, what was a monopoly has now become a collection of oligopolies. That is what has happened.

Essentially, the same rent-seeking against consumers continues. It does not go away; it is just that more people are engaged in it. There are more boards. There may be a slight variance in price from place to place, depending on circumstance. I understand that if we are looking at places where the market works, we are looking at Auckland, Wellington, and perhaps Christchurch. On the East Coast, for instance, I do not think it works terribly well. Nobody wants to go there. If the East Coast is looking for security of supply in future years, it will have to develop its own generation.

The point is that this is an incredibly political industry. When a dry year occurs—and let us not worry about whether the Minister involved is a Labour Minister, a National Minister, or a New Zealand First Minister—and the consumers face blackouts and/or brownouts, who gets the blame? The Government gets the blame. There are some reasons for that. Seventy-five percent of the retailers are State-owned enterprises, so in some cases one could sheet it home to the Government. But during the last energy crisis a State-owned enterprise was actually able to make more profit by not generating. We need to think about these things if we are going to be able to sort them out.

Brian Fallow, who writes for the New Zealand Herald, took some time to review the issues in the legislation in order to comment about it. He commented on Graham Scott’s submission, which was endorsed by the major companies, et al., but he made the point—and it is one that I do not think should be lost in the debate on the third readings—that the Government had said to the energy companies that they could not continue to behave in an unregulated manner. We all know that as a result of their behaving in an unregulated manner our senior citizens and those on fixed incomes are trapped with high energy costs. We have seen the cost of energy rise over the last few years. It has gone up significantly.

Hon Ken Shirley: Yeah, Government policy.

MARK PECK: No, that is not right. The member is more intelligent than that. He knows that it is not right. He is making a political point. I would have expected that when he got an opportunity he would actually think about some of these things. What happened is we said to the industry: “We will give you a period of time to agree on your own self-regulation”—

Hon Member: Or what?

MARK PECK: —“or we will regulate.” Indeed, the member is quite right to raise the “Or what?”. We cannot have companies that have the capacity to rent-seek in their charges acting in a deregulated manner. It is simply not possible, if we are serious about ensuring that consumers have some protection against monopolistic behaviour. That was the intention of the regulation. And they could not get it right. Despite those years, and the thousands of pages put together by the Hon David Caygill, who was doing the work on their behalf, they could not come to an agreement about the right thing to do. So we did legislate and, yes, as Brian Fallow picked up in his report, we did listen to submissions, and we made some significant changes.

I accept that we probably have not heard the end of this, and I know that my colleague David Parker, in particular, is doing a lot of work in respect of issues around energy. There will be another generation of politicians who revisit this on another occasion. But I know that the simple answer of standing up and saying we will go straight back to energy supply authorities simply will not work, and will cause more grief in the short term than it will actually settle.

This legislation is a start along the way, and I think it sets out some relatively good will. Yes, it does bring in Government policy statements, and it does require the Electricity Commission to have regard to those. But those Government policy statements are subject to negotiation, and if the Minister rejects the Government policy statement, he has to have a reason for doing so. Where will it finish up? It will end up on the front page of the business papers and, I would suggest, if it is particularly serious matter, on the front pages of the newspapers as well. This is not the sort of industry around which there can be a level of non-accountability. This is the sort of industry that will become far more transparent in its operations over time, and the legislation starts to give the Minister, who will get the blame for most of what goes wrong in the sector, some powers to work within it.

In conclusion I want to make one final comment. It concerns the role played by those in the gas industry. They saw clearly that the Government was serious about the need for these utilities to have regulation. They carried out a series of very comprehensive consultations amongst themselves and they came up with a solution that was acceptable to them. Indeed, the Commerce Committee went so far as to accommodate them right along the road to the point when the final report came back to the House, to ensure that what was in that particular report worked. One broker in the process, the Rt Hon Jim Bolger, played a very strong role, and I want to give him some credit. I would say to members opposite that they have two legacies: the legacy of Max Bradford, which has never been put to rest; and the experience of the Rt Hon Jim Bolger, who managed to get together a probably even more disparate sector, and who worked with its members to make sure that the regulatory powers were accepted by the industry.

This is good legislation for now, but I am sure it is not the last word of Parliament on the energy sector. Although I will not be involved in those debates, I want to wish Parliament well in the future as it tackles some very complex issues concerning our energy infrastructure in this country.

I always enjoy following the honourable Mark Peck, because I know he will put rather complex legislation in simple language so that a simple sailor like me can understand it. I thought he made some very good points, and his last point should not be overlooked: this is legislation for now, and more legislation will be required because this legislation does not address the problem as comprehensively as it should and could.

In 1998, when the lines were segregated from the generation—the Bradford reforms—there was, if not plenty of capacity, a reasonable amount of spare capacity in electricity generation. But we knew then that it would not last forever. At that point in time there was a need to create, on an annual basis, a reasonably significant amount of extra electricity. There was a need for ever-increasing investment in the industry. Regrettably, nothing happened. By 1999, the National Party Government knew that there had to be some regulations to tighten it up. I know that Max Bradford approached New Zealand First on more than one occasion to try to address the issue and get some regulation into the industry. New Zealand First and National got very close to doing that, but we did not do it—

Hon Ken Shirley: Why not?

PETER BROWN: We did not do it because of a glitch in the negotiations. We could not agree on everything.

Brian Connell: Did you agree on anything?

PETER BROWN: Yes, we agreed on quite a lot. Let me put it this way to the honourable member. Mr Bradford agreed with quite a lot of what New Zealand First wanted—not the other way round—to tidy up the 1998 situation. Then Labour came into power, and we had 2 dry years. That proved without a doubt that we have not got the industry—

Hon Ken Shirley: You should have done something.

PETER BROWN: Something should have been done. Between 2001 and 2003 we had 2 dry years, principally because we did not hold enough water in our lakes. Now we have this legislation, and we have to ask ourselves whether it will solve the problem. I think the honourable Mark Peck has already answered that: the legislation will do something only for now.

New Zealand First believes we have to free up the lines companies, to let them have greater access to the ability to create energy generation.

Brian Connell: To what extent?

PETER BROWN: Probably, removing the cap. We would like to have that professionally reviewed. We certainly think lifting the 25 megawatt limit to 50 is a token. It disappoints New Zealand First that United Future members sit there, puffing out their chests and claiming credit for it; if they were a little bit more worldly-wise, they would have supported a call for opening it up to a significant extent, if not totally removing the cap. I think there is a good argument—I say this to my colleague behind me, because I know he will shortly interject—to free up the lines companies, to let them have free access to produce as much electricity as they are capable of doing. Our concern is that if we did that right now, one of them would simply go out and buy, say, Contact Energy, and achieve its aim in that way. What we really want is new generation.

The second point I should raise is that there is also a very good case for freeing up the use of coal to produce electricity in this country. I know that the Greens will shudder, but when we go and talk to people in Dunedin, and other places further south, we know that it is absolutely—

Brian Connell: We agree.

PETER BROWN: Now the member has got me worried. There is a strong case for using the billions of tonnes—not millions of tonnes—of coal in this country to generate more power. I think if we freed up the lines companies and allowed more effective use of coal, we would solve a couple of problems. One, we would make more electricity available, and, two, it would be at a reasonable price and would stabilise at that price.

Jeanette Fitzsimons: Tell that to your grandchildren when they’re drowning.

PETER BROWN: I respect the member’s views on the environment, but we are talking about a country that is tucked down the bottom of the South Pacific with only 4 million people. The problems with global warming are not here; the problems are in China, which is exempt from the Kyoto Protocol; India, which is also exempt from the Kyoto Protocol; and other places far afield. If she looks at the countries in the Western World that use coal for generating electricity, she will find that New Zealand is a minor player—just 5 percent of our electricity is generated from coal. If we look at Australia, we see that the figure is 76 percent; if we go to Europe we see that it is 50-plus percent. I think the member holds Germany up as the pinnacle, as the most environmentally friendly country in the world, but over 50 percent of Germany’s electricity is generated from coal. But I digress.

Brian Connell: This is a very good National Party speech.

PETER BROWN: Now the member has really got me worried! New Zealand First members asked ourselves three questions. The first was whether the legislation would address security of supply. The answer to that—and I say to Mr Shirley that we have to be fair, although he might not always agree with that—is that it goes some way towards addressing security of supply. It does not go all the way, but it goes some of the way. Will the legislation reduce the price of electricity, or even stabilise it at a reasonable level? In general terms, the answer is no. I thought that the maximum lines charge of 30c for a customer using 8,000 kilowatts or less a year was a move in the right direction, but after going south and talking to people who live in Dunedin and places like that, I realise that it does not go far enough. The third question was whether the legislation would encourage investment in the industry. The answer to that was a firm “No”—

Brian Connell: No!

PETER BROWN: —as the National Party member behind me has just stated. It is essential that we encourage investment in the industry. It is hard to get investment in the industry if, as Mr Peck said, companies can sell everything they produce. His statement was along the lines that a generating company can make more money by not producing. That is a situation we are getting into in this country right now, and we must reverse it. With three of the five major generators in public hands—owned by taxpayers—we have an opportunity.

In summary, this legislation will not do the job. That was acknowledged by Mr Peck when he said that it is good legislation for now. I do not know that it is good for now. New Zealand First is of the opinion that when one does something, one should do it to one’s best ability and get it right the first time. We know that this legislation will not do that. We all make mistakes, but this legislation will not solve the problems. New Zealand First will oppose it, and we have made that quite clear throughout the debate. We have looked at this legislation very, very seriously. We wanted to support something, because we are not against regulation. We believe that there are times when regulation is appropriate, and regulation of this industry is appropriate. Nevertheless, we do not believe that the legislation will do the job required of it, so New Zealand First will oppose it.

It always amazes me that people like the member who has just resumed his seat believe that we should blame climate change on the Chinese because there are a lot of them, even though each one of them, on average, produces about one-fifth as much greenhouse gas as that member and other New Zealanders. It appears that there is somehow a view that because we are small and in the South Pacific, a tonne of coal burnt here will not have the same environmental impact as a tonne of coal burnt in China, which is, of course, nonsense. These five bills are part of a long-term, repeated, hugely expensive, and complicated fix-up of the destruction of our electricity system, for which consumers have paid, and paid, and paid in terms of higher prices, of loss of reliability, of loss of service, of loss of democratic rights, and of loss of any help in managing their own power use, for the very dubious benefit of phoney competition among the power companies. It was not much of a deal that the previous National Government foisted on this country.

I am no fan of the old New Zealand Electricity Department. It built the Clyde Dam, which produced the most expensive electricity ever in this nation, and, compared with anything we may build now, it wasted a large proportion of our Māui gasfield by burning the gas in power stations at 30 percent efficiency, putting the rest of its energy into the river and the sky. The department built 40 percent overcapacity in the 1970s, which was a big waste of public money, and it tried to build nuclear generation. But what it had going for it was that there was an integrated system. The department had a model for dispatching the next-most efficient and cost-effective power station in order to meet demand, and it had models for back-up capacity. It was able to make rational economic choices between whether to invest in transmission or in generation in order to solve a particular problem. It was under one roof, it was capable of taking a whole-system, integrated view, and that is what we have lost. That is all gone.

The heart of the competitive model is the concept of never letting the left hand of the electricity system know what the right hand is doing. The consumer has to pay enormous additional costs: the costs of running the market, of the lawyers, of the people who play the computer games and bid in order to try to game the market, and of the court cases as the consumer-owned Transpower and the consumer-owned Meridian Energy sue each other. There are the costs of not one but seven expensive boards, and of the chief executive officers and corporate structures for seven entities, where once upon a time there was one. And the same consumers have been bought and sold like cattle by those power companies. It is obvious that in this industry competition does not work well. We are working in an industry that has major resource constraints, that makes a product that cannot be stored and has to be dispatched instantly, and that is highly weather dependent. What we now have, instead of competition, is a set of virtual regional monopolies.

The electricity industry was supposed to work through self-regulation. Two and a bit years ago, I told the Minister that I did not think it would work. The Greens supported the previous electricity legislation because something had to be done. We said that because self-regulation would not work, the Government had to make sure that there was a back-up regulator. There was a back-up for a regulator provided. I predicted it would be used, and now it is being used. It would have been much better to provide for the Electricity Commission in the legislation 2 years ago, but the Minister wanted to try self-regulation. He was the Minister, and he was entitled to do that. But what we are doing now is setting up a huge and expensive structure to simulate the integration that we once had in the industry. We do need the commission and this enormously expensive structure, because now it is just about impossible to go back to the integrated system, which would have been much better. That is why the Greens support this legislation, although we have reservations about the way it works in practice.

The commission’s job is to give effect to the Government policy statement on electricity and gas. The policy statement is largely good. It stresses important things like security and reliability, fair prices, energy efficiency, environmental sustainability, demand-side participation in the market, distributed generation, and investment in renewables—all things that I would put in it myself. There is a huge amount of work for the commission to do, and there are some worrying signs. The commission does not seem to be interested in consulting consumers other than the big consumers in the Major Electricity Users Group. The Government policy statement states the commission must take into account the needs of consumers, but I do not see it being very consumer focused at all, at the moment.

The commission is intended to ensure that investment is efficient, and the first big test of that is now looming over the next year. It is shaping up to be a bit of a disaster. One of the most serious threats to energy security in New Zealand is transmission constraints. We have had times when water has been spilled because electricity cannot be dispatched over the wires as they are already full, yet in other parts of the country we are burning fuel that is scarce and expensive. Something has to be done to deal with the transmission constraints. There have been calls for major transmission upgrades, which will cost billions of dollars if they are all carried out. That is a huge cost on the whole economy, so we have to make sure that that cost is the most efficient way of proceeding.

Now for a number of years we have been shown another way of proceeding by Orion, the lines company in Christchurch—and, may I say, a publicly owned lines company in Christchurch—which has staved off new transmission investment for years and has provided complete security for its customers through distributed generation, peak-load shifting, and greater efficiency of end use, which means that the lines have been running at below their capacity even while demand has grown. Orion has demonstrated the principle of least-cost planning, which has been accepted in sensible electricity markets around the world for at least 20 years, since I first read about it, and maybe for longer than that. That principle means that there needs to be a proper study of the costs of a transmission upgrade versus the costs of putting in distributed generation on the other side of the constraint, along with load shifting and greater efficiency, in order to achieve the same outcome.

That is the job of the commission. The Government policy statement indicates that the commission must promote efficient investment in transmission or transmission alternatives at least cost. It must provide a statement of opportunities to identify the potential for transmission alternatives and provide incentives for least-cost options, including energy efficiency and demand-side management. So what is happening? There is a deadline imposed, of 11 months from now, for approval for the initial grid upgrade. That is across the country—the transmission upgrades. So Transpower can spend years—and has done—in coming up with proposals for grid upgrades, dump them on the commission, and the commission then gives the other players weeks or, at the very best, a few months to put together the alternative options. That is a highly technical and sophisticated process. There is no help for the development work. It requires gold-plated performance guarantees for peak demand reduction, but gives no credit for kilowatt hours reduction. It has to provide its own monitoring and verification. The commission has to dance to the Transpower tune, and it has to dance with frantic speed. In fact, all the cards are stacked against any least-cost options, any demand-side management, or any load shifting—which, incidentally, is also the most environmentally sustainable way to go.

We must avoid the temptation to perpetuate in the commission the “think big” that the New Zealand Electricity Department indulged in and that the current market players indulge in, and move into the 21st century of locally distributed, primarily renewable generation that is capable of meeting our essential needs by being reliable, efficient, and greenhouse friendly.

At the outset I will say that I found the analysis of the member who has just resumed her seat to have been very sound. I think that she gave a very fair analysis of the situation. Unfortunately, her conclusions were inconsistent with her own analysis. Totally rejecting the market is totally inconsistent with her speech, because all the reasons she gave in her speech were reasons for more market participation in and less government of the industry. She said that we do not have the least-cost options available to us, which is bad for the environment. I agree with that analysis, but I say the market will deliver the least-cost options and, thence, will give the best environmental outcomes—not big-Government prescription. The example of the most expensive over-investment in gold-plated generation that we have done is the Government’s “think big” Clyde Dam, which our grandchildren will still be servicing the debt on. That is the strongest argument against the conclusions of the Green member who has just resumed her seat.

The ACT party strongly opposes this legislation. It is very bad legislation. I think Mr Peck from Invercargill made the point that it is a bill for today. Government speakers are virtually conceding that it has weaknesses, but say that it is a sort of stopgap measure to try to tide us over, as the Government tries to grab more levers and have more controls. Well, it is not a bill for today; it is a bill for the 1930s. It is all about the politicisation of the energy sector, big-Government control, more government, and less market participation. That is the fundamental failing of this bill, and the ACT party deeply regrets it.

Energy is critical to this country. Next to our good fortune in having a temperate climate, the key competitive advantage that we have in this country is comparatively cheap electricity—an adequate availability of competitively priced electricity. If we lose that, we are done for. Our whole economy as a trade-dependent nation is based on processing our key export products. We are exporting energy. For milk-powder, wood pulp, and aluminium—for all our key exports—the cost of electricity is as great as the input of the raw material derived from the land, and if we do not have competitively priced electricity on an international basis, we are done for. What is the policy of this Government? It is to drive up the price of energy. The Minister said so. He said that energy was too cheap, which is why windmills are not competitive, and that if we had more expensive electricity windmills would then become competitive, and that would be good. No, that would be bad, but that is what this Government is doing. Because of the Government’s capture by the Green movement, it thinks that somehow, if we go for more expensive electricity, put blockages against coal and hydro generation, and favour and subsidise wind generation, it will be good for the New Zealand economy. That would not be good; it would be disastrous for the New Zealand economy. But that is the course of action this Labour Government has embarked on.

Of course, one can embark on that course of action only if one controls the levers, which is why the Kyoto Protocol is such a wonderful instrument. It is the perfect instrument for the socialist, because one can progressively control all the levers. One nationalises the sequestration credits, and then says to industry that it will have a carbon tax put on it, but that exemptions will be given. One tells people that if they go to the Government and lobby it, the Government will consider their cases and give exemptions. That is a politicisation of the total economy. It is a recipe for a command economy, and a recipe to drive up the price of energy in this country and diminish our competitive advantage against other trading nations—our competitors out there are in the global marketplace. It is disastrous for New Zealand, but somehow the Labour Government speakers have come to this debate to try to defend that and say that it will be good for us. It will not be.

The whole structure of the New Zealand energy sector is one of not enough market and too much government involvement. That is where the Greens’ conclusions are so wrong. Those members say that the market has failed. But it is not that the market has failed; it is that the Government has prevented the market from working. Looking at our generation, we see it is 80 percent controlled by State-owned monopolies that gouge our export industry with unbelievable price hikes. One hundred percent of our transmission is controlled by a single State-owned enterprise; there is no competition and no market. Then, when we come to the retail supply end, we find we have not applied price signals because of the metering problem. So the domestic consumer is not exposed to price signalling. We do not have time-of-use metering, and domestic consumers cannot respond to pricing signals because they are shielded from them. So at every step it is Government intervention and policy that prevents the market from working.

I was interested to hear the National Party claim credit for removing the restriction on energy supply companies becoming involved in generation. Well, I say good on those members for claiming credit for that, but I would remind the House of who imposed it in the first place, in very recent history. I remember spending several days in Bill Birch’s office with Max Bradford and Tony Baldwin, pleading with them not to do it, telling them not to go down that path, and saying that we did not need to split the supply and energy companies and then prevent supply companies from getting involved in generation. But just a few years back, that is exactly what the last National Government did—against the advice of the ACT party. We warned National about that, and the very aspects that we warned it about have come to pass. So I am delighted that National has now abandoned, and recognised the folly of, the policy that it implemented.

But we should not blame the market for the mistakes made in the Bradford reforms. Overall, the market reforms in New Zealand’s electricity sector have been a success. The problem is that we have not continued forward. We have not allowed the market to work, because of too much Government interference and too much monopoly. That is why this bill is so bad. The Electricity Commission is an absolute puppet of the Government and will become the plaything of the Minister. This is heavy-handed regulation that, rather than encouraging the investment we need in our energy sector, will be the single biggest put-off. For foreign investors the world is their oyster; their money flows like water to the best opportunities. They will look at New Zealand and see the great big State-dominated sector, the heavy-handed regulation, and the great big instrument that the Minister has. This legislation is the equivalent of the Minister having his hand up the back of the ventriloquist’s puppet, and the puppet looking at him, and saying: “Minister, you are an idiot.” It is an “I’m not.”, “You are.”, “I’m not.”, “You are.” sort of situation. The instrument that the Minister has created has already shown that his decision to subsidise his own State-owned enterprise, Genesis Energy, was silly. It was silly. It was stupid public policy, but it is just another recent example that we are seeing of that from the Labour Government. We will see a whole lot more examples like that, because Government members cannot help but fiddle. They are fiddlers—socialists are fiddlers. They have to have their hands on the control levers—they are control freaks. That destroys markets, destroys confidence, and kills investment.

This bill is bad, and the ACT party will be opposing it.

The principal purpose of the part of this legislation that deals with electricity is to improve the security and supply of electricity. On that subject, I draw to the House’s attention concerns about the implications for New Zealand’s electricity supply, and for our economy in general, flowing from the May 2004 decision of the Environment Court concerning the renewal of the Tongariro power development consents. As is now well known, the court has reduced the term of those consents from the requested 35 years to a mere 10 years, because of its inability to make judgments on the negative effects of the power scheme on Māori cultural and spiritual values, as required by the Resource Management Act. That is a matter of the greatest national importance. The Tongariro power scheme incorporates two major hydroelectricity schemes. The water is then discharged into the Tongariro River, flows into Lake Taupō, and then flows down through a further eight dams in the Waikato River until it reaches the ocean. That is a total of 10 hydro schemes, in all.

The decision means that the generating capacity of the entire system will be quite significantly reduced should the consents finally be confirmed on the condition that the diversion of water from the upper reaches of the Whanganui River, and a number of other rivers sourced from Mount Ruapehu, is brought to an end. Even worse is the signal that the decision sends to the business community in relation to new investments in New Zealand - based hydroelectricity and other electricity generating schemes. For hydroelectricity schemes the business community needs a 35-year-plus investment horizon and a certainty of process, or otherwise investments simply will not happen. Potentially, the damage flowing from the decision is such as to relegate New Zealand’s international reputation as an investment destination to a highly negative, if not a complete nutcase, status. It is important, therefore, that we examine that extraordinary decision and its effects.

The decision itself is clearly set out in the 134-page judgment, and is therefore a matter of record. The key finding is in paragraph 472, which states “In evaluating the various matters that we are required to under the Act”—that is, the Resource Management Act—“and evaluating the matters on which evidence was presented, we have had some difficulty in weighing the metaphysical matters against the physical and scientific matters. Notwithstanding this difficulty, the Act nevertheless requires us to do so. In so doing, we have had to make a value judgment, which reflects what is in our view the relative importance of these matters and the relevant magnitude of the various matters.” The Tongariro power project, as a result, is left in limbo. The court stated that it could not make a determination concerning the metaphysical matters, but at the same time it was obliged by the Act not to ignore them—a classic no-win situation. Accordingly, the Environment Court has just passed the matter back to the three iwi concerned—seven other iwi chose not to contest the consents—and to Genesis Power Ltd and has effectively said to them that it hopes they can get together and sort the matter out over the next 10 years.

Genesis Power is appealing that decision to the High Court—and it should do so, because it is not the function of our courts to adjudicate on the spiritual and the metaphysical. That is something that I understand the National Party is also in agreement with. For the moment we will have to await the outcome of the Genesis Power appeal. In the meantime, some people are saying that the Environment Court has got it completely wrong in the emphasis that it has placed on the metaphysical aspect. They argue that the purposes and principles under Part 2 of the Resource Management Act are paramount, and that the references there are only to the sustainable management of natural and physical resources. I hope for the sake of New Zealand and the future of its electricity supply that that view will prevail, and that the decision of the Environment Court is overturned by the High Court. However, if the decision is upheld, then the Government will need to act, and to act swiftly, to amend the Resource Management Act so that references to spiritual values are removed.

I need to be clear about one matter at this point: I am committed to defending, and will defend, the principle of religious freedom. It is a fundamental right in our society—including the right to change one’s religion. I need to say that because I want to emphasise it is not my intention in this speech to attack traditional Māori spiritual beliefs—

Brian Connell: I raise a point of order, Madam Speaker. I am reluctant to interrupt the member, but by my reckoning he is now 6 or 7 minutes into his speech, and I do not recall him having mentioned this legislation once. I would ask you to direct him to address his attention to the legislation.

GORDON COPELAND: Speaking to the point of order, Madam Speaker, I started my speech by quoting the principal purpose of this legislation. I quoted it as being to improve the security and supply of electricity. I am speaking to that matter.

Madam DEPUTY SPEAKER: The member has been speaking to the supply matter.

GORDON COPELAND: I was saying that I do not want to attack traditional Māori spiritual beliefs. In matters concerning religion, my attitude is one of respect and dialogue. I simply say that if the decision of the Environment Court in this case is upheld, then Parliament must act both to ensure the future of the 10 hydro schemes in question and to repair the damage done to New Zealand’s international reputation as a credible investment destination.

The reality is that we do compete in a worldwide marketplace for scarce capital resources. United Future believes strongly that our future economic prosperity will be dependent on New Zealand remaining a destination of choice for international investment. I agree with the point, which was strongly made by the Hon Ken Shirley, that electricity must remain cheap in New Zealand—as cheap as we can possibly make it. All of us should apply our minds towards ensuring that that happens, because it is clearly a comparative competitive advantage and, as Ken Shirley has pointed out, we do compete on the world stage. Dr Michael Cullen was quoted in this House a few weeks ago as saying that the purpose of the current Resource Management Act review is to provide greater certainty. I agree with that objective, but, should it become necessary, we will need to follow through with further amendments to the Act in order to ensure that that becomes a reality. Just saying it is so does not make it so.

I turn briefly to the question of the major investment that Transpower needs to make to upgrade the national electricity distribution system. I referred to that briefly in my second reading speech on the Electricity and Gas Industries Bill.

Brian Connell: Do you support the legislation?

GORDON COPELAND: I will come to that in a moment, for the benefit of the member. The problem that needs to be solved is the fact, as others have said, that we literally need billions of dollars, potentially, of investment in the national electricity grid. Because it has been neglected for 40 years we now have a major, major upgrade ahead of us, and I think that all of us in this House would be in agreement on that point. The question, therefore, is how to get that system upgraded while keeping the cost of electricity as low as possible, in order to achieve the economic goals that I have mentioned of ensuring that we retain a comparative competitive advantage relative to other players in the world.

In my view, the way to do that is that the State needs to have a hand in borrowing the money to do it. Then, I believe, it needs to endeavour to repay the funds borrowed over at least 35 years or so. It has to be an intergenerational borrowing, because the upgrade of the power grid will last for at least another 40 years—so 35 years for repayment is conservative. Then, I believe, we should recover from the electricity consumers of this nation just the amount that we actually need to service the interest and debt repayments on those loans, so that we can keep the price of electricity as low as possible. I used the analogy in my second reading speech of our roading system. We do not actually attempt to get, say, a 10 percent real rate of return on the investment in our roading system. We all agree that roading is a necessary part of our total integrated economy, and, therefore, that it is in the public interest and the common good to provide it as efficiently as possible. I believe that exactly the same thing applies to the upgrading of the transmission grid.

I can also say that to some extent I am in agreement with previous speakers from the ACT and National parties on other points, too. I think we need to take the step of getting rid of the current separation of the electricity sector into different segments. I do not think that has worked, and I think the time will come—and Mark Peck mentioned this also in his speech—when we will have to revisit that matter.

This legislation is not perfect, but, nevertheless, it is a significant step forward in what had become a situation that was, quite frankly, out of control. It was a mess created by the Max Bradford reforms, which obviously, from any point of view, whether one is a socialist or a free marketeer, have not worked. At least this legislation takes a step in the right direction towards fixing that. Therefore, I am pleased to signal United Future’s continuing support for these bills.

The range of electrifying speeches we have heard this afternoon—particularly the one by the member who has just resumed his seat—means that we have avoided the sleeping gas we might all otherwise have suffered.

In speaking to the third reading of the electricity and gas industries legislation, it would be helpful to remind members and other interested listeners what this legislation is about. The objectives of the Government, for both electricity and gas, are to have energy delivered to consumers in a safe, efficient, fair, reliable, and environmentally sustainable way. This legislation will take us further towards that goal. It puts in place all the decisions made by the Government this year on electricity supply, security, and the governance of all the electricity and gas industries. It will provide certainty and stability in the electricity and gas industries.

The legislation contains measures to promote security of supply, consumer protection, and competition, and to improve the governance of the electricity and gas industries. That is imperative, considering the importance of those industries to New Zealand’s continued economic growth and prosperity. At the same time, this legislation will enable us to continue our progress towards greater energy efficiency and a sustainable energy future. Mr Copeland, in expressing his party’s support for this legislation, has seen the light—which is a lot more than could have been said if we had continued under the failed reforms of Max Bradford. I will not continue—I was going to take only a brief call. I am very pleased to be supporting this legislation.

Georgina Beyer’s short call was anything but electrifying. I think the fuse burnt out.

Hon Maurice Williamson: No resistance!

Dr LYNDA SCOTT: There was no resistance in the system and it burnt out.

Brian Connell: Lost in transmission?

Dr LYNDA SCOTT: No, I think the speech before that was definitely lost in transmission. The Electricity and Gas Industries Bill has been broken up into the five different bills before us tonight. [Interruption] I really am going to try to speak on the legislation.

What do the consumers out there actually want? We are talking about all the details of this legislation, but what do domestic consumers want? They want to pay a reasonable price for their electricity, and they want security of supply. I think that every one of us can remember the number of times we ended up with power cuts at various times. I remember building a new house and putting in a fireplace that one could cook on because we knew—

Hon Maurice Williamson: Did you?

Dr LYNDA SCOTT: Yes, I did, because we used to keep having electricity blackouts. Blackouts and brownouts—

Hon Maurice Williamson: Was that during the war?

Dr LYNDA SCOTT: No, that was a little before my time. It was not during the war; I am not that old.

Brian Connell: Was the blackout Minister there?

Dr LYNDA SCOTT: “Blackout Pete” was very lucky a couple of years ago when we were heading for an extremely dry year, everybody was getting desperate, and no regulation was proposed at that time. What happened? It rained. He got off lightly that year, because the situation had been looking very, very serious. However, it brought to everybody’s attention the lack of investment in developing security of supply in the electricity industry.

As a constituency member of Parliament, what did people come to me about? The spot market was one thing. They had gone on the spot market and ended getting price gouged. I had a friend who had a supermarket. His costs went up from $8,000 to $20,000 in 1 month. Someone else who owned a rest home faced cost increases from $10,000 to $25,000 in 1 month.

Hon Ken Shirley: They got burnt.

Dr LYNDA SCOTT: Those people had bought into those businesses and they got absolutely burnt by the system. Businesses want security of supply and to know what the price will be so that they can make some decisions.

But the market has worked in various areas in New Zealand. When there is competition and people can make a choice, then the price usually comes down and the delivery of service is improved. That is what National stands for. We oppose this legislation. But if there is competition, then a marketplace is generally improved. The problem has been that in some of the smaller areas there has been a lack of choice so there is no competition. There has not been anybody come around to read our meter recently, so when it is read we usually find that they have got the estimates incredibly wrong. People can end up with huge bills because their meters have not been read for a year. That has caused problems for elderly people in particular. Those are the sorts of problems about which people come to me as a constituency member of Parliament.

The efficient, reliable, and secure supply of electricity is incredibly important when businesses are looking at whether they will invest in, and come to, New Zealand. If people are going to move to New Zealand they look at consumer protection. This Labour Government is about regulation. It has brought much legislation into this House that has seen a huge increase in regulation. Labour members will not leave the market alone. They said that they gave it 2 years. They are now in there, boots and all, regulating the market.

A lot of submissioners to the Commerce Committee felt that the Electricity Commission should be independent and the Government should not be interfering in it. They did not accept that the Electricity Commission should be able to be directed by the Government. The Government is choosing to regulate a key sector of this economy. Most of the submissioners did not feel that that would bring down the cost or increase the security of supply. They felt that there could be conflicts of interest and they were not positive about that at all. Many of the submissions to the select committee were against the legislation that we are debating tonight.

Part of the legislation is to do with lines companies. The ACT party talked about the fact that they were the Max Bradford reforms, but the intention was always to increase competition and reduce costs, to try to improve the system. The aims were honourable and they did work in some areas. They have not worked in other areas, but increasing the ability of lines companies to generate from 25 megawatts to 50 megawatts is a token. It does not go far enough. I know that our Marlborough lines company would have liked to see a bigger increase, which would allow local decision-making about increasing generation. One of the biggest problems, of course, is our lack of ability to have this increase in generation.

In the Marlborough, Kaikōura, and North Canterbury areas, but especially in the Marlborough area, the problem has been that the Dobson dam was scuttled. I am actually quite a conservationist—I am very concerned about New Zealand and protecting our environment. But the Dobson area was an area of gorse, and one has to look at the trade-offs. There were going to be some good trade-offs there to allow—[Interruption] They were going to get more than they were giving, and we would have increased hydro generation. For Nelson and Marlborough, the Dobson dam should have gone ahead.

Then there was Project Aqua. That has been scuttled as well. The problem is the Resource Management Act, and this Government is not addressing it. That is the problem. Transpower has problems as well—its major problem is the Resource Management Act. It would be better if we were debating some substantial amendments to that Act tonight, instead of legislation that National will not support. Members heard the Hon Roger Sowry talking about the fact that the Government was not going to move off the 25 megawatts of lines company generation ability until National came out and said that we believed we should go back to allowing lines companies to be able to be involved in generation. The Government then moved to 50 megawatts, but that does not go far enough. Every energy company that submitted to the Commerce Committee opposed the legislation. Genesis Energy opposed it, Orion opposed it, and Transpower came and argued for changes. TrustPower said that the legislation will not solve the issues, and opposed it. We have already discussed the lack of independence, the Minister having to sign off the work plans, the Minister appointing members on to the commission, and then the fact that the Minister can completely ignore that if he chooses to.

So one has to ask what the point of all of it is. We know that there needs to be much better investment. Tonight we debated all the various forms of electricity generation, and I heard the Greens being very adamant against coal. I have visited China many times lately because my son was living in Shanghai. The pollution there is absolutely terrible. The kids grow up not seeing the sun; it is just an orange ball. But the pollution is quite substantial. We do not want to see that. But we do have huge levels of coal reserves, and if it can be burnt to a level that is clean, and with new technology that can be done, then that is one of the options.

This legislation is only a token in addressing the security of supply. Most of the people who came to the select committee and made submissions said that they did not think this bill would lead to new investment in the industry. That is one of the most important things. We do need overseas companies or New Zealand companies wanting to invest in the electricity and gas industries. The fact is that under the gas regulations that will come in through this legislation there will have to be a sharing of processing facilities. That also will lead to less investment.

I rise to support the third reading of this legislation, and in doing so I acknowledge that National will not support it. It does not support the infrequent sojourns of its leader coming down to the House—it does not support many things in the House, but it does not propose anything either. This is most regretful. What National does do, however, is that it does support us. Roger Sowry, the outgoing shoe salesman who is due to set up business in Levin as a salesman, said that the Labour Government must now step up and show some direction. That is exactly what this legislation does. Roger Sowry has also renounced, as he rightly should have, the Bradford reforms. We have had to unbundle those, and we are putting in a regulator, as we had to in telecommunications, and so on and so forth. So we are a Government of solutions, and I commend this legislation to the House. I just wish that New Zealand First would support the legislation rather than being mean-spirited, as usual.

I conclude by saying that the great genius and legend in his own mind, Brian Connell, who is about to take a call—I cannot recall what seat he represents, nor can his constituents—said this: “I think the electricity reforms of the late 90s under Max Bradford were ill conceived. National has accepted that we got it wrong with these reforms.” That is what he stated in the Ashburton Guardian.

Brian Connell: It was the Timaru Herald.

Hon JOHN TAMIHERE: Well, in the Timaru Herald as well. But he neglected to add that National also got it wrong when it confirmed his nomination for the seat. I commend the legislation to the House.

I think it is a very sad day whenever John Tamihere takes a call, but it is a sadder day when a Government member, namely Mark Peck, gets up and says on such an important piece of legislation: “This bill is for now.” By implication he is saying: “We know it is broken, we know it won’t go the distance, but it is the best we can do for now.” Well, is it not about time that we had in Government men and women of vision who think beyond the next election cycle and actually do things for the common good of the people of this country? That is why I am proud to be a member of the National Party.

Let me address the issue that Mr Tamihere spoke about. Yes, I said that, and I am very adamant in saying that I think the National Party did get those reforms wrong. But do we beat ourselves up or do we do something about it? We are prepared, as Mr Sowry outlined in March of this year, to do something about it. We are not going to hide and, on top of our mistake, make another one—and that is where this Government is found wanting. I have to say that we do not have an energy crisis in this country. What we have is a power crisis. We have tons of energy options in this country if we allowed ourselves to use them. But this Government just will not do that. It has already been said, but it is worth repeating, that we have 1,000-plus years of coal reserves in this country. But “Blackout Pete” is inspired by the Kyoto Protocol, which in turn is inspired by the Europeans. He is being seduced by that, and by his own greenie tendencies, to make sure that coal is priced out of the market.

Madam DEPUTY SPEAKER: Can I just remind the member that he should refer to members by their correct names.

BRIAN CONNELL: The Minister of Energy, Pete Hodgson, will be responsible for many a blackout if this type of policy is continued with. What we need is more generation, but what we get instead is a bureaucratically inspired panacea called the Electricity Commission. It is a backward step. Nay, it is a leap backwards by at least 30 if not 40 years. It is an old, inflexible, and inefficient model that has been tried before. It is the worst type of central model that could be conceived. This is the very true component of what Mr Tamihere was saying, and he was correct about my views that what has been suggested now is ill conceived. It does not call for any more competition. For goodness’ sake! Any analysis at all tells us that the problem in this country is that we need more generation, not less. What will happen if we do not allow this competition? Lines companies, for example, with very good balance sheets, will simply decamp and invest in other people’s economies.

Hon Ken Shirley: They are already doing it.

BRIAN CONNELL: Well, they are doing it in some cases, yes. I say to Mr Tamihere that that is an absolute tragedy for this country. The people of Rakaia, in supporting me with my experience overseas, knew that they needed someone with the commercial experience in this country to tell the Government that it has to think beyond the next election cycle. This is a critical issue.

What will happen is that those who do take the risk of investing in this country are going to ask for a much higher rate of return, simply because they have to mitigate the costs that are being imposed on them by this Government. That is why the National Party is totally in support of the removal of any limits on lines companies entering into generation. Of course, that is subject to oversight by the Commerce Commission. The Electricity Commission is not independent.

Every serious submitter who came to the Commerce Committee said they were concerned about the commission’s lack of independence and the costs the Minister would impose in respect of what he is setting up. This is a huge bureaucratic model. It is a step backwards. It is akin to what we saw in Eastern Europe 40 or 50 years ago, and is really inflexible to boot. Hardly one submitter supported this legislation. An array of expertise came to the committee but not one of the Government members took it seriously. The fact they dismiss that type of expertise shows the arrogance of the Government and this Minister in particular.

I want to make it clear for the record that we are talking about some of the most senior executives in this industry, so I will name some of them. I refer to people like Stephen Barrett, Alan Jenkins, Murray Jackson, Doug Heffernan, Ralph Matthes, Keith Turner, Steve Bolton, Keith Tempest, Mark Franklin, and Ken Sutherland—to name just a few. They expressed very clear concerns about design. I want to pick up on some of them. They said that it will create an institution with advisory, operational, and regulatory roles that will place it in serious risk of performance failure and judicial review. What member of that select committee could listen to that and not think that we may have a problem? Considering the array of expertise before the committee, one would think a rational, sensible person would want to give it some thought. But this Minister simply dismissed those experts with a wave of the hand.

This Minister prefers to listen to his own closeted Labour advisers. I am surprised that some of them are not skulking around the corridors as we speak. One thing that really exposed the Minister’s ignorance and arrogance was what is being proposed in the gas industry. This is truly incredible. It is clear, and I think most parties will agree, that investment in gas exploration is expensive and risky. But having spent, let us say, $50 million on exploration, then striking gas, and then establishing infrastructure to support that new find, this Government says to whoever has been that successful company: “By the way, you now have to give your competitors a leg-up.” By that I mean that this Government is legislating to say that competitors in the gas industry have to let others use their infrastructure, whether or not they have contributed. I ask the House whether that will encourage investment. I ask Mr Copeland whether that will encourage foreign or domestic investment. Clearly, the answer is no. Why would one want to give one’s competitors a leg-up?

We should all have been put on notice very early in this debate when the Green Party said it was going to support this legislation. What I found a little bit more interesting was that United Future was prepared to support it. I have heard them speak, both privately and publicly, about their concerns regarding this legislation, and in particular the component around the sharing of gas infrastructure. That is incredible and simply stupid, because that will scare away investment in this country. That in itself will make sure that we do not have enough supply and that the cost of gas will soar.

I raise a point of order, Mr Speaker. In view of the proximity of the dinner break, I seek the leave of the House to adjourn a few minutes early so that we can start afresh on the new business at 7.30 p.m.

The ASSISTANT SPEAKER (Hon Clem Simich): Leave has been sought for that course to be followed. Is there any objection? There is.