Parker David: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeParker David: Questions for Oral Answer — Questions to Ministers[Sitting date: 08 May 2013. Volume:689;Page:9634. Text is incorporated into the Bound Volume.]4.Hon DAVID PARKER (Labour) to theMinister of Finance: Does he stand by his statement regarding the electricity market that: “Public monopolies will always rip off the consumer”; if so by how much have residential power prices excluding lines charges gone up in nominal terms since November 2008 according to the Ministry of Economic Development’s Domestic Electricity Prices Survey?Hon BILL ENGLISH (Minister of Finance): In answer to the first part of the question I stand by my full statement which was this: “It ignores risk. Under the previous Government they did have a pretty risk-free environment. They pumped up prices 72 percent in seven or eight years. We are making it a riskier environment by adjusting the market to make it more competitive and that is going to mean it is hard to make those sorts of excessive returns. Public monopolies will always rip off the consumer.” That is why we reject a scheme that would establish a public monopoly in electricity generation as proposed by the member asking the question. Monopolies simply cannot and do not do better than competition. In answer to the second part of the question according to the measure the member proposes since this Government has been in power prices have risen by that measure by 18 percent. Under the equivalent measure under his stewardship they rose by 100 percent.Hon David Parker: Why have residential power prices not dropped in the last few years but instead risen given that demand has slumped due to the recession and carbon prices have crashed?Hon BILL ENGLISH: The member is now mixing up measures. Of course as he knows one of the significant drivers of residential prices in recent years has been the line charges and transmission charges. He should be agreeing with that because his Government started out on the process of the large-scale investment in upgrading our transmission capacity. Someone has to pay for that in the end and that has flowed through into power prices. At the same time there is downward pressure from slackening of demand and a collapse in carbon prices. But I have to say that under that member’s emissions trading system policy households would pay an extra $500 per year which is well in excess of the cut that he is promising them.Hon David Parker: Why despite household demand falling is New Zealand one of just two OECD countries in the Ministry of Business Innovation and Employment data that have seen power prices increase since the recession?Hon BILL ENGLISH: As I have pointed out to the member before the investment of something like $3 billion or more in the transmission grid was required in order to provide for reliable supply and the cost of that has been flowing through to consumers. But the idea that a Government department is going to make better decisions is one that very few New Zealanders find credible. In fact I think it is only the Opposition that believes it.Hon David Parker: Why does the Minister believe that hydro generators should keep the windfall profits they make from public water under the current pricing system rather than passing them through to Kiwi families and businesses as Labour is proposing?Hon BILL ENGLISH: Because we do not agree with those assertions. In fact if the member looks at one measure of the profitability of hydro companies—that is the share prices of TrustPower and Contact—they have dropped over the last 5 years. In the case of both companies their share prices are lower than 5 years ago which proves exactly the opposite of the point the member is trying to make. There are not super profits and the decline in demand is reducing the value of those companies.