Hipkins Chris: Electricity Industry Bill — Third Reading 
Hipkins Chris: Electricity Industry Bill — Third Reading 
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CHRIS HIPKINS (Labour—Rimutaka) 
: 
 I notice that when Amy Adams stood up she said she did not want to traverse the details of the Electricity Industry Bill and that is because the details of the bill and the details of the evidence that the Finance and Expenditure Committee heard on the bill are that it probably will not work and that it does not address the major issues confronting the electricity sector. There was a huge amount of criticism of the bill. So I am not surprised that National members do not particularly want to talk about the detail of the bill because no robust case has been prepared or presented to justify what they are trying to do here. 
Let us be clear what this bill is all about. Firstly it is about making the State-owned enterprises Meridian Energy and Genesis Energy more attractive for privatisation. The rearrangement of the assets is all about making them more attractive for privatisation. Although the National Government promised New Zealanders before the last election that it would not privatise them in its first term we know that the work is under way to privatise them in the second term should it get one. That is one of the reasons why New Zealanders will reject the National Government at the next election and return a Labour Government. They do not want to see the National Government hocking off the family silverware. 
Hon Maurice Williamson 
: Ha ha! 
CHRIS HIPKINS 
: Maurice Williamson knows all about that because he was involved in privatising the assets last time around. In fact I think he was an Associate Minister of Energy and Resources last time around when it was busy hocking off Contact Energy. That was Maurice Williamson. He cannot wait to get his hands on the other State-owned enterprises. That is what this bill is all about. It is about preparing those State-owned enterprises and getting them ready for privatisation. There is no business case for the asset swaps. Treasury noted that the business case had not been prepared and the Ministry of Economic Development noted that the business case had not been prepared. The Institution of Professional Engineers submitted to the select committee about not only the business case but also the inefficient management of water that could result from the asset swaps. It noted that a case had not been made and that in fact it could have the opposite effect to what the Government claimed—that is that it would result in more competition when it could result in less. 
I want to traverse that for a moment. The Waitaki water scheme is one coherent system. Water flows from one lake into the next into the next. This bill takes the Tekapo A and B lakes which are power stations relatively near the top and gives them to one company. That company will control a large amount of the water supply flowing into the other lakes and the other power stations further down the water system. If it is going to operate in the way that Gerry Brownlee wants it to operate which is in a competitive market model its incentive will be to maximise its own use of the water potentially at the expense of the other power generators further down the hydro system. That is one of the reasons why the Waitaki system operates most efficiently as a monopoly because then the operator of that system can work out how to generate the maximum amount of electricity from the given amount of water that is available. That was the view put forward by a number of technical experts to the select committee and that evidence was ignored by the National members on the committee who used their majority to push this legislation through. 
There is no robust case for saying that separating Tekapo A and B from the rest of the Waitaki system will lead to more efficient use of water or lower power prices or even increased competition. In fact the committee received some strong advice that any modest increases in competition that may result from this asset swap would be more than offset by the potential downsides of it. The Government did not respond to that. It did not engage with the detail as Amy Adams said they were not going to because simply the details were not on the Government’s side. The details have not been on the Government’s side all the way through. The Government has taken its eye off the ball when it comes to electricity. 
The three major issues in the electricity market are sustainability affordability and security. That is what the Government should be focused on. Before the last election we had National MPs and National candidates up and down the country doing their best to give New Zealanders the impression that under a National Government power prices would come down. Not only have they not delivered on that but also suddenly they have changed their tune. They are not talking about lowering power prices any more; they are talking about stabilising the cost increases. What they are actually saying to New Zealanders is that power prices will keep going up and they have given up on any notion that they will lower power prices. That is what they promised New Zealanders before the last election but now they are simply talking about increasing power prices by a slightly lesser amount. 
When National members boast that power prices have gone up less in the last 2 years than they did in the 9 years prior to that they are ignoring the fact that we had a drought for a big part of those years prior to that which significantly increased the cost of power in New Zealand. When the hydro lakes are half empty it means we are more reliant on non-renewable energy which is more expensive. The responsibility for the mess in the electricity industry that led to some of those hydro shortages rests with people like Max Bradford and Maurice Williamson who created the mess in the first place with this idea that if we just had more competition and just carved up the electricity industry into all these different parts and made everyone compete against each other then the power prices would go down. 
It has been 14 years since Max Bradford and Maurice Williamson promised the House that carving up the electricity sector and introducing competition would result in lower power prices. They were proved to be spectacularly wrong. Now Gerry Brownlee is coming here and saying “Gosh if we just introduce a bit more competition and if we just go back to that original idea that Max Bradford and Maurice Williamson put forward in the first place maybe we could lower power prices.” Well it did not work the first time and it will not work this time. 
If we want to talk about really lowering power prices we need to look at the cheapest form of electricity out there. Renewable energy will be cheaper in the longer term than non-renewable energy. As oil and gas supplies continue to diminish as they are a finite resource and there is a limit to the amount of oil and gas that is available the price of them will go up. In New Zealand we have no excuse for being reliant on non-renewable sources of energy when we have such an abundance supply of renewable energy. We are already very fortunate in the sense that most of our electricity already comes from hydro energy. It means we are already well ahead of the rest of the world. We could easily reach the 90 percent renewable electricity target that the Government says it aspires to but is doing nothing to move towards. 
Hon Maurice Williamson 
: How much renewable energy was built under Labour? 
CHRIS HIPKINS 
: There was not enough I tell the member. I would say there could have been more because the previous Labour Government largely kept in place up until about 2003 the regulatory and legislative framework for the electricity industry that was put in place by Max Bradford and Maurice Williamson. Labour changed it and started to focus on renewable electricity but we did not start to see those benefits until the last few years. Electricity is a long-term game. It takes a number of years for an electricity-generating plant to go from the planning stage to actually producing electricity. 
Hon Tau Henare 
: Well you had 9 years. 
CHRIS HIPKINS 
: It was not long enough; that is right. In the next 9-year Labour Government we will have a lot more renewable electricity. Given the spectacular failure of this National Government another 9-year Labour Government is not an unrealistic prospect at the end of this very short term of National Government. 
I come back to electricity. In particular we need more renewable electricity because in the long term renewable electricity will be cheaper. That is where the Government should be placing its focus. It will also potentially if we diversify the renewable sources of electricity we have increase the security of supply. If we do it right it will ease the constraints on our transmission system. One of the big constraints on the system at the moment is that we have the hydro all in the South Island and a lot of the gas and geothermal generation increasingly in the North Island so electricity is flowing one way or the other over quite long distances. If we move to a new approach based on having smaller-scale renewable energy spread throughout the country then we can ease some of the real pressure on the transmission grid thereby reducing the amount of money that will need to be invested in upgrading the transmission grid over the next little while. That has to be a good thing. 
Those are the three things we think the Government should be focused on: sustainability affordability and security. Those things go hand in hand. If we deal with the issues related to sustainability then we will in part deal with the issues related to affordability because unsustainable energy sources will be more expensive in the long term. If we deal with the issues related to sustainability then we will also deal with some of the issues related to security because as I have said we can ease the constraints on transmission and so on. We can get a much better much fairer electricity system if we focus on those three things. This is a bad bill and Labour will be voting against it.