Shirley Ken: Urgent Debates — Energy—Project Aqua Cancellation 
Shirley Ken: Urgent Debates — Energy—Project Aqua Cancellation 
[Volume:616;Page:12066] 
Hon KEN SHIRLEY (Deputy Leader—ACT) 
: 
 Meridian Energy’s announcement yesterday to can Project Aqua has certainly focused the attention of most New Zealanders and highlighted the looming energy crisis that this country is facing. Project Aqua represented the first significant investment in new generation since the Clyde Dam some 20 years ago. We know and the experts remind us increasingly often that our demand is expanding at over 2 percent per year. That is as has been pointed out not 150 megawatts; it is actually more like 200 to even 300 megawatts per year and that is just to keep up with the expanding demand of a growing economy. 
I believe that New Zealand has three comparative advantages over our global trading partners. The first is our temperate cool climate and abundant rainfall. That allows us to be a major efficient agricultural producer and the key factor is the relatively benign climate that we enjoy in our temperate region. The second key factor though and one often forgotten is a reliable supply of internationally competitive energy—specifically electricity. In terms of all our production we often forget that we are not so much exporting milk-powder and wood product; there is often more energy in the form of electricity in those added-value finished products—which create the wealth for this country and the jobs for our people—than raw product. A particular example is a tonne of milk-power. To dry that takes more value in electricity than the value of the milk input. The Whirinaki mill in Napier is an example. We are actually exporting electricity there. There is more value in the electricity in that finished pulp than there is in the wood going into it. 
We must continue to have an abundant readily satisfactory supply of appropriately priced electricity. I am not talking necessarily about cheap electricity but it must be cheap relative to our trading partners. That is what concerns me about the policies of this Government. It is going down a path whereby it is abandoning our key comparative advantages and it wants for its own mantra to drive up the price of electricity so it can justify the winners that it sees in terms of wind generation and what it calls “renewables”. 
 Regarding wind generation the point has already been made that the most efficient state-of-the-art wind generator does 0.8 megawatts. To meet our expanding annual demand we would need to build 200 to 300 such windmills every year forever. What the Danish who have become heavily dependent on wind generators have found is that the wind sometimes does not blow. Denmark finds that 37 percent of the time there is no generation. At least water although it can be unreliable is seasonal and can be predicted. Wind is totally unpredictable and although it may be part of our future mix it is certainly not the answer this Government pretends it could be. 
The other disturbing thing with this Government’s policy is its foolish adherence to the fundamentally flawed Kyoto Protocol. New Zealand is the only Southern Hemisphere country to have ratified with an obligation. Our key trading partners Australia and the United States have had the sense and presence of mind not to bind themselves into that fundamentally flawed process. But oh no this Minister sees it as a way of driving up the price. He would put a carbon tax on things like coal and fossil fuels so that his precious little windmills would then become more efficient. That is nuts. It is taxing the most efficient and lowest-cost option in favour of a higher cost option and somehow pretending it is now a cheap option because one has taxed its competitors. That is “loony tune” economics but they are the messages we are getting from this Government. 
I am deeply alarmed with the process the select committee got into over Project Aqua and the Resource Management Act amendment which was the allocation model because on the one hand the Government was at pains to say it was not rushing through this “think big” national development - lookalike legislation specifically for Project Aqua. “Not at all” it was saying. Yet on the other hand the Government said the legislation had to go through urgently there was a very truncated select committee process and during the second reading just last week Minister Marian Hobbs said: “It is essential that we pass this legislation as soon as possible.” My question to the House is: why is it not on the Order Paper for the urgency motion this Government will take later this afternoon? If it was true last week that the Government had to pass this legislation as soon as possible why will it not include it in the urgency motion so it can go through its final stages this week? It makes one think that perhaps the Government knew that Project Aqua would have the plug pulled on it this week. It certainly raises that question. Could it be that the real concern of the Government was political and that we are seeing all this incredible crashing of gears and U-turns as it screeches to a halt to try to pretend that everything will change? There has been a whole run of U-turns this past month. 
Project Aqua was looming to be another Save Manapouri campaign. Those of us who are old enough will remember the Save Manapouri campaign and the political fallout from that. I predict that this Government saw it was heading for a Save Manapouri type of situation at next year’s election so it directed those shareholding Ministers to give a direction for Meridian Energy to pack it all up and pull the can on that project even though it had already spent $45 million or $50 million on all the scoping for it. One would have to think there has been political intervention to get that extraordinary result because unquestionably we need the energy Project Aqua would have brought. It could have produced energy at about 4c a kilowatt hour which is way below the average and certainly would have added to New Zealand’s energy mix. 
There have been other extraordinary policies from this Government. Mention has already been made in this debate of the Arnold River power scheme where TrustPower wanted to upgrade an existing dam and generator from a small 5 megawatt station to a 65 megawatt station. It was not a big block of energy relative to Project Aqua but it was certainly very significant and sited on the West Coast within a rain-abundant area. It made sense. It would have made the West Coast self-sufficient in power. It would have obviated the need to put two large upgraded transmission lines into the West Coast and there would have been additional power available for export to the national grid. But what did this Government do? It said it could not upgrade a small alpine valley add to the dam size and flood a small area which was substantially broom and gorse because the Department of Conservation would not approve. That is the nonsense of this Government. 
This Government has no strategy for energy planning. It has nationalised our generators instead of allowing market principles to operate so that about 70 percent of our electricity is now in State regional monopolies with Genesis Power Mighty River Power and Meridian Energy. Our national grid is totally nationalised and run by the Government. It is not the market causing the problem; it is actually a lack of market and too much Government. That is the problem. I predict that as this energy crisis deepens this Government will continue with its panic policies and we will end up in an incredible mess which will be bad news for the New Zealand economy. 
There was a foolish decision in recent months from the Minister of Energy. He threw $150 million of taxpayers’ money at a Whirinaki site for a single-cycle gas generator in the hope that we never have to use it and in the knowledge that if we ever do it will be the most power we ever use. It is essentially a 747 jet engine that is bolted down on a stand and requires its own storage bunker of fuel at Napier wharf to supply it. It was a foolish decision but the Minister did it for political reasons. What we are seeing across the board in the energy sector is an increasing politicisation and bad decisions coming out of that process.