Nash Stuart: Electricity Industry Bill — In Committee 
Nash Stuart: Electricity Industry Bill — In Committee 
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STUART NASH (Labour) 
: 
 I stand in the Committee stage to talk about allowing lines companies to retail in their local areas. There are only two points I would like to make with regard to that so this will not be a long call. The first point is about competition and the second is about monopolistic powers. I am all for competition especially in an area that has the potential to drive down prices in an absolutely essential service in this time of recession when families are really really suffering. On 1 October power prices will increase by at least 2.5 percent in line with GST. There are families out there as my colleague Ms Curran highlighted before who are facing $1000-a-month power bills. 
Hon Nanaia Mahuta 
: How much? 
STUART NASH 
: $1000 a month. That is unbelievable and totally unsustainable. Any form of competition that would reduce power bills of that level—in fact power bills of any level—is something I am all for. Let members make no bones about that. The Labour Party is all for competition in the areas that open up markets and reduce costs to ordinary hard-working consumers. But I do have one concern about this. I wonder whether the Electricity Industry Bill will actually allow that. I note that the ministerial review concluded that lines businesses should be able to retail in their local areas but I also note that it said there were monopolistic concerns. 
Let me give an example of this concern. The first-ever political campaign I was involved in was something called the Auckland Energy Consumer Trust. This is the trust that owns Vector power lines. I stood on a ticket called Powerlynk with some very able local body politicians and we ran a policy of 100 percent community ownership. When a lot of the power companies and lines companies had been disestablished and put into community trusts and had been sold the Auckland Energy Consumer Trust remained in community ownership. It was a great model because it gave dividends to every single consumer. A cheque went out every year. It was a wonderful dividend that helped a lot of people who were really struggling to pay their power bills. But what happened? A right-wing organisation stood against us—it was part of the Citizens and Ratepayers Now ticket—and said: “We will not sell your power lines.” We said: “Hold on a second. Something is going on here. They said part-privatisation was not bad but their campaign slogan is that it will not sell your power lines.” What did they do? They got elected on that promise and they immediately sold 24.9 percent of Vector. I will tell members what happened when they did that. The sort of non-profit benefits that go with 100 percent community-owned organisation were really scaled down. I am talking about things like undergrounding. Undergrounding costs a lot of money. There is a non-profit motive but it adds significant benefit to the communities. That was scaled right back because as soon as we sell down these organisations into commercial ownership the profit motive becomes the top priority. 
That is what we do not want to see here. I have huge concerns about this. Within the Powerlynk ticket on which I ran we had philosophical debates about whether we should push for the lines company to enter the retail market. It was our fundamental belief and it was Labour’s fundamental belief—we were in essence a Labour-led ticket—that a monopolistic organisation could be created and it would in fact not create benefits but take benefits away from consumers. Once we get a natural monopoly especially in a country the size of New Zealand in an area like electricity where there is a small population and wide geographical area then the barriers to entry become incredibly high. So we do not necessarily get competition; competition disappears and it is not replaced. Once that monopoly is there it is extremely hard to control prices because without competition the only thing we can do is legislate. So I have grave concerns about this and they have been spoken about by my colleagues. 
The Hon Nanaia Mahuta spoke about the lack of infrastructure development as did Chris Hipkins. We have talked about—I do not know when it was—a D-shackle failure and this was in terms of a lines company that was not putting sufficient effort into maintaining the infrastructure that carried electricity to the city of Auckland. 
In the First World country we pride ourselves as being if we do not have the electricity infrastructure running at 110 percent then there is no way in hell we will ever get overseas investment coming into this country to provide the direct foreign investment for jobs and the necessary resources to grow this country sustainably and that is why I have concerns. Vector should concentrate—lines companies should concentrate—on providing an exceptionally good service to retailers but if that disappears if the lines are blurred if they are owned by the same company or the same group of shareholders there are monopolistic concerns and that is not good. 
In conclusion I will sum up my two points. First I am all for competition in a market where it has the potential to reduce prices. That is of absolute necessity to consumers and I am absolutely for competition. My second point is that I do not think that Part 3 will provide that level of competition going forward. If this measure is implemented then in 10 years’ time we could well see a monopolistic structure that drives away competition rather than create it. When we drive away competition and end up with a monopoly we have no power whatsoever over pricing for hard-working struggling New Zealanders who need electricity to heat their houses to run their water cylinders and to live. Thank you. 
The question was put that the amendments set out on Supplementary Order Papers 154 and 166 in the name of Hon Gerry Brownlee to Part 3 be agreed to.