Cullen Michael: Electricity (Renewable Preference) Repeal Bill — Third Reading 
Cullen Michael: Electricity (Renewable Preference) Repeal Bill — Third Reading 
[Volume:651;Page:973] 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 I celebrate Mr Auchinvole’s being here because we have been hearing a lot in this Parliament about the number of firsts in both this and the previous Parliament—the first Chinese MP for the Labour Party the first Tongan MP the first Sikh MP and of course Mr Auchinvole is in the 150-odd years of this Parliament the first toff from the West Coast to be an MP in this Parliament. So we have many firsts to celebrate. 
But what did we hear from Pansy Wong who came in here like a small Energizer Bunny Pollyanna and her helper Chris Auchinvole? “The sun is shining.” they told us. The sun was shining as they walked to work and I have to say coming from Hawke’s Bay that when the sun is shining in Wellington it is important the rest of the country knows that fact because it is not always the case in this city. But of course what is their answer—“Let us try to stop this. Let us try to black the sun out. Let us try to block it out from New Zealand by having lots of thermal generation capacity.” Mr Auchinvole is looking for a thermal coal-fired power station to be built on the Wellington foreshore so that when he walks to work he does not have to worry about the problem of getting melanoma at some point in the future. 
What is the rush for this Electricity (Renewable Preference) Repeal Bill? You see at the very moment we are talking in this House there are a whole set of people in the lock-up and already there is not a dry seat in that house as they are going through the Half Year Economic and Fiscal Update. What that Half Year Economic and Fiscal Update will tell us is not that the Government managed to find another $50 million that somehow is not in the Pre-election Economic and Fiscal Update; it will tell us of a massive downgrading of world economic growth forecasts and therefore a significant downgrading of New Zealand’s economic growth forecasts. Therefore the reason why greenhouse gas emissions have gone up so much in the last 8 or 9 years will not be a big problem for the next couple of years for New Zealand. 
We will not have any real economic growth; we will actually have a pause. So we do not need to rush through with this bill because there is to be some big crisis in terms of power supply. Far from that we will not have that issue facing us very much at all over the next year or two. It is what we might call a blessing in disguise or as economists put it: “For every silver lining there is a cloud.” So we do not need the legislation that quickly. This could go to a select committee. It could be thought through more carefully. Just having it thought through would be good. 
The reason the bill is here is the same reason that lots of other things have come here under urgency in the last 2 weeks. The National Party in Opposition thought that its default position would be that if the Labour Government did it then it would say it would repeal it. Then having got there the National Government has to do something. Its 100 days of action have consisted of enormous moves like this: any national standards of education will not be able to be reviewed by a parliamentary select committee. This will drive stronger productivity growth! National says that we will not have to have sustainable electricity generation; that we can add to baseload capacity thermal generation in a plant that might be built in some years’ time and this will somehow drive stronger productivity growth over the short to medium term. It says that we will bypass Pharmac when it comes to the supply of drugs in New Zealand and this will somehow drive greater productivity in New Zealand. 
This has been the dynamic period of action. As I said before this has been the turbocharged Morris Oxford but what I did not realise was that a new gearbox has been put into the Morris Oxford as well with one forward gear and four reverse gears. That is National’s whole plan for the future. 
What about this issue of security of supply? That is an interesting one because any Government has to make judgments at the margin. We can have as much security of supply as we like as long as the country is prepared to pay for it. There is a trade-off at the margin between 100 percent guarantee of security of supply and the cost that the consumer has to pay because there will always be some point at which absolute security of supply cannot be secured without having yet another generating station. And no Government can pretend otherwise around that. That is the difficult trade-off. Actually the Government and the Electricity Commission have changed that trade-off recently to reinforce the importance of security of supply. But security of supply cannot be bought at the cost of other things as well. 
Let me deal with the issue of cost. Mr Brownlee worked himself up to something approaching enormous energy last night in the House. In fact he was so energised that he almost looked like Dr Hutchison when speaking to the House. He somehow blamed the Labour Government for the fact that costs have gone up but let me tell him that the fundamental issue is the structure of the market. The market for electricity is generated created on the basis of a model that says: “The price will be”—ignoring the short-term factors—“over the medium term the marginal cost of the next station being put in place.” Indeed there is a whole circularity. As the price goes up the revaluation of the generators occurs and then of course unless their prices go up again the return on equity falls. 
So there is a peculiar illogical logic that is imbedded into the nature of the market created by the National Government. There is no point in the National Government bemoaning this fact. If it wants to address that issue it actually has to fundamentally change that electricity market. It is an interesting question as to whether we want to fundamentally change that market and to fundamentally change that market almost certainly to having a monopsonistic buyer somewhere within the middle of the system that purchases new capacity but the electricity system as a whole being onsold at average price. As long as we have a marginal price model then almost by definition prices will rise because the next power station will be more expensive than the last one. 
That is particularly true of thermal generation over the longer term because the value of the gas or coal that drives it will continue to rise faster than prices on average and therefore the cost of that power will rise. That is not true necessarily of wind. It probably is true of hydro by and large which is why the previous Government strongly encouraged wind generation because it is our best prospect for reasonably priced sustainable generated capacity over the next 10 to 15-year period. 
The Government says that as long as we have a carbon price we can solve this problem. But the Government passed a resolution through this House last week to have a select committee to think about whether we should have a carbon price at all because it will even think about whether human-induced global warming is actually an issue. We know what Maurice Williamson thinks about that. He thinks that it is not an issue that it is not human-induced and therefore that no action we can engage in will affect that particular matter. If we are in that position then the Government cannot come in here and say: “We are going to have an effective emissions trading scheme quickly that will address that matter.” because the Government is saying it will take more time to think about an effective emissions trading scheme and ironically the slow down in world economic growth will buy some time in that particular regard. 
But what is clear is that if we have thermal-generated capacity—and let us remember that one is ready to go north of Auckland—rather than renewable-generated capacity then that simply shifts the costs of Kyoto Protocol compliance to somewhere else within the economy and to somewhere else within New Zealand. It means we have to strive strenuously and harder somewhere else to reduce our greenhouse gas emissions. What we have done as Ms Fitzsimons quite rightly said is that we decided not to pick the low-hanging fruit. We decided instead that we might stimulate the economy by encouraging the purchase of ladders so that we can go and pick the higher-hanging fruit instead. This is called turbocharging the New Zealand economy. 
Of course if I was being cynical I might consider this as some kind of retirement job for Gerry Brownlee. He clearly does not think he is going to be in the job very long given how he has been going over the last few weeks. I cannot remember a Minister who has had as bad a start as Gerry Brownlee has had over the last few weeks. I think he is looking forward to the creation of some kind of natural gas plant that he will be connected up to in the future so that he can become the motive power for that natural gas plant and that will be his retirement job into the long-term foreseeable future. 
This is a silly bill. If this silly bill was to be considered then it should have gone to a select committee. It goes with the repeal of the biofuels obligation. It goes with the setting up of the so-called high-powered committee with the well-known slogan: “If climate change should be done it should be seen to be done.” which is what the slogan of that particular committee seems to be. It goes with us going cap in hand offshore to discuss climate change absolutely unarmed with no moral authority at all in those important international discussions.