Peck Mark: Third Readings 
Peck Mark: Third Readings 
[Volume:620;Page:16118] 
MARK PECK (Labour—Invercargill) 
: 
 First I would like to thank the Commerce Committee for all the work it did in reporting the legislation back. I note that significant changes were made during the Committee stage as a result of a Supplementary Order Paper. 
I want to take a moment to look at why we are in the position we are in. As the honourable Peter Brown said on the occasions I talked to him about it it is a case of taking steps along the way. Why do we need to make these steps along the way? The reason is simply that what had been pretty well provided through electrical supply authorities was deregulated by the Max Bradford reforms. One cannot get away from that. The deregulation of the energy market and the consequent issues that arise from it came from those reforms. 
Hon Ken Shirley 
: 1989. 
MARK PECK 
: I disagree with the member— 
Brian Connell 
: Are you supporting us? 
MARK PECK 
: No not at all. I am indicating that the issues that need to be tidied up are a result of playing around with putting together a market. We cannot completely walk away from the market concept without there being serious ramifications for our nation’s economy. There are people who are interested in investing in the energy market in New Zealand and if they were to believe that the Government was going to do away with the market as it is now then we would lose that particular investment; it would no longer be attracted to New Zealand. That is too serious an issue to play petty politics with. 
I am sure that Roger Sowry and Brian Connell can get very good headlines out of saying they would go to complete vertical reintegration—maybe keeping some form of accounting separation—but that does not answer the question at all. The question is still there and it is how we deal with the reality of what we have which is a number of energy companies in the lines and retail areas in particular—I put to one side for a moment the issues concerning Transpower because they are of another nature. And there is the gas industry which has its own significant problems. Essentially in setting up the market what was a monopoly has now become a collection of oligopolies. That is what has happened. 
Essentially the same rent-seeking against consumers continues. It does not go away; it is just that more people are engaged in it. There are more boards. There may be a slight variance in price from place to place depending on circumstance. I understand that if we are looking at places where the market works we are looking at Auckland Wellington and perhaps Christchurch. On the East Coast for instance I do not think it works terribly well. Nobody wants to go there. If the East Coast is looking for security of supply in future years it will have to develop its own generation. 
The point is that this is an incredibly political industry. When a dry year occurs—and let us not worry about whether the Minister involved is a Labour Minister a National Minister or a New Zealand First Minister—and the consumers face blackouts and/or brownouts who gets the blame? The Government gets the blame. There are some reasons for that. Seventy-five percent of the retailers are State-owned enterprises so in some cases one could sheet it home to the Government. But during the last energy crisis a State-owned enterprise was actually able to make more profit by not generating. We need to think about these things if we are going to be able to sort them out. 
Brian Fallow who writes for the  
New Zealand Herald 
 
took some time to review the issues in the legislation in order to comment about it. He commented on Graham Scott’s submission which was endorsed by the major companies et al. but he made the point—and it is one that I do not think should be lost in the debate on the third readings—that the Government had said to the energy companies that they could not continue to behave in an unregulated manner. We all know that as a result of their behaving in an unregulated manner our senior citizens and those on fixed incomes are trapped with high energy costs. We have seen the cost of energy rise over the last few years. It has gone up significantly. 
Hon Ken Shirley 
: Yeah Government policy. 
MARK PECK 
: No that is not right. The member is more intelligent than that. He knows that it is not right. He is making a political point. I would have expected that when he got an opportunity he would actually think about some of these things. What happened is we said to the industry: “We will give you a period of time to agree on your own self-regulation”— 
Hon Member 
: Or what? 
MARK PECK 
: —“or we will regulate.” Indeed the member is quite right to raise the “Or what?”. We cannot have companies that have the capacity to rent-seek in their charges acting in a deregulated manner. It is simply not possible if we are serious about ensuring that consumers have some protection against monopolistic behaviour. That was the intention of the regulation. And they could not get it right. Despite those years and the thousands of pages put together by the Hon David Caygill who was doing the work on their behalf they could not come to an agreement about the right thing to do. So we did legislate and yes as Brian Fallow picked up in his report we did listen to submissions and we made some significant changes. 
I accept that we probably have not heard the end of this and I know that my colleague David Parker in particular is doing a lot of work in respect of issues around energy. There will be another generation of politicians who revisit this on another occasion. But I know that the simple answer of standing up and saying we will go straight back to energy supply authorities simply will not work and will cause more grief in the short term than it will actually settle. 
This legislation is a start along the way and I think it sets out some relatively good will. Yes it does bring in Government policy statements and it does require the Electricity Commission to have regard to those. But those Government policy statements are subject to negotiation and if the Minister rejects the Government policy statement he has to have a reason for doing so. Where will it finish up? It will end up on the front page of the business papers and I would suggest if it is particularly serious matter on the front pages of the newspapers as well. This is not the sort of industry around which there can be a level of non-accountability. This is the sort of industry that will become far more transparent in its operations over time and the legislation starts to give the Minister who will get the blame for most of what goes wrong in the sector some powers to work within it. 
In conclusion I want to make one final comment. It concerns the role played by those in the gas industry. They saw clearly that the Government was serious about the need for these utilities to have regulation. They carried out a series of very comprehensive consultations amongst themselves and they came up with a solution that was acceptable to them. Indeed the Commerce Committee went so far as to accommodate them right along the road to the point when the final report came back to the House to ensure that what was in that particular report worked. One broker in the process the Rt Hon Jim Bolger played a very strong role and I want to give him some credit. I would say to members opposite that they have two legacies: the legacy of Max Bradford which has never been put to rest; and the experience of the Rt Hon Jim Bolger who managed to get together a probably even more disparate sector and who worked with its members to make sure that the regulatory powers were accepted by the industry. 
This is good legislation for now but I am sure it is not the last word of Parliament on the energy sector. Although I will not be involved in those debates I want to wish Parliament well in the future as it tackles some very complex issues concerning our energy infrastructure in this country.