English Bill: Questions for Oral Answer — Questions to Ministers Questions to Members 
English Bill: Questions for Oral Answer — Questions to Ministers Questions to Members 
[Volume:608;Page:5085] 
1. Hon BILL ENGLISH (Leader of the Opposition) 
 to the  
Minister of Finance 
: What actions has the Government taken as a result of the 2000 Inquiry into the Electricity Industry the 2001 electricity crisis and the electricity governance establishment project and will these actions reduce what he described as “economic and social disruption” facing New Zealand this winter? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 We passed the Electricity Industry Reform Act and the electricity amendment legislation which were both opposed by National. The Government announced a series of moves yesterday to reduce the probability of disruption should a dry winter eventuate. 
Hon Bill English 
: After passing two Acts of Parliament conducting an inquiry into the electricity industry in June 2000 publishing the first policy statement by the Government as to the further development of New Zealand’s electricity industry—which includes the management of electricity supply risk—and then publishing a revised policy statement on exactly the same issue in February 2002 why is it that nothing has happened at all to reduce the impact of a dry year on New Zealand’s electricity supply? 
Hon Dr MICHAEL CULLEN 
: Despite the fact that Parliament is sovereign neither statute nor policy statement can make it rain in the lakes nor fill up the Maui gasfield with the amount of gas that was previously assumed to be recoverable. There are of course questions lying around the issue of whether the market is the best means of ensuring security of supply. I welcome the suggestion from the Opposition about reducing the amount of market influence in the electricity area. 
Mark Peck 
: Would the Minister care to share with the House exactly what is the effect of the legislation? 
Hon Dr MICHAEL CULLEN 
: Apparently it is to make the Opposition laugh but in fact it picked up the key recommendation of the inquiry by providing for industry self-regulation. However the Minister of Energy was far-sighted enough to provide for a Crown governance board should the industry model fail. It looks like we may now have to use that option which was also opposed by National and ACT. 
Peter Brown 
: Does the Minister concur that to address the electricity problems in the short term there needs to be appropriate regulation coupled with a financial incentive to save power and that in the longer term there need to be incentives and less bureaucracy in order to improve and enlarge the supply capacity? 
Hon Dr MICHAEL CULLEN 
: I agree on the second point that there is not enough bureaucracy and rather too much market in terms of long-term supply considerations. [ 
Interruption 
] The Opposition cannot have it both ways. It cannot say that the market works perfectly but there is a problem and then object to any suggestions for changing the market. Certainly it is very important for reductions in demand over the coming period to first look at issues like the appropriate levels of coal supply for the Huntly plant. 
Hon Richard Prebble 
: Will the Minister admit that any power cuts and economic and social disruption caused by electricity shortages are not the result of market failure but of Government failure in that the Government owns 70 percent of the generating capacity in New Zealand and has elected to take scarcity profits over building new generating capacity the Government owns 100 percent of the national grid and has elected to take profits rather than to increase the grid’s capacity it is the Government’s own Department of Conservation that is refusing to allow the Dobson hydro scheme to go ahead and it is this Government that has decided to make New Zealand the only country in the Southern Hemisphere to ratify the Kyoto Protocol? 
Mr SPEAKER 
: The member knows full well that he made a statement at the end of that rather than asking a question. The aspects of the question that were addressed the Minister can reply to. 
Hon Dr MICHAEL CULLEN 
: I will just reply to the last part. As a professional historian by training I say that for A to cause B A has to come first. As the Kyoto Protocol does not come into force until 2008 it is hard to see how it is causing a power crisis in 2003. 
Jeanette Fitzsimons 
: Does the Minister believe that the New Zealand economy has given Max Bradford’s market reforms a long-enough trial and does he agree— 
Gerry Brownlee 
: I raise a point of order Mr Speaker. That comment is totally out of line. The current situation we face in the electricity industry is entirely of this Government’s making— 
Mr SPEAKER 
: That is not a matter for a point of order. That is a political point. The member’s question so far is perfectly in order. The member will start again. 
Jeanette Fitzsimons 
: Does the Minister believe that the New Zealand economy has given Max Bradford’s market reforms a long-enough trial— 
Gerry Brownlee 
: I raise a point of order Mr Speaker. There is no such thing as “Max Bradford’s market reforms”. There are simply the reforms—[ 
Interruption 
] 
Mr SPEAKER 
: We have had a 2 weeks’ break and we are having a little bit of fun. That is where it ends. The member so far has not come to any point of order. I want to know what it is. 
Gerry Brownlee 
: If you refer to Standing Order 372(2) you will find that one cannot make inferences epithets or assumptions when asking a question. That is exactly what this member has done. What we have at the moment is Pete Hodgson’s power system which has fallen apart. 
Mr SPEAKER 
: If the member rewords her question “reforms introduced by the Hon Max Bradford” it will be in perfectly good order. 
Jeanette Fitzsimons 
: Thank you Mr Speaker for your advice. Does the Minister believe that the New Zealand economy has given the market reforms introduced by Max Bradford a long-enough trial and does he agree that the least economic cost and social disruption in future will come from accelerating permanent improvements in energy efficiency while we develop cost-effective renewable supply options? 
Hon Dr MICHAEL CULLEN 
: Clearly demand management over both the short and long term is important in the electricity market but it has to be said there are elements that can be used to influence demand factors. If one is to give away those elements then it is much harder to limit demand through other mechanisms. But there are some interesting questions around whether the market by itself will deliver a sufficient margin of security of supply given New Zealand’s peculiar situation of dependence on hydro power and the nature of its hydrology. 
Hon Peter Dunne 
: Is the Minister concerned that Transpower is apparently unwilling to commit the funding necessary to upgrade the distribution capacity of the national grid because it requires the approval of every local authority over whose area its wires might pass and has no confidence that that will be forthcoming; if so what action is he prepared to take in respect of that matter? 
Hon Dr MICHAEL CULLEN 
: That issue has certainly been raised but it is not clear that it is true. We are looking at that but there are other considerations in terms of Transpower’s own commercial imperatives. One of the changes that result from Mr Hodgson’s legislation is that once the Electricity Governance Board is in place it may be a great deal easier to deal with that particular matter. 
Hon Bill English 
: Given that the Government has itself known about the effects on New Zealand households and businesses of the 2001 electricity crisis can the Minister tell us exactly what steps this Government has taken since that crisis to reduce the impact of a dry year this year? 
Hon Dr MICHAEL CULLEN 
: There was no expectation of a dry year as early as 2003. The member should also be aware that the Maui Gas redetermination has a big impact on the amount of gas that is to be taken out of Maui this year. That was not expected.