Twyford Phil: Mixed Ownership Model Bill — In Committee Speaker Recalled In Committee 
Text is incorporated into the Bound Volume 
Twyford Phil: Mixed Ownership Model Bill — In Committee Speaker Recalled In Committee 
[Sitting date: 19 June 2012. Volume:681;Page:3092. Text is incorporated into the Bound Volume.] 
PHIL TWYFORD (Labour—Te Atatu) 
: 
 I want to speak to the fact that section 4 of the State-Owned Enterprises Act is missing from this bill. That is the section in the State-Owned Enterprises Act that requires the four energy companies that we are talking about to behave with the principles of social responsibility in mind. That is one of the criticisms that we have of this bill. By removing the energy companies from the principles of social responsibility this bill and this National Government are doing a terrible disservice to New Zealanders all over the country. 
In fact everybody who pays a monthly electricity bill will pay the cost of this privatisation exercise. There have been a number of statistics discussed in the Chamber today that show the weighted average charge for domestic electricity users buying from State-owned enterprises is $265 a year less than the average for non - State-owned enterprise suppliers. We know and the entire country knows that once you hand over 49 percent of the ownership of these companies to private investors—most likely foreign investors—there is only one direction electricity prices will go and that is up. 
I want to tell the story of someone I know very well who lives in one of the coldest cities of New Zealand. This person lives on an invalids benefit. They rent a flat and pay $40 a fortnight in electricity on a top-up with the local electricity retailer. I visited the person last week living in a one-bedroom flat in freezing conditions at the bottom of the South Island and this person lives with one electric heater in their flat. They do not use that electric heater because the price of electricity is too much to pay because they cannot afford on an invalids benefit to even pay the cost of heating a one-bedroom flat in freezing conditions in a city that you know well Mr Chairperson Roy. That is an unacceptable way for anybody to live in this country but we know that the impact of this privatisation of these companies can only mean that power prices will go up. It is the inevitable consequence of what this National Government is doing and it will mean that the price will be paid by New Zealanders in their electricity bills every single month. 
We know that public ownership keeps prices down. These are natural monopolies we are talking about. They are a licence to print money and if a half-share in these companies is handed over to private ownership it is inevitable that the profit motive will drive up electricity prices. If National had even given consideration to retaining the social responsibility clause in this legislation so that these companies would have to ask themselves before they put up prices whether or not this was a socially responsible thing to do and whether or not it was in the interests of the people of New Zealand then that would have been a good thing but that is clearly so far from being a consideration for National and for this Government. 
The chief executive officer of Contact Energy recently told commercial investors that they should not invest in energy projects until prices rise because a 6 percent return is not enough to cover the desired 8 percent return on capital. Well there are two options. If the Government wants to make sure that this share float is profitable for private buyers it has only two options: it can either raise power prices and boards will be legally obliged to raise power prices if they can to make larger profits or the second option is to discount the shares and get a lower price for the asset and let buyers make a profit on the gains in the share price. 
It is a very simple choice and I submit to you that this Government is doing a grave disservice to New Zealanders by exempting these companies from the social responsibility clause. If they had they might have spared New Zealanders the worst of what is surely to come and that is rocketing electricity prices— 
Hon Gerry Brownlee 
: Why didn’t the member stop the putting up of prices during the 2000s? 
PHIL TWYFORD 
: Every New Zealander knows that power prices have gone up too much—every New Zealander knows that. No one is disputing that. Everyone in this Committee has acknowledged it but if you think that—