Woodhouse Michael: Infrastructure Bill — First Reading 
Woodhouse Michael: Infrastructure Bill — First Reading 
[Volume:656;Page:5858] 
MICHAEL WOODHOUSE (National) 
: 
 I rise beside my esteemed colleague Allan Peachey in support of the Infrastructure Bill. Although the bill itself is a pretty technical one I think its overall purpose to facilitate infrastructure development is a very very important one. I will take a slightly broader view in relation to this issue than some other members have. As we have heard from the Minister and other members the sector is a really broad and complex one. We do not actually have a Vote Infrastructure as such but the bill broadly covers a number of areas. 
Moana Mackey 
: What is Dunedin getting? 
MICHAEL WOODHOUSE 
: Well I will come to that. I will illustrate with one example at this stage how important the Government’s focus on this is. I will focus on electricity in particular. In the adjournment weeks of July and August I was guest of New Zealand Aluminium Smelters at Tiwai Point near Bluff as part of the New Zealand Business and Parliament Trust. As members know the trust enables MPs to go out and visit businesses to find out what the issues are that face them and for senior managers to come to Wellington and understand how the lawmaking process works. I spent 5 days down there. The focus of my interest was on quality and process improvement programmes and how they might be applied to the public sector and the health sector in particular. But as one does with those sorts of visits one cannot help but get drawn into some of the other issues that face businesses particularly from a public policy perspective and that was certainly the case in my visit to Tiwai. 
One of the significant issues that face organisations like the smelter is the reliability and cost of electricity supply which as some members know is a huge component in the costs of producing aluminium. The smelter when it is at optimum operation I think consumes about 85 percent of all the power that comes out of the Manapouri power station. Members will recall that last year was a dry year. I know that one particular member will recall that very well because there was quite a big demand on the Government of the day to introduce demand-reduction measures and conservation measures. The then Minister of Energy the Hon David Parker pretended for quite a long time that it was not occurring but eventually the clamour from the organisations for a conservation strategy became so great that the Government put in place a campaign. But what was going on in the background— 
Hon David Parker 
: That’s because the commercial users didn’t want to pay— 
MICHAEL WOODHOUSE 
: Well that is what I am coming on to. In the background Crown companies were going to very large consumers of electricity like the smelter at Tiwai Point and saying “Please shut down.” In the case of the smelter a whole potline was closed down which made a significant positive impact on the demand at that time which was when the price of the very high-purity aluminium the smelter was producing was very good. Notwithstanding that the electricity price was by world standards high things were looking pretty good for the smelter. So in return for that magnanimity in reducing output and saving energy for the country the company was rewarded with an increase of about 15 percent in its contracted price for electricity at the same time as the world price for aluminium plummeted. That is a really clear illustration that an organisation—one of our largest exporters one of the largest employers in the deep south and one of the companies that makes a huge contribution to our economy—is extremely vulnerable because of the lack of a reliable electricity infrastructure. 
I am aware that the Minister of Energy and Resources is doing some really good work on highlighting those issues with the electricity market performance review and also with planning for the increased capacity that needs to be brought online straightaway much less saved for the increased demand we are predicting for the future. But I think we have got into a situation where there is a really quite woeful lack of infrastructure planning not just around electricity but around roading broadband hospitals prisons ships ports and everything else. So it is very necessary that the 20-year plan the Government has will spell out what those investment objectives are. 
As we know it is not just central government that invests in that sort of infrastructure; I have seen some figures that indicate there will probably be a fifty-fifty split between central government and local government investment needs over the next 10 years—needs that could cost as much as $60 billion. Given some of the demographic changes and I am quite sure that members have mentioned Auckland City in that context it is really appropriate that a national plan that looks forward into our infrastructure needs for the next 20 or 30 years is developed; I congratulate the Government and the Minister on doing that. 
One of the sorts of things that this coordination will do is give organisations like the smelter a much greater level of confidence to be able to invest in itself. So it is not just the direct infrastructure investment that we will get; we will get the industry investment as well. I did not talk about this when I was at Tiwai but I have no doubt that the owners of the smelter will not be putting any further substantial investment into the smelter unless they can be certain—or at least more confident than they are now—that they can get security of supply and get it at a reasonable price. If members think that that is tripe I can tell them that while I was there the news came through that one of the sister smelters in the group in North Wales will close next month and it will close simply because it cannot get reliable electricity at a competitive price. Without sounding like Chicken Licken I have no doubt that if the same conditions were imposed on the smelter at Tiwai Point that risk would be very real. 
Hon David Parker 
: But they’ve got a contract with Meridian for years out. 
MICHAEL WOODHOUSE 
: Yes but contracts do not deliver supplies; sources of electricity do. We can talk contracts and price all we like but if every time we have a dry year Ministers go running to large industry groups like that at Tiwai Point and ask them to switch off we will not have an environment and an economy where people want to invest with confidence—it is as simple as that. It is not rocket science. Jobs get lost overseas investment is lost and capital for investment is lost. Those are the sorts of things on which taxes are paid and health and social services are built. I want to move on to the issue of— 
Stuart Nash 
: So you say we fix the electricity problem by building roads. 
MICHAEL WOODHOUSE 
: Yes there are connections with all of those things and that is why the national infrastructure plan is so important. Now we have talked about central government and we have talked about local government but of course the private sector has a part to play in this as well and I think the broadband investment plan is a very good example of where the Government and the private sector can collaborate. It will probably be a slow journey into those types of arrangements by the admission of the Government organisations that briefed the Minister for Infrastructure—the likes of Treasury the Ministry of Economic Development the Electricity Commission and so on—whose officials admitted that “there was currently no practical experience and relatively little knowledge of public-private partnerships.” 
We have talked a lot about it have we not for the last 9 or 10 years? I heard a lot about it in health in energy and in other industries. But very little was done to invest in that knowledge and expertise. One of those areas where we do not get a lot of private sector investment at the moment is in the health care sector. It is what I know well and Mr Peachey mentioned— 
Stuart Nash 
: You want to privatise the hospitals! 
MICHAEL WOODHOUSE 
: Not at all and I think the member is disingenuous by saying that. I say now that the future of this country’s health sector has to be built on a strong and sustainable public sector but the private sector has been there for a long time. But even with public sector investment—Mr Peachey talked about $250 million of planned investment—there is another nearly $700 million of capital that is backing up in the Minister’s office looking for approval. That is the sort of thing that the national infrastructure plan is designed to address because if we do not we are going to get a bow wave of these things and at current growth rates it is simply not affordable. So I congratulate the Minister. I think this legislation is very important it is part of stepping up that infrastructure planning and I look forward to seeing it when it is rolled out. I commend the bill to the House. 
Bill read a first time.