Swain Paul: Electricity Industry Reform Amendment Bill — First Reading 
Swain Paul: Electricity Industry Reform Amendment Bill — First Reading 
[Volume:644;Page:13990] 
Hon PAUL SWAIN (Labour—Rimutaka) 
: 
 I do not do regrets but if I did they would be that I had to sit and suffer on the select committee which I was on with Jeanette Fitzsimons and others that had to deal with the botch-up of the Max Bradford reforms back around 1997-98. The classic comment that Max Bradford summarised in a short sentence was: “As a result of these reforms power prices will come down.” It was a very clear statement. I remember it; it was on the telly. He was asked: “Mr Bradford what do you expect as a result of these reforms?”. “Oh” said Max Bradford “power prices will come down.” In fact power prices went up. That was what happened. That was the problem with those reforms. As a result of that Max Bradford lost Rotorua his seat and of course the National Government lost power in 1999. If members will excuse the pun the National Government ran out of power as a result of those power reforms.  
We sat in that select committee night after night trying to get at what the reforms were supposed to do. The Government said that the issue was about getting rid of cross-subsidisation. Of course there are a number of ways to deal with cross-subsidisation. Functional operational separation for example is one way to deal with it and we are dealing with that in the telecommunications legislation. But you see the reforms were about ideology. They had nothing to do with reforming the electricity sector trying to improve the cost of electricity or trying to provide better services.  
Hon Member 
: Looking after their mates. 
Hon PAUL SWAIN 
: It was. It was about National’s mates. Which people suffered? The elderly and people on fixed and low incomes. They are the ones who paid the price for Max Bradford’s electricity reforms.  
I recall what happened in the Hutt Valley. There was a sudden surge in privatisation and shares were given out. Everyone got 1000 shares if members remember that. Of course what happened was that low-income people—beneficiaries and people who had debt—took $800 instead of $1000 because they needed the money to pay debt off with. Suddenly those people were disenfranchised. They had no ability to influence the power company and they had no dividends as a result of selling their shares off for $800. The power price went up. So the people who could stick their shares in the bottom of the drawer the ones who could afford to do that—people on decent incomes—sat on their shares. They were blue-chip stocks and as a result the prices rose. The people on low incomes once again paid for that.  
Then there was the great theory that electricity was a perfect market and that if people did not like the energy company they were with they could swap companies. Do members remember that? There was to be the great switch. The problem was that when customers rang to say they did not like a company and were going to swap to someone else they did not hear back for 6 months. They never heard back. Then suddenly people ended up with power bills 9 months later and when they did want to switch and swap companies the companies said that yes they realised people could do that but it was all very difficult. The companies said they did not have the technology and were not ready for that. So the perfect market in which consumers were able to swap and switch companies was completely nonsensical.  
What happened with regard to the meters? In the end the select committee said that the issue of the meters was too hard. The select committee members said they did not really know what to do about them so things should just be left the way they were. The great theory was that new meters would start to be used and people would be able to tell straight away whether they were spending too much on electricity. The meter industry was all revved up. The silly old thing stuck on the side of my house is still there. What happened to the new flash thing that was to go above the bench top? It did not come. So that was a total fiasco.  
Now I see Max Bradford is travelling the world as an international consultant—yes he is—on behalf of the World Bank. Do members know what for? Electricity reform! Can members believe that? I say to the World Bank that it should look at the 1998 reforms and see whether it can get its money back because the people of New Zealand certainly have not succeeded in doing that.  
People have outlined the nature of this bill. I think it is a good bill. This is not the last time we will have to come back and fix the botch-ups of Max Bradford—I am sure it is not. As Jeanette Fitzsimons outlined quite clearly the bill involves three policy changes. The first makes it easier for owners with lines businesses to sell the output of the generation they were permitted to own under the 2001 and 2004 amendment Acts—that is for people to be able to hedge and to sell at times when there are problems with for example wind power. The second change is to allow the owners of lines businesses to be able to be involved in generation and retailing without limit outside their lines area. That was restricted before. And the third one is to define renewables which is a really good thing too given the issues now around climate change.  
So here we are again under urgency in the dead of night ramming through legislation to fix the botch-up—the muck-up the mess-up—of the Max Bradford “power prices will come down” reforms of 1998. As I say if I ever get to heaven and I am standing there and there is some discussion about whether I should go in or go downstairs I will say I sat on that select committee—I sat on that thing and I had to put up with about a year of listening to ideological nonsense about electricity reform in New Zealand. I am hoping that St Peter will say “Come forward my son; you have done your time on Earth.” 
Bill read a first time.  
Bill referred to the Commerce Committee.