Electricity and Gas Industries Bill — In Committee 
Electricity and Gas Industries Bill — In Committee 
[Volume:620;Page:16017] 
Electricity and Gas Industries Bill 
In Committee 
Debate resumed from 7 October. 
The CHAIRPERSON (Ann Hartley) 
: Before giving the member the call I shall rule on a matter that arose immediately prior to the Committee reporting progress when it was last considering this bill. On a point of order an entitlement to a consecutive call for the first Opposition speaker was claimed. There is no such entitlement. The revocation of Standing Order 178 removed the requirement for the Chairperson to give preference to a member who had not previously spoken. The Chairperson now has the discretion to give consecutive calls. This does not mean that a member can claim a consecutive call as of right. 
The giving of a call is always a matter entirely for the discretion of the Chairperson; it is not a matter for debate. Where a member seeks a consecutive call and another member from the member’s own party also seeks the call the Chairperson must also take into account the factors set out in Standing Order 102. The Chairperson has to have regard to proportionality as well as the seniority and interest of the member with the call. Giving a consecutive call might ultimately be at the expense of the member’s party colleagues. 
The call once given cannot be taken away. During the point of order Brian Connell sought to yield his time to the Hon Roger Sowry. Yielding is not a way of transferring one member’s speaking time to another. It is a way of providing time during a speech for a member to ask a question of the member with the call. But a member may choose not to continue his or speech. Brian Connell could surrender his call if he so wishes. It would be then for any member to seek the next call. 
The question before the Committee now is that clauses 1 and 2 stand part and Brian Connell has 5 minutes remaining if he so wishes. 
Hon ROGER SOWRY (National) 
: 
 I raise a point of order Madam Chairperson. I listened to your ruling and I want to take up with you the issue which I believe you have inadvertently got wrong. At the start of your ruling you made the point that a claim was made that a member—and the claim was made by myself as the senior member speaking on this bill—was entitled to two consecutive calls. That was not what I claimed. [ 
Interruption 
] I want to have your attention—I think that was half the problem. I never claimed that that was a right. I know the Standing Orders very well and know that that is not a right. The point I was making was that right the way through the debate other Chairpersons had by convention been giving the senior spokespersons—who in this case was myself—consecutive calls but only at the beginning of each part. We were at the beginning of a new part and members were entitled—allowed I guess is a better word—to have consecutive calls. 
The issue I raised with you was that it seemed odd to me having been given consecutive calls on other parts of the bill that when you took the Chair you did not follow the convention of the other Chairpersons. I made the point to you that I hoped that was not something you were personally doing—that you were operating with different rules or that perhaps you did not like me or something. You advised me that you had given consecutive calls to me in the past. I have been back and had a look and I can find an occasion on which that occurred in the previous week. So I do not want to imply that you have a snitcher on one particular member. What I want to say is that it would be nice if you could at the next meeting of presiding officers raise the issue of senior members going for a consecutive call so that it becomes the convention that that occurs rather than have the sort of whim that took place last week. After all all sorts of members will seek a call. Of course they will—they have to to contest it. I say to the Chairperson that when I looked at the  
Hansard 
 it was noticeable to me that the one time that a particularly hard-hitting speech was being given was the time that a consecutive call was not given. The debate I have to say with the Minister in the chair has been largely non-acrimonious. There have been issues that we have disagreed over around the bill but the debate in which the Minister has taken several calls has been a good debate in the Committee. There was an issue around the retrospectivity of the legislation that was causing a heated exchange and a vigorous speech and at that point the Chairperson chose not to give a consecutive call. All I ask is that you have a look at this and raise it with the other chairpersons because it seemed to me when I looked at the way in which the debate on the rest of the bill has been carried out that the exercising of the call was being done for a wider range of reasons. 
The CHAIRPERSON (Ann Hartley) 
: I have been generous in listening to the member. There is nothing in what the member said that I did not cover in my remarks. The call cannot be debated and I am ruling that nothing that has been said requires my ruling. 
Hon ROGER SOWRY 
: Point of order— 
The CHAIRPERSON (Ann Hartley) 
: No I have ruled. I ask the member whether it is a new point of order. 
Hon ROGER SOWRY 
: Of course it is. 
The CHAIRPERSON (Ann Hartley) 
: I have been very tolerant to the member but I have not yet heard anything that is a point of order. 
Hon ROGER SOWRY 
: I raise a point of order Madam Chairperson. This is the first occasion that I have seen on which someone has asked the Chairperson whether he or she would at least take something back and discuss it—which is what happens among presiding officers—and the Chairperson has ruled that he or she will not do that. Is that what I am to take from your ruling? 
The CHAIRPERSON (Ann Hartley) 
: The member will be seated. I have made my ruling. As I said there is nothing in what the member has said that requires a ruling on a point of order. 
Hon ROGER SOWRY 
: Point of order— 
The CHAIRPERSON (Ann Hartley) 
: I warn the member that raising trifling points of order is disorderly. I have ruled on the point of order. 
Hon ROGER SOWRY 
: I raise a point of order Madam Chairperson. I am not asking for a ruling—let me be quite clear. I am asking whether as a presiding officer you can establish a clear convention around the issue of a second call. That is all I am asking for. I ask whether you would accept that request and discuss the issue with the other presiding officers. 
The CHAIRPERSON (Ann Hartley) 
: I have made that perfectly clear in the ruling I read out. 
Clauses 1 and 2 ( 
continued 
)  
JILL PETTIS (Labour—Whanganui) 
: 
 I am taking a brief call. This bill exhibits the leadership qualities this Government has unlike that member who has just resumed his seat in mock impersonation of some sort of Napoleonic behaviour. Thank goodness he will never ever lead anybody into battle. 
This bill puts in place all the decisions made by the Government this year on electricity supply security and on the governance of the electricity and gas industries. It repairs some of the errors that the previous National Government made. It is a good bill with a thoroughly good Minister in charge and the best thing we can do is to get this bill passed so that it can benefit the people out there in New Zealand. 
Hon ROGER SOWRY (National) 
: 
 I want to continue on the points being made last week when this bill was being debated. Despite the senior Government whip’s pat reading of the Labour Party’s research lines about the Minister being good and all that sort of nonsense the real issue is that when this bill was introduced and sent to the Commerce Committee last year the Government said it had to be passed in a hurry. The Government made the energy companies and the interested sector people put in their submissions over Christmas—whilst the Minister was wandering around on a beach—and the select committee commenced hearings on the bill. We have now reached 12 October and the Minister is still trying to get the bill passed. He has backdated some of the clauses in this bill to 20 May 2003 which is when he deems that parts of this bill will have come into force. 
National thinks that retrospective legislation is bad. In a commercial environment it is even worse. The Minister is not unpicking any of the commercial reforms of the electricity market. He is not doing anything for the market. The member for Whanganui clearly had not read the bill before she read the Labour research unit’s notes because she alluded to the fact that this bill fixes up and changes a whole lot of the market. No it does not. What it does is set up a bureaucracy to watch over the market and sets up some rather convoluted workings between the Commerce Commission and the Electricity Commission which in fact endanger the independence of the Commerce Commission. 
As well as that the bill overrides some of the contractual arguments or arrangements that might be occurring in the sector and I want to particularly focus on those. Transpower charges lines companies for example for work that is being done or that has been carried out such as upgrades and the like by means of its transitional pricing methodology—so it is the lines companies who end up paying in the end. One part of the bill provides that Transpower’s pricing methodology is deemed to have come into force on 26 January 2004. The bill was before a select committee the Government clearly did not have an open mind on whether things would be changed and it has now said with regard to a whole lot of commercial arrangements that it is too bad about any arrangements or disputes because the State will use its power to ensure that Transpower gets paid what it requires. Of course what happens is that individual consumers end up having to foot the bill because they cannot contest it and the arrangements have run over the top of existing commercial arrangements. 
I think that is bad. This matter was so urgent that it had to be passed quickly. United Future members voted procedurally with the Government as they always do; they lay down on their backs and decided that this bill should go to a select committee and be dealt with really really quickly and urgently. Then of course United Future did not put anybody on the committee anyway. They did not bother with it so I guess it is to the fore for them. But what has happened is that the bill has come back before the House taking not just 1 or 2 weeks or even 1 or 2 months to get to that stage but months and months and months. We believe the dates in the bill should be changed and we have put forward an amendment providing for that. We believe that it is commercially unfair to backdate it as far as it has been backdated. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I have to say that New Zealand First shares some of the concerns raised by the Hon Roger Sowry. We are concerned that this bill is being made retrospective by quite some time and perhaps the Minister could take a call to explain why it has to go back that far. This Government only a week or so ago said that when it came to criminals it was impossible to go backwards. It said that it was impossible for the Government to apply retrospective legislation in respect of guys who are thugs murderers and goodness knows what but for law-abiding people it can go back something like 18 months. That just does not sit comfortably with New Zealand First because—as the Hon Roger Sowry has said—this bill has at least the potential to override some serious contractual arrangements. 
I have said before that we in New Zealand First looked for three things in this bill. Would this bill address security of supply? We believe that by giving more teeth to the Electricity Commission it probably does address that issue very largely. Will it reduce prices? Well we do not believe that it will. We believe that this bill could be a formula for increasing prices. I personally had some confidence in the cheap lines charge of 30c a day plus a higher unit for power and that confidence was shared by most if not all of my colleagues. However recently I was in Dunedin and the people there said: “Well that might be all right and fair and proper for you guys in Tauranga but come down here in the winter and see whether you can live on 8000 units a year.” They told me that it was quite impossible and that for Dunedin people it should be around 13000 to 14000 units as it is so cold down there. I was there on a sunny day and I have to say that it was a bit chilly. So we do not believe that this bill will go terribly far towards reducing prices for the average consumer in particular or even for the business consumer. 
So the third question that we asked ourselves was: will this bill create a climate for greater investment in the industry? We have seen nothing that gives us any confidence that it will achieve that. In fact we think that the best opportunity to increase investment in the industry would be to open up and take a more liberal attitude towards lines companies and allow them to do so. They have millions of dollars that they want to invest in electricity. The only place they can invest in electricity is outside New Zealand and the logical place for them to do so is Australia. I understand that several if not many of them are looking at investing in Australia or at using their finance to invest in some other sort of activity altogether. 
I have to come back to this. Had United Future shown a little bit more keenness willingness or conscientiousness towards this bill we might have got something. Had that party put a member on the Commerce Committee—even though the member could not have voted he or she could have turned up to hear the submissions—we might have got somewhere. But no United Future told members in the Committee that they did not like the maximum of 25 megawatts a year for lines companies and they wanted to increase it to 50 megawatts as an appropriate percentage. Those members did a deal in a back room somewhere—I was going to say a smoke-filled back room but I do not think that it was smoke-filled. They did a deal and that is not democracy. 
The United Future members are shocking. Had they come to the select committee they would have heard several representatives of the lines companies saying that they wanted to have a better opportunity to invest in the industry. They have the money and expertise and they could increase the total capacity for New Zealand. The total capacity right now as I understand it is about 8700-plus megawatts a year and on an ever-increasing basis we need another 150 megawatts a year every year from now on. If we believe Bryan Leyland we will have to double that. I am not expert enough to say what exact amount we need every year but it seems that there is a very good degree of common ground that is saying we need a lot more electricity capacity every year. The fundamental solution to that is investment and the lines companies are the only people with the money to do it. 
GORDON COPELAND (United Future) 
: 
 I will take a brief call in response to some of the remarks made by Peter Brown. There are two points. In terms of his accusation about backroom deals being done there were no backroom deals. I raised the matter of increasing the megawatts from 25 to 50 here in the Chamber in a public debate that followed the cancellation of Project Aqua. Secondly I wrote a letter to the Commerce Committee in that regard. In due course the select committee wrote back and notified me that it had received it and had considered it. 
Dr LYNDA SCOTT (National—Kaikoura) 
: 
 The National Party opposes this bill. It is interesting having the title debate the way we do now. I can remember many many days in this Chamber having title debates where it was to say the least very difficult to keep to the point. Usually they became quite ridiculous as members thought up different names for a title. I think that it is good that we now have the title debate at the end with a more wide-ranging debate to discuss the bill. 
The National Party does oppose this bill. We agreed with submitters because they expressed concern over the Electricity Commission’s design. This institution’s advisory operational and regulatory roles will place it at risk of serious performance failure and judicial review. There is a belief that it will fail to achieve the independence required to be an effective and credible regulator. 
We know that this country has suffered from a lack of investment in infrastructure under this Government. We have heard a great deal of rhetoric about the need to develop infrastructure to develop our roads and to have a security of electricity supply. In the Chamber today we have been talking about that. We have been talking about the fact that we have 8700 megawatts of generation and that we need so much more than that to be able to guarantee certainty of supply and price. A country cannot develop if it does not have those infrastructure situations correct and the ability to develop them. Twenty-five years ago this country had wonderful roads. Twenty-five years ago a lot of electricity was generated. 
Gordon Copeland 
: I raise a point of order Madam Chairperson. The member alluded to the fact that the Standing Order in relation to clauses 1 and 2—the title of the bill and the commencement date—has been changed and that we no longer have wide-ranging debates on those clauses. I am yet to hear the member mention either clause or speak to them. 
The CHAIRPERSON (Ann Hartley) 
: The Standing Order has been changed to allow a more wide-ranging debate when we take those clauses at the end. Do members want it read out? 
Lindsay Tisch 
: My colleague Dr Scott has taken part in previous debates in the Committee stage. She is familiar with the issues and is contributing now in the final debate which concerns the title of the bill and the commencement. As you have indicated Madam Chairperson and as members well know this is a wide-ranging debate that is like a peroration that brings together the arguments we have canvassed and articulated over the course of the Committee stage. That is the position Dr Scott is taking and she should be able to continue in that vein. 
The CHAIRPERSON (Ann Hartley) 
: I will just quote for members from the review of the Standing Orders: “However we consider that when debating the preliminary clauses at the end members should have some latitude to summarise”—that is really what is intended—“and make concluding remarks about the issues they have raised during the committee’s consideration of the bill.” I thank Mr Tisch. Did he want to add something more? 
Peter Brown 
: I draw to your attention the fact that the member who raised that point did not speak once to the title nor make reference to the commencement date. 
The CHAIRPERSON (Ann Hartley) 
: That is not relevant because we are clarifying the point. 
Dr LYNDA SCOTT 
: I am pleased to continue. We are in this Chamber talking about the Electricity and Gas Industries Bill because of the need to develop our infrastructure in that area. If United Future members who are supporting the Government on this want to take a better call and contribute for a little bit more than just 2 seconds that would be very valuable. Perhaps those members should think about doing that and have more to say on this bill. United Future did not even have anybody on the Commerce Committee so I am not too sure why that member is telling me I should be taking a narrower focus. 
To continue National has concerns about various provisions in this bill. National supports the total removal of the limits on line companies entering into generation and that is one part of the bill we have supported. At the moment when oil prices are at US$50 per barrel being able to generate electricity from gas and coal reserves and looking at more sustainable forms of electricity generation as well from wind and solar power has to be a concern for any Government in this country for the future. 
In parts of this debate we have talked about what happens when we end up being unable to invest in those sorts of structures. I am thinking about petrol and carless days and of how that affects New Zealand. If we cannot get surety of supply it will affect businesses and the competitiveness of this country. Businesses must be able to look at New Zealand and come here thinking that they can get a good price for one of the major commodities of any business—being able to give surety of electricity supply. 
I remember the spot market. I had a friend who bought a business and went on the spot market for electricity 3 years ago—the price was quite low at the time he did that. He owned a rest home and all of a sudden he went from paying $8000 per month to paying $20000 per month for his electricity supply. That nearly put him out of business. Because this Government has not increased the funding to rest homes he had no capacity to increase charges for any subsidised patients. The Minister of Health Annette King who is sitting over there will know that our rest homes need to be friendly and warm in the winter. That cost went from $8000 per month to $20000—and that was just for a small business in New Zealand. Let us look at how that affects our major businesses—overseas investors will not look at New Zealand if they cannot feel they can come here and have a surety of supply. We need to better develop our infrastructure. 
There is also concern in the National Party about proposals in the legislation covering the gas sector. That is a concern to us. National totally opposes the clauses that will allow the Government to direct the usage of infrastructure. To say that one company can develop gas fields and then to direct that those gas fields can use somebody else’s processing infrastructure because there is spare capacity will have a lot of people looking at whether they should invest here. 
MOANA MACKEY (Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8; Independent: Awatere Huata. 
Motion agreed to. 
A party vote was called for on the question  
That clause 1 be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8; Independent: Awatere Huata. 
Clause 1 agreed to. 
The question was put that the following amendment in the name of the Hon Roger Sowry to clause 2(1) be agreed to: 
to omit the expression “26 January 2004” and substitute the expression “31 October 2004”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8; Independent: Awatere Huata. 
Noes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon Roger Sowry to clause 2 be agreed to: 
to omit subclause (2) and substitute the following new subclause: 
(2)Part 2 is deemed to have come into force on 5 October 2004. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8; Independent: Awatere Huata. 
Noes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
A party vote was called for on the question  
That clause 2 be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8; Independent: Awatere Huata. 
Clause 2 agreed to. 
Hon PETE HODGSON (Minister of Energy) 
: 
 I move  
That the Committee divide the bill into the Electricity Amendment Bill (No 2) the Electricity Industry Reform Amendment Bill the Commerce Amendment Bill (No 3) the Gas Amendment Bill (No 2) and the Crown Minerals Amendment Bill (No 2) pursuant to Supplementary Order Paper 242 
. 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 71 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2; Maori Party 1. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 8; Independent: Awatere Huata. 
Motion agreed to.