Hipkins Chris: Electricity Industry Bill — Second Reading 
Hipkins Chris: Electricity Industry Bill — Second Reading 
[Volume:665;Page:12479] 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 If anybody should be apologising to the New Zealand public for the perilous state of our electricity system it is Max Bradford and his ministerial colleagues who created the mess in the first place. Although I accept that the previous Labour Government did not adequately solve the problem Max Bradford created it does not mean that the Labour Government was responsible for creating the mess in the first place. It is very hard to unscramble an egg which is exactly what Max Bradford did. He created a huge shambles and we are still living with the impact of that today. 
People who are worried about their increasing power bills will be very disappointed to hear Craig Foss stand up in this House and all but say he does not care. The Government does not care about increasing power prices. It accepts that this bill will not do anything to stop the massive increases in power prices that New Zealanders are seeing. Many submitters to the Finance and Expenditure Committee said that this bill will increase power prices not lower them. The select committee received some very considered submissions but the Government chose to ignore them. 
The Labour Party is opposed to this bill because we believe it fails to balance the priorities of a secure electricity supply affordable and predictable pricing and the sustainable production and use of electricity. Those are the three major points that we think the electricity system should be based upon and this bill does not do that. In fact we are very concerned that some of the proposals put forward by the National Government have not been subject to the type of rigorous analysis we should be able to expect from legislation that has a multimillion-dollar impact and that is the sort of impact this bill will have because it asset swaps. 
We are not talking about toys here. We are not talking about minor things being switched around such as saying: “Meridian have been allowed to play with the Waitaki for a little while so now we’ll give it to Genesis and let them have a play with it.” We are talking about multimillion-dollar assets and the least that the New Zealand public can expect from their Government which is the trustee of these assets on their behalf is that significant changes are adequately and robustly analysed to make sure they will work. We have seen very little analysis of that by this Government. 
Treasury’s regulatory impact analysis team argued that many of these proposals have not been properly thought-out. Treasury said that the regulatory impact assessment for the bill was lacking in certain areas and should have—and I quote directly from Treasury in the commentary on the bill—“included a more comprehensive discussion of the risks associated with proposed options”. We are talking about significant risks. I restate the point that we are talking about a multimillion-dollar asset reorganisation. Treasury has argued that the risks have not been properly analysed. 
Treasury also argued that the regulatory assessment for the bill should: “provide a better idea of the magnitude of costs and benefits of the options discussed in comparison to the problem they are trying to address”. These are pretty basic fundamental issues that the Government has not dealt with in putting these proposals before the House. Treasury argued that the assessment should have: “better reflected the range of views received during consultation”. The Government’s approach to the select committee process was to ignore the vast bulk of evidence put before the committee. Treasury also argued that the assessment should have contained: “a discussion of whether or not the options proposed have been tried overseas and if so what their impact was”. 
Electricity reform has been tried all around the world. We have one of the worst records for power price increases in the last few decades so why would we not look around the world to see what is being done? I am very concerned about the proposed asset swap. The select committee received some very considered submissions from organisations such as the Institution of Professional Engineers which argued that the Waitaki water system operates best as a coherent whole and that removing Tekapo A and Tekapo B—which is what this bill does—from Meridian and handing them over to Genesis is potentially creating a less-efficient use of the water. It argued that we are creating competition on that water system whereby the players will be incentivised to maximise their own commercial benefit from the use of the water rather than make the best overall use of the water on the Waitaki system. That view which was put forward by the Institution of Professional Engineers in a very considered submission was ignored by the Government. 
We are very concerned about the impact that this bill will have. TrustPower stated in its submission: “the uncertainty created by the industry shake-up [is] likely to have a chilling effect on private electricity generators’ willingness to invest in new electricity plant raising the prospect of shortages again within a decade.” TrustPower which is one of the bigger players in our electricity sector says that this will have a chilling effect on investment in new electricity plant raising the prospect of shortages within a decade. 
The electricity sector has long lead times. What we were suffering from a few years ago with the electricity shortages was a lack of foresight when those first electricity reforms were put forward in the late 1990s. It created this market and disincentivised investment in new generation. We suffered the consequences of that throughout the late 2000s before we reached 2010. The Government has not done anything to deal with that. 
Gerry Brownlee stands in the House and trumpets the fact that we have done very well in the last year or two in terms of the renewable electricity we have had. There are two reasons for that the first of which is that it has rained quite a lot. Gerry Brownlee may like to claim credit for a lot of things but I do not think he can claim credit for the fact that it has rained quite a lot in the South Island in the last couple of years. That has been a significant contributor to the proportion of renewable electricity generation that we have seen in New Zealand over the last couple of years. 
The other reason is the significant emphasis that the previous Labour Government put on encouraging investment in renewable plant. Things like wind farms which have been coming on stream and have increased our renewable energy percentage are very good things. Unfortunately this bill does nothing to further those reforms or to further the drive towards renewable energy. Of course that is not really surprising because this Government’s overall Energy Strategy is a total shambles. 
On the one hand Gerry Brownlee is saying that the Government is committed to having 90 percent renewable electricity but on the other hand he is going up and down the country talking about “sexy coal”. I am not sure how he manages to reconcile those two things but that just goes to show what a total shambles the Government’s energy policies are. 
I have to say that the Leader of the House and the Minister of Energy and Resources obviously do not get on very well together. What kind of Leader of the House would put forward an energy bill for debate in Parliament today? On the day that the Government backed down on the mining he put forward an energy bill for debate in Parliament. The Minister of Energy and Resources and the Leader of the House may want to communicate a little bit more! 
I would have thought that the Government would be conscious about not wanting to debate a whole lot of energy issues in the House today given the absolute dog’s breakfast it has made out of the mining issue and the absolutely humiliating back-down that John Key had to make today after going out there and promising that the energy sector would be the major cornerstone of the Government’s step change in the economy. Yet we have here today the Electricity Industry Bill which will not lower power prices or lead to a more sustainable supply of electricity. On the same day the Government is also backing down on its plans to mine in the national parks. It just goes to show what happens when the Government blunders its way through putting forward proposals on the energy sector without making sure that it has the evidence the facts and the research all lined up beforehand. 
The Government’s energy policies are a mess. Gerry Brownlee promised a New Zealand Energy Strategy within months of becoming the Minister of Energy and Resources. The Government is more than halfway through its term and we are still waiting for a New Zealand Energy Strategy. The importance of a New Zealand Energy Strategy cannot be understated. People and companies look to it for the important signals it sends about where they should be investing what the Government’s overall vision is where the incentives lie and where the penalties lie. There has been nothing from the Government on that. 
The current Energy Strategy is the Energy Strategy put in place by the previous Labour Government and Gerry Brownlee is going around the country telling everybody to ignore it because this Government does not support it. The Government’s official Energy Strategy is in fact the Energy Strategy of the previous Labour Government because Gerry Brownlee has not got around to putting in place another one. It is a year and a half since National became the Government and it is about time it finally stumped up and put forward a coherent plan and a coherent vision for the energy sector in New Zealand. 
Labour members will have a lot to say about the Electricity Industry Bill as it progresses through its remaining stages in this House. We think it is very weak. The bill has a lot of flaws that will need to be addressed in the Committee of the whole House and we will have some further things to share with the House on that as we go through that debate. This is not a bill that will lower power prices for ordinary everyday working New Zealanders. The Government has given up on the task of trying to contain power price increases. Power prices will keep going up under National.