English Bill: Urgent Debates — Electricity Industry 
English Bill: Urgent Debates — Electricity Industry 
[Volume:608;Page:5837] 
Hon BILL ENGLISH (Leader of the Opposition) 
: 
 I move  
That the House take note of a matter of urgent public importance.  
We have heard today some Government announcements about changes to the electricity industry. Before we debate those changes I want to put the announcements in context. The House should not be misled to the view that these changes deal in any way with the oncoming electricity crisis. [ 
Interruption 
] 
 I raise a point of order Mr Speaker. The senior Government whip makes a habit of continuous interjection whenever I am on my feet. I have tolerated that for any number of speeches over recent weeks but I am not willing to tolerate it today. 
Mr SPEAKER 
: The member said he wants to be heard in silence. He will be. 
Hon BILL ENGLISH 
: I did not say that. 
Mr SPEAKER 
: The member has said that he does not want that sort of interjection. There will not be any more of it. I give him that assurance. I ask the senior Government whip not to interject again during this speech 
Hon BILL ENGLISH 
: I am just making the point that I am not willing to tolerate a continuous stream of interjections. 
Mr SPEAKER 
: I have stopped him from interjecting. Carry on. 
Hon BILL ENGLISH 
: The House should not be misled by this announcement that it has anything to do with this year’s winter crisis with the supply of electricity next winter and probably the winter after that. The reason the Government has made this announcement today is that its mishandling of the electricity crisis has affected its public image so badly that it decided it ought to come up with something to make it look as if it is doing something. 
I have been particularly disappointed in the attitude of the Prime Minister. She has tried to make out that it was only in recent months that this issue has come before the Government at all. That is simply incorrect. Since before the 1999 election the Labour Party has campaigned intensively on the issue of electricity. It was doing deals before the 1999 election in Opposition offices with people involved in the electricity industry. That was followed by a stack of reports and reviews and even policy statements. A Government policy was made before the 2001 electricity crisis. A review was done of that crisis. A subsequent policy statement was made and it was amended according to the views that were taken from the industry throughout the crisis. 
Helen Clark has sat as the chair of a Cabinet that has seen dozens of reports on the electricity industry. So the timing of this announcement is nothing to do with the matter coming to the attention of the Government. It has been before the Government for over 4 years. The timing today is to give the public the misleading impression that the Government is taking some action on the current electricity crisis and that therefore the cold showers the brownouts and the blackouts are someone else’s fault. Well they are not. This Government is responsible for the current electricity crisis and today’s announcement makes not one bit of difference to that responsibility. 
It is unlikely when we look at this announcement that it will make any difference in the future. The announcement today makes a big play of reserve generation. I say to the Minister of Energy who is here today that I hope he has informed his Prime Minister that there is plenty of reserve generation around right now. All over the countryside there is reserve generation—generation not being used generation not turned on. It has been there in previous years. It is still there now even with these high market prices for electricity. Going out and contracting for a bit more actually will not make much difference because it is already there. 
So I invite the Government to tell us whyif there is reserve capacity now it is not being used; whyit is that going out and contracting for more in 2 or 3 years’ time will make any difference at all today. Because it will not. 
Let us get the picture clear. Lake levels are still low and dropping. There is spare generation around the countryside right now that is not being used and we still have the major problem that has afflicted this industry in recent years and will continue to do so despite any announcements today. I am talking about the problem of getting sufficient baseload generation up and going to meet the needs of a growing economy—even if that growth slows down. Perhaps that is the best chance; that it will catch up—that is if the growth slows down. That has always been the issue. 
This Government with a combination of confused policy and endless navel-gazing over what it is going to do with electricity and a strong dose of political correctness has made sure there is not enough new generation coming in the market to keep up with the economy. 
Let us look at this distinction between renewal and non-renewable energy. At the same time as the Government is saying that it will make consumers pay a tax for reserve generation it is actively promoting renewable energy over non-renewal energy—renewable energy being wind and rain. These are much less reliable sources of fuel than the non-renewable energy which is coal. I would not mind betting that the kind of generating capacity the Government is going out to contract for will almost certainly be non-renewable. Because that is the only way that the person who is providing it can guarantee it is there to turn it on in the years when there is not enough rain or wind to meet the demand. 
This is a fundamental policy confusion and it is being perpetuated with these announcements today. The Government has a strong ideological push to favour only renewable energy. The announcement today is actually an announcement that if this worked at all it would be about solving that problem—namely by making sure there is sufficient non-renewable energy available to the New Zealand electricity market. How stupid can one get! Why does the Government not just ditch the ideology? Why not just ditch the political correctness of saying that because we have signed the Kyoto Protocol we cannot burn coal? Why not let both forms of energy develop; make the rules about carbon tax if that is what the Government wants to do; and let the market sort it out? Who is going to pay the price for this stupidity? New Zealand consumers will pay. 
Stephen Franks 
: And New Zealand business. 
Hon BILL ENGLISH 
: And New Zealand businesses households—indeed everybody. What we have seen today is a new tax—“Helen Clark’s energy tax”. It cannot be called anything else. That is what it is. It is a new tax. I hope that United Future will have a harder think about this tax than it had about the Budget. Helen Clark has decided to impose a tax on all electricity users in New Zealand. So all pensioners; all students; all low-income families; all families with children who live on benefits and therefore below the poverty line which is something that people keep telling this Government—in fact everyone who turns on a switch—will pay an energy tax because of the stupidity of the Labour Government. 
We estimate that that tax is around $200 million a year—if we multiply half a cent per unit by the number of units. If people thought the “sherry tax” was controversial wait until pensioners work out the electricity tax! But of course the Government will get tricky. It will say that it is not the Government that is putting the tax on but the Electricity Commission—they are the ones who decided about the tax! 
Dr Lynda Scott 
: Blame the officials. 
Hon BILL ENGLISH 
: It will blame the officials just like the Prime Minister when she said the only reason we had the energy crisis is that officials were too slow with their advice. She said she was outraged by how slow the officials were. She was referring to her trusted offsiders in the Department of the Prime Minister and Cabinet the Ministry of Economic Development and Treasury. I bet they are becoming a bit tired of being blamed for everything—ranging from the Government’s dishonesty to the energy crisis. In this case the responsibility for the tax falls on the Government. It is a tax; a tax on electricity. No one has really thought of it before. We have always had electricity prices that go up and down but no Government has imposed a tax on electricity. 
I cannot help thinking that the announcements today are a solution when the Government has not quite worked out what the problem is. In fact the closer I look at it the more it looks like the Government has pulled together—[ 
Interruption 
] Well it is; it is a solution when the Government has not worked out what the problem is. If the Minister does not know the problem is not a lack of reserve generation. There is plenty of reserve generation. It is just that it is not switched on. 
Pansy Wong 
: Like the Minister. 
Hon BILL ENGLISH 
: Like the Minister! The current is not working! 
Hon Paul Swain 
: We’re all switched on over here. 
Hon BILL ENGLISH 
: There is something shorted out particularly with that Minister. It is a tax. There is plenty of reserve generation. I look forward to the debate the Government is going to have with the electricity industry. The reserve generation that contracts through this process will be an overhang on the market. All the time in all the years when there is plenty of fuel there is going to be an overhang on the market and there is going to be a very substantial argument about what price that generating capacity should be switched on at. Is it going to be when the price gets to 10c or 12c or 50c? The investors in future generation are going to need to believe that this Government will not use it for its political convenience. 
In election year business comes along and says: “Look the price has gone up over 15c. You’ve got all this generating capacity sitting there. Why don’t you just switch it on and keep the price down?”. Of course this Government will do it. Otherwise it will be attacked for having all this electricity generation that it refuses to use and that is keeping the price up. Of course the Government will do it. The Electricity Commission legislation will almost certainly have ultimate ministerial control over its decisions. I ask the Minister of Energy to deny that. No he will not. 
I say to investors in the electricity industry that this is a tool that Labour will use to keep electricity prices as low as its political convenience requires. New Zealand consumers will have to pay a tax right across the board to finance it. The Government will go out and say that it is a little tax. Look at the fuss the Government got over the “sherry tax”. That was meant to be a little one—$50 a year if that is what it is; $200 million across the country. Helen Clark has agreed and confirmed her view that a tax on electricity is a good idea. She knows full well that that is putting up electricity prices for the people who she believes support her in particular the pensioners. I invite any MP to say to the next pensioner who comes into his or her electorate office: “Oh don’t worry it’s only $50 a year. Don’t worry it’s only a little bit.” They will not accept that. They feel blamed for the electricity crisis. They feel they are being made to take responsibility for the shortage of energy and now the Government is going to make them pay with a tax. 
Hon Roger Sowry 
: The Prime Minister’s on gas. 
Hon BILL ENGLISH 
:The Prime Minister says: “Don’t worry I’ve got gas.” I say to the Prime Minister that she should be saving gas because we are running out of that faster than we are running out of electricity. She did not know that. She did not know that we are meant to be saving gas as well as electricity. 
The consumers will pay twice. Look how the Government structured the deal. They pay the tax every year in case there is a dry year and when the dry year comes they have to pay a high price for the new stand-by generation. Why is that? Why should they have to pay a high price for the stand-by generation when they have already paid for it many times over through the “Clark energy tax”? I invite the Minister to tell us that. It is confused policy and more spin than a hydro-powered turbine.