Panic stations | The Jackal

19 Apr 2013

Panic stations

Today, the NZ Herald reported:

Labour leader David Shearer and Greens co-leader Russel Norman yesterday said that if they won next year's election they would establish a new agency called New Zealand Power which would act as a single buyer of wholesale electricity.

The agency would also have the power to set prices based on generators' operating costs and a fair return on capital. NZ Power would sell power to electricity retailers at prices lower than those on the current wholesale market and those savings would be passed on to consumers.

However, those savings would come at the expense of power companies.

The plan would cut the nation's power bills by up to $700 million a year and that money would come straight out of the revenue streams of power companies, including Mighty River and others earmarked for partial sale.

The power company's revenue for 2012 was $9961 million... $700 million of that is only 7%.

But despite that very small reduction:

Mr Bridges and Economic Development Minister Steven Joyce said the plan amounted to nationalising the electricity industry.

"They may want to return to sort of United Soviet Socialist Republic of New Zealand days but National certainly doesn't," Mr Bridges said.

Joyce also put out a press release:

“This is truly wacky and desperate stuff obviously made up in the last minute in the Koru Lounge between comrades Norman and Shearer,” Mr Joyce says.

“Their crazy idea to have both a single national purchaser of electricity and to exempt Government-owned companies from both company tax and dividends would effectively demolish private investment in the electricity industry overnight. It would also raise real questions as to why any individual or company would want to invest in businesses in New Zealand.

“Even the idea of it is economic vandalism of the highest order, with the timing designed to try and disrupt the mixed-ownership company floats. What we are seeing here is a desperate Opposition that is prepared to sacrifice economic development in New Zealand on the altar of political opportunism.

We're talking about a 7% reduction in power company's revenue profiteering, which hardly amounts to economic vandalism.

What Labour and the Greens policy will actually do is reduce people's power bills effectively putting more money in consumers back pockets. That will give average Kiwi families more expendable money to purchase items they require, save for a rainy day or invest in more productive sectors of the economy.

So why is the government, instead of adopting this policy themselves, acting like a bunch of freaked out clowns? Clearly the National party only represents the interests of big business and not the people of New Zealand, who will likely support the Greens and Labours policy changes at the next election.