It is a pleasure to rise on behalf of the ACT Party to speak on the Electricity Industry Bill.
I start by thanking the Minister of Energy and Resources, the Hon Gerry Brownlee, for the way that he has involved the ACT Party in the preparation of this bill and bringing it to Parliament. National has been very good at consulting with one of its confidence and supply partners. The ACT Party will support this bill being referred to the Finance and Expenditure Committee on its first reading. We look forward to hearing submissions on the bill in the committee, and to hearing the views of New Zealanders and those with expertise in this area.
Listening to this debate this evening, one would think that the Labour Party is concerned about electricity prices. One might be excused for thinking that the Labour Party actually cares about how much electricity prices go up, and how much ordinary New Zealanders—mums and dads—have to pay for their electricity. Nothing could be further from the truth. We heard from Amy Adams just a few minutes ago. She talked about how power prices had gone up by 72 percent in the last 8 years, against a CPI that had run at 28 percent. So in the last 8 years, under the Labour Government, electricity prices came close to doubling. What do we hear from Chris Hipkins? He interjected across the House asking whether power prices are going down. He said that there is no mention of the lower power prices that the Prime Minister and the Hon Gerry Brownlee talked about when they campaigned up and down this country.
I would like to take members back just 2 weeks, to when we were debating amendments to legislation on the emissions trading scheme. The Labour Opposition strenuously opposed those amendments—strenuously opposed them. What did those amendments do? One of the things those amendments did was delay a 10 percent increase in the price of electricity from 1 January 2010—a 10 percent increase, I say to Mr Hipkins. It may not concern the Labour Party that electricity was to go up by 10 percent on 1 January 2010, because when electricity has already gone up by 72 percent in 8 years, what is the problem with another 10 percent? Labour members have come along to this House this evening, pretending to be concerned about ordinary New Zealanders. The Labour Government passed an emissions trading scheme that would have imposed a cost on emissions that would have led to an anticipated 10 percent increase in the price of electricity.
Hon Darren Hughes: $110 billion.
JOHN BOSCAWEN: Only $10 billion, the interjections come. A 10 percent increase in the price of electricity.
The previous emissions trading scheme was strenuously opposed by the ACT Party. It was also strenuously opposed by National when it was debated in this Chamber last year before the change of Government. But, sadly, what did we see from the National Government? We saw an amending bill that, rather than imposing a 10 percent increase from 1 January, increases electricity prices from 1 July next year. So electricity prices are to go up. The good news is that they are to go up by only a further 5 percent, and that increase will be delayed for 6 months. Electricity prices will go up by a further 10 percent in 2013, which is 2½ years later.
Labour members come along here this evening to have us believe that they are concerned about the price of electricity going up. They talk about the mums and dads, the homemakers, and the residential consumers having to pay more for their electricity. If it had not been for that amending bill that went through, electricity would have gone up by 10 percent on 1 January next year, which is just 15 days away.
But it is worse than that, because the emissions trading scheme works by adding 10 percent to the price of all electricity that is sold. Only those generators that generate electricity from fuels such as coal or gas have to pay that carbon tax, so it results in windfall profits. Generators such as Trustpower, which is substantially generating electricity from renewables—from hydro and wind sources—is able to increase its prices by 10 percent, but does not have to pay the off-setting carbon tax. So for Trustpower it represents a massive profit windfall. That is equally true for Contact Energy, Mighty River Power, and Meridian Energy. Meridian Energy and Mighty River Power are Government-owned, so one might justify this provision on the grounds that it is a tax, it will result in extra profits for those generators, and that profit will come back to the State. One might justify it that way, but why are we having any increase in electricity prices, even of 5 percent on 1 July next year, just to see it go in windfall gains for Trustpower and Contact Energy, which are privately owned electricity companies?
It was also particularly interesting that Mr Hipkins referred to the need to grow our renewable generation. I absolutely agree. If Mr Hipkins had been a member of the Commerce Committee, he would have heard a submission in recent weeks from Mighty River Power about how it has developed the Kawerau geothermal station and its plans to develop other geothermal stations around the volcanic plateau. Those stations operate at very high gross margins. The fuel—the steam—that drives those stations comes out of the ground and it does not cost anything. Mr Heffernan, the chief executive of Mighty River Power, told us that the profit margin is something like 88 percent, so there is a very, very good margin when developing geothermal power stations. New Zealand will no doubt have a lot more geothermal power stations, all brought on without a need for an emissions trading scheme that will artificially increase the price of electricity for all New Zealanders.
But I was interested to hear Mr Hipkins’ comments on the break-up of the Waitaki power catchment, and those comments were echoed by Mr David Parker. I think that both Mr Hipkins and Mr Parker made very good points. They talked about the inefficiency of breaking up that system, they talked about how that water may not be efficiently used, and they talked about the need to double up the management and the engineering resources. So that is why I say to the House that the ACT Party will be listening with interest to the submissions at the select committee, and we will be interested to see what is in New Zealand’s best interests.
I would also like to comment on the issue of smart meters or electricity meters, which was also raised by David Clendon. I would like to compliment a member in the House this evening Clare Curran, who is also a member of our Commerce Committee, and who has taken a particular interest in this subject. When this issue was first raised 3 or 4 months ago members of the committee were very concerned about what appeared to be the haphazard nature in which smart meters were being rolled out throughout New Zealand. I commend Clare Curran’s interest in that, and it would be good to see some common sense and some consistency.
New Zealand needs cheaper electricity. It needs more efficient supply. It needs greater reliability and it needs greater competition. The market will work. Mr Hipkins criticised the fact that the market was not working, but if there is insufficient competition, Labour had 9 years to do something about it, and it did very little.
The ACT Party will support this bill’s first reading and we look forward to New Zealand having cheaper power and a more
competitive market. Thank you very much.