Quotes of the month

May 1, 2020

The most galling aspect of the current lock down is that we could’ve prevented it. If we had introduced strict quarantine at the border and made provision for widespread testing much earlier, like South Korea and others, we probably wouldn’t be in the situation we now find ourselves. We all have to pay a high price to bring this disease under control and that cost is now as much in our liberty as our wallets. I don’t think there is anything to be gained at this time in castigating the Government for their earlier inaction, but let’s not give them undue credit either. Hopefully there will be a reckoning after all this is over. – Kiwiwit

One should never underestimate the power of amnesia in human affairs. Even catastrophes on a vast scale are often soon forgotten, at least by those who were not directly affected by them. The young in Eastern Europe, it is said, know nothing of the ravages of communism, though they lasted decades and still exert an influence, and quite a lot think that socialism might be a good thing to try, as if it had never been tried before. Moreover, no memory exerts a salutary effect by itself unaided by thought and reflection: memory (even where accurate) has to be interpreted, and where there is interpretation there is the possibility of error and disagreement. – Theodore Dalrymple

With a full belly, everyone knows better than farmers how to manage land, and how to care for the countryside. – James Rebanks

This is our wake-up call to respect farming once more — not uncritically: we have an absolute right to want more nature on farmland, high welfare standards for farm animals, and safe and healthy food. –James Rebanks

A couple of weeks ago, I wrote a column in the Listener in which I was too dismissive of the health risks of the Covid-19 threat. The reaction was furious and often vituperative – which is another thing we have all become accustomed to these days. My column that would normally be spinning off the printing press right now, said, “I got it wrong”.

I did get it wrong, but our job is to scrutinise, and I remain more afraid of the economic fallout of New Zealand’s response to Covid-19 than I am of the virus itself. – Joanne Black

I don’t jeer at smokers, though. Nicotine is a drug, you get hooked on it, and it takes a lot of effort to stop – I had someone doing it with me and we could console and help each other when it got too hard. It was also a time when I didn’t have any money worries, but really, in the end I kept it up because I was determined I wasn’t going through withdrawal symptoms ever again. I hated that I couldn’t just stop without enduring what seemed like punishment instead of the congratulations I deserved. Renée

That cast iron aversion to enforcing personal responsibility is baked in to our law in numerous areas. . . Shame (whakaama) is the mechanism at the cultural heart of nearly all successful systems for control of anti-social behaviour.  – Stephen Franks

It is as if the government is afraid of confronting and dealing with real hard choices –  and being honest on what they value, what they don’t –  and just prefers now to deal in simplistic rhetorical absolutes, when not much is very absolute at all.Michael Reddell

 Bauer’s exit is further evidence that foreign control of New Zealand media is generally ruinous. Australian ownership did grave – some would say irreparable – damage to both our major print media companies and it seems the Germans are no better. Overseas owners have no emotional stake in the country and no long-term commitment to our wellbeing. They don’t understand our culture and ethos and are largely indifferent to New Zealand affairs. They are interested in us only for as long as they can make a profit, and when that ceases, they cut and run. – Karl du Fresne

Many politicians and voters don’t seem to appreciate the reality that every dollar spent by the government needs to come from taxpayers, who need to earn that dollar in order for the government to take and spend it. Even when the government borrows money to fund its splurge, it is just postponing the bill to future taxpayers. Kiwiwit

We will decide to end social isolation and take to the cafes (those that have survived) with gusto. It will be our duty to support what is left of the economy and keep people employed. We will rush to businesses that the COVID-19 Czars deemed non-essential and hope we have the cash to spend and hope they survived. – Judith Collins

Consistency, at least in matters of public policy, is no doubt the hobgoblin of little minds, and not every argument has to be followed to its logical conclusion. Philosophical abstractions cannot be the sole guide to our political actions, though neither can they be entirely disregarded. The man with no principles is a scoundrel; the man with only principles is a fanatic.Theodore Dalrymple

The feminization of society isn’t  the overlay of feminist values. No. It’s the overlay of natural feminine tendencies. Don’t tell me they don’t exist. Most females become mothers. They are biologically designed to nurture. To bond through touch and soft murmurs. To provide their bodies to their babies (and lovers) as cushions and warmth. They placate, they adjudicate. They practice kindness with reasonable ease because that is at the core of the jigsaw puzzle piece they are.

Mine is a traditional but organic view of what a women is. She is not less than a man. And she is not more. – Lindsay Mitchell

When the New Zealand public looks back on the response to Covid-19 they won’t be judging success by whether we went ‘faster’ or ‘harder’ than other governments. Instead, we will want to know whether the Government’s response was balanced and proportionate.

Specifically, was the response proportionate to the risks posed to the citizenry from the virus? Were the short-term and long-term consequences to health and wellbeing appropriately balanced? Were the impacts on younger members of society who bear the brunt of the financial consequences appropriately weighed against the interests of the elderly members who carry the highest health risks? And were the impacts on low-paid wage earners and disadvantaged communities who will fall deeper into poverty appropriately considered and compensated?

Certainly, extending the lockdown beyond four weeks and prolonging border closures would be the right thing to do only if it saves more lives than it costs. Grant Guilford

 I get home and just try to catch up on all the news I missed while I was writing it. As with March 15, I find filtering the horrible events through the filter of a news story that I am writing the best way to numb myself to their power. If you have to sit back and think about the world shutting all its borders for years to come, of a recession deeper than any we’ve felt in a century, of needless deaths if we don’t resist all the things that make us feel alive, then it all gets a bit much. When you get to write it out as a news story its just data to feed into a well-worn formula, a coping mechanism that also happens to be your job. – Henry Cooke

 The best battery of all is a lake. Water management allows more investment in plant based proteins, better management of waterways, and more green industry. If we want this renewable future then as a country we need to have a mature discussion about water storage which must be, and will be, a net positive for the environment. – Rod Drury

One of the lessons from the animal world, is that every disease has its unique characteristics that determine the specific strategy. But every time, one way or another, it requires a track and trace that is carried out with speed and rigour. – Keith Woodford

I write my way into a story, a poem, a play and I write my way out. One thing I know for sure – there’ll be sticking points, hurdles. Writing that flows like it was effortless and easy to write comes only after hard work. Renée

There must be many other people in these strange times who find that having the time, no longer trying to stuff too many duties and activities into their day, they can now discover the world of small things around them, and find it utterly loveable. Birds singing, leaves unfolding, spiders spinning their miraculous webs – all these things can be food for the soul and can remind us of the goodness of life even in ‘these interesting times’, in the words of the Chinese proverb. –  Valerie Davies

What other industry is allowed to steal the product of another industry’s endeavour and pay nothing for it, while at the same time steal their livelihood through advertising? Because that’s what social media does. They pay absolutely nothing for the product that is the lifeblood of their operation and that is the news content made and paid for by news media organisations.

“I know of no other industry where you can steal something and not only get paid for it through advertising but get the government’s backing for it as well. – Gavin Ellis

So let’s use every nuanced tool we have available to us. Let’s protect the vulnerable, require businesses to prove they can operate safely before reopening, seriously consider regional alert levels, and continue with our physical distancing and virus hygiene protocols. But let’s also move quickly to staunch the bleeding of our troubled economy. Otherwise, we may need to start including suicide statistics, domestic violence call-outs and bankruptcy numbers in our daily briefings. – Lizzie Marvelly

My mum has probably never shown up in the GDP. Men can be pretty shit with a tape measure when it comes to women. No offence. But she could help you with that. Run it down your arm. Around the cuff. Calculate costs in an instant. Show you where you went wrong. Pins askew in her mouth. Glen Colquhoun

We’ve been bemoaning the fact that no one wants to listen to the good stories for years. Who would have thought it would take a global pandemic to give us a window to be able to have that voice again? It seems bad taste to be observing silver linings and opportunities whilst so many are suffering however, an opportunity to connect and support our country can only be a positive for everyone in my books. The primary sector’s social licence and our economy depends on it.  – Penny Clark-Hall

The people that we are talking about now are not the sports stars, not the celebrities, they are the people at the front line -the health workers – the Jenny’s from Invercargill, they are the special people. – Sean Fitzpatrick

One of the problems with Government money is that it always feels like other people’s money, doesn’t it? At the end of the day it’s ours or at least future generations’, who will have to pay it back in some way. We ought to be just as cautious with that money as we would be in our own businesses.

If you give cheap or free Government money to enable businesses to continue, in doing so you may be destroying the very thing that is valuable in business, which is the ability to evaluate risks and to take risk where the benefits that flow are greater than the costs. – Rob Campbell

Not all deaths have the same social cost. The death of a 90 year old can be sad, but the death of a child or young adult is almost always a tragedy. Burden of disease estimates often adjust for the number of life years lost and this adjustment should be made in assessments of the benefits of intervention options.Ian Harrison

Is there any rail network in a sparsely populated narrow and skinny country like ours that has ever paid its way? Perhaps the Greens can enlighten us if there is. The Greens will probably say that there is a financial cost to an economy where climate change is front and centre, but we already know what a carbon-free economy in the year 2020 is like – we just have to reflect on the economic destruction that has taken place during the Covid-19 lockdown.

Rail is not an asset – it’s a liability. And it’s not a stimulus package, any more than spending money on people digging holes in the ground is. Stimulus money should be spent on work that will facilitate commerce and enhance the economy in the long-term, not destroy it, which is what the Greens are proposing. – Frank Newman

If the government wants to build on its success so far and continue running an effective public health campaign against Covid-19 at minimal cost to the economy, it needs a robust decision-making framework that will allow rapid response to changing circumstances and reflect a broad range of health, social and economic considerations. – Sarah Hogan

The more the government can show it is learning and carefully considering the complex sectoral, health, social and economic trade-offs at each alert level – most likely by comparison with a ‘no intervention’ alternative – the more likely it is that decisions will prove durable.

Without more structure, rigour and intense communication effort, the gains won so far against the virus risk unravelling if public scepticism and weariness combine to thwart the battle in the months ahead. – Pattrick Smellie

We shouldn’t take our culture and heritage for granted because it has helped us to strengthen our resolve and courage in such an uncertain time.

I have found that looking out for each other and valuing our culture makes us stronger and although it has been tough we will come out stronger as a community. – Hana Halalele

It does stick in my craw that even the most self-reliant of us have all become dependent on the state. I can’t help thinking that this is seen by those in power as a useful by-product of their Covid-19 response. The metaphysical basis of almost all political belief today is social, cultural and economic collectivism. We are all just part of one big, global village, and, as in any village, every person should be concerned with everyone else’s business. Self-reliance is seen as selfishness and is not to be tolerated, and if you think you know what is best for your own life, you simply don’t know what is good for you. – Kiwiwit

As leader of the nation, Ardern is unparalleled. But her performance as leader of the government is less flash. – Matthew Hooton

Amid the coronavirus implosion I’m guessing productivity failures won’t even get much attention this election.  But they should, and any serious recovery plan should go hand in hand with a strategy that has some credible chance of finally beginning to reverse decades of failure.  Turning inwards and looking more heavily to the state is most unlikely to be such an answer. – Michael Reddell

Any one country trying them will quickly find that tariffs meant to protect domestic steel producers, for example, ruin domestic industries that use steel. And when everyone turns protectionist, the complex international supply networks that deliver us everything from cars to phones seize up. –Eric Crampton

Given that a supply chain these days can take in the entire globe, how is the official to know whose making “essential” parts and who’s not? How, even, are manufacturer’s to know, if the screws they’re making are just the ones that are needed to hold together this machine that when running properly makes thatmachine, and that machine is the one that makes ventilators, say. – Peter Cresswell

Here’s what politicians don’t understand: The economy isn’t a lightswitch that can be turned off quickly, then turned back on without consequence. Economic freedom isn’t just an integral part of the American dream, it’s a prerequisite for prosperity.

Most importantly right now? Everyone’s livelihood is essential to them.

Economic activity is, at its heart, a human activity. To disregard some as non-essential is a mistake with heavy consequences. – Amanda Snell

I find myself wondering if people can identify with what I have written about how it feels to be diagnosed with cancer and whether they have found themselves glimpsing the world I live in. In some strange way it could be possible that people are experiencing to one degree or another, what it feels like to have the rug abruptly pulled from under their feet and to wonder if they are going to die. Right now, people are facing one of the greatest challenges in life that they could ever imagine, just as I and many like me faced when we were given our cancer diagnosis. No words can ever describe what it’s like living with cancer but maybe an experience such as what we’re currently living through might provide a glimpse. Like with a cancer diagnosis, this pandemic will change lives and for many life will never return to what they have always known. It will change the way they view their lives and the world, perhaps even their priorities so post-pandemic life becomes a new normal for them. That phrase is one that everyone who has experienced cancer will have heard at some point because life post-cancer is never the same again, it actually does become a “new normal”.  – Diane Evans-Wood

You know, the theatre has kept going through the plague in the 1600s and it has a 2000 year-old history. Performers are part of that whakapapa and there will always be a need for human beings to connect…and, of course, that is what the arts does for us. – Jennifer Ward-Lealand

We need to balance the ability to be financially sustainable while being environmentally sustainable, not be expected to reach lofty targets set when the world was burning more fossil fuels and living beyond its means before the pandemic.

For NZ those targets need to be readdressed as soon as possible. We must lift the lid on the pressure cooker the primary industries have been under as we look to the future. – Craig Wiggins

One thing I do know is that what has become important now has always been important – food, shelter and good company – Craig Wiggins

Everyone who has a job in this economy is an essential worker. Every single job that is being done in our economy with these severe restrictions that are taking place is essential. . . People stacking shelves, that is essential. People earning money in their family when another member of their family may have lost their job and can no longer earn, that’s an essential job. Jobs are essential – Scott Morrison

Merit of action should be based on decisions made (or not made), the application of reason and science, and of course, the final results. Merit and accolade should never be given simply because of person’s age, gender, belief system, or political leanings. Sadly, we are seeing a commentariat very willing to continue its pursuit of identity politics where the ‘who’ is more important than the ‘what’ and ‘how’.  Simon O’Connor

Whether a farmer, café owner or self-employed plumber, the driving force behind most small businesses is the dignity of self-employment. For some people (me for starters) that’s a huge factor overwhelming any other consideration. – Sir Bob Jones

And yet, if there are any two countries that could pull off a clear if hermetically sealed victory — offering a model of recovery that elevates competence over ego and restores some confidence in democratic government — it may be these two Pacific neighbors with their sparsely populated islands, history of pragmatism and underdogs’ craving for recognition.Damien Cave

You are going to be part of a team facing tradeoffs.  Will we cancel the upgrading of the Tauranga to Katikati highway where there are too many road deaths so we can plant trees on good farm land to suck up CO2?  Will we delay buying equipment for an isolation strategy in a probable flu epidemic or build a cycleway on the Auckland harbour bridge?  Should we introduce tough new water quality measures while farmers are struggling and suiciding?  Will Pharmac get more money for new drugs to save five to ten lives or will we build a tramline to the airport?  Can we afford to close maternity hospitals in Southland risking mothers and babies lives so we can shift the Port of Auckland to Whangarei? – Owen Jennings

I have been alarmed to see that disdain for the mainstream media has spread to the mainstream media itself. Recently I was contacted by people who should know better, asking me to send them a copy of my column because they refused to fork out the readies to breach this paper’s paywall. The total required at the time was $1 a week. This much they would not sacrifice because of their aversion to one columnist. They would forgo the fine work produced by many excellent writers who did not have that columnist’s attention-grabbing profile and gift for alienating readers. . . .

Now more than ever, mainstream media which, for all its flaws, continues to uphold basic journalistic standards has a vital role to play in society.

As I explained at the time, refusing to share my column with my stingy friends, if you think life without magazines is bad, wait until you live in a world without newspapers.Paul Little

We must never again allow a situation where the law allows a young woman with much charm and little real world experience, to legally take such dictatorial powers.

The current legislation needs to be reconsidered in Parliament. While it’s conceivable such situations could arise in the future requiring such a heavy-handed approach, the supporting legislation should require say a 75% Parliamentary vote. Sir Bob Jones

There are two clear dangers for New Zealand.

The first is the virus – or more specifically, the prime minister’s strategy of eliminating the virus; how many lockdowns can we endure?

And the second is our prime minister, who fundamentally believes in state control, and is being given a free rein to embed her agenda deep into the heart of our democracy.  – Muriel Newman

Instead of adding to the deficit by throwing expensive shovels at projects, and thereby taking the public sector’s share of total spending up even further than its current, very high, level of 40 per cent of GDP, let’s hold the line on spending and cut tax revenues for a while, and let the households and the business sector sort out the shovelling for themselves. – Tim Hazeldine

For a Government, public confidence is the most precious of commodities. In ordinary times, it allows businesspeople to take more risks, invest in plant and technology, open new markets, start new ventures, employ more staff. It allows householders to decide yes, we will buy the new fridge, take a bigger holiday, eat out more often. Confidence turns the wheels of the economy. Simon Wilson

We are right to take a strong stand to value life and be against premature death. What we should now ask of our leaders is that they be consistent and place equal value on the risks, both physical and mental, for all people. One of the important roles of teachers in a crisis situation is to hear students’ questions and concerns with an open mind and allow them to work their way through things. Suppressing this process can only lead to conformity for the sake of it and a deep sense of helplessness. – Alwyn Poole

We’ve flattened the curve; we don’t need to flatten our country. Indeed, we now need another curve, an upward growth curve – growth, jobs, and a track back to normality.Simon Bridges

 The instinct of the Labour/ New Zealand First government will be to assume that a committee of Wellington politicians and officials, with a couple of business folk, a union rep and two iwi leaders should steer our path into the new economy. The likes of Shane Jones and Phil Twyford will implement it. . .

But the core engine of growth will always be private sector investment – men, women and their businesses taking on new ventures, rebuilding their businesses, expanding, hiring people – taking mad risks. No committee would have thought Kiwis should get into rockets, or into online accounting systems.

The recipe hasn’t changed. Successful economies make it easy for the investment to flow to more productive activities – they welcome investment, they don’t over regulate or over tax, they provide clear and consistent rules, properly enforced, and don’t go changing them all the time. – Paul Goldsmith

This is not a time to panic or point fingers. It is time for us to reveal our true character. Sir Don McKinnon

We need to speak very plainly about this: these three career politicians have absolutely no idea what sectors of the economy are doomed, which have a future, and whether any particular commercial proposal makes sense. Add Economic Development Phil Twyford to the mix, and it risks the appearance of a circus run by clowns. . .

Free-market capitalism works not because it is individualistic — although it is — but because it collectivises everyone’s best guesses and analysis. In contrast, collectivist economic systems reply on the brilliance of individuals or, worse, committees. Again, we should speak plainly: central planners are not just often wrong, but invariably wrong, just like most of us. – Matthew Hooton 

If you have one tenth the number of intensive care beds per capita that Germany does, if you don’t have contact tracing in place, then if you don’t have that level of resourcing available, you’ve got to focus very hard on the keep-it-out strategy. The fact that we’ve had to work so hard to stamp it out can only mean we’ve failed to keep it out. – Des Gorman


Rural round-up

August 3, 2019

NZ Centre for Political Research: A sacrificial lamb – Dr Muriel Newman:

The PM’s plan is to put so much pressure on farmers that she will drive them out of business, just as occurred in the coal industry, and oil and gas.

In a speech to state sector workers and children in Melbourne, Prime Minister Jacinda Ardern described a period of economic turmoil in New Zealand: “Starting in 1984, through to the 1990s, we removed regulations that were said to hamper business, slashed subsidies, transformed the tax system, dramatically cut public spending … “

She questioned whether the reforms were really necessary, then added, “I was a child back then, but I remember clearly how society changed. I remember nothing of Rogernomics of course — I was five. But I do remember the human face.”. . .

Allan Barber challenges Shane Jones to consider the unintended consequences of his headlong rush into forestry, as well as to disclose where all these logs or added value timber will be sold – Allan Barber:

There’s an irony about the combination of the Provincial Growth Fund funded one billion trees programme, sheep and beef land being sold without needing Overseas Investment Office (OIO) approval for conversion to forestry, the sharp fall in Chinese log prices, and Shane Jones ranting about log traders being intoxicated by high prices.

According to Jones, these log traders should have supported the domestic timber processing industry, although it’s not immediately obvious how domestic sales would have compensated for log exports to China which exceeded $3 billion over 12 months.

The history of tree planting, well before it was seen as essential for meeting greenhouse gas reduction (GHG) targets, is no different from any other commodity. After an exciting start too much of anything inevitably provokes indigestion; think oil, dairy, sheep meat, wool, angora, alpacas, logs – you name it, there is always a cycle; the world may even turn away from New Zealand Sauvignon Blanc one day. China features strongly as a market which has a habit of dominating purchasing patterns, driving prices up before turning the tap off, although this was more of an issue when the state rigidly controlled all purchasing. . . 

Growers slam ‘very clunky’ process for claiming fuel tax rebates – Maja Burry:

Some growers say they are being left out of pocket by Auckland’s regional fuel tax because there is no simple way to claim back for on-farm vehicles and machinery.

The 11.5 cents-a-litre regional fuel tax was introduced last July to fund transport projects around the region. It is expected to raise $1.5 billion over the next 10 years.

A rebate system, overseen by the Transport Agency, is meant to help growers and farmers claim back for on-farm vehicles and machinery.

Brendan Balle of Pukekohe-based Balle Brothers helps run a family-owned market garden business which employs about 300 staff. . . 

Northland dairy farmers win top milk award for fifth year running –  Susan Botting:

Producing top-of-the-line milk from 6000-plus dairy herd milkings over five years has earned Far North dairy farmers Terrence and Suzanne Brocx a dairy industry acknowledgement.

The Puketi couple have this year won a Fonterra award acknowledging their top-of-the-line milk production — for a fifth consecutive year.

Milk from the 2018-19 dairy season on their Puketi and Ohaeawai farms has this winter been awarded a Fonterra gold standard “grade-free” quality award, adding to four previous annual awards of the same type. This means all of the milk produced on their two farms since 2014 has reached the dairy co-operative’s highest gold standard quality standards. . . 

Stink bug warning to importers:

Biosecurity New Zealand has sent a stark message to shippers, agents, and importers that imported cargo must meet new rules intended to keep brown marmorated stink bugs out of New Zealand.

“The importing industry needs to be aware that high-risk cargo that hasn’t been treated before arrival will not be allowed to come ashore in most instances,” says Biosecurity New Zealand spokesperson Paul Hallett.

“The aim is to keep out a highly invasive pest that could devastate New Zealand’s horticulture industry if it established here.” 

Biosecurity New Zealand formally issued new import rules on 22 July. They require off-shore treatment of imported vehicles, machinery, and parts from 33 identified risk countries, and all sea containers from Italy during the stink bug season.

In the past, only uncontainerised vehicle cargo from risk countries required treatment before arriving in New Zealand. . . 

Hunters have their sites on a shareholding in a stunning high country shooting and fishing station:

Avid big-game hunters and trout anglers are being lined up as potential shareholders in a remote South Island high country partnership on the market for sale.

Shares are being sold in the land and buildings at the Miners Creek high-country station some 13 kilometres west of the Central Otago township of Ettrick.

The 513-hectare freehold property is located on the Mount Benger Range adjacent to the Department of Conservation’s Mount Benger Reserve. Combined, the two landholdings are home to red stags on its stark hills and brown trout in its pristine rivers. . . 


Quote of the day

April 2, 2015

To their credit, National has already identified that one of the key barriers to progress and development in many parts of the country is the Resource Management Act (RMA). This is certainly the case in Northland, which is rich in natural resources but poor in economic activity and jobs. But ironically for the people of Northland, by electing Winston Peters they may well have blocked the RMA reforms that are required to improve access to such resources.

The RMA is one of those Acts of Parliament that most people have little contact with. They are the lucky ones.

It’s the property owners and business people with initiatives that come into contact with the Act. Most come to dislike it intensely because they encounter first hand the extortionate demands of ‘affected parties’, the manipulation by activists, the huge costs extracted by the RMA industry, and the barriers put up by consenting authorities.

As a result, consents will often take years to go through the process – council hearings, the Environment Court, the High Court, the Court of Appeal, the Supreme Court, all costing applicants such vast sums of money, that in the end many are forced to abandon their project altogether. . .

While there are no doubt a multitude of ideas about how best to move resource planning forward to benefit the country – including the use of council case managers as advocates to guide applicants through the regulatory process and gain the cooperation of government agencies – at the heart of this matter is a realisation that holding back progress is not in the country’s best interest. Yes, we must be careful to minimise the impact of development on the environment, but we must also recognise that New Zealand families need economic growth and jobs if they are to thrive and prosper.

The irony is that as a result of the Northland by-election, the fate of the RMA is now in the hands of Mr Peters. Does he truly care about the long-term well-being of Northlanders, or is he too going to deliver more show than substance for his constituents – some new bridges and a bit of tar seal, when what they really need are jobs.  – Dr Muriel Newman,


Govt. control costs consumers

August 21, 2013

The Opposition is touring the country peddling its power policy.

Dr Muriel Newman points out is has already cost us millions of dollars in sabotaging the Mighty river Power Float:

Just days before the listing, Labour and the Greens announced their intention to regulate the wholesale pricing of the electricity industry should they become the government in 2014. This announcement created such a shockwave that the sale of Mighty River Power had to be suspended to allow investors time to back out of the deal. As a result many tens of thousands of investors who had expressed an interest in investing did not do so and many tens of millions of dollars were wiped off the value of the government’s shareholding. Within two days of the Labour-Green announcement, the share market value of Contact Energy, Trust Power and Infratil had fallen by almost $600 million.  

It is fair to say that as a result of the greed of the Maori Council and the political uncertainty created by Labour and the Greens, New Zealanders lost out. The proceeds of the Mighty River sale were less than expected, so less investment money is available for spending on hospitals and schools than would have been the case if Labour, in particular, had not played politics.

The point is that people have come to expect the Greens to demonstrate their deep socialist roots and extremism when it comes to policy-making. In spite of their clever portrayal of financial credibility, even a cursory examination of their policy proposals reveal how ideologically driven and deeply flawed they actually are.

However, the markets expect Labour to produce a rational policy platform – one designed to take the country forward, not backwards into the dark ages. Yet, if their plan to re-nationalise pricing in the electricity industry ever became the law, industry experts warn that the power cuts of bygone years, would again become part of our future. . .

The architect of National’s electricity reforms, Max Bradford, compares power policies of different political parties:

The Labour and Green parties have announced a policy to effectively nationalize privately and publicly owned companies by controlling their prices and their profits. NZ First proposes to reacquire the generation companies and create one large state-owned generator like the NZ Electricity Department (NZED) once was. They believe they can force down electricity prices, while at the same time guaranteeing security of electricity supply and encourage investment in electricity generation and distribution.

National, on the other hand, believes that the electricity sector works best within a competitive market, with a mix of private and public ownership, and regulation where there is no competition in those parts of the sector where there can be no competition i.e. the local lines companies and Transpower. This is the best way to get the lowest electricity prices consistent with guaranteeing security of supply and sector investment to meet increasing demand.

These are dramatically different approaches.

Furthermore, it seems that the National Government will proceed to partially privatize Meridian Energy now that the uncertainty over the Tiwai smelter’s future has been delayed for a few years. This follows the successful partial float of Mighty River Power.

National’s approach is followed by the rest of the world and gets security of electricity supply and the lowest power prices possible consistent with a long-term viable sector.

It is my view too, not from any ideological perspective, but simply from what achieves the best practical result for consumers: New Zealand’s energy history and experience in world energy markets shows that government owned or controlled energy companies cost consumers – or taxpayers where subsidies are paid – far more than an efficient competitive energy sector, with well designed regulation where it is necessary to make the markets work. . . .

The opposition’s policies are a prescription for price rises, insecure supply, and power cuts.

. . . Some people in New Zealand believe that the electricity sector cannot be competitive, and prices will always be higher than in a state owned, politically determined industry. This belief is in spite of the fact that every other sector of the economy once owned by the government (e.g. telecommunications and airlines) is now operating in competitive markets, giving consumers choice and lower prices.

How many people would want the government to monopolize air travel or telecommunications again? Competition has produced palpable benefits for consumers, and has generated tax revenue for the government, whereas in the past taxpayers had been subsidizing these sectors. . .

The Bradford reforms were criticised from all sides but  when competition was introduced in 1998-99, real electricity prices fell on average for four years. That hadn’t happened in the preceding 20-30 years of state ownership and control.

. . . Prices fell more for some consumers than others: the commercial sector, and farming had been subsidizing households for years as prices were politically determined, with the result that very high non-household power prices helped make business and farming internationally uncompetitive.

Inflation adjusted prices for local lines distribution companies fell substantially for some years after 1999, as the regulator – the Commerce Commission – forced these monopoly companies to seek cost efficiencies and only allowed a reduced rate of return on capital because of the lower commercial risks they faced compared to competitive companies.

In 2002, the then Labour government began to re-regulate the market in a series of policy moves, although they didn’t move to change the structure of the market finally established in 1998 after a decade of reform.

The overall effect of these moves was to reduce the competitive pressures on the generators. Government policies reduced the ability of companies to build low cost thermal generation (such as low emission coal fired stations). There were other pressures as well that no government could avoid e.g. the ending of low cost gas supplies from the Maui gas-field, and the addition of increasingly expensive new generation capacity as lower cost alternatives were not available (such as wind power).

The result was a 72 percent increase in inflation adjusted power prices between 2002 and 2008. This had nothing to do with the structure of the market, but was principally the result of Labour’s policy mix where the market could not find the lowest cost generation capacity and the downward pressure on electricity prices of the 1998-99 reforms was eliminated by government policy.

During this time, the government also sought higher dividends from the state owned power companies, which in turn put upward pressure on prices.

After its election in 2008, National reinstated the policy pressures on competitive producers and retailers. Consumers were encouraged to shop around for alternative electricity suppliers, just as they do for air travel, mobile phones, or petrol, with initiatives like Powershop, the What’s My Number campaign and greater transparency of pricing.

As a result, power prices have risen at a far slower rate than in the 7 years prior to 2008. Whether they can or will fall further on a sustainable basis, depends on the policies being followed by the government of the day, and perhaps more importantly on the cost of each new increment of electricity generation capacity as New Zealand has run out of “cheap” renewable energy such as hydro. . .

He has suggestions for further improvements which would make the market work better, and put pressure on the industry to deliver the lowest possible prices to consumers.

I would include the following:

  • Mandating smart meters into all electricity consumers’ premises
  • Consider removing metering from the generators and putting them in the hands of independent meter operators or lines companies
  • Improve the ability of independent retailers of electricity to provide electricity to household consumers, by removing any barriers to their ability to buy power from generators, independent retailers or the wholesale market
  • Providing a power tariff for household consumers to buy power through the wholesale market (to get the benefit of low prices when the wholesale market is over-supplied)
  • Make it easier for individuals to generate their own power and supply into the grid, with a certain, if necessary mandated, tariff payable by lines or generation companies

He identifies serious shortcomings used by the Labour and Green parties to justify their policy and concludes:

As a country we have clearly reached a fork in the road: do we continue to promote competitive measures to force competitive generators to look for lower cost solutions, together with sensible regulation on monopoly parts of the electricity sector; or do we return to the post-war model of monopoly state ownership and control, where political parties determine prices and profits?

We’ve got a choice.

There’s the LabourGreen policy which puts power in the hands of politicians and bureaucrats or National’s policy which puts the power in the hands of consumers.


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