Transcripts from Sunday 21 April Q+A Panel Discussions- Part One

Sundays on TV ONE and one hour later on TV ONE plus 1. Repeated Sunday evening at 11:30pm. Streamed live at www.tvnz.co.nz   

HOSTED BY SUSAN WOOD

In response to DAVID PARKER and STEVEN JOYCE interviews

SUSAN WOOD
Welcome to the panel political scientist Dr Raymond Miller from Auckland University; Heather Roy, former ACT MP and army reservist; and Matt McCarten, Unite Union. Well, Matt, let me start with you. The Nats say- They were talking about North Korea, North Korean communist-type model. You just heard Steven Joyce. Doesn't work, though. South Korea - it doesn't work. Texas - it hasn't.

MATT McCARTEN - National Secretary, Unite Union
No, no, no. It's all very selective. It works in California. We can all go through examples, but, actually, closer to home, it's the model we use with Pharmac, and it works very well. It's the same model with our most successful business called Fonterra. They all do it, and it's the way. Most of that is lost in that debate. What people know is that the power prices are too high, and the reason for that is the generating companies are making a bomb because they can. Now, they make $4.2 billion. That's all people need to know. $4.2 billion. $1000 profit for every man, woman and child. The power prices, even a fool can see that is exorbitant. And so what the Greens and Labour are doing is saying ‘We’ll put something in between. We want to negotiate those prices down, and will pass those savings on.’ Consumers will get that.

SUSAN Heather Roy, you’d have to say Labour and the Greens have certainly hit a nerve point. You talk to anybody, and they are concerned about their power prices.

HEATHER ROY - Army Reservist and Former ACT MP

Oh, they are. Everybody wants cheaper power prices, but a government monopoly is not the answer, and Matt said that’s it’s very like the Pharmac model. It’s not, in fact. With Pharmac, you’re paying a lot for intellectual property. We’re talking here about a commodity - electricity - the thing that turns your lights on, and Pharmac has been very good at getting prices down, but what it has led to is much poorer access to leading pharmaceuticals, medicines, and also there are significant issues with surety of supply. And there are two things that we need here: security of supply is the first, and second is competitive and efficient pricing.

MATT Are you seriously saying we won't have any power if it goes to this model? Really?

HEATHER No, no. I think that there is an issue with security of supply, but, more importantly, we need proper competition. And, actually, David Parker was right when he said, ‘Uncompetitive pricing isn't helpful.’ It's not, but what we should be looking at is giving the authority more power to deal with issues like price gouging, and we should be looking at more transparency, particularly around the way the lines companies do their pricing.

SUSAN Matt, there is an issue around security of supply. I remember sitting in this building on the Breakfast set back in 1998. They had generators in the basement-

MATT That was the free market that didn’t work.

SUSAN Bradford reforms came in after that.

HEATHER That was when there was a monopoly.

SUSAN That was when there was a monopoly. The Bradford reforms came in after that, because there is one line into Auckland and one line out.

MATT Because they hadn't invested a line. That’s right.

SUSAN In the infrastructure, and there has been now a massive investment in it, which is the reason why they tell us our prices are so high.

MATT No, they are gouging profits. Everybody knows that. What I was saying before is where we say it is 1000 bucks a year per person, that's 20 bucks a week. You just have to count the people. That’s all you need to know. Count the people in your household and times that by 20 bucks a week. That's how much they’re making. That's not competitive.

HEATHER It is very complex, and when you look at the electricity CPI, immediately after the Bradford reforms, those next four years were the lowest price increases that we have had in 25 years. The last four years, the prices have also come down, and that's because of that big bubble that Corin talked about, was the infrastructure costs that are just starting to come right. And the two largest years and the last four are actually due to external influences. Firstly, there was the GST increase, which was offset by tax cuts, and secondly there has been the emissions trading stuff, and that does bring bigger prices.

SUSAN I’m going to bring Raymond in here. You have been saying for weeks sitting on this couch, Raymond, ‘We need Labour to differentiate. We need to see a point of difference.’ We've got one now.

RAYMOND MILLER - Political Scientist

Yes, and it's not North Korea, and it's not the former Soviet economic model, and it's not Venezuela, it's not Robert Mugabe. What it is, really, fundamentally, is Labour deciding that this is a potent issue electorally. They can see the opportunity of being able to deliver more back to the consumers. And for most consumers, they’re not interested in the technical arguments. They are very difficult to understand.

SUSAN It’s complex.

RAYMOND Very complex. What they do know is that their electricity prices are going up, and they don't much care, I would argue, who is actually controlling the prices - be it the state or the market. I think the important thing for them is there is what they might see as a cartel, and they see it as anti-competitive. So many people tell me that they go and they switch providers, and then they find three or six months later that they are no further ahead. So, for voters, it's an important issue. It's like housing. Those are two big issues for Labour and the Greens, providing they can really make them stick.

SUSAN Matt, what National is saying is this could scare off investors. 600 million bucks wiped off the share market. You know, Mum and Pop investors with Contact shares.

MATT No, no, no. It's true that when they're making 4.2 billion bucks, it's printing money. It's great. When you say, look, that's going to have to be passed on to consumers, then of course people are into make a quick buck. ‘I’m going to invest in that because I don't make enough money.’ Of course it is going to have that effect. Why should a consumer pay? Someone is paying. Someone is always paying. The investor is paying some of it, or the consumer is. That's the measure. Is the pricing right? No, it's not. And Raymond is right. The Greens and Labour strategically have answered the question which I thought they had a problem with. Because, as I say, if you are like the sale - because it's going to affect the sale - that's why they’re jumping. That's why it's North Korea. Because suddenly the buyers for the shares are going to go, ‘Hold on a minute. I thought I was going to cream it. Now it looks like I’m not going to be making the money I thought I was.’ That's the problem. Now Labour and the Greens have seen it and got in on it and have changed the debate. Because the debate with them was once it's sold, you're going to buy it back. They have actually very cleverly now changed the whole debate, and I think they've changed the whole way we see it.

SUSAN Raymond?

RAYMOND What is worrying politically, I am sure, for the government too is that we seeing Labour and the Greens finding any area where they can agree with each other, speaking to some extent with one voice, but also you've got Winston Peters, who’s out there as the Lone Ranger, and he's basically saying, ‘I agree with what these two parties are doing.’ Now, for next year, where are National’s support parties? Where is National going to get back into government? Who was going to help them? This is an important issue, I think, politically.

HEATHER Politically, that's correct, but we're actually here to talk about electricity, and this is the wrong thing for the economy. Steven Joyce was absolutely correct when he said we have to consider the broader economic consequences too. It's absolutely true. And going to a monopoly situation will provide disincentives for any companies to invest heavily in infrastructure in the way Contact has, for example, in the last five years. They've invested $2.5 billion. Do we really want to go to a situation where the private sector at the moment is providing that investment because the incentive is there? I don't we do. And it will be too late once the structure is put in place that the flow-on effects are felt way on down.

RAYMOND Politics is front and centre of all these decisions.

HEATHER Well, that's true. It is true.

SUSAN And I want to know, actually, how they've presented it as an incredible looking alternative. We had to the Greens, and we heard Corin earlier in the programme sort of saying probably a bit of accident when they finally got it together. Slightly messy.

RAYMOND The thing as that on the centre-left, Russel Norman is their most effective spokesperson. I mean, he speaks in sound bites that people can understand. David Parker is more of a technocrat. He likes to explain all the details. He is very thorough and rational. Steven Joyce is very good at laying the blame on the former Labour Government, and that can only work so far. There comes a time when you have to take personal responsibility yourself for what's going on.

SUSAN And David Shearer is going to be the man who is going to have to sell a lot of this policy.

RAYMOND And that's the worry. I mean, the worry is that they've got to have one voice that speaks clearly on the issue. They can't have lots of different people using all sorts of complicated explanations. As soon as they had problems with the housing issue, when they started qualify their figures, you could see suddenly it beginning to lose momentum.

MATT They have learned from that. I mean, I think they framed the debate very well this week. I think it's got the National Government on the ropes. The housing thing, you're right. That is a separate thing-

SUSAN Heather, do you think they have framed the debate well?

HEATHER Politically, it was a masterstroke. They have managed to put the kibosh on the market. The price went down immediately. People are now questioning, I believe, whether they should buy Mighty River Power shares. But is that good for NZ? No, it's not.

SUSAN Very good.

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