10. Hon CLAYTON COSGROVE (Labour—Waimakariri) Link to this
to the Minister of Finance
Does he stand by his statement to the Finance and Expenditure Committee that the State-owned energy companies’ returns have been excessive?
Hon BILL ENGLISH (Minister of Finance) Link to this
Yes. The member needs only look at trends in power prices during the 9 years that Labour was in office to see that retail electricity prices jumped by 72 percent and that State-owned energy companies benefited from this enormous lift in power prices under the previous Government, which pocketed large dividends from them.
Hon Clayton Cosgrove Link to this
How does he reconcile his comments to the Finance and Expenditure Committee on Wednesday, 9 February with the letter sent by Simon Power, Minister for State Owned Enterprises, in December 2008 where the Government demanded higher returns from all State-owned enterprises?
That is exactly the point—not to confuse price with performance. The Government in its role as a regulator, under the leadership of the Minister of Energy and Resources, decided that the electricity market was not sufficiently competitive. Over the last couple of years he has engineered a range of complex changes to make the electricity market more competitive.
Hon Clayton Cosgrove Link to this
Has the Minister seen reports from energy specialist Molly Melhuish that Contact Energy and TrustPower have both raised their retail charges consistently faster than the three State-owned power providers, and does he have any evidence to suggest that the State-owned energy companies will not also increase prices at a faster rate once he has partially privatised them?
The fact is that complaints from the Labour Party about power prices lack credibility because at a time when Labour had total control of the State-owned energy companies, retail power prices went up by 72 percent. This Government is trying to undo that momentum through better regulation and clearer definition of the roles of ownership and performance.
Hon Clayton Cosgrove Link to this
Given the returns being made by State-owned power companies, why is he in favour of partially selling the State-owned energy companies, a policy that will transfer profits to the private sector—profits that could instead be used to fund essential public services for New Zealanders like schools, hospitals, and infrastructure?
Use of the mixed-ownership model is just following the example set by the previous Labour Government, which through its mixed ownership of Air New Zealand was able to free up capital for other uses, which is what we want to do; make investment in good New Zealand companies available to New Zealanders, which is what we want to do; and get better performance out of the companies, which is what we want to do. We are just following the lead of Air New Zealand.