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Dr Muriel Newman

Time to End Policy of Appeasement

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Dam2The Maori Council’s claim over the ownership of New Zealand’s fresh water was a blatant attempt by a powerful political group to seize control of a public good natural resource. New Zealanders are angry about it and so they should be.

The opportunistic endeavours by tribal corporations to seize control of public good resources such as air, wind, the electromagnetic spectrum – maybe even sunlight itself – are outrageous but very real. We should get used to them – there will be many more. Resource control is becoming the central focus of tribal activism, now that the Treaty of Waitangi settlement process is in its final stages.

Any thoughts by the public that the Treaty claims process would become a closed chapter in New Zealand’s history once this round of historic claims have been finalised (the fourth ‘final’ settlement for some of the tribes) is just naïve, wishful thinking. Tribal corporations will continue to push for anything that gullible politicians will give them. And with the iwi leaders group having forged a direct line of communication with government ministers – thanks to the Maori Party’s coalition deal with National – their progress towards becoming an elite governing class with superior rights to all other citizens is progressing at a fast pace.

This new era in Treaty politics will not go away anytime soon unless the advances are strongly challenged by the government on behalf of the New Zealand public. However, instead of questioning the legitimacy of the superior rights already enjoyed by tribal corporations – that give them special advantages over all other New Zealand businesses – our political rulers choose appeasement. But acquiescing to such demands simply makes things worse, as buoyed by their successes, insatiable tribes keep coming back for more.

Commercial gain and governance rights were at the heart of the tribal challenge to the Supreme Court: “their lack of ability to derive income from the exploitation of what they see as their water resource”.1 All the rhetoric about guardianship and life forces is just fancy-dress for what they really want – an endless flow of passive income from the county’s natural resources.

While the Supreme Court ruled in favour of the government’s right to continue on with the partial privatisation of Mighty River Power, the judgement nevertheless indicates that the battle for water is far from over. The debate has just shifted. Iwi will have these same “conversations” with Regional Councils, and government ministers – as they shape the future reforms of the Resource Management Act – as well as through the on-going work of the Fresh Water Forum. One can only hope that the public’s view is represented in these discussions, otherwise public ownership and control of freshwater and other natural resources will gradually slip away into some tribal quasi– governing role or ownership status, just like the foreshore and seabed.

As a result of the Supreme Court ruling the partial sales of Mighty River Power is about to begin at pace. New Zealand’s electricity market is made up of a mix of private and public generators and retailers. According to data from the Ministry of Economic Development, Mighty River Power produces around 17 percent of New Zealand’s power needs and is one of our five main electricity generators.2 The others are Meridian Energy which generates 32 percent, Contact Energy 22 percent, Genesis Power 15 percent, and TrustPower 6 percent. Other independents provide the remaining 8 percent of the country’s power needs.

These five main generators are also responsible for providing 95 percent of retail electricity to consumers – often through subsidiaries: Mighty River Power through its brands and subsidiaries Mercury Energy, Bosco Connect and Tiny Mighty Power; Contact Energy and subsidiary Empower; Genesis Energy and subsidiary Energy Online; Meridian Energy and subsidiary Powershop; and TrustPower. The other main suppliers of retail power include Pulse Energy, Opunake Hydro, and Bay of Plenty Energy and Auckland Gas, which are both owned by Todd Energy and trade together as Nova Energy in most markets in which they retail.

New Zealand is a world leader in the generation of electricity from renewable sources. Ranking third in the OECD, around 77 percent of the electricity generated in 2011 was renewable – hydro 57.6 percent, geothermal 13.4 percent, wind 4.5 percent, and bioenergy 1.3 percent. The balance of our electricity production came from natural gas 18.4 percent, coal 4.5 percent, and other thermal sources 0.1 percent.

Yet in spite of this, the former Labour Government and now National decided to appease the radical demands of the green movement and adopt the totally unreasonable goal of increasing our reliance on renewable energy for the generation of electricity to 90 percent. Because of the way electricity markets function, this energy strategy guarantees sizable price rises in the future, since many of the new forms of renewable energy are much more expensive than traditional sources. The main reason is that the buying and selling of wholesale electricity is done via a “pool”, where electricity generators offer electricity to the market and retailers bid to buy the electricity at prices set half-hourly. Since all generators receive the highest price in any successful “bid”, the higher the percentage of expensive forms of renewable energy available in the pool, the higher the price consumers will pay.

Looking at the bigger picture, data from the International Energy Agency shows that in 2011 New Zealand had the second highest contribution of renewable energy to the country’s total overall energy supply in the OECD – behind Iceland and ahead of Norway. This is largely due to the high levels of hydro and geothermal energy used in the generation of electricity. A snapshot of the total energy market in 2011 shows that 46.4 percent of all energy consumed by New Zealanders came from oil, 26.2 percent from electricity, 10.8 percent from gas, 10.4 percent from other renewable energy sources, 4.5 percent from coal, and 1.7 percent from direct geothermal use. The biggest use of energy was for transport, which used 38.4 percent, industry 35.1 percent, the residential sector 11.9 percent, commercial users 8.9 percent, and agriculture 5.7 percent.

These figures also show why the recent report released by Greenpeace, which calls for all of New Zealand’s energy to be produced from renewable energy sources by 2025, is potentially so damaging.3 Put simply, their plan would cripple the economy – in spite of their ludicrous claims that moving to 100 percent renewable energy would save money and create jobs.

The fact that the Green Party supports this call by Greenpeace for 100 percent renewable energy by 2025 – describing it as a “credible” plan and claiming that New Zealand now needs a “Green Government” to kick-start this transition – demonstrates just how radical that party has become and how it is simply not credible nor sensible enough to be let anywhere near the Treasury benches.

This week’s NZCPR Guest Commentator is Bryan Leyland, a consulting engineer and electricity market specialist, who, in his article, Why electricity prices are too high, outlines why the electricity market is failing to work in the best interests of the consumer, and why the Emissions Trading Scheme (yet another political appeasement – this time to the green movement) is making things worse:

“The Emissions Trading Scheme further complicated the power business. The theory was that increasing the cost of power generated by the Huntly coal-fired station would reduce the amount of electricity it generated. Huntly is the major generating station of last resort and, without it, we would have serious problems in dry years. When it is generating it is often setting the price that all the stations get. The commercial signal that this sends out to all the generators is that they will make more money if Huntly is generating and, in some circumstances, it will pay them to switch off some of their own their own generation to make sure that Huntly continues to generate to boost the price they get for their remaining generation. So, like many regulations brought in by people who do not understand the complexities of the system they are dealing with, the net result is an increase in generation at Huntly and a considerable and totally unnecessary increase in the power price.”

Bryan points out that the emissions trading scheme is based on “seriously flawed science” and he holds most of the media responsible for providing far too many one-sided, judgement-day type headlines about this highly political issue – instead of producing properly balanced and objective reports. You can read Bryan’s full article HERE.

The reality is that the Emissions Trading Scheme was fundamentally flawed from its inception. New Zealand is the only country outside of the European Union misguided enough to adopt an ETS, which was designed to reduce carbon emissions in large, heavily industrialised economies like Germany, not small agricultural nations like New Zealand – where the main culprits are not factories belching carbon emissions, but sheep and cows belching methane! The ETS continues to add an unnecessary cost burden onto New Zealand consumers through an inflated price for power and fuel that has increased the cost of all goods and services in our economy.

In fact, a government’s attitude to the ETS is a good measure of their conviction to improve real economic growth. Any government that genuinely puts growth ahead of the need to pander to the green lobby would repeal the ETS now that the Kyoto Protocol has ended.

The reality is that energy production around the world is changing at a very fast pace, and leading the technological advancement is hydraulic fracturing. Fracking, as it is commonly called, is an extraction method that has been in use in New Zealand for years, but it is now being used to extract gas from shale rock, creating a major new, cheap form of energy that has raised the United States to the top spot in the world for natural-gas production. As countries embrace this new energy source, the costs faced by businesses and consumers are expected to fall dramatically.

The recent report from the Commissioner for the Environment gave a green light to fracking in New Zealand, but the green lobby is opposed. One can only hope that science and logic will triumph over the green movement’s “Chicken Little” ideology, and that New Zealand will embrace the benefits that this new energy supply will provide.