The Greens and Labour

Not What We Meant At All

If you are on the left of the political spectrum and a mainstream media reporter is decrying your latest policy announcement as "loony" you know you have strayed way off the reservation.  Such is the ignominious result of two of New Zealand's smartest politicians declaring that once elected a Labour/Green coalition would nationalise the electricity industry.   The characters of this comedy are Russel Norman, leader of the Greens and David Shearer, leader of the Labour Party.  The establishment reporter is Colin Espiner. 

Here is Espiner's reaction to the Norman/Shearer bombshell.

Labour's crazy new energy policy

(The headline is was what actually appeared in the Dominion Post.)
Has Labour actually gone insane? As in stark, raving, Monster Loony Party mad?  I'm assuming the answer is yes, judging by today's incredulity-creating announcement that, if elected next year, Labour will essentially nationalise the electricity industry.

The Opposition says it's going to create a single buyer, NZ Power, that will buy all the country's electricity generation "at a fair price'' and then onsell it to consumers.  It'll pretty much give away a 300KW bloc to every household and then charge for additional units. 

At a stroke, Labour is proposing to dismantle the electricity market, ruin Contact Energy and Mighty River Power and decimate the Government's share float plans for both MRP and Meridian.  Oh, and sell thousands of mum and dad investors down the Mighty River, since MRP's share price would almost certainly plummet if the company was forced to retail only through a government department at whatever price it deemed to be fair.

The Left we love; but the Loony Left is something else entirely.  When the left-wing empathising media are calling left-wing political party leaders "loony" you know that you have strayed so far off the reservation, you are beyond the sight of mortal men.  When the left wing media establishment can see lacunae to the right, holes to the left, and nothing but thick fog ahead you know that you have put the tongue into gear before engaging the brain. 

I'm no fan of high power prices - and I don't own any Contact or MRP shares - but what Labour is proposing is essentially nationalisation a la Brazil or Argentina. This is Third World, funny-money stuff. Goodness knows what the financial markets will make of it. And what message does it send to overseas investors?   There's also Tiwai Point to consider. Will NZ Power control the power to the smelter, too? What becomes of South Pacific Aluminium's contract with Meridian? Would a Labour government simply tear it up? . . . .

There are so many holes in this policy I don't know where to start. How much is a "fair price'' for power, and who decides? The Government? How does Labour decide that a 300KW block will save households $300? And who pays for this, given that nothing in this world is free?  How does giving away electricity square with Labour's stated plans to be more energy-efficient? Or to reduce greenhouse gases?

The Greens want to add "progressive pricing" - charging poor people less for their power - to the mix. Will Labour agree to this? How would that work? Is it fair? What about moderately well-off people who live in cold climates?  Labour claims its policy would create 5000 jobs. Seriously? How?  Will Labour compensate private industry for having millions written off their balance sheets?

 David Shearer and Russel Norman are one-trick political ponies.  They deeply believe that New Zealanders' oppose the sale of state owned assets.  Therefore they have returned to beat this particular drum over and over again, hoping to gain political traction by its relentless sounding.  In our view they have myopically misread the political landscape.  With the government floating 49 percent of Mighty River Power and with potentially hundreds of thousands of New Zealanders ending up owning the thing they must have desperately searched around for a circuit breaker, no pun intended.

The loony path off the reservation must have ran something like this: we allege that privatising a minority stake in electricity companies will result in rising power prices.  Therefore we oppose privatisation. We, however, need to explain how we would stop power prices rising. The only feasible (and dramatic) alternative is to do the opposite of privatising: that is, nationalise the electricity industry and control power prices by government fiat. That will get everyone's attention.  That'll show 'em were a force to be reckoned with. 

We know that Russel Norman's economic policies date him somewhere way before antediluvian days.  Russel is a two trick pony when it comes to any political problem involving money or the lack of it: nationalise everything that moves, and print money like crazy.  Is NZ deeply mired in debt?  Print money, lots of it, says Russel.  It worked for the US.  "Yeah, right", says the Tui Billboard.  Are power prices rising?  Nationalise the industry.  This latest announcement is exactly what we would expect from Red Russel, the watermelon Green. 

But the fact that the Labour leader got sucked into it illustrates to our mind just how much Shearer is clinging to the false reading that New Zealanders are prepared to change political sides over state asset sales.  His naive view must be that if the country opposes asset sales (which in itself is a false reading), then it must also favour the extreme opposite: that is, state nationalisation of industry.  Consequently, he has lurched toward Red Russel.  In so doing he has made himself and his party a laughing stock in many quarters and an embarrassment to his media cheerleaders.

We leave the final damning indictment to Colin Espiner:

It's extremely rare that I agree completely with Economic Development Minister Steven Joyce, but his comment today that the plan was "a return to the 1970s-style monopoly provision of electricity...Only North Korea and Venezuela did not think such ideas are nuts'' is pretty much spot on.  I agree with Joyce that Labour is virtually sabotaging the economy.

One can imagine the handwringing taking place within the walls of hard-core Labour.  They so much wanted Shearer to move to the left.  "But not this, David.  That is not what we meant at all."