Millions of dollars of New Zealanders' savings have been wiped after Labour and the Greens announced plans to radically reform the wholesale electricity market, the Government says.
The announcement of a Labour-Green plan to establish a new agency, New Zealand Power, to act as a single buyer of wholesale electricity has been followed by a drop in share prices for power companies listed on the NZX.
Contact Energy shares dropped almost 6 per cent in early trading today, with chief executive Dennis Barnes saying it would have been hard to justify the company's $2.5 billion investment in power generation under the proposal.
Labour and the Greens said their plan would cut the nation's power bills by up to $700 million a year, which would lower household power bills by as much as $300 a year and give the economy a $450m annual boost.
However, those savings would come at the expense of power companies, including Mighty River and others earmarked by the Government for partial sale.
Economic Development Minister Steven Joyce today said the sharemarket value of Contact Energy, Trust Power and Infratil had fallen by more than $300m within hours of the announcement.
"That value was taken out of the pockets of hard-working KiwiSavers, the New Zealand Super Fund and small shareholders across New Zealand.
"If Labour and the Greens could do that in just a few hours, imagine what they would do if ever they got near being in government."
Mr Joyce said the parties did not understand the policy would have a much broader effect on savings, investment and jobs.
"Why would you invest in New Zealand in this modern day of mobile capital if a government can turn up on a whim tomorrow and nationalise your industry?"
Energy and Resources Minister Simon Bridges also attacked the plan, quoting Labour finance spokesman David Parker's own advice to Cabinet in 2006, when he was energy minister.
Mr Parker had said a single buyer would likely result in higher capital and operating costs, adding: "The risks involved in changing arrangements could be significant. The resulting uncertainty could lead to investment proposals being put on hold."
Mr Bridges said competition was by far the best tool for delivering electricity at competitive prices.
Both Labour and the Greens today defended the policy against the Government's accusations, with Mr Parker saying National's reaction was "hysterical".
"Their scaremongering shows they're worried that hard-working New Zealanders who are sick of paying through the nose for electricity will embrace our new policy."
He said it was wrong to suggest the policy would destroy savings and jobs.
"Independent analysis by economists shows that lower power bills for businesses will provide a $450m boost to the economy. That will create 5000 new jobs.
"Lower power bills can increase savings, not lower them."
Green co-leader Russel Norman said the plan would open the door to new competition and innovation in electricity generation and retailing, leading to lower prices.
"National wants to keep the door shut and lock-in high power prices to protect the five companies that dominate the electricity sector today," he said.
"Currently, the electricity companies share risk across their generation and retail wings, and ensure that their generation meets their retail needs first. That has allowed them to lock out new competitors."