Bryce Edwards ' Opinion

Bryce Edwards is a lecturer in Politics at the University of Otago.

Bryce Edwards: Political round-up: The electricity shakeup game changer

File / NZ Herald
File / NZ Herald

Being attacked by the government of the day is not a problem for opposition parties - being ignored and portrayed as irrelevant is. While the merits, politics and even ethics of the Labour-Greens Power NZ policy is being fiercely debated, the consensus is that it will have a big impact on the next election - and even beyond.

The announcement "landed like a bomb" for those in the electricity markets writes Pattrick Smellie: "For many, it's a question of whether the world just changed. That makes the Opposition's announcements this week politically powerful. If the world didn't just change for the electricity sector, then at the very least the ground just shifted" - see Mr Smellie's excellent discussion of the political positioning on the issue: Electricity policy - Labour just changed the conversation. The Opposition has made itself relevant in one stroke says Rob O'Neill - "a player rather than a critic" - see: Electricity policy move sends political surge. And for background on the issues involved, Anthony Hubbard provides the usual detail and analysis in It's enough to make you want to scream.

This change has clearly rattled many who thought the economic consensus between Labour and National was a given: "Since 1984 there have been many aspects of economic policy that have put Labour and National closer on the political spectrum than they are to their coalition partners.

And recognising the importance of capital markets used to be one of those things." - see Liam Dann's Political divide is widening needlessly.

But Sean Plunket, who isn't necessarily a fan of the opposition policy, thinks maybe it's time we looked again at those old assumptions: "With the world struggling to cope with the downstream of the global financial crisis and a tonne of examples (Pike River the most recent) that the market doesn't always deliver the best results, maybe it is time we had a more meaningful and fundamental debate about how we run our country and economy" - see: Electricity plan my fuel hands-on politics. Mr Plunket also has a prediction: "don't be surprised to see National resurrecting a few of Sir Robert's old strategies as well. Bring on the dancing Cossacks".

National might want to be careful on that strategy points out Mike Smith at The Standard: "The dancing cossacks were part of an ad that attacked 1975 Labour's compulsory superannuation plan.... If only voters hadn't been seduced by Muldoon then we would now have a sovereign wealth fund that would be in advance of Australia's, instead of being light years behind. Our savings and investment would be top of the world" - see: Exhuming the Dancing Cossacks.

No Cossacks yet, but Steven Joyce has already said the policy belongs in the USSR, and Fran O'Sullivan says Hugo Chavez would have liked it (see: Left's power plan a bid to plug back into office), and David Farrar asks what sector will be next in line for central planning: "Now both Labour and Greens want to devalue the NZ currency. The inevitable impact from doing so, is price increases. So if supermarkets increased their food prices, it would be the perfect excuse to introduce a single buyer for food also, effectively nationalising supermarkets also" - see: It won't stop at power companies. The theoretical argument may be valid, but it could equally be argued that National's continuation of Pharmac and publicly provided health care means that they too will soon be announcing "that if you have more than one house, the government will confiscate it and give it to an aspiring home owner?" - see: O'Sullivan on power nationalisation. Some commentators are raising questions about the validity of the comparison between Pharmac and NZ Power - see, for example, Pete George's More on NZ Power versus Pharmac.

For Gordon Campbell the debate about market versus regulation in New Zealand has been based on a falsehood: "In everything from supermarket pricing to power pricing, New Zealand consumers have never been exposed to a free market, if that means protection by robust anti-trust mechanisms that a genuine free market requires, and which New Zealand has conspicuously lacked. The only freedom at work here has been a licence to gouge profits from a captive pool of consumers" - see: On the Labour/Greens plan to cut power bills. Campbell has also written another column on the matter: Points scoring over power policies.

Of course the timing of the policy has led to accusations of sabotage and dirty politics, a destructive but effective strategy according to Cathy Odgers - see: MRP A Dead Duck. There is clear evidence that the policy announcement will have a major impact on the MRP float price - see Vernon Small and Kate Chapman's Plan puts frighteners on investors. The Government will be hoping that the predictions of massive dis-investment (see TV3's JBWere predicts capital flight) will undermine swinging voter confidence in Labour's economic management. The obvious self-interest of those critics may, however, be outweighed by voter self-interest as they struggle to pay the power bill each month. Having Mighty River Power boss Doug Heffernan slam the proposed changes as "socialist" (see: MRP chief slams socialist' plan) on the same day it is revealed he has been paid $1.5 million a year to run a state owned company probably won't help - see Neil Reid's Power bosses' $1m-plus salaries revealed.

There seems to be confidence on the left that the furious reaction from the Government and markets is rooted in fear that the policy might actually get traction with voters: "You know the NZ right wing and business community are terrified about policy when they call it 'Communism'. It's the same type of scaremongering tactic used by Tea Party fanatics and mad Republicans when trying to attack Obama's watered down medicare package by calling it 'socialism'" - see: Martyn Bradbury's Labour/Green electricity policy 'Communist' like Obama is 'Socialist'. The right has lost touch with the majority of the electorate says Danyl McLauchlan: "The level of disconnect around this debate has been pretty funny, with various Ministers putting out press releases about the loss of share value in various energy companies, apparently oblivious to the fact that most of the country despise the power companies and see them as loathsome profiteers" - see: 'de facto nationalisation' and why the new power policy is a Big Deal. National will now be on the lookout everywhere for creeping socialism thinks Scott Yorke - see: Joyce catches Labour leader buying coffee.

As for the policy itself there is actually some thoughtful analysis amidst the shouting. Lance Wiggs, an industry insider, says there are ways the current market could be made more effective without the heavy hand of the Power NZ policy - see: Electrickery: 10 alternative suggestions for changing NZ's electricity industry. At Offsetting Behaviour, Seamus Hogan has some pointed questions for Labour, particularly relating to the actual need to reign in power company profits - see: An Open Letter to David Shearer and David Parker. But Bernard Hickey thinks the power company bosses and the Government should have seen this coming - especially when "it proposed handing those super profits to the richest New Zealanders in the form of shares and dividends. That was the moment the Government and the industry crossed that red line and triggered the regulatory backlash promised this week by Labour and the Greens" - see: Power barons fail to fool the public this time around.

The Opposition parties are not unanimous in their support. Winston Peters doesn't support the policy, instead making re-nationalising any shares sold a bottom line policy of any future coalition agreement - see: Buy back Mighty River Power - Peters. Mana's John Minto thinks the Labour-Green proposal is a good start but asks "why use a market mechanism to fix a market failure" - see: Bolder than expected but too timid.

What is all the fuss about, wonders leftwing blogger Steve Cowan, noting that the promised power savings amount to the same as a cup of coffee a week: "The real issue is that, again, nationalisation remains firmly off the agenda as does any talk of operating the power companies as social utilities rather than profit-driven state owned enterprises. Labour and the Green haven't given up on the 'free market', folks" - see: WOOF! WOOF!. Cowan is particularly dismissive of Chris Trotter's overnight conversion into a David Shearer fan.

While the actually policy may not be that radical the political implications look to be more significant. If the current polling trends continue or accelerate then David Shearer may have the confidence to differentiate from National on more economic issues. Just as the response to Don Brash's Orewa speech gave an immediate and sustained lift in his polling, Shearer may have hit a truly populist note that could give him some much needed political direction and freedom. The fear of that may be generating much of the reaction, more than the immediate threat to power company profits.

Finally, if you want to see how the country's cartoonists (and others) are portraying the issue, see my blogpost aggregation, Images of the proposed power industry shakeup.

- NZ Herald

Bryce Edwards

Bryce Edwards is a lecturer in Politics at the University of Otago.

Bryce Edwards is a lecturer in Politics at the University of Otago. He teaches and researches on New Zealand politics, public policy, political parties, elections, and political communication. His PhD, completed in 2003, was on 'Political Parties in New Zealand: A Study of Ideological and Organisational Transformation'. He is currently working on a book entitled 'Who Runs New Zealand? An Anatomy of Power'. He is also on the board of directors for Transparency International New Zealand.

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