National’s runway for relief is shrinking – Adam Pearse

Three key facts:

• The Government announced a range of measures intended to improve the electricity market.
• Associate Energy Minister Shane Jones was absent from Wednesday’s announcement.
• Te Pāti Māori is expected to unveil a “reset” next week.

OPINION

If a book is ever written on the history of bipartisanship in New Zealand politics, Christopher Luxon’s letter to his Labour counterpart seeking common ground on energy policy will probably not feature.

What could have been a creative response to two concerns highlighted by the Mood of the Boardroom (a lack of cross-party collaboration and painfully high power prices), while also trying to paint Labour into a corner, is now seen in the same light as most letters of this nature: political theatre.

Chris Hipkins learning of the letter from media before he’d even set eyes on it allowed him to dismiss pressing questions about Labour’s energy policy and instead condemn the missive as nothing more than a stunt, proving right those concerned the coalition Government is too often distracted by political sideshows.

Criticism can hardly be confined to just one side – after all, National may have been inspired by Labour’s Megan Woods, who wrote to Energy Minister Simon Watts in August about developing a bipartisan plan, a letter that also found its way into the public domain before Watts had responded.

Perhaps the letters would be taken seriously if they reflected the honesty portrayed by Auckland Mayor Wayne Brown in his two-word reply this week to the Auckland Ratepayers’ Alliance about supporting its Ratepayer Protection Pledge (his second word was “off”).

Finance Minister Nicola Willis will be grateful responses to her letter this week have been somewhat more positive, having written to the bosses of the energy companies Meridian, Mercury and Genesis, in which the Crown is the biggest stakeholder.

Finance Minister Nicola Willis and Energy Minister Simon Watts defending the impact of their reforms, during a press conference. Photo / Mark Mitchell

In it, she confronts one of the central findings in the Government’s review by Frontier Economics into the electricity market: that there is a “perception” among the companies that the Crown won’t stump up the cash for larger generation projects, and this had constrained investment.

“I want to assure you that this perception is incorrect,” Willis wrote, asserting the Government would be open to commercially viable proposals that reinforced the country’s resilience regarding low returns from renewable energy sources.

Public comments from the companies themselves after Wednesday’s announcement haven’t entirely endorsed that narrative: Meridian chief executive Mike Roan didn’t agree constraints had been imposed but claimed the Government’s intent would allow companies to think bigger and act bolder.

Willis argues the previous Government’s oil and gas exploration ban, coupled with its 100% renewables target, discouraged investment.

While that theory has at least some merit (as does the Frontier report’s suggestion energy companies could have starved the market of new capacity to stuff their own coffers), it does not explain why in the two years since Labour was in power, no one had thought to pick up the phone and stress-test this “perception”.

Equally likely is the energy companies assuming the Government has limited ability to provide capital, based on its almost constant references to the economic car being forever trapped in a ditch.

Associate Energy Minister Shane Jones has questioned the claim in Frontier's report. Photo / Mark Mitchell

Among the biggest doubters of the claim about the perception was Willis’ Cabinet colleague, Shane Jones, who finally found his voice on Friday to allege either the generator-retailers (gentailers) were telling fibs or Treasury had dropped the ball in its advice to the Government.

As Associate Energy Minister, Jones would ordinarily have been one of the main voices articulating the Government’s actions, which included starting procurement for an LNG import facility and requesting information from market stakeholders about how it can support new projects to shore up supply.

But come Wednesday morning, Jones was nowhere to be seen. He instead put as much distance between himself and Wellington, spending the day in Kaitāia at a meeting of the Māori Women’s Welfare League.

While he has been outspoken in his calls for fundamental market reform – including breaking up the gentailers – Jones gave his support as a member of Cabinet and should have fronted.

Perhaps it was a case of once bitten, twice shy; Jones is often teased by his former colleagues in the Opposition benches for his association with Labour’s oil and gas ban as he now thunders away about the policy’s consequences.

Jones has made no secret of his intent to campaign rigorously next year in favour of more government intervention in the electricity market, in a bid to secure votes in regions being economically suffocated by the impact of expensive power.

Jones’ absence may have emboldened Watts, who would be forgiven for feeling a touch undermined by his deputy, who snatches any opportunity to be the Government’s authoritative voice on energy.

Energy Minister Simon Watts had a potshot at his deputy. Photo / Mark Mitchell

Asked why the Government hadn’t pursued Jones’ gentailer dissection, Watts declared such ideas might make better “political bumper stickers” than good policy.

The comments haven’t impressed his NZ First colleagues, Jones popping up in Dunedin and responding by slightly misquoting Shakespeare’s Twelfth Night: “The whirligig of time has its own revenge”.

Whatever the optimal reform is in the long term, there are doubts the Government’s moves can do much to shift the dial in the short term.

Watts and Willis point to the $200-$300 they say is baked into our power bills to account for the risk posed by “dry years”, when the rain doesn’t fall and the cost of hydro generation spikes.

But even with a mountain of coal to help fuel the Huntly Power Station, there’s no guarantee that risk premium will change significantly.

“How big it is and when the market has enough certainty to unwind [the risk premium] are two things that I couldn’t give you an answer on,” Meridian’s Roan said as he predicted any decreases in power prices would likely happen in the medium to long term.

It risks entrenching the perception the Government’s attempts to increase competition in uncompetitive markets to bring prices down – think banking and supermarkets – skirt the edges rather than running straight up the guts, with the 2026 election edging closer.

Eyes will turn towards next year’s Budget to see if any proposals from the gentailers earn something from Willis’ constrained pot of capital funding.

The Government may get brief respite next week as the focus shifts to a promised “reset” from a plagued Te Pāti Māori.

Accusations on Thursday of a dictatorial leadership structure and failure to honour the party’s constitution from one of the most prominent young Māori rights advocates, Eru Kapa-Kingi (also son of recently demoted Te Pāti Māori MP Mariameno), raises serious questions about the party’s viability potentially 12 months out from an election.

Eru Kapa-Kingi is a spokesman for the Toitū te Tiriti movement. Photo / Alex Cairns

The party has jumped into damage control mode, releasing publicly its response to members, promising to announce “our reset and our vision for the path ahead” and stream it live on Thursday after incoming MP Oriini Kaipara delivers her maiden address to the House.

The timing is unfortunate for the new Tāmaki Makaurau MP, who should be afforded clear air to outline her aspirations in Parliament but will likely be overshadowed as the party reveals “the direction we are charting for the future”.

Kapa-Kingi’s comments prompted Labour to take its criticism of Te Pāti Māori to a new level, Hipkins on Thursday suggesting that as it stands, the party doesn’t appear up to governing.

A Te Pāti Māori reset will naturally spur even more questions about whether Labour will entertain a relationship in government, something Hipkins is yet to answer.

Hipkins is quick to note such a question becomes null and void if Labour can increase its vote share alongside a fairly stable Green Party support base. That seems a big “if” at present, given public polling indicates Te Pāti Māori is essential if Labour is to return to power.

National will be eagerly watching on, hoping Labour’s challenges provide a much-needed distraction from its own headaches.

Adam Pearse is the Deputy Political Editor and part of the NZ Herald’s Press Gallery team based at Parliament in Wellington. He has worked for NZME since 2018, reporting for the Northern Advocate in Whangārei and the Herald in Auckland.