O’Sullivan on power nationalisation

April 20th, 2013 at 11:47 am by David Farrar

Fran O’Sullivan writes in the Herald:

The ghost of Hugo Chavez is alive and thriving within the Labour Party as it turns its back on its free-market past to buy itself back into power courtesy of the taxpayers’ chequebook.

And not just , but free electricity!

If David Shearer and Russel Norman muster enough votes to win the next election, they say they will toss us all the equivalent of a free 300KW block of electricity

Just as the Greens think you can print money, they and Labour also think you can just give electricity away for free, and somehow new generation will be built.

We are asked to believe this policy will also produce 5000 new jobs and generate $450 million worth of new economic activity because two pages of bare analysis on Berl’s equilibrium model tells us so.

I don’t think so. No one with any residue of grey matter left will believe Shearer’s protestations that the timing of this joint announcement has nothing to do with the pending Mighty River Power IPO.

This policy has all the signs of being rushed out with one aim in mind: To spook the private investors (including the many smaller shareholders who are being enticed back into a New Zealand sharemarket, which was on the verge of its own demise a few years back) who are lining up to buy shares in the forthcoming float.

Indeed.

But the decision to insert a state-owned monopsony – or monopoly buyer – called New Zealand Power between the supply and demand sides of the electricity industry without first undertaking any stringent analysis and submissions from existing privately listed companies like Contact Energy, TrustPower, Infratil and the privately owned Todd Energy really amounts to nothing more than effective renationalisation of the competitive sector.

And why are they nationalising them? Because they hope it will gain votes?

But what is really instructive from the BusinessDesk report (a good scoop, by the way) is Jones’ admission that not only do asset owners need dividends but “politicians need dividends as well”.

The report went on to note that to win the 2014 election, Labour needed to move about 5 to 7 per cent of the voting public to favour it.

Jones suggested energy analysts’ capacity to “make 5 to 7 per cent of the public hate us [because of this policy] is zero. Our capacity to impress that percentage [with this policy] is infinite”.

In other words, the sniff of power is so enticing to Jones that he is prepared to give away the return on state-owned assets to consumers to bribe his party’s way back to power.

Their next policy may be to announce that if you have more than one house, the government will confiscate it and give it to an aspiring home owner.

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73 Responses to “O’Sullivan on power nationalisation”

  1. Manolo (12,637 comments) says:

    Given the high number of morons, thieves, bludgers and parasites among the NZ populace, where the socialists poll reasonably well, and the increasing number of imbeciles and callow youth conned by the communists Luddites, these two parties could end up clinching the election and attaining political power.

    Neville Key and his spineless Labour lite acolytes and yes-men will have no one to blame but themselves.

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  2. double d (219 comments) says:

    Manolo – get some new lines ***YAWN***

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  3. odysseus (22 comments) says:

    Oh dear DPF, you really are getting hysterical now. Do you beieve then that the CEO of Vector is a card carrying member of the Communist Party?

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  4. Tom Barker (92 comments) says:

    I’m not sure that there’s a whole lot of support out in the electorate these days for wild-eyed 1950s-style Red-scare tactics.

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  5. Lance (2,311 comments) says:

    Who in their right mind would build very expensive new generating plant in an environment like that?

    Mind you, Labour + Greens will have an easy fix for brown outs. The state will nationalise all power facilities and the tax payer can start building power sources.
    Ah the good old days…. 60 cents tax in the dollar to pay for it.

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  6. flipper (3,273 comments) says:

    O’Sullivan and DPF score 100/100 on the political/economic aspects.

    Max Bradford, this morning on TV3, scored 125/100, and demolished Labour and Greens (red melons) on technical and economic grounds.

    Some contributors might rubbish Bradford. But his economic and technical qualifications earned him a top Treasury policy post before he entered politics. And the reality/benefit of his policy thrust was demonstrated with great clarity in the GRAPH posted by DPF yesterday.

    And, to give credit where credit is due, Smalley demolished Parker and Hughes. It would be too much to hope that TV One’s left wing producers will match that event, will it not? No they will probably feature the same idiotic panellists.

    If anything became clear from this morning’s exercise, it is the need for all MPs to reaffirm their oath of office every week.
    And on like matters, to those that yearn for a return to the days of Sutch/Lewin /Fraser/ Nash/ Nordmeyer et al, it is worth remembering that the UK’s economic demise began with the post war Atlee Labour Government’s policy of nationalising steel, coal and other big industries (aircraft, motor vehicles etc.), which were promptly screwed by the Soviet aligned trade unions.
    Let us also remember Harold Wilson in his two terms as PM closed more mines than Thatcher et al.

    The grab for power by the red wing, using our money is so sick, and bare-faced that it almost defies belief. Almost. :)

    I repeat my comment of yesterday…extract Peters from the equation by giving all Super Gold Card holders a 10% discount on their power bills!

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  7. MikeG (359 comments) says:

    Farrar’s out of real points to criticise the policy so once again resorts to the absurd in his last paragraph.

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  8. ross69 (3,645 comments) says:

    Just as the Greens think you can print money

    Actually not just the Greens but your mate David Cameron thinks you can too, not to mention the US, China, Japan and most of Europe.

    Kiwiblog – Making Shit Up since 2003.

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  9. bhudson (4,720 comments) says:

    I think we can next expect Dr Russel Norman to promote using the govt’s generation capacity powers under their proposed policy to require generators to over supply, on the basis that over supply places downward pressure on prices, thereby saving the taxpayers even more!

    That would seem to be about the depth of his understanding of economics and business management.

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  10. s.russell (1,486 comments) says:

    Ross, printing money.is just like getting a hose and spraying.water.throughout your house, This.is only a.smart thing to do if your house is on firefire. Ours.is.not. So soaking.everything with a hose would be.really stupid.

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  11. ross69 (3,645 comments) says:

    s.russell

    What’s.with.all.the.full.stops. And.your.analogy.is.just.as.bad.

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  12. ross69 (3,645 comments) says:

    Smalley demolished Parker and Hughes

    You really should remove both eye patches before turning on the TV – it’ll make the experience so much more enjoyable.

    Smalley needs to enrol in Econ 101 before she discusses economic matters. The fact she couldn’t understand how tax revenue is generated by consumption was staggering.

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  13. All_on_Red (950 comments) says:

    ross69- ignorant moron since birth.

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  14. All_on_Red (950 comments) says:

    What I’m curious about is how much is the power going to cost you if you exceed your “ration” of 300kw?

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  15. Nick K (918 comments) says:

    I still don’t understand why Red Russell doesn’t just print money and give $300 handouts each year if that’s how much he thinks he can “save” from families’ power bills.

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  16. Mark (1,302 comments) says:

    Shearer has panicked yet again just when it was becoming clear Keys lying over GCSB has hurt National in the polls. This power policy is economic illiteracy at its worst and gives some idea of the dire consequences of putting labour and the Greens in control of the treasury benches.

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  17. All_on_Red (950 comments) says:

    What I’m also curious about is that if Wussell Moron wants to lower power prices why doesn’t he just increase supply?

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  18. Johnboy (13,424 comments) says:

    The price required by David and Russel, from Shaney, to redeem his current status from wanker to front bencher must be almost more than a proud man can swallow! :)

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  19. Pauleastbay (5,030 comments) says:

    Who gives a flying hand job about the $6 per week saving,big deal. I want someone to ask those two morons where the 5000 jobs are going to come from.

    And DPF’s last paragraph is not so absurd as some would make out. Tax the second, third car in the family anyone, tax the en suite toilet ( I know councils already do by stealth) ,extra tax if you refuse to belong to a union ,nothing is too stupid for these fuck wits.

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  20. Nick K (918 comments) says:

    Let’s face it, they’re going to have to tax farting too because they will be spending so much money they’ll need every last cent to avoid us ending up like Greece.

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  21. Johnboy (13,424 comments) says:

    10% off the value of the listed Powerco’s already. David and Russel can only hope for a quick death from the investors firing squad come 2014. These are the folk who think we invest far to much in property? :)

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  22. duggledog (1,116 comments) says:

    If the Labour / Greens clusterf**k govern after November 2014, I’ll just wait it out.

    I’ve got most of my own food sorted, wood burners etc., candles you name it. I’ll work half the year in a bull shit Government job (or a related one) to avoid the high taxes the left always find a way to impose and then, when it’s all over in a year or so I’ll get myself a bit of cheap property as the inevitable happens and over exposed people go to the wall.

    It happened last time but I was too young to take the wave. Good luck everyone!

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  23. Nick K (918 comments) says:

    Yes. The plan would be to sell all properties and cash up and send all your money offshore. Leave your well-paying job and become one of “them”. Take the handouts and distribution that will inevitable result. When assets collapse in value, bring your money back and get very rich in the following 10 years or so after asset values have recovered.

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  24. Simon Arnold (94 comments) says:

    Now what I don’t understand about the BERL report is that it shows GDP increase of 0.2% based on household consumption going up because of the price reduction but no loss of GDP from generators having $500-700m drop in income all in the form of profit reduction. That seems like a 0.3-0.4% reduction in GDP (without multiplier effects) to get a 0.2% increase.

    Must have that wrong – my economics are rusty – surely BERL would have included the costs as well as the benefits.

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  25. hamnidaV2 (247 comments) says:

    O’Sullivan clearly forgets the main point of this policy – New Zealanders will pay less for power. We are currently being overcharged.

    In any case, New Zealanders will get to make their decision on polling day – Pay more for power so a few fat cats can get richer, or have cheaper power for all.

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  26. All_on_Red (950 comments) says:

    O’Sullivan clearly forgets the main point of this policy – New Zealanders will pay less for power. We are currently being overcharged.

    Got any proof for that?

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  27. Johnboy (13,424 comments) says:

    Quite right hamnida but only for those who can afford off grid solar or are young enough to pedal long enough to cook their dinner once investment in new generation stops! :)

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  28. Nick K (918 comments) says:

    Oh, it’s that easy is it hamnidaV2. Just nationalise something and make it cheaper for the plebs. Are your lot really that thick? Actually, I think they are. Because no one with half a brain would believe New Zealanders would pay less for power under this plan.

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  29. muggins (2,903 comments) says:

    The way I see it is that the would be investors in Mighty River Power are more likely to be National party supporters . So of course they will rubbish the Labour /Greens proposals. But those proposals will appeal to those who can’t really afford to buy shares. And don’t forget there are many people who don’t want the Power companies to be half- privatised anyway.
    Two questions.
    If a Labour/ green coalition wins next years election will the Mighty River Power share price fall?
    In my opinion almost certainly,although it will probably have fallen before then if the polls show a likely Labour/Greens victory.
    And secondly, will the dividend paid on those shares come down?
    Once again, almost certainly.
    If I had any spare cash and was thinking of buying any MRP shares I reckon all this uncertainty would have caused me to change my mind. Better to leave any spare cash in the bank,in my opinion,even though the interest rate is only around 4%,rather than take a punt on MRP shares for a first year dividend of 6-7% and then possibly a price drop and reduction in dividend.

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  30. sparky (235 comments) says:

    Nick K, my thoughts exactly. Send money offshore, so these Looney’s don’t get there hands on it, that is what we are looking at doing, and once the Lunatics have hit the wall and voted out, bring it back.

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  31. Pauleastbay (5,030 comments) says:

    New Zealanders will pay less for power. We are currently being overcharged.

    I can quite confidently say bullshit to that right now, unequivocally – by the time they set up their commissions and jobs for cronies. Buy vehicles for all concerned, Koru memberships and junkets to the economic miracle that is North Korea we will be bleeding out .

    Nothing has ever got cheaper that the government has their hand in. ( Remember when your private ACC had to stop and you had to go back to the government under labour – very easy to forget or are you not old enough to remember?.)

    In fact I would bet you that power prices would increase because when ever the coffers get a bit empty they would ratchet up the price for a top up. If you are stupid enough to believe anything these clowns say I am really fucking glad my vote cancels yours out.

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  32. hamnidaV2 (247 comments) says:

    All_on_Red – I have lived and paid power bills in several other OECD countries including the UK, South Korea and the US. I can say with out a doubt, we pay far too much for power in New Zealand.

    In South Korea, my power bill was about NZ$20 a month.

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  33. hamnidaV2 (247 comments) says:

    You Neolibs still buying MRP shares?

    If you do, and the share price falls, imagine all the “I told you so” remarks you’ll receive.

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  34. Pauleastbay (5,030 comments) says:

    In South Korea, my power bill was about NZ$20 a month

    well don’t let any of us here stop you fucking off and enjoying such treats again

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  35. Johnboy (13,424 comments) says:

    If he went north of the DMZ it might drop to NZ$2 a month.

    I think he should. :)

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  36. Nick K (918 comments) says:

    In South Korea, my power bill was about NZ$20 a month.

    My lunch in a restaurant in Lanzhou China in 2008 was about $3. We are paying far too much in NZ for Chinese food. Time for the government to nationalise it and sell it to us for less.

    You. Are. A. Moron. HamnidaV2.

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  37. Nick K (918 comments) says:

    You Neolibs still buying MRP shares?

    I’m buying even more now because the list price will be depressed because of this announcement. Ha! Red Russell has just given me “cheaper power”.

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  38. flipper (3,273 comments) says:

    hamnidaV2 (170) Says:
    April 20th, 2013 at 2:25 pm
    All_on_Red – I have lived and paid power bills in several other OECD countries including the UK, South Korea and the US. I can say with out a doubt, we pay far too much for power in New Zealand.

    In South Korea, my power bill was about NZ$20 a month.”

    What a fuck wit.

    The $20 per month is plausible, if electricity is NEVER used – or available for use. The following shows why.

    http://www.theatlanticcities.com/technology/2012/12/new-highly-detailed-image-north-koreas-lack-electrical-infrastructure/4201/

    If you love it so much Hammy, why not emigrate…and take the red reverend(sic) Borrie with you. Hope you enjoy rat and dog meat. :)

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  39. ross69 (3,645 comments) says:

    Got any proof for that?

    How about this.

    “By comparing the actual wholesale prices with hypothetical competitive benchmark prices, Professor Wolak estimated that the wholesale prices charged over the period 2001 to mid-2007 resulted in an extra $4.3 billion in earnings to all generators over those that they would have earned under competitive conditions. This suggests that wholesale prices were, on average, 18 per cent higher than they would have been if the wholesale market had been more competitive, and the gentailers had not been able to exert market power.”

    http://www.comcom.govt.nz/media-releases/detail/2009/commercecommissionfindsthatelectri

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  40. ross69 (3,645 comments) says:

    10% off the value of the listed Powerco’s already.

    Hang on a minute, you reckon the market ought to decide prices. But you’re complaining that the share price of Powerco’s – which is set by the market – is too low? Rachel Smalley is not the only slow learner.

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  41. ross69 (3,645 comments) says:

    I want someone to ask those two morons where the 5000 jobs are going to come from.

    Only 5000? If John Key can create 170,000 jobs like he promised, 5000 will be a walk in the park.

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  42. Johnboy (13,424 comments) says:

    I mainly feel sorry for all the poor bastards that have joined Kiwisaver just to see 10% wiped off their savings in two days by the deluded ravings of the two thickos Shearer and Norman.

    Welcome to investment world dumbo Godzoners! :)

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  43. Johnboy (13,424 comments) says:

    Still it might have the upside of making thicko’s realise what can happen when you allow drongo’s like Labour or the Greenies to gain any sort of power! :)

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  44. Reid (15,593 comments) says:

    This policy has all the signs of being rushed out with one aim in mind: To spook the private investors (including the many smaller shareholders who are being enticed back into a New Zealand sharemarket, which was on the verge of its own demise a few years back) who are lining up to buy shares in the forthcoming float.

    This pre-emptory strike makes good politics for Shearer and Norman…

    …I shouldn’t be surprised at the naked opportunism that is now on offer as some of Labour’s own market disciples start trading in their principles for the sniff of electoral power. This was the party that, after all, bribed students with taxpayers’ money to get back in the 2005 election…

    …”Not only asset owners need dividends,” he says. “Politicians need dividends as well.”

    To win the 2014 election, Labour needed to move about 5 to 7 percent of the voting public to favour it.

    He suggested energy analysts’ capacity to “make 5 to 7 percent of the public hate us [because of this policy] is zero. Our capacity to impress that percentage [with this policy] is infinite.”

    Bingo. The fundamental miscalculation bought about by the lethal combo of Liarbore’s arrogance and the Gweens roaring mentalism.

    Energy analysts aren’t the only ones interested in this story. Der. This has cut to the quick of every single business operator in the entire country. The message is massive, the effects incalculable because nothing is known about: is this a general principle to be applied elsewhere as well.

    The Gweens have obviously convinced the arrogant Liarborites that the model was defensible based on overseas implementations. But neither of the big ders considered the wider ramification of the extrapolation of the principle, which is a no brainer, to anyone in the real world.

    But apparently, because the Gweens are roaringly mental and Liarbore screamingly arrogant in their pursuit of “the cause,” which makes everything done in its sacred name entirely OK, up to and including damaging the country, who cares about that, when it comes to getting elected, is the obvious and apparent attitude from Liarbore and has been since Lange left Bolger a mess which resulted in the open book approach and since Hulun tied the twin albatrosses of interest-free student loans and WFF for the rich to us and now, apparently, Shearer’s going to do it too. I bet Goff would not have played it that way. He’s looking very good by comparison to the dummy in current charge, that’s for sure.

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  45. Reid (15,593 comments) says:

    Still it might have the upside of making thicko’s realise what can happen when you allow drongo’s like Labour or the Greenies to gain any sort of power!

    I hope so Johnboy. I doubt it will, but I hope it does.

    Most people don’t give a damn about “the markets.” What are they, they say.

    Dan Carter? Oh yeah. But markets? Nah.

    They have the same vote we do Johnboy. It only takes two of those thousands and thousands of utter mentals to cancel out your and my democratic right to have our side in power all the time. And if we were to try and do something about it, we’d be the ones who got arrested.

    It’s not fair.

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  46. Morgy (167 comments) says:

    This is cynical and disgusting politics of the highest order. Sad thing is those they claim to help will suffer. I actually feel for people like Hamnida and Ross69 because THEY HAVE BEEN LIED TO but they believe the shit pouring from the desperate Norman et al.

    Fran’s article is right on the money and the government needs to keep the heat on these fuckers to ram home the lies they are spouting. As an aside, on The Nation this morning, Parker talked of 5000 to 10000 jobs! He can thank Ganesh for that pearler. Fucken idiots! I am sometimes critical of Rachel Smalley’s style but she monstered him today.

    Bottom line……disgusting

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  47. Ed Snack (1,539 comments) says:

    What astonishes me is the way that Shearer and Co (and those such as Ross69 and Hamnida above) all confidently assert that we/they pay too much for power, and yet there seems to be no recognition of why. Fat cats, the rich, like hell, the government owns the majority of the generating assets for christ’s sake, and the prices were pushed up especially fast under the last Labour government !

    So inserting yet another government bureaucracy is expected to reduce prices, when it is the government who is charging us too much already ? Massive WTF required by all concerned. The government doesn’t need to bring in a new mechanism, it already owns the generators and can cut prices unilaterally, Contact would be forced to follow suit immediately. So why the new layer of waste, because a bureaucracy of 5000 to do what could be accomplished by a directive to the boards to cut prices and eliminate profits is a complete and utter waste.

    So, Hamnida and Ross69, who is getting all these excess profits right now, or at least the majority of them ? And who pushed the prices up in 2002-2008 by so much, and why ?

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  48. Morgy (167 comments) says:

    Further to your point too Ed, what is a ‘”fair price”? Will it be a dollar amount or based on a cost plus model? Ross69/Ham…..do you know?

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  49. ross69 (3,645 comments) says:

    As an aside, on The Nation this morning, Parker talked of 5000 to 10000 jobs!

    A drop in the bucket compared with the 170,000 jobs which John Key promised us. How’s that working out, Morgy?

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  50. ross69 (3,645 comments) says:

    What astonishes me is the way that Shearer and Co (and those such as Ross69 and Hamnida above) all confidently assert that we/they pay too much for power, and yet there seems to be no recognition of why.

    Didn’t see the link to the Commerce Commission media release which I supplied? It explains why prices (and profits) are excessive. Hint: prices are often excessive when there’s a lack of competition in any given market.

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  51. nzd.gbp (130 comments) says:

    the market is a dynamic discovery process and can’t be modelled properly by equilibrium theories, as anyone that participates in free exchange of ideas and wealth knows. It’s evolution vs design all over again and the left are betraying their roots by going all religious on this.

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  52. OneTrack (1,977 comments) says:

    “hamnidaV2 (170) Says:
    April 20th, 2013 at 2:26 pm
    You Neolibs still buying MRP shares?

    If you do, and the share price falls, imagine all the “I told you so” remarks you’ll receive.”

    Thanks to Labour and the Greens, the share price will now be lower than it should be. Local mum and dad investors will be scared off by the chicanery of the left and will stick to investing in property, keeping the prices high. So the shares will be quickly snapped up by offshore investors at a bargain basement price. Is that what Shearer and Norman planned? If so, high five?

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  53. Nick K (918 comments) says:

    ross60 – perhaps you missed Ed Snack’s reasons for excessive prices above. If you did, I’ll make it very simple.

    During Helen Clark’s years, the capricious and money-hungry left, demanded billions in dividends from the state-owned generators to pay for their welfarism, interest free student loans and the pledge card in the 2005 election.

    Because of this, cashflow and working capital requirements of the state-owned companies were limited. They needed cash. So they increased prices – 72% over the nine years of Helengrad. You can see a good graph of it here: http://dimpost.wordpress.com/2013/04/19/hideous-graph-of-the-day-yes-its-about-electricity-edition/

    Check carefully the red line that goes north at great rates from 2000-2009.

    Then the Left claim the market has “failed”, yet it never had a chance in Klarkistan under Helengrad.

    After grabbing billions in dividends and screwing the industry entirely, they nationalise it immediately screw over millions of New Zealanders to the tune of hundreds of millions of dollars.

    That’s how fu*ked this is. It’s very simple, and irrefutable.

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  54. UpandComer (496 comments) says:

    Ross69 – the economy produces 30 thousand jobs as a matter of course. Bill English promised 170 thousand jobs over 4 years to 2015 from 2011, and is on target to reach that. Even in the midst of recession.

    You are wildly off balance.

    Parker is saying 5 – 10 thousand jobs will be in NZ Power, as a direct result of this one. Policy. That is utter crap. I know people who work in the power industry. You must know it’s utter crap as well. That you don’t, is, well… not good for you.

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  55. UpandComer (496 comments) says:

    Also it’s not a decision for ‘cheaper power’ for all vs a few investors.

    As will be made clear this will cover a large number of equally fundamental issues, and it won’t resonate like you think it will. The devil is in the details, and the numbers on this are going to make Phil Goff’s silliness look positively intelligent.

    This isn’t South Korea, and the model is nothing like South Korea. I can’t wait for us to open up some Nuclear reactors to make us a little bit more like South Korea. It’s good to see you’re a bit chirpier, but the inevitable economic and practical results that come from stupid policy are going to made clear.

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  56. All_on_Red (950 comments) says:

    Hamnida V2
    “In South Korea, my power bill was about NZ$20 a month”

    Well Nuclear and Coal generate most of the power in South Korea. Nice to see you are happy about that. Will that be Green policy too?

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  57. Yoza (1,352 comments) says:

    What a wonderful noise, more little piggies squealing than you would find lined up on the kill floor of an abattoir.

    Top points to Shearer and Norman for pointing out there actually are alternatives to the economic prescriptions demanded by our foreign corporate overlords and their domestic lapdogs.

    It is instructive to witness those who question the legitimacy of neoliberalism being attacked in a manner that wouldn’t be out of place in the former Soviet Union where those whom questionied the legitimacy of the system were deemed psychologically unbalanced.

    I’m enjoying watching the the spawn of Thatcher, Reagan and Douglas join in a headlong rush to seize the moral low-ground as their precious dogmatic delusions founder on the reality of a public being better informed than is officially recognised.

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  58. Pete George (21,826 comments) says:

    Parker isn’t claiming the 5-10k jobs will ne in NZ Power, he specifically said they wouldn’t be.

    He explained that by taking money off some people (he claimed overseas investors) and giving it to others (New Zealanders) that will boost spending, boost business and that will create the jobs.

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  59. Johnboy (13,424 comments) says:

    And you believe that PG…..? :)

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  60. Pete George (21,826 comments) says:

    Here is the BERL summary:

    Economic Impact of Electricity Price Changes
    Office of Leader of Opposition, NZ Labour Party
    16 April 2013

    1 Overview
    The BERL computable general equilibrium (CGE) model was used to estimate the economic
    impact of a one-off reduction in the user cost of electricity.

    2 Headline results
    Compared to the business as usual (BAU) outcome these simulations result in
    * higher real household consumption by between 0.3% and 0.5%
    * higher real export volumes by between 0.1% and 0.2%
    * higher real GDP by 0.2%
    * lower consumer prices by between 0.2% and 0.3%
    * higher employment by between 5,000 and 7,500 full-time equivalent (FTE) positions
    * an improvement in the government’s crown balance by between $200m and $270m
    (excluding the direct loss of revenue from lower generator dividends and lower tax receipts from their reduced profits).

    http://www.labour.org.nz/sites/labour.org.nz/files/20130418_BERL_NZPower_Report.pdf

    So they give a different range for the number of jobs.

    It’s based on a computer model. No mention if it took into account a collapse in the value of and investment in energy companies.

    JB – no, I’m very dubious, and David Parker looked far from convincing on The Nation.

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  61. Johnboy (13,424 comments) says:

    David Parker looks far from convincing as a human being to be honest PG! :)

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  62. Cunningham (746 comments) says:

    David Parker looked like a complete ass and Smalley didn’t even grill him much. Wait until someone with some balls (like Susan Woods) gets hold of someone from Labour about this policy. She made Shearer look like the ametuer he is and this policy has more holes then swiss cheese. The Greens and Labour will be made to look stupid when they are given the grilling they deserve.

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  63. Nick K (918 comments) says:

    So they give a different range for the number of jobs.

    It’s based on a computer model.

    Fuc*en great. Another leftie computer model. Did it also start with a Hockey Stick graph?

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  64. Pete George (21,826 comments) says:

    It sounds like Labour’s hit job was a rush job, and BERL wouldn’t have had time to do a detailed analysis of possible outcomes of sabotaging the share float and devaluing the power companies. Not that Labour would have wanted them to look at what might actually happen.

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  65. Francis_X (143 comments) says:

    Tell you what, Pete.

    I’ll have the cheaper power.

    You can pay top dollar.

    I have no problem with that, do you?

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  66. Francis_X (143 comments) says:

    Lance (1,845) Says:
    April 20th, 2013 at 12:42 pm

    Who in their right mind would build very expensive new generating plant in an environment like that?

    Well, actually, we did. In the 1950s, 60s and 70s.

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  67. Simon Arnold (94 comments) says:

    Further to Pete George’s comment above and my earlier comment I still can’t see how the Berl modeling works. If we think about the first round effects (using $500m price reduction) by assumption this flows 66% to households ($333m) and $167m to business. On the power company side if government expenditure isn’t to decrease the government forgoes $260m of revenue that needs to be funded from increased borrowings (less the up to $50m revenue from taxes on the businesses increased profit), and private investors drop $240m in income.

    It is likely that the private investors will in the short-term seek to dissave to cover their immediate income hit. So in the first round we will have perhaps $400m additional requirement for debt at a time when the risk premium for NZ will be heading up. Now either this will suck back in some of the $400m still sitting in the hands of households and business (and if so not create any useful impact on the economy); crowd out investment elsewhere in the economy (substituting current consumption for investment); or come from overseas at a time when overseas investors will be seeking to reduce their exposure to NZ.

    But Berl show no impact on investment spending in their GDP calculations. I doubt it.

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  68. Pete George (21,826 comments) says:

    I can’t see anything in the BERL report that allows for increased electricity use that is likely to occur if the price is reduced.

    It’s well known that many people who install heat pumps don’t reduce their monthly electricity costs as much as might be expected, offsetting much of the reduction on heating costs with increased heating.

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  69. Pete George (21,826 comments) says:

    Francis_X – I’d be happy to have cheaper power, but not at any price, and the unintended consequences of stuffing the electricity market and stalling the encouraging improvement in the sharemarket may be a much greater price than Labour are prepared to admit – in fact they seem to be deliberately blind to any adverse affects.

    They really don’t seem to know and/or care about what they might have already triggered (and that may be just the begginning), they are too intent on winning a short term political victory.

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  70. Ed Snack (1,539 comments) says:

    Yoza, “Top points to Shearer and Norman for pointing out there actually are alternatives to the economic prescriptions demanded by our foreign corporate overlords and their domestic lapdogs.”

    I see, so the government is a “foreign corporate overlord”. You do realize I take it that the government (and one controlled by Labour 2002-2008) owns the majority of the generation assets, and that the “excessive profits” supposedly earned over the past decade or so have largely gone to the general revenue account of the government ?

    Maybe this is a belated recognition by Labour and the Greens that raking in all that money and spending it in handouts of various sorts is counter-productive, and that really they are better off leaving money in the hands of New Zealanders will in fact generate more profit. I wonder if they will extend that to the rest of the taxation system, as power prices have been used as a means of gathering extra tax since the Clark years. Has the light finally dawned on these lefties, that government tax collecting and spending is router-productive ? Could we be seeing light at the end of the tunnel.

    And I’m happy to see those supporting this proposal, Yoza, Ross69, Hamnida, supporting that concept, that money left in peoples hands and not taxed off them and spent by government, will lead to greater growth and a wealthier population. Congratulations people, on that realization at the heart of economics; the acknowledgement that governments subtract value, not add to it.

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  71. Ed Snack (1,539 comments) says:

    Should check the post before edit expires. For “router-productive” please read “counter-productive”. Also the third paragraph should read in part “…and that really they are better off leaving money in the hands of New Zealanders AS THIS will in fact generate more profit.”

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  72. Pete George (21,826 comments) says:

    David Parker will be on Q + A on TV1 in the morning (9am), that will follow him being repeated on The Nation on 3 at 8am.

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  73. lazza (296 comments) says:

    Any! analysis by BERL, based on personal experience, shoud be treated with the greatest of circumspection. They have no idea of what constitutes “an independent professional” opinion. As hired guns and to get the self-serving biased report you may be after then … “BERL can do it … Sure can!

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