The Key government and those who support the privatisation of the power companies have pulled their response from the Reds-under-the-beds play book, as seen in James Henderson’s Standard post. However, a similar policy has worked successfully in capitalist California. And similar principles are the bases of Pharmac and Fronterra. For the right, their socialist scaremongering aims to mask the fact that the current arrangements deliver exorbitant profits to the power companies and their directors. In order for the profiteers to feed their greed, middle NZ and small businesses need to tighten their belts. At the same time those suffering from fuel poverty have to choose whether to pay for healthy food and a safe environment for them and their children, or to pay for more power (as well evidenced in Anthony Robin’s post on fuel poverty).
And in contrast to the NAct PR demonisation of NZ Power, the Labour (and possibly Green) architects of the policy, draw on third way discourse in an attempt to defuse the right wing scaremongering.
The response to Russel Norman’s OIA request shows just how much the power bosses are profiteering from the current arrangements.
Figures released to the Sunday Star-Times confirm that the bosses of four of our five power providers – Contact, Mighty River Power, Genesis and Transpower – are paid more than $1 million a year.
Figures for Meridian Energy were not available but, as early as the 2008-09 financial year, the company was paying its CEO a $1.03m salary.
Green Party co-leader Russel Norman released the figures on Friday, just 24 hours after revealing a joint Green-Labour proposal to pull the plug on ever-rising power bills.
Russel points out the obvious, we are paying higher power bills to enable the powercos’ to make big profits, and the power bosses to get big salaries:
Norman was also alarmed at soaring payments for board members. The biggest increase over a three-year period was at Contact, which paid out a total $1.14m in the 2011-12 financial year, as opposed to $852,651 in the 2008-09 financial year.
The figures revealed are:
Contact Energy CEO Pay: $1,303,250. Total board payments: $1,141,00. Staff on $100,000-plus salaries: 395.
Mighty River Power CEO Pay: $1,492,601. Total board payments: $657,066. Staff on $100,000-plus salaries: 262.
Genesis CEO Pay: $1,200,000-$1,210,000. Total board payments: $534,242. Staff on $100,000-plus salaries: 233.
Transpower CEO Pay: $1,050,000-$1,059,000. Total board payments: $1,026,000. Staff on $100,000-plus salaries: 42.4
Meridian Energy CEO Pay: Info not available. Total board payments: $436,916. Staff on $100,000-plus salaries: n/a.
Also today, Bernard Hickey explains how this profiteering power bosses have breached the “licence to operate”: a vague notion referring to the way corporates will push their profit-taking as far as they can without losing the goodwill of the public. Basically, Hickey argues that the power bosses have pushed the profiteering beyond the level that the public will accept.
Hickey concludes that the SOE sales breached the “license to operate”, by arranging for “super profits” to go to the “richest new Zealanders”. Hickey’s article ends:
What was the industry thinking? That their customers and voters would not notice? The shock of investors realising they had crossed the line and would pay the price was evident in a 12 per cent fall in Contact’s share price and a 7 per cent fall in Trustpower’s share price. No doubt, the likely price of Mighty River Power shares also took a tumble in the minds of potential investors.
As Labour and the Greens would say privately: “That’ll learn ya.”
Also today, Matt McCarten argues that the Labour-Green power policy has “knee-capped” the government’s privatisation agenda, with the government going into “panic mode’.
The best that unofficial co-prime minister Steven Joyce could come up with was his spluttered comment that the agency was a basket-case idea from Albania. Is that the best he can do?
In any event, the correct international example to use overseas would be capitalist California, which brought in a similar agency to stop its power companies from ripping off its citizens. It has worked fine.
McCarten also points out that Pharmac and Fonterrra operate in a similar way to the proposed NZ Power. Further, McCarten says that the government’s asset sale programme is based on a “structural unfairness”, with powerco profits exceeding inflation and the gap between prices to homes and businesses being the 2nd biggest in the OECD.
On the other side of the PR war, the Mighty River Power chief, Doug Hefferman, draws from the red scare play book, labeling the Labour-Green policy as “socialist” (as if that’s a crime).
The Government says competition is the best way to set power prices and a single buyer would result in higher prices over time.
Heffernan said the surge in renewable electricity investment over the last five years would not have happened under the opposition parties’ plan. “What you’ve just described is a socialist consumer model,” he said in an exclusive interview. “Mighty River Power would not have made the $1billion investment into geothermal energy that we’ve made in the last five years … The risks would have been too high.”
The article ends with Gareth Hughes successfully going to the heart of the issue while David Parker opts for a bit of Blairist, Third Way, “neoliberal’ apologetics.
Asked if the policy was socialist, Green Party energy spokesman Gareth Hughes said: “We’d call it a practical and cost-effective solution.” Parker rejected the “socialist” accusation: “I would say excessive profiteering is neither socialist nor capitalist, it’s just uncompetitive.”
Perhaps Labour needs to heed Bomber Bradbury’s advice on media management of their power policy, in his review off yesterday’s The Nation. And perhaps we all need to take note of Bomber’s argument on ‘why Mana is the Greens best friend’.
[Updated title] to add quote marks. NZ Power is not actually a socialist policy. It does nothing to change the capitalist system. Just makes it less damaging to those on low incomes.
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