Why Phil O’Reilly wants you to keep paying too much for power

Written By: - Date published: 7:12 am, May 3rd, 2013 - 79 comments
Categories: capitalism, energy, privatisation - Tags:

Yesterday, Phil O’Reilly’s Business New Zealand basically declared war on Labour and the Greens. Their ‘open letter‘ demanded opposition parties to withdraw the NZ Power policy or risk a capital strike. Unprecedented in modern NZ history. It was a boots and all attempt by the capitalist elite to try to monster the Left. It proves that they think NZ Power is both practical and popular. The Greens and Labour told them to fuck off.

So, who does Phil O’Reilly represent?

He claims to represent all Kiwi business, which is manifestly false. Only a tiny minority of businesses are members of Business New Zealand. And who’s among that tiny minority?

  • Contact Energy
  • Genesis Energy
  • Meridian Energy
  • Mighty River Power
  • Transpower

In other words, Phil’s bills are paid, in part, by the companies whose excessive profits NZ Power will give back to the people. He’s doing their job by being their dirt man.

More broadly, Business New Zealand represents New Zealand’s rentier class – the people who make great big piles money not by doing anything clever and innovative but simply by virtual of owning strategic assets that have become even more profitable thanks to neoliberal deregulation and privatisation. Rentiers effectively ‘tax’ the productive economy by owning key inputs that everyone has to use (eg. power) and charging as much as they can get away with.

The rentiers see NZ Power as a huge threat. If the electricity companies lose their rents by virtual of NZ Power fixing the broken market, whose rents could be next? That’s what’s got the others worried. That’s the underlying context behind the elite’s all out attack on Labour and the Greens since NZ Power has been launched.

Despite all their bullshit and their bought ‘academic’ analysis, the rentier elite know that NZ Power will work. That’s why they’re so terrified and why they’re kicking and screaming so hard. If NZ Power was an impractical joke, then the Right would gleefully mock it, not plead and demand for that Labour and the Greens drop it.

79 comments on “Why Phil O’Reilly wants you to keep paying too much for power”

  1. Gosman 1

    It wasn’t just Business NZ who signed the open letter to the Labour and Greens though. Which business organisations are legitimate in your view?

    • aerobubble 1.1

      Businesses bulk buy, why can’t consumers? The markets rigged to pick winners, larger businesses. Small business would love to negotiate a better rate. So why should small business and private households subsidize privately these bigger players? Why are public subsidizes wrong but not privately legislated ones?

  2. Gosman 2

    Btw I gleefully mock the proposed plan. However I don’t have as much invested in the debate. It us unlikely my business will ‘ve adversely impacted directly.

    • lprent 2.1

      That is rather the point of the post. NZ Power doesn’t affect any productive enterprises. The businesses it affects are those that use their asset position to extort rents.

      As someone who only works in export based enterprises, I have no sympathy for greedy parasites. In the absence of any effective monopolistic price controls and with the evident noncompetitive collaboration that many of the utilities operate with, NZ Power looks like a adequate solution.

      • Ennui 2.1.1

        Well said, I think Gos has the delusion that business is business, a one size fits all “we are all capitalists” approach.

      • Gosman 2.1.2

        It has the potential to affect all businesses if the bureaucracy they put in place screws up and we get power shortages. Also electricity prices for businesses have been treading very favourably over the past few years. They don’t see a need to change what seems to be working. In essence the proposed plan is a sop to retail consumers. A bribe essentially. It certainly doesn’t mean our businesses are more efficient.

        • Tracey 2.1.2.1

          Imagine that Gosman a system that trends nicely for businesses but increases for consumers, almost like a closetted subsidy.

        • geoff 2.1.2.2

          retail consumers
          ie ordinary people. Yeah why should we care about them as long as business gets it lolly scramble?

        • Frank Macskasy 2.1.2.3

          Gosman: How will, it affect “all businesses”? Why do you think we’ll get “power shortages”? What do you base that assertion on? Do you have any evidence, or are you just making it up?

          • Draco T Bastard 2.1.2.3.1

            He’s a RWNJ which means, by definition, that he’s making shit up.

          • Gosman 2.1.2.3.2

            Because Frank when you remove the market mechanism to determine power supply you inevitably get dislocation between supply and demand. Your family homeland gives plenty of examples of that under communism.

            • McFlock 2.1.2.3.2.1

              And the bit that you wilfully ignore is that the market mechanism frequently produces a dislocation between individual need and the seller’s price.

              But gossie the gilmour groupie doesn’t give a shit about that.

              • Gosman

                Yes. If you want to make something affordable to all you can attempt to mess with the market mechanism. There are unintended consequences as a result. To deny these is dishonest.

                • felix

                  Of course just leaving it all to the market NEVER produces unintended consequences. 🙄

                  • McFlock

                    I quite like the implied honesty that he doesn’t care if some people can’t afford the necessities of life such as electricity or food. Or would at least prefer that situation to nebulous “unintended consequences”.

                    The “left/right divide” right there.

      • Daveo 2.1.3

        Exactly. That’s why the Manufacturers and Exporters Association has backed NZ Power.

      • Ad 2.1.4

        You are one of a very good few who work in export-focussed industries. Most however who are employed in this country are not. The great majority of those who have any capital to spare are part of the “rentier class” because they will have at least one flat that is rented out. The question Labour has put is whether it’s better to keep your funds in property – and support real estate capitalism in New Zealand – or divert some to another “rentier” asset. Both in their own way are very safe, very patriotic, very reliable income streams.

        Local New Zealand capital is deeply deeply parasitical rather than export focussed. But at the moment Labour is signalling to everyone what not to invest in. Not real estate, not shares, not anything with capital growth. This sets people’s teeth on edge because it pushes people unwillingly into higher risk investments, and too many have been burned in living memory to want to do that.

        Perhaps Labour always knew who this long list of enemies were. It’s quite a powerful bunch. But Labour need to accept that at some point they won’t be able to run the country if they keep pissing capitalists off even before they get into power.

          • Ad 2.1.4.1.1

            Have I forgotten? More like have they forgotten.

            Happy to change my mind if the report due out “sometime” shows what to invest in, and how. But if the answer is more regulation, don’t expect anyone to sell the family flat to reinvest locally any time soon.

            And as for your link to the Dunedin rail workshop, Labour have had plenty of promises of providing local weighting to local manufacturers, and after unpteen terms it was all too hard.

            So yes, I focus on Labour. Because they will likely be leading the country. It’s just not enough for Grant Robertson to run around the brokerage houses the week after the KiwiPower saying “Don’t worry we won’t touch anything else.” That’s not an investment strategy. That’s incoherent ass-covering.

          • Rob 2.1.4.1.2

            Yeah Karol, being a manufacturer I have totally forgotten the Green – NZ First- Mana focus on manufacturing. Maybe because all it was a trumped up talk fest designed for TV news that offered no value at all to genuine maunfacturing workers and business.

            • Colonial Viper 2.1.4.1.2.1

              There was no value offered to genuine manufacturing workers and business from the “talk fest” because the Government you support can’t be fucked with your useless sector.

        • Rogue Trooper 2.1.4.2

          as an aside, following weekend social a burning sensation came by the upper tract during the Sunday morning prospects.

        • lprent 2.1.4.3

          Local New Zealand capital is deeply deeply parasitical rather than export focussed. But at the moment Labour is signalling to everyone what not to invest in.

          Oh I agree and that is the whole point. Governments are there to govern not only for the current point in time but also for the future.

          Now think about what is required to support the rapidly aging population of the future. Currently everyone is popping their capital into houses or power generation or land use or whatever rentier system operates. They all get capital growth on the basis of rising local and/or world population or rising living standards.

          Problem is that NZ is well past having the 1950/60’s style of rising living standards.

          Our natively generated population growth is static at best.

          Currently most of the demand is generated from immigration. What happens when the world population stops growing and other major countries approach NZ living standards? Both are likely to happen in the next 50 years. Meanwhile we have an aged population whose only assets are in local properties that no-one wants.

          You are one of a very good few who work in export-focussed industries. Most however who are employed in this country are not.

          And that is almost entirely the consequence of government decisions in the last 30 years. They managed to signal that long ago that the approved way of NZ capital was to figure out how to extract more money from doing nothing and wait for capital gains.

          For instance, the profit margins on all farming these days is pathetic when viewed against the capital values tied up. Farmers make their money at the end when they flog off the land. When viewed against that then the near complete lack of substantive research into more efficient farming* over the last few decades makes a lot of sense. You know the kind that leads to kiwifruit or a wine industry or efficient dairy farming. Our farming sector are currently cruising pretty much on the basis of research done by the DSIR back in the 60’s and 70’s when I was a kid.

          Incidentally, it wasn’t luck that put me into the export sector. It was a quite deliberate decision. I started working only for export based industries back in the mid-90’s because it was pretty clear to me after a stint at local corporates that the rentier economy that National favours does nothing for our families kids.

          • geoff 2.1.4.3.1

            What happens when the world population stops growing and other major countries approach NZ living standards?

            Is that because they improve or because we descend?

    • Maui 2.2

      Which one is that, Gos ?

    • “Btw I gleefully mock the proposed plan. However I don’t have as much invested in the debate. It us unlikely my business will ‘ve adversely impacted directly”

      That’s fine, Gosman.

      I will fully endorse and support your right to buy electricity at the more expensive rate directly from your powerco – while we get ours via NZ Power.

      See? Everyone is happy. :-).

  3. felix 3

    Can’t stick around today, but I would just like to quietly suggest that everyone ignore Gosman’s early morning attempts to derail the thread with irrelevant questions before it even starts.

    • Paul 3.1

      +1 and ignore the adepts of Rueboil

    • Paul 3.2

      7/22 comments on this thread by Gosman to date…..

    • I done a bad, bad thing… 🙁

      I replied to Gosman… 🙁

      On the other hand… I rather look forward to us all having CHOICE. Choice is good in a free market, right, Gossy?

      We can have the choice of cheaper power…

      Gossy can have the choice of paying full price (plus yearly increases).

      Dunno about you folks, but I’m happy-as-larry at the prospect. 😀

  4. IrishBill 4

    What makes me laugh is that these ratbags have decided that NZ Power is a subsidy and state intervention which is odd given:

    A) it doesn’t actually involve a subsidy

    and

    B) just about every signatory to that letter and industry they represent is the beneficiary of some kind of subsidy and/or state intervention

    Straterra’s members, for example, have had the state heavily subsidise their mineral exploration and intervene to facilitate their businesses, similarly MEUG members are in receipt of significant carbon credit subsidies for the carbon content of their electricity and many of them have their other emissions subsidised (while you and me have to pay our way), the road transport forum members are getting billions of dollars of uneconomic roads built for them by the taxpayer and are having their main competition – rail – activly suppressed by government, and every single one of the employer groups will receive a variety of government grants.

    It seems to me that they’re not so much upset by state intervention and subsidies as by state intervention and subsidies that benefit anyone who’s not them.

    • Gosman 4.1

      It involves a state enforced transfer of wealth which is technically not a subsidy but is similar.

      • geoff 4.1.1

        It involves a state enforced transfer of wealth which is technically not a subsidy but is similar.

        Wait, you’re talking about the signatories of the open letter ay, Gos?

      • One Anonymous Knucklehead 4.1.2

        “technically not a subsidy but is similar.”

        🙄

        What a lovely weasel. Is it trained?

      • Matt 4.1.3

        “It involves a state enforced transfer of wealth”

        Yeah, in the form of asset sales.

    • Rogue Trooper 4.2

      Yep, Irish

  5. Craig Glen viper 5

    This is nothing more than Business Bully boy tactics. O’Reilly has little business creed in my view he is just a mouth piece for a bunch of overpaid bludgers. O’Reilly is of coarse is a staunch Nat member who they pay to go whaaa whaaaa whaaaa. He’s a product of who he has rubbed shoulders with not what he has done or achieved.

    • IrishBill 5.1

      Indeed. I don’t think he’s ever actually been a business owner.

    • Gosman 5.2

      How about you lefties organise a left business organisation. Then you can have your own spokesperson going waah waah when the National party proposes policies.

      • vto 5.2.1

        Fonterra is New Zealand’s biggest left business organisation. But they are so thick they cannot put one and two together to recognise that their own structure, which serves them so well, also performs as well outside Cow World and they should advocate for its increased utilisation across the entire economy and community. But they don’t.

        • Rogue Trooper 5.2.1.1

          still, even Fonterra is letting corporate staff go, in the Curds and Whey of a low play-out hand.

        • Saarbo 5.2.1.2

          Yep, was told by a Fonterra Director (Spencer from memory) in 2001 that if it wasnt for Helen Clark and Labour, Fonterra (Fonterra legislation) would not have been set up, National didnt want any part of it, Fonterra is a left business.

          • vto 5.2.1.2.1

            And there we have it.

            We need to find a way for the silly righties to acknowledge this and the success of Fonterra as well as save face at the same time…. just to get it to happen like

  6. Colonial Viper 6

    State owned enterprises threatening action against democratically elected parties of the NZ Parliament. This is a constitutional incident.

    The post says that Labour and Greens told O’Reilly where to get off. Links?

    Should Labour win the next election the CEOs and boards of the above mentioned SOEs should be fired. Unless they publicly denounce O’Reilly now as not representing them.

  7. Jim Nald 7

    Thanks, Eddie. You are on the front foot, taking the fight back to the bastards.

    Relevant to your piece are the following excerpted bits that should be hammered home again and again and again:

    “… the point is that all businesses make what profits they make only because the government, and the electorate as the ultimate sovereign (at least in theory), helps them in all sorts of ways – free money (banks), free workers (Poundland), monopoly rights (pharmaceutical companies), implicit permission for substandard products (supermarkets).

    “Once we accept that the amounts of profit companies make are ultimately determined by these “welfare payments” society decides to confer upon them, we begin to see the problem with the free-market view that has dominated the world for the last few decades.

    “For far too long we have been told by the business lobby and free-market ideologues that profit is the objective indicator of a company’s contribution to the economy, when it is really socially and politically determined. Poor people receiving government benefits have been told far too often that they are spongers, when the rich get even more government benefits.

    “It is time that we dispensed with the myth that the market is a force of nature that should not be meddled with. Markets are social creations that can be, and have been, modified for social purposes.”

    A virtual chocolate fish for correctly identifying who has clearly expressed the above before you check out the webpage:

    http://www.guardian.co.uk/commentisfree/2013/apr/05/company-profits-welfare-payments-society

    • Paul 7.1

      Challenging the corporate narrative – thanks again Eddie. Have you thought of emailing these articles to the Green and Labour parties? Maybe also distribute to the media. You never know if someone has done the spadework they may just use it in their stories.

    • Tracey 7.2

      +1

    • Rogue Trooper 7.3

      Thanks for the timely reminder link Jim.

  8. vto 8

    Phil O’Reilly and supporters of his are complete and utter arsehead hypocrites.

    Intervention by the government, by way of dictatorship no less, in the Christchurch rebuild Blueprint and in Environment Canterbury, was intended to and has had the effect of heavily altering asset values. Central city property values shot up. Farm values shot up. The business community is completely aresehead quiet on this intervention.

    Now when the government intends to intervene, by way of election policy not dictatorship, and it has the effect of altering asset values in the other direction these arseheads claim the sky is going to fall.

    Increased capital values benefit nobody except moneylenders and rentiers, who contribute fuck-all to our community.

    O’Reilly is a hypocrite, and a bad one. Arsehead.

  9. karol 9

    The NZ “1%”(or nearest local equivalent) are squealing. This means the Green-Labour NZ Power policy is likely to do what it aims to do, return power to the people.

    Excellent posts, Eddie.

  10. vto 10

    It may be worth linking to this mini-thread yesterday with puddleglum and a couple others pointing out some realities of government intervention in an economy. http://thestandard.org.nz/open-mike-02052013/#comment-627458

    Hey, Phil O’Reilly, why aren’t you crying about this here in Christchurch?

    Why so selective in your battles?

    You are compromised fulla. Your credibility weak.

  11. framu 11

    aint it funny how when a large entity uses its buying power to get a better deal for the public is bad and a subsidy – but when the same thing happens for the benefit of shareholders or some other group its free market.

  12. Enough is Enough 12

    How much has PhilO lost since we sunk his masters plan to sell our assets?

    Follow the money. PhilO is pissed because he won’t get to the unjust enrichment his masters told him he would be getting.

  13. g says 13

    let me get this straight- one of the reasons for opposing nz power is that power companies operate in a free market.
    surely nz power is an example of ‘the market deciding’?

    • vto 13.1

      The New Zealand government is part of the free market and is perfectly entitled to act to the full limits of its ability and within the limits of its legal constraints.

      Just like business does.

  14. Rogue Trooper 14

    Thanks for the post EDDIE; the narratives from the MSM and The Standard are so disparate it becomes bewildering at times.

  15. McFlock 15

    I reckon they’re gone overboard, like Shirtcliffe did with his anti-mmp campaign in ’93.

    A sustained campaign from suits tends to alienate voters. Keep it up, I say.

  16. Rich 16

    So government owned entities (MRP, Genesis, etc) are using taxpayers money for political campaigning. How is that even legal?

    • IrishBill 16.1

      Yes, it’s like a better laundered version of the Timberlands debacle of the late 90s.

  17. remo 17

    Go for it. its the best single turn-around idea in a decade,

  18. King Kong 18

    Coming on Monday “why Simon Power wants you to keep paying too much for Power” plus an indepth exclusive on life inside David Cunliffes anus.

  19. Gosman 19

    Here’s a question for you lefties. You seem big on calling for consultation when it comes to Inproducing policies such as Charter schools. How come the Labour and Green parties didn’t engage with the key industry players in the formulation of this policy?

    • Clockie 19.1

      No problem with that Gosman. Then they could ignore the submissions in exactly the same way that Banks and the NAct Govt will ignore submissions on charter schools. Fair enough?

    • felix 19.2

      Sorry Gosman, but your very selective desire for a very specific type of consistency in very precisely chosen examples is of no real consequence.

      In much the same way that a sandfly isn’t really part of a picnic, you’re not really part of this discussion.

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