United Future
Gordon Copeland

Urgent Debates - Project Aqua

GORDON COPELAND (United Future): I move, That the House take note of a matter of urgent public importance. I move that motion because Meridian Energy’s bombshell announcement yesterday that it will not be proceeding with Project Aqua creates new and significant risks for the New Zealand economy, and, in consequence, for all New Zealanders and their households. A cheap and secure electricity supply is critical to all businesses and households in this country. I saw a graph, presented to me last year, that indicated that New Zealand could face a significant primary energy gap from around 2007, now just 3 years away—[Interruption]

 Mr SPEAKER: When the House grants leave for an urgent debate to take place, it indicates that the matter is important. I am talking to Mr Mallard. I know that some members have to attend select committees, but I want to hear this speech in silence, apart from the usual sorts of comments. There can be the odd interjection, but there is too much noise. I have not deducted time from the member’s address.

GORDON COPELAND : I was making the very vital point that I was presented with a graph last year that indicated New Zealand could face a significant primary energy gap from around 2007, now just 3 years away, because of the rundown in gas from the Maui field and the problems associated with the use of Waikato coal for electricity generation. The graph presented to me was truly frightening. It illustrated that without Project Aqua, a gap between electricity supply and demand may begin in 2007 and rise to a massive 11,000 gigawatts by 2017. That forecast should be of concern to all New Zealanders, because it clearly indicates that unless we can bring additional generating capacity on stream within the next 3 years, we will face an electricity shortage.

Simply stated, the cancellation of Project Aqua is an issue of very critical importance to New Zealand businesses going forward. We have a wall of wood to process and many new irrigation schemes coming on stream. We have new roads to build in Auckland, and growth in the dairying industry. All those situations, and all the other plans for expansion in the next few years of other New Zealand businesses—thus to grow the economy—are dependent upon electricity for that to happen. That is why I say this issue is of critical importance to our economy. Along with security of supply—that is, electricity being available when needed, businesses need cheap electricity. New Zealand is a long way from its markets, and at the moment we have a comparative competitive advantage in being able to use not just electricity but cheap electricity, by world standards. The switch that I think we are now forced to make, from renewable energy sources such as hydro-electricity to energy sources such as coal—a switch that seems inevitable, arising from the decision taken yesterday—means that we will not only go to something less environmentally friendly but also to something significantly more expensive. That has the capacity to erode New Zealand’s competitive economic position with regard to the rest of the world.

My own vision, however, for the New Zealand economy is that it should grow, and grow quickly, so that we can deliver to New Zealanders and their households the material well-being and the good health and educational services we all desire, in going forward. I want at this point to address a few comments to Meridian Energy itself. I do so as a shareholder in that company—for all New Zealanders are shareholders in Meridian Energy. I ask the company to be open to the possibility of seeing at least some residual hydro scheme proceed on the Waitaki River. I ask the company at least to work through the new water allocation framework that will come into being as a result of the passage of the Waitaki catchment legislation. It seems to me that even if Meridian were not successful in obtaining the amount of water flow it ideally would have liked for Project Aqua, it is still possible for it to see a smaller-scaled project go ahead.

If Meridian Energy is not willing to do that then I would think that other major electricity generators in New Zealand should step into its shoes and look at that possibility. At the end of the day, the situation that faces us as a nation is so critical we cannot afford to say no to any significant low-cost way of generating electricity. I will also address some comments to the Government itself. I hope that it will take heed of this development and ensure that there are now no ideological or regulatory barriers to allowing hydroelectricity schemes in New Zealand of all shapes and sizes, together with schemes using steam, wind, coal, or whatever, to proceed and proceed quickly so that we have some of them on stream in time for a shortage from about 2007 onwards. I specifically ask the Government to look again at the Dobson hydro scheme on the West Coast of the South Island. The Government’s position on the scheme is that it should not proceed because it will do damage to the conservation estate of this country. It says that it will reduce the area of the conservation estate. My response is that the people of Greymouth have offered the Government Mount Buckley by way of exchange—a larger area. So in actual fact the conservation estate of this country would increase, not decrease, if this scheme goes ahead. The Government has said that it would involve the loss of some kahikatea trees in the 500 hectares—and that is all we are talking about—that would be flooded by the new dam, creating a beautiful lake in a bush setting. If the Government were to ask TrustPower, I believe that the company would well be prepared to buy some existing private kahikatea trees and gift them to the nation’s conservation estate. The Government says that there are birds that live in this 500 hectares—an area, by the way, in approximately 1.8 million hectares of conservation land on the West Coast, just to put it into some sort of perspective—that need to be protected. I agree entirely with that and I say that if the Government were to speak to TrustPower it may well be that TrustPower would be prepared to cooperate with it, with the Department of Conservation, and with the people of Greymouth to create a bird sanctuary where our birds could flourish and increase in large numbers, instead of having to compete daily for their very survival under the gaze of rather hungry stoats, weasels, feral cats, and possums. That scheme has strong local support. A few minutes ago, in response to a question of mine, the Minister of Energy said that it was going to be only about 5 months’ supply for New Zealand. I think that answer misses the point of what my party has been saying in relation to these kinds of schemes. We believe there is potential for a number of hydro schemes on the conservation estate throughout New Zealand. It is time to start to think outside the box, and for the Government to give away the false dichotomy that it has erected for ideological reasons between conservation on one hand and hydroelectricity on the other. That is completely unnecessary. As I have pointed out, there is a way through and I was hoping very, very much that Dobson might become a prototype for many other similar schemes right up and down this country that would continue to supply electricity to this nation at an affordable price using a long-term renewable, sustainable source of energy. It is time to put aside this straitjacket.We can no longer afford the luxury of caving in to that kind of ideology that defies common sense. I will also bring up another point at this time—again, something that I alluded to during question time—and that is the very strong submissions that the Electricity Networks Association of New Zealand has brought to my attention concerning the rules that presently prevent it from investing in new, local electricity-generating projects. I think we need to give this one very careful consideration. That situation arises from what I believe were the somewhat ill-advised reforms made by Max Bradford when the National Party was in Government. I cannot understand, therefore, why a Labour administration coming into that situation would be prepared to allow that to continue. The Minister makes the point, and I agree with him, that there has been some new flexibility given. Local line companies—and I want to stress here that these are companies owned by local communities, that are sensitive to local needs and are able to invest local money for the benefit of local communities within New Zealand—are saying: “Let’s take off the Max Bradford restraints, let us invest in new interest generation, and give us the ability to supply that electricity directly to customers.” They want to know why they should be taken out of the retail loop, and I believe that is a legitimate question. I believe that the Bradford reforms did not correctly understand competition law or the way that competition works. This would indeed provide the major electricity generators with some much-needed competition. Apart from that, it simply makes sense. Why should we be trying to relay electricity all the way from Waitaki, say, to Whangarei, with the significant loss that occurs in the transmission process, when there is a line company based in Whangarei that would love to get going and build a scheme to supply the people of Whangarei with electricity in their own backyard—with minimal loss on the way through. In 2002 the people of this nation, by quite a significant majority, elected the Labour Party and the current Government to be our Government and to provide leadership for this nation. Following the cancellation of Project Aqua, and the critical issues that I have outlined in my speech concerning not only the security of electricity supply, but also the actual price of electricity and its importance to keeping the New Zealand economy going forward, we now need to look to this Government to provide some real leadership in this situation. If the Resource Management Act is holding these things up, let us change it. If the Conservation Act is holding good schemes up, let us change it. If the Max Bradford package of so-called reforms to create competition within the electricity sector is not working correctly, let us change it. Future generations of New Zealanders and, in fact, New Zealanders 3 years from now, should we—as I am suggesting today is a very likely scenario—encounter situations where we have to close down our factories and switch off the switches in our homes, and that is beginning to happen, will see the legacy of this Government diminished. They will ask why on earth the Government did not act, and act more quickly.

 But I want to go one further than that, and make this point. We need these kinds of ideological and regulatory restraints removed, and removed now. It is now that alternative energy projects need to be planned, and it is now that decisions need to be made, because of the lead time it will take to construct these new electricity projects so that we can continue in New Zealand both to grow our economy strongly, based on steady, reliable, cheap electricity, and to provide the living standards in New Zealand going forward, which all of us expect, and indeed should expect, from this Government or any other Government.