O’Sullivan on power nationalisation

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 nationalisation, 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.