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April 29, 2013 | by  | in Opinion |
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Government Powerless to Stop the Opposition’s Shocking New Policy

Last week, if you pricked up your ears at just the right moment, you might have heard an enormous crashing noise. This was the sound of nearly thirty years of mainstream political consensus about the New Zealand economy being torn apart.

Since 1984, Rogernomics, Ruthanasia and all that guff, the broad economic policies of the two major political parties in New Zealand have been the same. The market is supreme in public policy; Labour and National really only disagree on how much to ameliorate the failures of the market, at the margins. Labour, in its desperation to regain power, has given into its baser instincts and retreated into their comfort zone of the hard left.

This sharp break with the rational neoliberal consensus takes the form of the NZ Power policy. Labour, the initiate novices, have now joined long-term recidivist economic criminals the Greens in concocting a particularly crazy policy. It goes a little something like this. If Labour and the Greens become the government in 2014, they will set up a new government agency to buy all power, and set the price of power for consumers. Apparently the average New Zealand family will save $300 and it will create 5000 “jobs”.*

Now for the problems with this policy, in the least hysterical way possible. First, to be blunt, the money in your wallet. Labour and the Greens will likely whack tax rates right back up, to pay for policies like this. What is the point in getting $300 off your power bill every year if you are paying $1000-2000 more a year in income tax annually?! Secondly, it is purely political. If Labour and the Greens were principled, they would have started talking about high power prices a year before the MRP float. It is target, brutal, economic sabotage.
They have wiped $500 Million dollars of the value of New Zealand energy companies off the share market. Don’t believe me? Google “Hey Clint”. Thirdly, it won’t work. Look at the graph I have left the link to at the bottom of this column.**

Following the much maligned Bradford reforms in 1997, power prices dropped and were trending down. Then, in 2000, Labour held a ministerial inquiry and partially re-regulated the market. Prices increased dramatically, and Labour in government was all too happy to accept the dividends, adding to Dr Cullen’s large budget surpluses. It is the grossest hypocrisy that they now rail against high prices they helped to create.

As for Grant Robertson saying that Labour has no plans to intervene in any other part of the economy…yeah right.

 

*Government does not create jobs. It employs people using taxation, which is the wealth of the private sector. Government has no money of its own.
**http://www.kiwiblog.co.nz/2013/03/bradford_voted_best_energy_minister.html.

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