Tiwai doesn't have to pay for transmission (except for a short direct cable), distribution or retail. And for the generation, it is buying in bulk so of corse it's prices are a lot lower than retail.
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Granted, but their cost is one quarter of the consumer retail price? Generations of taxpayers had to cover the capital cost of Manapouri, Rio Tinto didn't have any costs there. But the point is that Manapouri has an asset or replacement value, yet its capital cost has been paid off. This unit, and other hydros like it, generates 70% of our power, for 0.5c to 1.0c per kWhr cost.
For many years successive governments have used their control over power generation to levy a bit of extra tax. Retail prices in particular have not been as competitive as in other countries, and the GST rate of 15% has not helped end-users. Labour/Greens are simply setting up a proposal to tax a bit less, in the hope that it will stimulate the economy. And it should do. Lower income earners spend most of their income, so power savings will normally be spent in other retail areas.
I'm pleased to see the Greens and Labour standing together on this idea, it's a powerful message. If they want to achieve results in the next parliamentary term, the first step is to win the elections.
It's a powerful message alright. Either party is happy to pursue their own self interests by using economic suicide.
Why not solve the problem simply Sell Manapouri to Rio Tinto the wanted to build & own it in the first place
How long will the Labour Party take to find a charismatic leader with positive policies and not the negative "anything the government does, we will undo - without any consideration of whether it is right or wrong" I know that all the main parties, from time to time elect leaders that are without substance or appeal and only hang around for a limited time. But if they really expect to win the treasury benches, then they need their star performer to walk on stage now, not after most of the audience has left. I expect to do well out of Shearers pronouncement on nationalising power simply because the fleeing investors from that sector may boost the demand for Telecom shares.
Craic, are you saying John Key is charismatic? He's still popular enough though. David Shearer is getting better at the job, he'll be fine by 2014.
The power cost saving proposal is not radical, it just means the govt and MRP/CEN make a little less profit. $300 per household p.a. implies the retail saving will be small percentage-wise. Today someone rang up for a phone survey about my opinion on various matters affecting NZ. Sensing it could be political in nature, I said yes to a 35 minute survey. I'm not sure who commissioned it, Nat/Lab/TEL/SKY, but the questions were around those NZ issues, and who would I vote for in an election held today. Possum, I did my best :).
JK leaves Shearer for dead as a leader. He is popular. Have a look at the drop in the NZX when Shearer made his pronouncement, albeit with a certain Green hand up his back working the strings. There will not be a $300 reduction - what will occur is that the price will remain the same or increase and the excuse will be that the price would have increased by more than $300 had they not taken the steps they took.
FP, wasn't it you who said watch Face the Nation or Q&A to see a poor performance by David Parker? I watched both and David Parker was well prepared for any questions. Like the Greens, their research on these matters goes back many years. I thought Rachael Smalley's questions showed a big lack of understanding of economics on the part of whoever posed them for her. That explained Parker's responses, he probably couldn't believe the inane questions.
In the SST today, a good writeup on the need for a systematic approach to R&D in NZ, and while those giving their views are part of the current system, the data implies the SME sector in NZ needs prodding. They're spending only 0.6% of GDP on R&D, and the OECD average is 1.6%, nearly three times higher.
I was most impressed by an article written by Jesse Medcalf on the facing page (D7), giving his views on the importance of IT career support at Secondary and Tertiary levels. He showed great perception about the new world 7th formers (year13) are entering.
http://www.stuff.co.nz/technology/85...-with-IT-goal/
But think of the jobs it will create. We'll need a whole new govt dept to run it too!
Won't it be a renamed Electricity Authority? Already there. In any case, say 10 staff, 1 mill cost p.a., half of that coming back in taxes, not a big price to pay for hundreds of millions of savings in power for the retail consumer. Don't forget that's the target, not existing wholesale users. Small SMEs will benefit too, of course. MRP and all of the other electricity SOES have a team of database analysts, doubling up on each other's work no doubt, keeping an eye on the trends in power use, figuring out their power deliveries in the weeks and hours ahead, working out how best to supply the cheapest power to the end-users who are paying at a fixed rate. If we still had the NZEC, there would just be one team doing that work, and it would have saved us all some costs. Like these costs.
Too right - I think it's time we had an option like the big power users, to buy on the spot market, or to negotiate a deal (like we think we can with the banks, on interest rates).
By the way, there are some charts being pointed at by National, showing that the power prices went up when Labour got in around 1999, just after National's power reform (Max Bradford). The power prices had dropped a bit, and then started climbing. The key bits of information missed out, are that the SOEs probably started figuring out how they could work together after a few years, the new normal. And more importantly, the giant Maui gas field started running down about the same time. This put the price of wholesale gas up (it doubled) and of course Huntly was then used to set the lowest spot base price, while running on gas. We were using most of the power available back then, and there were rolling blackouts in dry winters. So Huntly often featured in the spot pricing, because it had to run full bore at 1000MW to conserve the hydro lakes.
Nowadays the E3P side is used, and of the four older 250MW turbines in the main structure, one is mothballed at the moment. The other three appear to be getting looked after for longer-term use.
What are the chances I was one of those polled by TV1? :) http://tvnz.co.nz/politics-news/nati...w-poll-5413152
Yes, CJ, maybe a Labour/Green coalition has a real chance this time. I did find out who polled me, it was UMR. Here's their research for all of 2012. It shows that the public are starting to get a bit disenchanted with the govt, steadily.
http://umr.co.nz/sites/umr/files/umr_mood_of_the_nation_2013_online_0.pdf
Bryan Gould has written an article that was published in the Herald on Friday. http://www.nzherald.co.nz/business/n...ectid=10878341
Bryan Gould has been around the clock so many times and learnt so little there must be rubber strips flapping off his tyres as well as peeling paint.
He was a Labour MP in the UK for Yonks and yonks and his thinking has never advanced since about Harold Wilson circa 1964. He's bl**dy lucky to still get published let alone still breathing.
Wrong MVT. Bryan Gould eyes a comeback in NZ as this week´s version of the Labour Party has moved far enough to the extreme left to include him right smack bang in the middle of it !
I had to read this statemen from David Parker (defending why he as a Minister in 2006 opposed their newly announced policy) several times as I did not believe my eyes : " However, Parker told BusinessDesk much had changed in seven years, and that the only reason for continuing with the market arrangements at the time was because there was a shortage of new generation, and the changes could discourage such investment from occurring."
In other words, investment was sorely needed in new generation and only the private sector could fund it. Now that several billions of dollars have been invested by private investors, the time has come to nationalise it.
This is something one would expect from the late Hugo Chaves or Cristina Fernandez Kirchner.
Good luck to Labour to explain this to the average and not so silly NZ voter, once the dust settles on the headlines about power price reductions. No mention yet for the average punter on the fact that the sugegsted poer savings will be eaten up and some, by implementation of Labour/Green ETS alone. This purely populist, misdirected and economically destructive policy will not withstand the coming scrutiny.
Don't expect too many voters to look past the $6 a week - even though there is no guarantee they will get that, but whether they do or don't the govt. will miss out so have to pick it up from another tax. Labour has shown before how easiky the voters can be bought. (Think Cullen - remove interest from student loan.)
Leopards don't change their spots do they? This sort of stuff has been well covered already. Labour performed brilliantly in building up the number of SMEs, budget surpluses, and tax income in their last three terms. They had every right to see that tertiary students, who had gone through completely state funded in the past, had a small rebate on their interest costs, now they were funding about 1/3 of their education costs themselves. There were also a lot of other good initiatives that were allocated some of the new tax base.
Conversely, National has reduced their tax base, and their voters would like to see it reduced further. The govt is probably still meddling too much, it will probably always be meddling too much, nothing new there from this faction. Meanwhile more NZers are unemployed, SME numbers have dropped, manufacturing has continued a decline but it's much faster, and we are looking at a surplus of power generation for the first time in many years. As for budget deficits, National has set some records there.