27 January 2011 Media Statement

Flogging off power companies a self-interested bid by National to cling to power

Labour’s Economic Development spokesperson David Parker says National is using New Zealand’s long-term savings to prolong itself in power through its plan to flog off state-owned power companies.

“Its plan will benefit the few who prosper mightily under this government, but will do nothing to grow our exports and the jobs and incomes we need,” David Parker said.

“Selling off up to half of the power companies will result in higher electricity prices over time as the companies seek to maximise revenue.

“Does anyone really believe there is a competitive market in electricity which will hold prices down?” David Parker said. “I am a former Minister of Energy and I reached the conclusion that it does not and will not.

”The dividends and increases in share price (often tax free) will go to the shareholders. Many will be from overseas. The small minority of New Zealanders who remain shareholders after the initial feeding frenzy will overwhelmingly be those who are already wealthier. They will be the same 10 percent who got more than 40 percent of National’s tax cuts. Might there be a pattern here?”

David Parker said that National maintains that flogging off the family silver is necessary because of rising government debt.

“That takes us straight back again to 40 percent of those income tax cuts having gone to the same 10 percent,” David Parker said. “New Zealand as a whole, and especially the 90 percent who are not the winners under National, ends up poorer simply to benefit the 10 percent for whom National so plainly governs.

“It is sad that after two years in power this government has the books in such poor shape that they think they have the excuse they always wanted to sell off the family silver,” David Parker said. “After two years of National in power our economy is drifting, despite record commodity prices.

“National has undermined rather than encouraged growth in the breadth of our export base. Its only significant attempt was its foolish plan to mine national parks.

“National’s failure to grow the breadth of our export economy is reflected in its trifecta of appalling economic decisions:

o Abolishing the R&D tax credit despite our demonstrably low private sector R&D spend and the fact that our more successful competitors – including Australia – recognise the need for this to grow export businesses.

o Undermining KiwiSaver despite our poor record in savings. Our low savings for investment are another reason our non-land based exports are not flourishing. The Government’s belated response – to set up an advisory group on savings – shows how bereft they are of real economic leadership.

o Falling at the last hurdle on ring-fencing property losses. The Treasury backed it as being necessary to encourage our precious capital to be better directed into the export rather than speculative economy. Labour gave them room, but still National failed to do what is so obviously necessary.

“It is undeniable that New Zealand is getting poorer by the day. Private and government debt are both increasing,” David Parker said.

“The next election will be fought on the economic vision for New Zealand. It is good that National has shown its intentions.”

ENDS

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