The House has chosen to set aside an hour of its time to debate energy issues; something that says it’s a serious issue for this country, something we really need to work on—hopefully, in many ways, in a bipartisan way, because there is much that we can agree on in the energy space.
What I want to do, however, is to take this debate first back to defining what some of the issues are in the energy space. When I started to think about it, I thought, well, here are the three broad areas of concern around energy in New Zealand. The first is around supply—sufficiency and certainty of supply—the second is around pricing, and the third is around climate. Let me just talk through each of those issues and why they are a particular concern for us.
I’ll start with supply and certainty of supply. Of course, what has been affecting the country today does point to that, in some regards. We know that, right at the moment, around about 90,000 households are without power. I don’t know how many businesses are without power, but given that many households are out, so many businesses will be too. I heard there’s some quite big outages in Southland. There must be some farmers there who are a bit worried about milking and how that’s going to happen.
Of course, the outages today have been caused by the massive storm through the country. I’m sure that the thoughts of everyone in this House are with the people who are affected directly by the storm and with the workers who are out there trying to get the power back on—I know they’ll be working hard out there. But that certainty of supply can be affected not just by storms but literally by whether there is sufficient supply; whether we can rely on the fact that walking into our lounge, our kitchen, our business and turning the switch on means that the lights go on. It’s one thing for the lights to be taken out by a storm, but another if our supply isn’t certain. That’s something we need to do in this country.
We need to make sure our electricity supply, our energy supply, is certain. In particular, we need to think about what’s called firming—making sure that our system is robust. That’s a really important thing. But businesses need to know that their supply is secure. Households need to know that their supply is secure. Hospitals need to know that their supply is secure. Supply is very important to us.
Going alongside the supply of power—just being sure that it actually will arrive when we turn on the switch—is, actually, the price of power. Power needs to be affordable. Energy needs to be affordable. Now, we’ve seen just in this last week new inflation figures have come out, and when we do the calculations, we’re told that inflation in the year to 30 September has been 3 percent. If you go to the actual data issued by Stats New Zealand and look at the actual index and do the calculation, the actual inflation wasn’t 3 percent; it was actually 3.046875 percent, but, of course, the rounding God smiled upon that.
If the index had been one point higher—if the index had been 1320 instead of 1319, a very small difference—the inflation rate would have been 3.125 percent, outside the Reserve Bank’s band. One of the things we know that is driving that inflation rate has been the price of power. In particular, in the Stats New Zealand release, the prices and deflation spokesperson said that, in actual fact, the 11.3 percent annual increase in electricity prices over the last year is the largest since the March 1989 quarter. It’s a little bit hard to comprehend what’s going on. This is the graph which came out in the Stats New Zealand release. This is just this very last year, and in just this last steep incline—oh, I can deliver it to you shortly, if you like, Minister. That very, very steep incline and increase in power prices in that last year shows the increase. It was steep; it was hard. We have seen businesses closing because of that increase in power prices. We have seen jobs lost because of the increase in power prices. We have seen real hardship in households because of the increase in power prices. Not only do we need abundant power and readily available power; we need it available at a price that our businesses and our households can afford. That is the second aspect that we need to think about when we’re talking about energy.
The third is climate—the third is climate. We simply must move to renewable power—end of story. There is no choice about it. We must move to increased use of renewables such as wind and solar. We must move to increased use of geothermal power. We must ensure that we have the appropriate batteries, the reserve supply of power—and, frankly, the South Island hydro lakes that we use right at the moment for our everyday power, they are nothing but enormous batteries. Perhaps we need to start thinking of them as that and then having that reliable source of power from the South Island hydro lakes as a battery, and thinking of other renewables as the regular, everyday source of power.
There’s another reason for going to renewables. It means that New Zealand can be independent in its power. If we are importing coal and gas from overseas, we are not independent. This is where I really disagree with part of what the Government is proposing to do in its energy strategy. If we look at the Government’s energy strategy, one of the things that they have said they would do—if I can find the “at a glance”—is to set up a permanent fuel depot. Got it, got it, got it—they’re going to launch a formal procurement process for a liquefied natural gas import facility, importing gas, permanently.
We actually need to transition away from gas. I mean, there’s a whole rhetoric that says that it’s cleaner than other forms of power, but, to be clear, it is something we need to move away from in the next decade or so. Why set up a permanent fuel facility for something that we actually need to be moving away from? That is one area where we simply need to make a difference there, and I urge the Government to do that. Again, no matter what, using fossil fuels contributes to our greenhouse gas emissions; we need to make a difference.
In terms of what we actually do, well, we do need an affordable, secure, clean energy source for the 21st century. We do need to get away from those fossil fuels. I see the members over there shaking their heads. There is only one area where we may need to continue with some fossil fuels for a bit longer, and that is in supplying process energy—the sufficient level of energy for manufacturing in some of our industries. That could be a reason to maintain some of the fuels that we have for a short time until new methods of providing process of energy eventuate. There’s some really interesting progress being made in that space, reported just in the last few weeks.
Aside from that, if South Australia can have days when all their electricity is generated 100 percent renewable—if Victoria can do it, if Queensland did do it—so can we. We can do it with wind; we can do it with tides; we can do it with solar—solar, which operates in all sorts of weather. Then we need to think about how we build our reserve batteries. If we have sufficient batteries, we have sufficient reserve supply of power, then we can guarantee that secure supply.
Above all, we need to start thinking about power as a utility. We need to stop thinking about it as a commodity that must be sold at the highest possible price. We need to think of it as a utility that enables the rest of our economy. If we change our way of thinking, we can do better on energy.