Power prices: New Zealand First’s Shane Jones appears to bite tongue over Government’s energy announcement

He said his party’s portfolios in Government “expose us to the downside of energy prices going haywire and energy policy not delivering an affordable or secure level of output”.

“There has always been a different approach that NZ First has taken, and it has been more from the consumer end and less from the insider or the investor end.”

The MP referenced how he had this year written to his party leader Winston Peters on the state of the market. He had suggested potential options to address it, such as renationalising the power companies or splitting up the gentailers, as well as more technical ideas.

“But collective responsibility and whatnot,” Jones said.

That’s a reference to a key part of being in Cabinet, that ministers accept collective responsibility for decisions. It means even if they personally disagree, there are very limited circumstances in which they should publicly express that.

“Issues are often debated vigorously in the confidential setting of Cabinet meetings, although consensus is usually reached and votes are rarely taken,” the Cabinet Manual says.

“Once Cabinet makes a decision, ministers must support it … regardless of their personal views and whether or not they were at the meeting concerned.”

There are formal mechanisms for which disagreement can be aired. For example, the coalition documents allow for parties to invoke an agree-to-disagree clause. That’s relatively rare, though NZ First did do so just last week in relation to an immigration policy.

Jones went on to say that as the next election gets closer, “each party will give greater clarity for the public as to what they think should happen”.

He said the gentailer system had “run its race”, his views on the gentailers hadn’t changed and he had warned them “time is passing and social licence is really important”.

Jones mentioned some of the work he was doing, such as trying to get more investment in gas through a $200 million contingency fund.

Energy Minister Simon Watts, a member of the National Party, was asked on Wednesday morning about Jones’ position and whether the NZ First MP had pushed for more radical reforms privately than what was eventually agreed upon.

Watts said the package being announced represented the Government’s position and the Cabinet paper on the topic was a “joint paper between minister Jones and myself”.

“The decision was unanimous,” he said. “We stand by that position. This is a clear package of interventions by this Government to deal with the problems we face.”

While a review of the electricity market has been ongoing and Jones has been voicing his concerns with the sector, Watts didn’t give away much but seemed to pour cold water on any suggestion of radical market reform in May.

He told the Herald at the time that the main challenge in the sector was a lack of available firming generation and “changing ownership of existing assets won’t solve that fundamental issue”.

The Frontier Economics report that looked into the market and which was released on Wednesday made several significant recommendations about the Government divesting its shareholding in the gentailers and setting up a new entity to deal with thermal generation.

These were turned down by the Government in favour of other options, such as launching a procurement process for a liquified natural gas facility, reassuring the gentailers that capital was available to support investment and requesting more information from the sector about ways to kickstart projects that will boost supply.

When asked why the Government hadn’t gone down the path of re-nationalisation or splitting up the gentailers, Watts said that “may make good political bumper stickers, but they are not good policy”.

“We have identified as a Government what are the problems that exist within the market and come up with the solutions that are most efficient and effective to deal with those problems,” he said.

Jones’ NZ First paper includes splitting up the gentailers or re-nationalising the system as potential options, though the latter was not his favoured choice. Other options included more regulatory change to allow industrial users greater access to gas or the Government inking long-term contracts with gentailers.

The Herald reported in May that Jones believed successive Governments have “not done enough” to address structural issues and he didn’t want to be a politician who “didn’t do much of anything” in that regard.

Watts denied on Wednesday he was attacking Jones with his comments about “political bumper stickers”.

“I am just acknowledging the fact is the package of announcements today is the package of announcements that was supported by the Cabinet and is the Government’s position on solving the problems that we face in the energy market.”

The Council of Trade Unions yesterday also called on all political parties to bring the gentailers back into public ownership.

Seymour: ‘Jihad on stability’ put us in this position

Meanwhile, on the other side of the coalition, Act’s David Seymour told the Herald that the Government had come to a “very sound position where we recognise the last thing the sector needs is more uncertainty from erratic Government policy”.

“Equally, it does need surgical interventions that will get generators to the grid and energy to the people. We have struck a very good balance in that regard,” Seymour said.

He said the market didn’t respond well to “people waving dramatic ideas around”.

“You make an investment in a new generator that must pay off over usually 20 years and if all the rules change, before people can get a payoff, then they won’t invest.

“If people think the rules will change before they can get a payoff, they won’t invest. I just say to people, if you want dramatic, that’s actually what got us here. It is the jihad on stability that other Governments have waged that put us in this position.”

Asked about Jones’ views, Seymour said the NZ First MP was a “passionate guy” who was also “committed to the Government policy”.

“I think the way that we’ve all worked together as a coalition is another example of how well this coalition works on getting to the right outcome.”

As for Act’s own views, Seymour said it was no secret his party “doesn’t believe that the Government should own commercial businesses on behalf of the taxpayer”.

“But right now, the Government policy is to maintain the 51% ownership. I think what Nicola Willis is doing is very smart, signalling that if there are private investors who want to come to the table, then we would match it.”

On the Opposition benches, there was sharp criticism.

“New Zealanders are being let down. Today’s announcement is a weak, short-sighted response that fails to confront the reality of our broken energy system,” Labour energy spokeswoman Megan Woods said.

“Instead of delivering real solutions to lower power bills, the Government has chosen to tinker at the edges and protect the status quo. The coalition failed and couldn’t find a set of measures they could agree on so New Zealand households and businesses are going to be saddled with high energy prices for longer.”

Woods said Prime Minister Christopher Luxon was gambling on companies finding more gas, despite significant efforts in the past.

“It’s time he faced reality: New Zealand must shift to cleaner, cheaper energy alternatives and fast.

“There are practical steps the Government could take immediately; installing solar panels on schools, supporting households with solar and battery systems, partnering with businesses to transition to cheaper energy sources and leveraging the Government’s own energy demand to drive investment. But none of this urgency is reflected in today’s plan.”

Green Party co-leader Marama Davidson said support for LNG infrastructure represented a move away from sustainable and affordable energy.

“While the devil will be in the detail, these purported ‘reforms’ appear to only entrench the dominance of the gentailers and deepen our reliance on fossil fuels – a risky, expensive and increasingly uncertain source of energy,“ Davidson said.

“We can build a more sustainable and affordable electricity network that puts people and planet before the profits of our gentailers. But what’s required is significant structural reform and Government-led intervention, not more market-led solutions.”

Jamie Ensor is a senior political reporter in the NZ Herald press gallery team based at Parliament. He was previously a TV reporter and digital producer in the Newshub press gallery office. He was a finalist this year for Political Journalist of the Year at the Voyager Media Awards.