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April 29, 2013 | by  | in Opinion | [ssba]

Who Got the Power?

Before the smoke from Lady Thatcher’s crematorium had even settled over the cold streets of London, there was a revolution happening. No, the Britons didn’t revolt, but the announcement that the New Zealand electricity market was to see the most significant reforms in a generation provided a fine contrast to the legacy of the Iron Lady.

The Green Party joined with Labour in announcing NZ Power; a new agency which a Labour-Green government would use to control the price of power for New Zealanders. NZ Power is, at long last, the opposition’s response to the implementation of the mixed ownership model and in effect takes a hammer (and sickle) to the neoliberal agenda. The plan can be summarised thus: NZ Power will buy all the electricity for a fair price which is above, but not extraordinarily above, the cost of generation, and then require retailers to sell it to consumers at a fair price.

David Shearer explained during the announcement that the free electricity market was broken, citing the fact that prices are rising at more than double the rate of inflation, and much more quickly than in similar countries. Indeed, for a country where more than 70 per cent of electricity is generated using free resources and over 55 per cent using free water passing through dams built and paid for many decades ago, it is a failure when prices rise so quickly.

The policy has been labeled by the right as “North Korean economics”and “economic vandalism” and compared to Soviet policies. The panic from the Government has resembled a spasming octopus, its limbs flapping about in an uncoordinated, uninformed and ineffective response. Meanwhile, Kiwis can see not only cheaper power bills, but also two parties working together as a viable alternative government.

What is more interesting from this announcement is the identification of a market failure in one of the most crucial areas of our economy, and the proposal of a smart, cheap, hands-on fix. It’s not just a $330 saving per year, but a sign that a potential future government is prepared to shift away from neoliberal and third-way policies that permeate developed societies. This precedent is a game-changer, making the left/right divide not just one between a free market, and a slightly-less-free market, but instead between a free market and smart new-age socialist solutions. When asked what her greatest achievement was, Thatcher is reported to have responded with “New Labour”. Perhaps when asked a similar question, Shearer and Norman will be able to take credit for a new, modern-socialist version of left politics.

This precedent is exciting. A future government which isn’t afraid to break from the neoliberal paradigm in favour of helping the many is exactly the government that New Zealand needs, as poverty and unemployment grip the nation and climate change raises its head.

As many commentators and world leaders noted, Margaret Thatcher’s government changed Britain. Here’s hoping that the combination of Shearer and Norman can change New Zealand in a way that Maggie couldn’t—for the better.


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