Richard Wagstaff: Council of Trade Unions President on the Government's upcoming announcement on energy sector reform

The CTU's head says excessive dividends for shareholders are stopping power companies investing more in generation. 

The union says the partially Government-owned gentailers should re-nationalise. 

Energy Minister Simon Watts will make an announcement tomorrow on sector reform. 

Richard Wagstaff says gentailers have their priorities wrong. 

"Between 2016 and 2020, there's 1.2 billion in capital expenditure - that was about a fifth of the dividend payout. There's no more generated today than there was 10 years ago."

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Episode Transcript

Speaker 1 (00:00):
Now, tomorrow's a big day for the electricity sector, with

(00:02):
the government set to announce its surgical intervention. Meanwhile, the
Council of Trade Unions has said shared its solution today,
which is to renationalize the gen tailors that Mum and
Dad investors brought into during John Key's administration. The CTU
president is Richard Wagstaff.

Speaker 2 (00:17):
Hey, Richard hi there.

Speaker 1 (00:19):
How much would it cost to do this, Well.

Speaker 2 (00:22):
It would take a considerable time, but basically it wouldn't
cost a lot at all because what we're saying is
that instead of wasting money as the current gent tailors do,
on their own dividends, so it put those dividends back
into reclaiming public ownership. So it's a longer term strategy
and one where we think the money is better spent
than on exorbitant dividends the shareholders, which correct happens.

Speaker 1 (00:41):
So over a period of time they increase their own
stake back up to one hundred percent.

Speaker 2 (00:45):
Yeah, yes, And if they don't do that, then they
can spend their money on investing in the future of
the elctriisity industry. What we've had is a system where
they're not pumping in the money on capital expenditure. They've
been pumping it into private dividends and private profits. So
we're saying time to focus on providing energy and electricity
as a public utility rather than a place for making

(01:05):
his orbit of profit.

Speaker 1 (01:06):
How long does this buyback take.

Speaker 2 (01:09):
Well, it depends on how much they want to direct
back into dividends or how much they want to invest
back into capital expenditure. What we found with a current model,
which is sort of unfortunately seems to be dominated by
private interests, particularly since privatization, is that they'll put a
lot of time and energy into focusing on providing dividends
and not enough energy and not enough money into providing

(01:29):
capital expenditure. That is up to them, And if we
bring in this policy that we're proposing, I'll have to
make that call. It might be that they think a
little harder about wasting so much money on dividends and
they put a bit more into capital expenditure. If they don't, well,
the state will own more of it and we'll be
able to direct that investment accordingly.

Speaker 1 (01:48):
I don't think this is a good idea, Richard. I mean,
if you talk to a phraser Winneray, who was previously
the chief executive of Mercury Energy. He himself says that
when they floated, it suddenly introduced efficiencies they did have
when they were in twe hundred percent publicly owned, which
is you think.

Speaker 2 (02:05):
You've got to be joking. Thirteen billion since twenty thirteen privatization,
thirteen billion went out in dividends and a fraction of
went into capital expenditure. This market system that keeps.

Speaker 1 (02:15):
Okay fair enough. That sounds like a big number, But Richard,
how much number? How much was spending capital expenditure before that?

Speaker 2 (02:21):
About a fifth of that we reckon. It's about a
year's worth of dividends between twenty sixteen and twenty twenty.
There's one point two billion in capital expenditure there. That
was about a fifth of the dividend payout. In other words,
just a fraction of the dividend pay out. Our electricity
is no more generated today than there was ten years ago.
There's something failing in Wilson Winnerray and so in winter
in Bolsom Winray and Winnerray's model, where we're not increasing

(02:44):
the amount of generation of electricity. We have a growing population,
we should have a growing economy, We should have cheaper electricity.
When we talk to our weeks about this, they're deeply
concerned not just about the cost of living and keeping
the home warm, they're really concerned about businesses going under,
like in the Central North Island we're citing three costs
has been one of the biggest shop.

Speaker 1 (03:03):
Respect to you for coming out with an idea, right,
but are you actually you're just dealing with only one
part of what is a massive confluence of problems. Right.
This doesn't deal with the fact that we have a
gas shortage which is causing all the spikes that we're
seeing at the moment. It doesn't deal with the fact
that the primary thing pushing up our electricity bills, at
least for residential customers at the moment, is transmission costs.

Speaker 2 (03:22):
No, I kept looking at that in the reverse order.
Really we've said it differently, Heather. The reason why we're
having to we're talking about gas and coal and stuff
is because we haven't invested in our renewables. If we
start investing in our renewables win solar, GSRMAL, which are
available to us in New Zealand, we wouldn't have to
be thinking about going up to gas, which isn't certain
by any streets or using an efficient coal and dirty

(03:44):
coal wh could be addressing this thing more strategically, and
that's kind of the problem. We don't keep doing these
short team fixes and saying more market will fix it
when the market has failed us, failed our industry, failed
our economy, and failing individuals in terms of electricity generation,
availability in pricing.

Speaker 1 (03:58):
Richard, thanks for having a chat to us. Should wag
Staff Council of Trade Union's president.

Speaker 2 (04:02):
For more from Hither Duplessy Allen Drive.

Speaker 1 (04:05):
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