Why power prices matter

News that the CEO of Contact Energy is now earning $1.7 million a year, or $33,000 a week, has shocked many New Zealanders and reinforces the urgent need for Labour’s NZ Power policy, Labour’s Finance spokesperson David Parker says.
“Currently power companies are allowed to charge excessive prices by pricing all electricity at the price paid for the most expensive electricity produced (often gas fired).
“Under Labour’s NZ Power consumers pay the average, rather than the highest, cost of generation. This saves hundreds of dollars a year for the average household and about 5 per cent for commercial users.
“This is only fair. Sixty per cent of NZ’s electricity comes from hydro, which is the cheapest electricity to produce in the world. It’s fuelled by the energy which comes from our public rivers. At present the public gets little benefit from this.
“I have been challenged by the business community on how I justify Labour’s policy to drop power prices.
“It’s easy.  People are cold. A couple of weeks ago I was in Wanganui. It was a cold day. I dropped into a suburban library. I was told many of the people who come in do so to get warm. They stay for hours on cold days because they cannot afford to heat their homes.

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Key’s inequality claims another fudge-it

John Key’s attempt to claim that inequality is flat in New Zealand would be laughable if it wasn’t so serious, Labour’s Finance spokesperson David Parker says.

“John Key is yet again pulling the wool over Kiwis’ eyes. New Zealand is now a country where the gap between the wealthy and the less well-off grows wider every year.

“National cherry-picks statistics to back up its claims. The Perry Report that John Key cites excludes capital gains, which is a significant contribution to inequality in this country.

“The truth is in the 1980s New Zealand was in the best 30 per cent of the OECD for income inequality. Since then income inequality has got worse overall in the OECD and New Zealand’s downward trend has been even worse. We are now in the worst 40 per cent of countries for income inequality.

“The consequences of income inequality at these levels pile up every year. That’s why home ownership rates are dropping and child poverty is increasing.

“New Zealanders know that. John Key is telling the 75 per cent of New Zealanders who say the gaps are widening under his policies that they are wrong.

“Under this Budget those gaps while grow even wider.
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English nothing to say on inequality at Davos

Bill English is attending the World Economic Forum this week but will have nothing to contribute to the biggest issue on the agenda – the ever-widening gap between rich and poor, says Labour’s Finance spokesperson David Parker.

“Bill English has been in charge of an economy where the inequality gap has increased. Income tax cuts weighted to those who already earn the most, a refusal to tax capital gains of the wealthy, and house prices rising beyond the reach of the young.

“His policies have made inequality worse in New Zealand.
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Inequality up under National

Bill English can try to rewrite history all he likes, but the truth is that inequality is getting worse under National and Thursday’s Budget does nothing to fix that, says David Parker, Labour’s Finance spokesperson.
“Both income and asset inequality have worsened under the current government, and will continue do so.
“On Q&A this morning, Bill English desperately tried to deflect criticism of rising inequality by trying to push the blame on to previous governments. But no amount of spin and denial can cover up the current Government’s record of rising inequality.
“National’s 2010 tax cuts put $2.25 billion into the hands of top of income earners – that was 40% of the total tax cuts package to the top 10% of taxpayers.
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Nothing in budget tackles two-speed economy

The budget does nothing to tackle the two-speed economy that National is creating, says Labour’s Finance spokesperson David Parker.

“National’s two-speed economy is creating winners and losers. The winners are a few well, connected elites. The losers are the rest of us.

“We have two economic speeds, where exporters and manufacturers struggle, while speculators flourish.

“We have two speeds in a fairness sense, with incomes and wealth ever more concentrated in the hands of the few.
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National’s anaemic economy only growing inequality

National’s anaemic economy is funnelling the meagre proceeds of growth into the hands of a minority of New Zealanders who were already best-off, while ordinary New Zealand families struggle to meet the bills and unemployment is over 7%, says Labour’s Finance spokesperson David Parker.

“At 0.2%, growth in the last quarter was closer to 0 than 1%. The vast majority of New Zealanders are no better off. That’s because National is creating the highest inequality levels ever.
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Meeting with Joseph Stiglitz

I  travelled to the US and UK to discuss my ideas on monetary policy with some of the best economic minds in the world, including former World Bank chief economist Joseph Stiglitz, Harvard academic Jeffrey Frankel and IMF chief economist Olivier Blanchard.

I believe Stiglitz is one of the great living thinkers in the world and so I was looking forward to seeing him again. It’s not often you get the opportunity to canvas views with a Noble Prize recipient.

Stiglitz’s views on life and economics really are holistic. While we started on monetary policy, we soon moved on to inequality and more general economic issues that concern him.

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