Labour won't intervene in any other market, says deputy

Labour Party deputy leader Grant Robertson has moved to try and reassure financial markets that its sudden lurch to favour central planning in the electricity industry is one-off.

In a statement attacking Economic Development Minister Steven Joyce, Mr Robertson says: "Labour makes no apology for stepping in to fix problems in the electricity sector. But this is not a signal that Labour is going to intervene elsewhere in the economy.

"As we said on the day we launched NZ Power, we have no plans to intervene in any other markets."

That point was buried in the detail of last week's announcements by the Greens/Labour parties about their intention to create a central buyer, planner and regulator of electricity, to be known as NZ Power, if elected.

Coming ahead of next month's sharemarket float of 49 percent of the shares in state-owned power company Mighty River Power, the plan has been attacked by government ministers as "economic sabotage" because the uncertainty creates is likely to sink the MRP share issue price.

The government gave an indicative issue price range of $2.35 to $2.80 when it launched the MRP offer documents, but some analysts suggest shares could be issued at a price below the bottom of the range and most believe the opposition policy has at least reduced appetite and therefore the price for MRP shares.

"National's hysteria on this issue is nothing more than an attempt to scare New Zealanders and hide the fact that the government has no idea how to bring down power bills," says Robertson, who is leading comment on the policy rather than Labour leader David Shearer.

The policy was forged by the party's economic spokesman David Parker. Its energy spokeswoman, Moana Mackey, has been barely visible on the issue.

The policy announcement saw an immediate drop of almost 10 percent in the value of Contact Energy shares last week, and hit the share price of TrustPower and its majority owner, Infratil.

However, the Contact share price has recovered somewhat this week to trade at $5.38 this afternoon, still 7.4 percent down on a week ago.

MRP issued an update to its offer document yesterday warning the Greens/Labour policy materially increased regulatory risk for the whole electricity sector, but suggested the policy could take up to four years to implement.

(BusinessDesk)