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The Vector Ltd Sale and Flawed Images of Energy
Letters to Prime Minister and response from the Deputy Prime Minister


Principal Letter to Hon Helen Clark
Prime Minister (part of a series)

Secondary Letter to Hon Helen Clark

Prime Minister of New Zealand

Letter from office of Hon Pete Hodgson

Convenor of the Ministerial Group on Climate Change, Minister of Energy, Minister of Science

Letter from  Hon Michael Cullen

Deputy Prime Minister
Minister of Finance
Minister of Revenue
Leader of the House of Representatives

LIMS saga

Example of Governments ability to articulate its concern about community capital.


These letters are the most recent of a continuing correspondence with the Prime Minister, Government Ministers and officials that began in 2000. The latest letter continued my theme of concern for the symbols the Government uses to portray the nature of energy and the climate. It also is an attempt to alert the New Zealand Prime Minister, Helen Clark, that the transfer of ownership and control of Vector Ltd from its present community owners to overseas investment banks will have a major negative impact on the sustainability of her electorate and the country as a whole.

This latest series of communications does not include a number of phone calls. Initially I received acknowledgement of receipt of my letter from the Office of the Minister of Energy (Pete Hodgson) and I received assurances that the Prime Minister would sight the letter and respond. Eventually I received a response from the Minister of Finance. (Michael Cullen)

The Michael’s letter is remarkable on a number of counts:

  • He pleads the Government is powerless to intervene because the role of the government and the Minister of Energy ceased in1993 with the completion of the procedures under the Energy Companies Act 1992 when the then Minister approved the Establishment Plan (which included the trust deed) of the new energy company  (then called Mercury Energy, now Vector).
  • These reforms were part of a decade of reforms of the electricity industry, which his party, then in opposition deemed insane and described as Mad Max’s Reforms. Max Bradford was one of the architects of the Reforms. The Finance Minster is saying that “insane’ laws cannot be changed. The Minister and his Government has had 5 years to amend the legislation and re-enfranchise communities and has failed to.
  • His letter is saying the Government cannot advise Aucklanders to be aware that the advent and conjunction of a raft of new technologies means the Vector Ltd will be severely undervalued at the time of its transfer. About the same week I received his letter the Minster for the Environment (Marian Hobbs) was in all the media vociferously condemning the Auckland City Council for contemplating placing Land Information Memorandum (LIM) warning that 4,872 residential owners that their homes may possibly be on land previously contaminated during its use for horticulture. This represents a mere 4% of properties region wide and only 27 LIMS have been tagged with the information. The Government was keenly aware of how this might affect valuations and went to great lengths to ensure Auckland people found ways to remove the information of the LIMS.  The transfer of Vector Limited involves loss of capital to the far in excess of any property value reductions and yet the Government cannot speak out to warn people
  • The Minister of Finance clearly as no idea of the importance of electricity grids in developing sustainable economies and knowledge based societies. He quickly found nearly a billion dollars to prop up the sunset airline industry. Operating now with an even greater budget “surplus” of several billion he cannot find a half that amount to invest in a vital sunrise industry i.e. an intelligent, sustainable locally owned and operated as/electricity/optic fibre system. This inability to ensure that control of the bulk of New Zealand meter boards does not revert to overseas merchant bank (s) seems to be part of a pattern where an extra ten billion dollars is being invested in the sunset industry of motorway construction and he could not find the approximately $200 million to return intelligent control of the sunrise rail industry to the nation. The Finance Minister and Leader of the House also admitted in Parliament this year (2005) that he had never heard of the concept of Peak Oil. His officials were advising him oil prices would be $19 a barrel in 2004. They were closer to $50. It is are $57 a barrel as I write (3 April 2005)
  • The letters reveals the Finance Minister believes he is an authority on the science in the communication of climate change issues. It is difficult to gauge the extent of his knowledge, as he provides no information. It is uncertain whether he has sighted the response of the Minister of Energy, as it was not attached as promised. If he had sighted it and the questions it was responding to he would surely have concluded it is a most ignorant document and failed to address a single question I asked.  In lieu of information in the letter I can only judge his knowledge from trends national investment patterns, energy efficiency statistics, dependency on imported oil, SUV investment (up 4 fold since 2000), the “Fart Tax fiasco and increases in emissions of gases such as CO2.


I have published the letters in reverse sequence as the reader may find it an interesting exercise to guess what the Ministers are replying to. I have also published an account of the LIMs episode as evidence of the Government’s ability to articulate its concerns to communities if it feels the need. The reason why I wrote of climate issues and the Vector sale is because I believe the sale will have a major negative effect on the environment and I wished to link the issues.

Office of Hon Dr Michael Cullen
Deputy Prime Minister
Minister of Finance
Minister of Revenue
Leader of the House of Representatives

16 November 2004

Dave McArthur
85 Houghton Bay Road

Dear Dave McArthur

The Prime Minister has asked me to reply on her behalf to your email letter of 21 September 2004 regarding the assets of Vector Limited and the images the government uses to portray the greenhouse effect.

I can understand that there are a lot of people wanting to see the assets of Vector Limited remain in community ownership. However the role of the government and the Minister of Energy ceased in1993 with the completion of the procedures under the Energy Companies Act 1992 when the then Minister approved the Establishment Plan (which included the trust deed) of the new energy company  (then called Mercury Energy, now Vector). The government has no powers to intervene in the activities of electricity trusts such as the Auckland Energy Consumer Trust which owns Vector Limited. Trusts are free to make their own decisions within the requirements of the trust deed and relevant law, in particular the Trustee Act 1956.

Regarding your queries about the images we have used to portray the greenhouse effect and ways we can address climate change, I understand that you asked the same question in your letter of 20 August 2003 to Hon Hodgson in his capacity as Convenor, Ministerial Group on Climate Change. I have attached the response the Minster sent you as I am in agreement with the Minister on this issue

Yours sincerely

Hon Dr Michael Cullen
Deputy Prime Minister

 2 November 2004

The Prime Minster 
Hon Helen Clark
New Zealand

Dear Helen Clark

 On September 21, 2004 I wrote to you expressing my concern about the impact of the privatisation of Vector and on issues relating to Climate Change.

I did receive a letter acknowledging receipt from the Hon Pete Hodgson, Convenor of the Ministerial Group on Climate Change on the September 27, 2004. I have yet to receive an acknowledgement of receipt from your office. This is of concern to me as my letter was written to you. The privatisation of Vector will have a major and negative impact on New Zealand and especially on your own electorate and city.

I look forward to your response

Dave McArthur

Office of Hon Pete Hodgson
MP for Dunedin North

September 27 2004

Mr Dave McArthur
85 Houghton Bay Road

 Dear Dave McArthur

On behalf of the Hon Pete Hodgson, Convenor of the Ministerial Group on Climate Change, I acknowledge receipt of a copy of your email dated September 21, 2004 to Prime Minister regarding climate change and related issues.

Thank you for your correspondence. Your letter is with the Minister for his consideration.

Yours sincerely

Trevor Cudby
Private Secretary –Energy/Climate Change


85 Houghton Bay Road
Wellington 3

21st September 2004

The Prime Minster 
Hon Helen Clark

Dear Helen

First I would like to check that Pete Hodgson in his capacity of Minister of Science and Technology, Minister of Energy and Minister of Transport has briefed you fully on the implications of the proposed privatisation of Vector. In summary, the confluence of three major new technologies - distributed generation, "smart" response systems for buildings and appliances and the advent of the ability to use "electricity grids" for broadband transmission (PLC) - is set to give the new owners of the Vector grid unparalleled control of a key national asset for a vastly undervalued price. For instance, the privatisation deal stands to give them ownership and control of 1.5 million of the approximate 1.9 million main switchboards (meters/ripple controls) in New Zealand. 

Also as Wellington shows, the loss of integrated community control of the local electricity grid and public transport systems seriously reduces "smart" light rail options.

The scale of the transfer of corporate power and capital proposed in the Vector float is matched only by the gifting of the national rail system and its optic fibre link to other merchant bankers in 1991. It dwarfs the implications of the sale of Telecom as its copper wire technology was always going to become redundant with the advent of PowerLine Communication. Once the process of privatisation is started, full realisation will be very quick. The fate of the Trust Bank system, Hutt Mana Energy Trust, Taranaki Trust etc in the last decade proves this. 

The impact on the environment and the atmosphere of this privatisation will be equally great. History shows the privatisation of our rail/optic network caused a major reduction in our nation's ability to make intelligent use of rail efficiencies to move product and people. Similarly the privatisation of Vector will seriously reduce our nation's ability to develop intelligent, local-based response systems with their use of electricity and gas. It will eliminate many of the valuable options that communities have to develop knowledge economies using the broadband capacity of their local grids. These negative impacts will combine to generate further increases in high-risk emissions of Warmer Trace Gases such as carbon dioxide. 

In terms of its impact on our uses of energy forms such as electricity, it dwarfs the Clyde dam commitment. The Vector privatisation proposal is Think Big by any standards in its impact on the economy and the environment - especially the atmosphere.

This links me to the main reason for my letter. I am concerned about the images the Government evokes of the nature of energy and of climate processes. I believe they are deeply flawed and put humanity at enhanced risk. 

Not one of your officials has been able to point me towards any research that offers scientific proof that the Government’s use of key symbols to communicate intelligent uses of energy and Climate Change issues actually works. I have studied the research performed by the Climate Change Office and NGOs such as Greenpeace. I can detect little effective Science in their research. Indeed the phrasing of the questionnaires probably works to compound the confusion of how the atmosphere works. 

Conversely, there is evidence that the popular use of key symbols is promoted by and works to serve narrow sector interests. These interests do not tend to coincide with the greater national and global good. These uses also work to lower Science standards in our schools.

In late October 2002 I wrote requesting a brief audience with you to outline my concerns of a conflict I perceive between the activities of those charged with achieving the objectives of NEECS and those charged with achieving Kyoto objectives.

I also wished to show you simple proposals for eliminating the conflict.  At the time I asked that I not be referred to government officials. My wishes were not respected. I received at very short notice an invitation from Donna Gardener of the Mfe to attend a specially convened meeting on November 14, 2002 of the Mfe, SMF, CCO, the Royal Society, the NZAEE president and the Ministry of Education. The latter was "too busy" to attend.

As anticipated, the meeting was an unhelpful use of taxpayers’ money. I suggest you obtain minutes of the meeting. Some of the confusion was caused by the fact the convenor was finally responding to an urgent instruction from her Minister, Marian Hobbs, to convene a meeting to consider how the Energy Action 2008 programme could be funded into our schools. Marian had issued this instruction six months previously in May. Marian had seen this education resource at the January 2002 NZAEE conference in Hamilton and had been very impressed. 

Energy Action 2008 is an upgrade of the Energy Action programme put into NZ schools in the 1990s by the now dismantled local "power boards" and Council owned electricity supply companies. In brief, it taught primary school children how their use of fuels and electricity impacted on the environment and on the atmosphere in particular. All participating schools had a large poster in their entrances foyers graphing their use of gas/ electricity and the corresponding impact on CO2 emissions. One of the first acts of Pete Hodgson on assuming office was to bestow Communication awards on its creator, a genius called Grant Dunford. The programme ceased because of a lack of funding in 2000.

The minutes of the meeting will reveal my attempts to outline my NEECS -Kyoto concerns were met with varying degrees of hostility and indifference. My experience is that institutions such as our universities, the Royal Society, the Ministry of Education and the NZCER are hampered by a lack of funds to research the issues I raise. They simply do not have the time to think about the issues. 

This situation is compounded by the reactions of key individuals who have made a major investment of their careers and egos in "environmental education" programmes that may well fail the scientific scrutiny I call for. I say this most kindly. 

I also say it in sadness. It could be these programmes work against our children developing sustainable images of energy and enjoying the Knowledge Economy. An example is the influential Enviroschools programme. This contains no integrated Climate Change component or support for teachers in communicating scientific concepts of energy. Its hidden curriculum is that the atmosphere is not important. Its effect is to enhance the ability of key industrial sectors to shape the school curriculum for their own purposes. 

I have since watched the key national indicators of New Zealand's impact on the climate worsen, despite your Government's efforts to reverse the trend. I have watched your helplessness to effectively implement programmes such as the methane emission reduction programme. We have just generated another generation of thermally illiterate trades people. 

The "Fart Tax" fiasco is perhaps an example of how your officials have not served you as well as they might.

In 2001 I wrote a detailed proposal to the CCO that it sponsor a competition in primary schools for the best 3-4 minute video portraying the trace nature of the key Warmer Gases the Kyoto Accord is concerned about. The videos would also communicate how Earth's surface temperature would be 33C cooler in the absence of these Trace Gases. The proposal was inspired by a rather anguished comment to me by the then head of NIWA, Martin Manning. He said people do not understand that with Climate Change we are talking about Trace Gases. The simple point Martin, the CCO and education officials have difficulty understanding is that we are NOT talking about Trace Gases. 

My proposal was that the best five-six videos be compiled as a peer -peer teaching resource and that as part of Rio +10 commemorations in September 2002 the videos might be broadcast on national television, one video each night before the weather for the Rio week.

Despite repeated inquiries, the CCO would not even acknowledge receipt of the proposal. I suggest it would not have been so easy for your Government's proposals to be kneecapped by the derisory "Fart Tax" label if our twelve year olds could explain to their parents that we are talking about Trace Gases and their incredible thermal leveraging ability.

I invite you to join my call for a national review of the symbols we use to evoke images of the nature of energy and of how Earth's Climate works. I am well aware of the difficulty your officials, the media and the public will have in appreciating the need and value of such a review.

As a positive response to the Nov 14 2002 meeting, I have endeavoured to create a website featuring a multi-faceted approach to the problem of communicating strategies for ameliorating the impact of our activities on the climate. Perhaps this can be used to establish a framework for informed discussion of the issues.

The website address can be found at (I am not a company - I cannot afford to maintain a range of domain names.) Please understand I have minimal resources and skills to create and maintain the website. It requires review and editing.

The website also contains a related section called Electric Thinking. It contains a limited discussion that backgrounds the importance of Vector to your constituents in Auckland and on national strategies for creating a Sustainable/Knowledge Economy.

I look forward to your response. I will forward you a printed copy of this letter when I can get access to a printer.

Dave McArthur

City halts soil tags on LIMs pending further studies

22 December 2004

Auckland City has agreed with the advice of the Crown Law Office and will not tag Land Information Memoranda (LIMs) on properties which may be on land formerly used for horticultural purposes, Mayor Dick Hubbard has announced.

A Crown Law Office opinion on the issue was requested on behalf of Auckland City by the Ministry for the Environment (MfE) and made available to the council and other local authorities in the region this week.

The mayor said that the City previously believed it had no option but to put the information on LIMs.

The Crown Law Office agreed that Auckland City had acted lawfully by using its discretion to put the information on LIMs, but pointed out other ways it could be made public.

"While we will stop tagging LIMs for the time being, there are some issues to be resolved," said Mr Hubbard.

"We are still in discussions with the Auckland Regional Council (ARC) and the MfE on a soil testing programme and guidelines of contamination levels as they may affect health. If, once these issues are resolved, unacceptable levels of contamination are confirmed, the information will be put on the LIMs of affected properties," he said.

"We are grateful for the assistance of the Minister, the Hon. Marian Hobbs, in securing the opinion from the Crown Law Office and for the offer of assistance in dealing with contamination issues."

So far only 27 LIMs have been tagged with the information and this will be removed. Letters to the owners of nearly 5,000 properties believed to be on land formerly used for horticultural purposes will be sent in the New Year advising them of Auckland City's decision.

Mr Hubbard said at the outset the council believed it had a legal responsibility to tell people it was aware of information contained in a report prepared by the Auckland Regional Council and the Auckland District Health Board (ADHB).

The Crown Law Office has advised Auckland City that there are other ways of making this information available to the public.

These include the District Plan, release of official information under the Local Government Official Information and Meetings Act (LGOIMA) and by general publication which could include the council's website, for instance.

In the meantime, the information on sites potentially affected by former horticultural land use would remain on the council's website.

The Crown Law Office found that under section 44A(3) of LGOIMA the council could use its discretion in placing the information on LIMs.

Mr Hubbard said that while the key issue in the public's mind has been settled for the time being, the longer term issues of possible contamination of former horticultural lands still had to be resolved.

"All our efforts are aimed at increasing the amount of certainty we can give owners and residents and we will continue to work closely with the ARC and MfE on their further studies to progress this."

The background:

in 2001, the ARC and ADHB undertook a research project to assess the extent of residual contamination in soils from past horticultural activity in the Auckland region. The study involved sampling 43 horticultural and agricultural sites in the region. Only one site within Auckland City's boundaries was tested.

the study concluded that historic horticultural activity resulted in comparatively elevated levels of contaminants on about 4 per cent of the region-wide sites. The remainder of the sites showed acceptable levels.

Auckland City then undertook a desktop study to identify which properties on the isthmus may have been used in the past for horticultural purposes. Old aerial photographs from the 1940s and 1950s were studied and overlaid with maps of present day development. This study found that properties of 4,872 residential owners may possibly be on land previously used for horticulture.

the council wrote to these owners advising them that the existence of the ARC/ADHB report would be flagged on LIMs of potentially affected properties.


The Ministry for the Environment has been working with Auckland Regional Council and territorial local authorities in the Auckland region on the issue of potential soil contamination from former horticultural land for more than two years.
· In October 2004, Auckland City Council decided to place Land Information Memorandum (LIM) notices on approximately 5000 properties formerly used for horticulture.

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