Behind Auckland’s power crisis – Profiteering, deception and anti-democracy

Ray Nunes February 1998

Since Auckland’s power crisis began in mid-February the public have been subjected to a barrage of evasions, double talk and phoney reassurances.

There can be no doubting that Mercury Energy bears a big responsibility for all the blackouts and shutdowns, and the enormous disruption they have caused. But behind Mercury, in the public opinion dock stands the government.

1. Who is responsible for the deceptive set-up of Mercury Energy’s controlling board? The Government.

2. Who is responsible for restructuring the economy in order to place profit in command instead of public service? The Government.

3. Who sat back and did nothing in the face of the crisis, pretending it was not its business? The Government. What has it come up with in the way of solutions? Nothing.

The New Right – or the New Wrong!

In the present maze of claims and counter-claims the public is being misled by experts – and we don’t mean the technical staff. But it is not difficult to see that the New Right, free-market ideology of the Government plays a major role at all levels.

To start with we find a bag of dirty tricks behind the completely undemocratic set-up of Mercury’s controlling body.

A community trust nominally owns and controls Mercury Energy. But the real directing power lies in the hands of five of the directors appointed by the law firm of Russell McVeagh; they really exercise control over Mercury’s policies. But this structure is only a front for big businessmen. The law firm flatly denies ever appointing any director. This denial was in a statement the firm made, reported in the New Zealand Herald of February 26. It also said: ‘Russell McVeagh has no power to influence the control or business of Mercury Energy and has never done so’.

Absolute power?

So here’s a pretty picture. If Russell McVeagh don’t appoint directors or influence Mercury’s business then who does? Do the directors hold their office by Divine Right? They may think so, because their role is similar to that of absolute monarchs who claimed to hold their power from God. But the reality is that they hold their positions through Government manipulation of the setting up process.

Energy Minister Max Bradford claims that the Auckland Energy Consumer Trust which owns Mercury was set up in 1993 in the way put forward by the people of Auckland through trust representatives – not the Government. But that’s just horse feathers. There was no referendum of the people in Auckland on the question. But there were right-wing Citizens and Ratepayers supporters of the Government who followed out the Government’s free-market line. Someone or some group must have told Russell McVeagh who was going to be appointed so they could give their OK while still denying actual appointments.

Big money for executives

What is clear is that an iniquitous anti-democratic set-up was organised, one which disregarded the public’s right to regular electricity supply and created a corporate structure with massive salaries for Mercury’s executives.

According to Alliance leader Jim Anderton, union-busting Australian chief executive officer Wayne Gilbert gets a salary package of close to a half-million dollars. ( In The Spark of April 1994 we criticised his astronomical salary and role as anti-union hatchet man). The directors’ salaries went up substantially in 1997. Board Chairman Macaulay’s fees went from $50,000 to $70,000; other directors went from $25,000 to $34,000. While just-resigned deputy chairman and head of the Auckland Chamber of Commerce Michael Barnett went from $37,500 to $42,000. Mercury’s profits went from $21.8 million in 1993 to $82 million last year. But how did Mercury’s workers fare during that period? In 1992 Mercury employed 1141 people; since then nearly half that work force has been laid off, including experienced cable fitters, so some have to now be imported from Australia.

Where the buck stops

We have now answered the three points listed at the beginning of this article. All of them point to one conclusion: the buck stops at the Government’s door. That is not in the least bit altered by their belated promise to hold a public enquiry into the causes of the crisis. But that won’t be for another 10 weeks, and before then power will be restored and the heat taken out of the situation.

Another useless exercise

What will be the outcome or the value of such an enquiry? According to Max Bradford it will probably consist of 5 people. What’ the betting that 3 of them – a majority – will be supporters of the Government’s right-wing free-market ideology?

We well recall the whitewash job of the Winebox enquiry which completely exonerated the group of multi-millionaires in the gun, though it was plain they were guilty as hell. In a whole series of articles from the beginning of the scandal to the end, The Spark gave a class analysis of the interests and issues at stake (see our articles in almost every issue from 1994 onward).

Will another Government-appointed enquiry be any different? Will it dare to put the Government on the spot? Never on your life.

The motive force – lust for profit

We have not offered any opinion on the technical issues involved in the power crisis. We can say the public were led up the garden path with Mercury’s false assurances of the time for power restoration. We don’t blame the technicians. We do blame Mercury, and the Government’s lust for profit. The same sort of market-forces ideology has powered the health and education reforms which have fallen heavily on the shoulders of the majority, and particularly the mass of wage workers.

We note that Herald columnist Garth George, with whom we often disagree, calls the Government ‘fascist’ in a recent article. It certainly has some tendencies in that direction. They have been manifested in the deception of the people over the power crisis. It is time the mass of working people got up in arms and gave Shipley’s government and its supporters a lesson in democracy. Obviously the whole shebang don’t know the meaning of the word.