WELLINGTON NZ, 6 April--As the lights start going back on-permanently we are being reassured--in Auckland's central business district (CBD), the issues posed by what was probably the largest, most prolonged and most serious power outage in any imperialist country since the introduction of large-scale electrification over a century ago, is still being hotly debated in New Zealand.
For five weeks, electricity was not available in the heart of NZ's largest city and financial and commercial centre. The total shutdown was preceded by a series of cuts, as Mercury Energy lost each of its four cables in succession. When the fourth cable went at the beginning of February, 73,000 inner city residents and 8,500 businesses were left without power. Those that could moved out of the city centre, while others scrambled to bring in their own generators. But nothing could disguise the embarrassing fact that in a supposedly "developed" country, the foremost city could not maintain its central power supply. News of the crisis spread around the world, displaying, along with the Asian economic meltdown, aspects of the irrationality of capitalism.
In a desperate attempt at international damage control, NZ government heavyweights attempted to minimise what was happening. Prime Minister Jenny Shipley on a state visit to Japan reassured businessmen that the failures were contained within a two square kilometre block. She did not play up the fact that these two square kilometres also happened to be the country's central business district.
The government is launching an official inquiry. But there is plenty of evidence that suggests that the fiasco was a consequence of deregulation and privatisation of the electricity infrastructure.
The construction and maintenance of hydro and thermal power generation was up until the mid 1980s the responsibility of the state. But under the impact of "Rogernomics" (the NZ equivalent of Reaganomics/Thatcherite monetarism) power generation and its supply system was broken up and progressively corporatised. The NZ Electricity Department was turned into a state-owned business, while the locally owned and run electricity boards that supplied power to individual consumers were privatised.
Paradoxically, the old Auckland Electricity Power Board (AEPB) was not privatised, although this was the stated intention of four of the five directors appointed by the government to administer it. In the face of strong public opposition, the privateers backed off and decided that majority ownership (i.e., 75 percent) of the electricity supply authority would be retained publicly, with the remaining 25 percent of shares to be floated in the private sector. As part of this "compromise," it was decided that a majority of the directors would be selected as representatives of the future private shareholders.
With the dissolution of the AEPB into Mercury Energy, the priorities shifted from the maintenance of continous cheap electricity, to increasing profits. The means to do this was through cutting expenditures on staff and infrastructure, while pouring money into gobbling up other smaller power companies. In short, private feasting at the public trough. Writing in the Listener (7 March) Denis Welch complained that Mercury's managers "spent too much time in front of the dressing-room mirror instead of being out there in the field. There has been an enormous preoccupation with empire-building...."
Mercury tried to portray the failure as a result of the unusually high temperatures that hit Auckland in January. But as it became obvious that, one by one, each of the four power cables supplying electricity to the city was failing, the former chair of the old local authority board, John Collinge (a member of the conservative National Party) had a different explanation. He attributed the failure to the cutbacks in maintenance staff. According to Collinge, since Mercury Energy came into being, staff had been cut from 1,200 to 600, and this particularly affected cable monitoring and maintenance.
Mercury management claimed that crews could be brought in to fix the cables when necessary, i.e., when there was a crisis. But what about monitoring the situation in order to avoid a crisis? There is evidence that Mercury had known two years ago that these underground cables were unreliable and likely to fail (The Dominion, 3 March). Other reports indicate that AEPB had been warned of the potential problems in the early 1980s.
It isn't easy to sort out all the conflicting claims and counterclaims, but the one thing that is clear is that the Auckland power crisis has put a big dent in the government's programme of continuing deregulation and privatisation. Other privatised power companies claim that similar crises are unlikely to happen to them, but most people find these assurances somewhat hollow. Whether by coincidence or design, a crisis of this magnitude never occurred under a regime of state-controlled electricity supply. There is widespread recognition that while energy is treated as a commercial product to be exploited for private profit, human needs will always be less important than the bottom line.
This is why socialists defend public utilities and public sector activity in general against privatization attempts. But within capitalism, the logic of the market will always be paramount. The only way to organize society in a rational manner is by freeing it of the requirement to maximize profit. This in turn requires the expropriation of the "privateers" who control the productive capacity of society--a task which can only be accomplished through socialist revolution and the replacement of the existing capitalist state with one run by, and for, workers and the oppressed.