Power Surge: a Q&A with John Boshier
New Zealand has been through all this before, when Kiwis endured inflation averaging 15 percent and economic recession.
But New Zealand’s biggest crisis since the Second World War has been largely forgotten. The years between 1978 - 1990 were transformative, and the energy sector had the biggest changes. Every aspect of society was affected.
International oil shocks in the 1970s alarmed the Muldoon Government. Fuel prices rocketed and motorists endured carless days. Then the unmistakable warning of an imminent Middle East war in 1980 was to result in four years of dramatic decisions radically altering New Zealand’s energy future. It would usher in an era known as Think Big and the tsunami of change which followed, called Rogernomics.
In his new book, Power Surge, John Boshier, an insider who worked in the Ministry of Energy with ministers from both sides of the political divide, records this turbulent era and its relevance to today’s problem of climate change.
New Zealand is facing a new revolution as we grapple with climate change. I have always thought that the 1980s brought an economic transformation to New Zealand, which is very relevant to what we now face. The memories of the people who led these events are now starting to fade, so it was time to talk to them and write their stories.
Why do you think this period of NZ’s history is particularly important?
Power Surge describes the biggest creation of infrastructure since the time of Julius Vogel in the 1870s, when he built railways and roads throughout the infant nation.
In the 1980s another substantial infrastructure programme took place. In five years $8.2 billion was invested; worth $22 billion in today’s dollars. This Growth Strategy was designed to overcome recession and make New Zealand more self-sufficient in energy after the oil shocks of 1973 and 1979.
The economic reforms in the late 1980s then liberated the economy from state control.
What do you think people have forgotten about this time period?
We have forgotten what it was like to queue at petrol stations to fill the car, and not be able to drive for one day each week. We have forgotten the periods of high inflation and economic recession when families worried about making ends meet. To us now, unemployment has mostly become a scourge of the past.
What’s your personal connection to these events?
I was fortunate to be an insider to the action, starting as Director of Planning in the Ministry of Energy. From 1979 to 1984 my team wrote the Energy Plan and carried out the economic analysis of most of the major projects.
After 1984 this planning function was disbanded and I entered Coal Corporation as its Planning and Ventures manager before being the CEO of the Wellington Electricity supplier, Capital Power.
How are the decisions that were made then, impacting us know?
The big decision was to use Maui natural gas to make methanol instead of using it to generate electricity. Hydro-electric power stations were built instead, which are zero-carbon. Methanol exports create over $1 billion of foreign revenue a year and hundreds of jobs. The decisions to expand the aluminium smelter near Bluff, and the steel works near Auckland created new industries.
After 1984, energy supply and demand were deregulated and markets created. These commercial structures meant energy was no longer a public utility funded and managed by government. Energy prices are set by market processes, not by cabinet ministers.
Climate change policy heralds the biggest change in society since that time.
What can we learn from this time in terms of the challenges we’re facing as a country around climate change / the pandemic / Russia’s war?
The economic reforms after 1984 were sweeping and sudden. Productivity in the industry was improved, but at the high social cost of many jobs. Power Surge suggests a ‘Big Bang’ such as this could be avoided in designing climate change policy. It is important that people be given time to change their patterns of energy use and not be disadvantaged in the process.
Russia’s war in Ukraine has caused serious disruption in world energy markets. Russia has the world’s biggest reserves of natural gas, and interruptions will cause an energy crisis as bad as that in 1979 when Iraq invaded Iran. The 1980s showed us it was essential to have strong export industries to pay for energy, and adapt quickly to changing oil prices.
Power Surge ($39.99 RRP, White Cloud Books an imprint of Upstart Press).