Federalism in Australia is blamed for many things, including the poor management of resource development and environment issues. The experience of electricity planning in New Zealand in the 1970s, however, suggests that this blame is largely misplaced for the political attractions of development prevailed there even in the face of institutional arrangements different to those in Tasmania. Indeed, these differences in institutional arrangements were mostly of a kind that, on the basis of the Tasmanian case, might have led us to expect a less reverse-adapted pattern, yet this was not the case.

In the 1970s and early 1980s New Zealand possessed what we might have expected to have been a number of institutional advantages over Tasmania in the field of electricity planning. Yet these institutions proved to be just as adapted to expansion by the construction of the preferred hydroelectric means. Even after demand levelled off, the momentum of the development projects embedded in these institutions proved unstoppable, and the consequences were costly, especially since (unlike Tasmania) there was no Federal Government to pay the bill. An expensive dam was built much earlier than it should have been, and it should have been deferred in preference to thermal capacity. In this case demand side management and least-cost planning techniques were ignored as means of responding to planning uncertainties, and the planning process continued as usual.

This chapter will examine these developments, focusing on the decisions to build two power stations and the forecasting and planning processes in general. First, however, we shall look at the institutional setting for electricity planning in New Zealand, which suggested in many ways the reforms suggested in Tasmania.