Hon DAVID CUNLIFFE (Labour—New Lynn) to the
Minister of Finance: Why doesn’t his Budget’s net debt track take into account lost dividends from SOEs and sales costs arising from his policy of privatising state assets?
Hon BILL ENGLISH (Minister of Finance)
: Because final decisions have not been made about the mixed-ownership model. In fact, the National Government has been very clear that it would proceed with that model only after it had laid out its plans to the New Zealand voter and it had managed to get re-elected.
Mr SPEAKER: Question number—does the member have a supplementary question? We cannot wait all day.
Hon David Cunliffe: Given that the Minister has banked in Budget 2011—
Hon Trevor Mallard: I raise a point of order, Mr Speaker. Although some of us do not mind some jovial encouragement from you in the Chair, that is not the sort of comment you use to Ministers when they miss their opportunity to get questions. I think—
Mr SPEAKER: The member is quibbling with what I have just done. That is not a matter of order. I was about to call Kevin Hague, and I was surprised that the member
had a further question. Members cannot expect the House to wait for them; that is not unreasonable. Some members take too long to get to their feet, and being occasionally reminded that they should take their call is no bad thing in itself. It is not the end of the world.
Hon Trevor Mallard: I raise a point of order, Mr Speaker. I think we need to look at this carefully. I think your role is as a referee, not a commentator.
Mr SPEAKER: I do not think I need such lectures.
Hon David Cunliffe: Given that the Minister’s 2011 Budget has already booked the proceeds of those asset sales, for which he has just confirmed that he lacks a mandate, did his Government’s Budget 2011 Fiscal Strategy Report set the upper net debt ceiling at 35 percent, and what guarantee can he offer that his policies will not break this limit when his Budget does not properly account for the costs of his Government’s plan to sell public assets?
Hon BILL ENGLISH: The 35 percent ceiling is well above where we expect net debt to peak, which will be just under 30 percent. I think this will be more of an issue for the member. If he says he will use a capital gains tax to offset sales of assets, he cannot count the dividends, because they are still in the Budget now. He cannot add dividends from retaining State assets. They are still in the Budget.
Aaron Gilmore: Assuming that 49 percent of the State-owned energy companies were sold, what impact would this have on the operating balance, and what would the size of the Crown’s future commercial assets be?
Hon BILL ENGLISH: It would depend a bit on the price. If we use last year’s valuations, our annual interest costs would fall by $400 million, and annual dividends would fall by about $185 million, leaving the operating balance about $215 million better than it would otherwise be.
Hon David Cunliffe: If these State-owned enterprise assets yield low returns, as he claims, and given that Treasury says that efficiency gains from privatisation are likely to be moderate at most, would not power prices have to rise to make these new companies attractive to investors, or will he now admit that these assets are already highly profitable, which is why foreign buyers he has met, like the China Investment Corporation, want to buy them and why it does not make sense to sell them?
Hon BILL ENGLISH: No, that is not the case. The measure of poor performance of the last Labour Government is that despite the fact that power prices went up 70 percent in 8 years, these companies actually paid very poor dividends.
Hon David Cunliffe: Why does the Minister not just admit what all New Zealanders already know, which is that he has booked the proceeds of selling State assets in his Budget before he has a mandate to sell them, and that he has done so without booking the lost dividends that he must take down if he goes to 51 percent?
Hon BILL ENGLISH: No, that is not the Government’s position. The fact is that the Government needs to keep investing in its core information technology systems, in ultra-fast broadband, and in rebuilding KiwiRail. We have arranged the Budget so that we will be able to use the proceeds of a partial sell-down of electricity companies for the very real capital needs of the core State sector, which will continue to grow.