Hon STEVEN JOYCE (Minister for Economic Development)
on behalf of the
Minister for State Owned Enterprises: I move,
That the Mixed Ownership Model Bill be now read a second time. This bill—and this debate—is about three things: it is about controlling our nation’s debt, it is about strengthening New Zealand’s capital markets, and it is about providing funding for new high-priority infrastructure projects.
No nation can afford to let debt get out of control. Huge debt is at the core of why countries like the United Kingdom, Ireland, Spain, Italy, and Greece are being forced to impose tough measures on their citizens. We do not want that for New Zealand. I ask those on the other side of the Chamber why they would seek to expose this country to more risk and more debt than we need to in volatile world markets. The National-led Government is committed to getting on top of debt, protecting and growing our economy, and keeping it safe for New Zealanders from the debt-ridden troubles plaguing other countries. Our mixed-ownership policy is part of a wider economic programme to reduce debt, increase savings, and get our country through one of the worst economic crises the world has seen in 100 years. It is also a key part of our post-election plan and our business growth agenda.
It is very important to point out that we have guaranteed that the Government will always own at least 51 percent of these companies and will prevent any other shareholder from owning more than 10 percent. That will ensure widespread New Zealand investment. It is written into this bill, and all of the Opposition approach on this is to ignore those simple facts—at least 51 percent Government ownership, and no other shareholder able to own more than 10 percent. It is written into the bill. This partial share Government float programme will also help reinvigorate New Zealand’s capital
markets and bring stronger commercial disciplines to each of the mixed-ownership model companies.
The Government has been up front with New Zealanders over our decisions in this matter. We have talked about it for 18 months. We took it to the country last November. We sought, and we obtained, a mandate. The consultation process that has happened since then has included 10 hui, which were held around the country earlier this year. The Finance and Expenditure Committee travelled to hear submissions, and all submitters have had their views considered.
The opponents claim this legislation will increase power prices. Well, under this Government there is now a more competitive electricity market than ever before. In the 7 months to February 306,000 customers switched providers to get cheaper prices. That market regime is in place and it is not affected by the minority ownership of these mixed-ownership companies.
This Government and this Parliament have a duty to future generations to control our debt, which is projected to increase to about 30 percent of GDP in the next few years. This programme is expected to raise between $5 billion and $7 billion to invest in high-priority infrastructure that will help grow our economy, important social infrastructure like schools and hospitals. That is $5 billion to $7 billion we would otherwise have to borrow from overseas lenders. These share floats will provide a minority stake in some of our State-owned enterprises to enable the investment and to enable this country to go forward. This is good economic management.
The four energy State-owned enterprises’ dividends—because this will undoubtedly come up—have averaged about 4.1 percent over the last 5 years, which compares with the cost of new debt for the same period of around 5.2 percent. That is the reality. This arrangement makes strong fiscal sense. The future profitability of these companies, which some private shareholders will get to participate in through their dividends, will be captured in the eventual sales price. So the country gets the cash up front, which makes a lot of sense in these difficult times.
This Government understands the fiscal risks the world is facing. We are not afraid to make the right decisions to protect New Zealand from the world’s financial crisis. Opposition members will now posture, they will exaggerate, and they will claim that it is rushed, that it is happening too quickly, that it is losing money, and that it is not needed. They are all wrong on all counts. They are politically posturing and not thinking of the long-term future of this country. Unfortunately—[Interruption]
The ASSISTANT SPEAKER (H V Ross Robertson): Order! I will stand. Can I just remind members on my extreme left that they should look at Speakers’ ruling 60/5(1), which states that interjections are to be rare and reasonable.
Hon STEVEN JOYCE: They are politically posturing and not thinking of the long-term future of this country. Unfortunately, it is entirely consistent with their approach, where they oppose any move, including this one, to strengthen the New Zealand economy. They oppose moves to strengthen the country’s accounts and to invest in New Zealand’s future. They oppose the mixed-ownership model. They oppose, frankly, not just our investment in schools and hospitals; they have opposed broadband investment, they have opposed our transport investment, they have opposed the irrigation investment, they have opposed the new convention centre, they are opposed to oil and gas, they are opposed to foreign investment, and they are opposed to the
The Hobbit movies. They oppose everything that will give the New Zealand economy an opportunity to get ahead. They are playing politics with New Zealand’s security. They are playing politics with New Zealand’s future.
This Government has its eye on the ball. This Government is focused on jobs, on growth, on the financial security of New Zealanders, and on investing in our future.
Over the next few weeks the Opposition will continue to see how challenging the world is financially. The Mixed Ownership Model Bill is a part of this Government’s wider economic programme, which will help to control debt, increase savings, control spending, strengthen our capital markets, and get our country successfully through the worst financial crisis the world has seen in nearly a century. I would like to acknowledge the fine and sterling work of the Finance and Expenditure Committee and I would like to commend this bill to the House.
Hon CLAYTON COSGROVE (Labour)
: That speech by Steven Joyce was the “offensive” being put into the “charm offensive”. That is what it was. I sum up New Zealand’s feelings by reading from the editorial of the
of 10 June. The editorial reads: “There is no good argument for asset sales. They make no difference to the Government’s net debt. It is flogging off assets for ideological reasons, not economic ones.”
Let us just deal with the debt argument for a moment. What New Zealanders were not told before the last election was that the deficit would worsen. It was hidden by Treasury, of course, which allowed the Government to book the proceeds of the asset sales in the pre-election fiscal update without disclosing the loss in profits. So here is the real story, as we know, around debt and deficit. The Budget Policy Statement shows that Treasury estimated that the Government saves $266 million in borrowing costs per year, yet loses $360 million a year in profits. That is the deal. So all the smoke and mirrors in respect of debt and deficit are the reverse of what that member says.
This is a dark day for New Zealand, and it is a dark day for a number of reasons. Some of us in this Parliament—in fact, on both sides of this Parliament—on the asset sales debate have some regrets in respect of our political history. But some of us in this Parliament went down that track, and when we were elected to Government some years later we learnt from our experience and we actually bought assets back. We knew that the experiment did not work. That crowd over there, of course—the lineage of the Bolger Government—got back into office under Mr Key and did not learn. Here is the deal. This is another example of rushed, ad hoc legislation that has not been thought through. I say it is rushed because they insulted submitters. I say it was rushed because the select committee process was pre-ordained. We had the absurd, illogical act whereby Treasury was instructed by the chairman of the Finance and Expenditure Committee, under the stewardship of the Minister, to write a report analysing the public submissions—all 1,489 of them, only 9 of which out of 1,489 supported the bill—before the submissions were actually completed. That is shameful. The report was pre-ordained in the face of 80 percent of New Zealanders opposing the bill: 80 percent before it was written, 80 percent when it came out of the select committee, and 80 percent as we sit and stand in this Parliament today.
I say this: selling assets is not a plan for New Zealand. It is not a plan. It will not put food on the table of the lost and lonely of our society, it will not get the 87,000 young people languishing on the dole back to work, and it will not help those who languish outside our health system or outside our ACC system. No, it will meet the ideological requirements that that Government has, because its only sort of strategy is to flog off assets that New Zealanders already own. It justifies this policy by saying what were originally the words of Mr Key: “We want these assets to grow. In order for these assets to grow they must have capital.” “We have no money,” said the Government, “ and we can’t afford to put any money into it.” That is why it said it had to flog them off.
Then the Government was faced with the dilution argument. Bill English woke up, read his form 5 “BusCom” textbook, and realised what the definition of “dilution” was. Then Tony Ryall got up in this House and said that in order to avoid dilution below 51 percent we will borrow, we will tax, and we will do whatever it takes to adhere to that
position and solidify that position. But did not those members tell us that the reason for the sale was they had no money to spend on the growth and the capital of these companies?
This is wrong. This is rushed, shonky legislation that will sell out. It will sell out assets, sell them back to New Zealanders, back to generations of New Zealanders who built them, and back to generations of New Zealanders who already actually own them. I put this question to the Minister and his ilk: show me the thousands of mum and dad Kiwis in our society who have bucketloads of cash—maybe in Epsom, possibly, but apart from that—who can afford to go down to the stock exchange, spend money, with or without a loyalty bonus, and buy back what they already own. These are New Zealanders who are struggling to make ends meet today. Show me the New Zealanders who have money—the mum and dad Kiwis.
Look at this bill. There was talk about an ownership cap. There is nothing in this bill in respect of penalties for breaches in that ownership cap, and we were told by submitter after submitter—not just Joe Public but technically, professionally, academically qualified submitters—that you could drive a bus through the 10 percent ownership cap rules. In fact, I recall the officials saying to me that if you had foreign owners, perhaps mum, dad, and son, and if the son was under 18, then he would fall under the influence of his parents and that is a sort of related party transaction. But if he turns 18—or 21 depending on the jurisdiction—he is his own man, and he can go away and buy 10 percent if he wants to as well, as well as mum and dad. You could drive a bus through this—you could absolutely drive a bus through it.
Eighty percent of New Zealanders are opposed to this bill. There was talk about power prices. We had an Oxford PhD economist come before the select committee—and other technical experts—who told us that consumers purchasing electricity and energy from State-owned enterprises were paying, on average, $265 less per annum than if they acquired those energy resources from the private sector. We asked the officials in the select committee hearing whether they had done any work on this and could they provide us with any advice on this. That was refused by Todd McClay and his ilk and Maggie Barry, whose only contribution to the process was to demand, unbelievably and insultingly, that a submitter tell her how he had voted because he was anti - asset sales.
We asked Bill English in the Finance and Expenditure Committee yesterday whether he would provide us with advice—if he had not asked for it, which he had not. We asked whether he would instruct Treasury to provide us with advice on the electricity price issue, and whether he would make it public to either prove us wrong or reassure New Zealanders. He said no. He would not do it. We asked Phil Heatley, the Minister of Energy and Resources, whether he would instruct his officials to do it. Oh, no—hear no evil, see no evil. That is what National does not want to tell New Zealanders, because prices will go up.
We are going to propose a number of amendments. Outside this place, mum and dad Kiwis all over the country are signing a petition to trigger a referendum. This is not a group of people or a coalition that is made up of just New Zealand political parties like Labour, New Zealand First, the Greens, and others. Oh no. This is Grey Power, this is the New Zealand Council of Trade Unions, and this is a large number of community organisations that are galvanised by giving people a formal say. I say this to the National Party members: they are a bunch of poll-driven fruit cakes. That was demonstrated, of course, by the Hekia Parata reversal. It seems the criterion for reversing policy is getting one of Steven Joyce’s polls and over a large whisky or bourbon one night saying: “Hey, the people don’t like it.” That is the reason they gave for the Parata reversal: the people will not wear it, the people will not tolerate it; it was
not because National members thought it was wrong, of course. No, they read a poll. If the criterion is that the people do not like it and will not wear it, and they did it with education, then I say to colleagues that they should do it with State-owned enterprises.
Once these assets are gone, they are gone. National members try to bluff people by saying that they are going to buy other assets. They are going to buy schools and the odd bridge. Here is the problem with that, of course: you sell a revenue-generating asset, you buy a non - revenue-generating asset, and at some point the money runs out. Then the question is this: what do you do? We are borrowing $300 million per week, and they have disposed of all the surpluses that Labour created over 9 years. National is borrowing $300 million per week so the people at the top get a massive tax break. So what is left? Flog off the family silver. The Government has no plan and it has no strategy but flogging off the family silver. What do you do after you have flogged off the energy State-owned enterprises and Air New Zealand? You still have no plan—it has no plan. It is still borrowing. It is still not generating exports. There is no growth plan. So what will the people be faced with? Selling more assets—selling more assets.
Future generations—sold out. Past generations—sold out over these asset sales. Those members can do their usual and sort of grin and grip, as it were, but I say in this House that we are going to fight right through this process. We are going to take it outside of Parliament after this process, and even if they get one away, the people of New Zealand will have an opportunity to stop the rest—the second, the third, and any more. I say that we should boot them out in 2014.
Hon CRAIG FOSS (Minister of Commerce)
: I acknowledge the call, Mr Assistant-Speaker Robertson, and you have obviously been a very busy Speaker, as the previous member told us you were very busy doing things with assets etc. I am sure he was not really intending to impinge upon you like that.
The mixed-ownership model is empowering for our families, for our capital markets, and for keeping our debt under control across New Zealand. It will also help increase net savings within New Zealand now, tomorrow, and into the future. This Government continues to manage our economy and the balance sheet on behalf of all New Zealanders—those who are with us now, and future generations—in the most prudent way possible, particularly in the context of the financial crisis around the globe that we are in the midst of right now.
The mixed-ownership model helps encourage the payment of dividends to Kiwis rather than interest to overseas lenders. It empowers New Zealand families. It can enrich New Zealand as a whole because dividends will be paid to New Zealanders, rather than furthering debt, as the other parties propose, which would require interest rate payments overseas.
New Zealand is vulnerable. New Zealand is incredibly vulnerable, right now, to the state of the global financial system. All eyes are on Europe, southern Europe in particular. That is a good wake-up call. We should be thankful that all eyes are not on us, because unless the Government keeps our balance sheet, our finances, and, most particularly, our debt and our ability to fund our debt under control, we could, sadly, see what is playing in Europe happen here in New Zealand.
We must remember that New Zealand owes the world $180 billion. We must maintain the most prudent management possible in terms of our accounts, our balance sheet, and our assets across New Zealand, because the issues that are playing out in Europe are a result of not managing balance sheets appropriately, ongoing increases in spending promises, reprioritisations not happening, and no accountability.
New Zealanders can judge for themselves when they watch what is happening on their TV screens, when they see yet another €100 billion given to the Spanish banking system, and when they watch what plays out with the Greek elections this weekend.
They can judge for themselves—and I back them to do that—whether they would like to see in New Zealand what they see there, if we do not make some of the calls that are necessary. In fact, that same public gave this National Government and its coalition partners permission to implement a well-flagged policy.
I note still that this is about managing the balance sheet. I know Mr Parker is tired of hearing about the impact of the Christchurch earthquake, which is about 10 percent of our GDP, and Mr Parker was quoted as saying that. I know Mr Parker, the Labour finance spokesman, is tired of hearing about the excuse of the global financial crisis and its impact on New Zealand. Well, because New Zealand must owe, pay, and fund $180 billion of debt to the rest of the world, actually, those who also funded the European situation are also keeping an eye on how things are going back here.
So even though the Labour Party, or Mr Parker, is tired of hearing about it, the fact is that we had a terrible, tragic earthquake in Christchurch that affected us socially, in humanitarian terms, and also economically. The fact is that the global financial crisis has been with us for quite some time, and this Government is still dealing with the remnants of the economy that we inherited, which was not particularly flash.
This proposal was flagged over 1 year ago. Over 1 year ago the previous National Government, 2008 to 2011, flagged this as one of the options it would take to the electorate on 26 November, and it did. We campaigned on it and, of course, the largest Opposition—they were somewhat larger at the time—campaigned on it last year. That was the basis of their campaign. Our vote, the National Party’s vote, went up from about 45 to 47 percent, and the Labour Party’s vote went down to about 27 percent. So when people talk about referendum, permission, or mandates, we must note that. That was a key issue. If it was not a key issue, I do not know why Labour spent so much of its campaign money on those various ads it ran.
Here is what is proposed, and it is somewhat different from history, particularly the Labour Party’s history. We told New Zealand what we were going to do. We asked for their judgment about 1 year ago—we asked them to make a judgment on our policy at the election. We have explained the model—how it will work—to New Zealand, and they understand it. We told New Zealand what we intended to do with the proceeds if, in fact, they gave us permission to pursue this policy—the Future Investment Fund.
We put caveats around the sale—if in fact it is to proceed—of the various mixed-ownership models being proposed here. We told them about the caveats around that. Mr Speaker, we told them that no one would have a shareholding of more than 10 percent. We told them, Mr Speaker, that we targeted 85 to 90 percent of New Zealanders as being first in the queue. We told them we committed to 51 percent, at least, of Crown ownership remaining, Mr Speaker. So, Mr Speaker, that is somewhat different from previous examples such as no asset sales from the Labour Party when I measure it against what they have done—
Rt Hon Winston Peters: I raise a point of order, Mr Speaker. I am sorry to raise this, but unless you are thinking of leaving the Chair, why are we having in this speech a barrage of references to a person called “Mr Speaker”? You are staying there. The sentence starts with your name and ends with your name. Frankly, it is boring, and the member should be asked to desist from his constant reference to you. You are not part of the debate, for goodness’ sake.
The ASSISTANT SPEAKER (H V Ross Robertson): Well, that is true, but often members do refer to “Mr Speaker” as a way of helping with their speech.
Hon CRAIG FOSS: Thank you, Mr Speaker. Mr Speaker, I suggest that member take a cup of Horlicks and put a rug over his knees, and I look forward to his speech, Mr Speaker. So, in contrast to what we have proposed to New Zealand and what we have gained permission on, in recent history there were wholesale trade sales of New Zealand
assets initiated by the Labour Party—and many of the members of those Cabinets are still in that party right now—with no protection. The wholesale sales were mostly to offshore.
In the 1980s there were many, many assets sold. In recent history, going back as recently as 2007, Spring Creek was sold offshore for multimillions, without any of the caveats that we are putting in place and which are described in this mixed-ownership model right here. In recent history, as recent as the 2005-08 Labour Government, State-owned assets were pledged to debtors offshore and in proposed mergers—for example, Air New Zealand and Qantas. That is what that previous Government, when it was looking at the balance sheet, decided to do. We note that it put its model before the public of New Zealand and was thrown out.
The mixed-ownership model—I tell Mr Peters and all other members—allows the building of billions of dollars of assets for New Zealand. Therefore, those who vote against this are voting against a billion dollars of 21st century schools. Those who vote against this are voting against modern learning environments. Those who vote against this are voting against water storage, irrigation projects—you name it. Those who vote against this are voting against those things that have a direct impact on export growth and jobs for our families. That is what they are voting against. It is clear, and it is as crisp as that.
Keeping the New Zealand Crown balance sheet under control, prudently, as much as possible keeps interest rates down for our families and their mortgages and keeps inflation down. If members are wondering what the other side of that is, they just need to look at where interest rates were and where inflation was in 2006-08 under the previous administration. There is some criticism from the other side, which is very ill-informed. There is confusion of dividend yield versus total return. There is confusion of one-off payments versus ongoing cash flows. I am sure other speakers will play out those other issues.
If the members opposite are saying you should not sell something because it is profitable they are therefore saying that you should sell everything that is not profitable. So I am interested to hear that members opposite want to put up KiwiRail, schools and the police for sale. And given their history in this space, it would not surprise me at all.
Hon DAVID PARKER (Labour)
: The first thing I will say to the prior speaker, Craig Foss, is that we in the Labour Party do not take advice on fiscal responsibility from the National Party. During the last Labour Government, Government debt was reduced from 38 percent gross to 17 percent gross, and net debt went down to 0 percent—it went down to 0 percent. And every one of those Budget surpluses that Labour ran in a time of surplus was opposed by National. When John Key was finance spokesperson, he opposed them. When Don Brash was finance spokesperson, he opposed them. And when Bill English was finance spokesperson, he opposed them. Those are the reasons that New Zealand has got low levels of private debt now.
We have a few Keynesians in the National Government now, but we never have proper Keynesians over there who put money away in a time of plenty in order to keep the economy going when times are tough like they are now. We hear comparisons to Greece—what a nonsense! New Zealand is not even in the position of Greece. It never has been. Maybe it would have been if National had been in charge of the Treasury benches and we had not run Budget surpluses during the 2000s. But Labour did, and as a consequence even now New Zealand has amongst the lowest rate of Government debt in the Western World.
This Parliament is faced with this legislation as being the biggest part of the Government’s economic agenda for our country. This is on the very day that the Reserve Bank downgraded New Zealand’s growth forecasts. New Zealand’s growth
forecasts are so bad that New Zealanders are leaving for Australia at the rate of 1,000 people a week. And they are not leaving because of Greece’s problems; they are leaving because of New Zealand’s problems. In fact, the Reserve Bank today told us that the average growth rate of New Zealand’s 16 largest trading partners this year is three times New Zealand’s growth rate. It predicts our growth rate is going to be 1.1 percent—
Paul Goldsmith: Because it’s China.
Hon DAVID PARKER: —and it says that for the rest of the world, for the 16 largest trading partners—it does include China. It includes Australia. These people are our trading partners. Greece is an irrelevance to us in the sense of trade flows. The growth rate of our trading partners is three times that of New Zealand. At the same time the Reserve Bank said that New Zealand’s productivity growth rate is being pruned back. That is even worse news for New Zealand—that we will not have as much growth as we thought we would in the future because our productivity is growing at such a miserably low rate.
We even had the Minister of Finance concede at the Finance and Expenditure Committee yesterday that New Zealand’s economy has not rebalanced, and it will not rebalance even by 2016. We hear talk about government debt. Between last year and 2016, New Zealand’s net international liabilities—that is what we owe net in the world—will go up from $130 billion to $200 billion. Just about all of it is private debt.
This Government is so out of touch with New Zealand that it thinks that the major part of its economic strategy should be changing who owns what already exists. That is what this legislation is about. It is changing who owns these power companies. It is not increasing the output of those power companies. It is not increasing New Zealand’s export earnings. It is changing who owns what already exists, which does nothing to grow the economic output of New Zealand.
We heard the Prime Minister give a speech just before the election, and he called it “sticking with a plan that’s working”—sticking with a plan that is working.
Hon Dr Nick Smith: It is, absolutely.
Hon DAVID PARKER: He has it endorsed by Dr Nick Smith, the ACC bomb. National’s plan is not working. Growth forecasts keep getting put down. The only thing that goes up is the current account deficit and net international liabilities. This is the central part of the National Government’s economic agenda for this 3-year term, and it is wrong. Even if it was right, it would not grow our exports and it would not improve the productivity of the New Zealand economy.
I want to come back to the question of mandate. The National Government claims a mandate. National and Treasury, under the governance of this Government—National last time and this time—abused the fiscal responsibility provisions in the Public Finance Act by booking the proceeds of sale from these State-owned enterprises and not accounting for the loss of profits that they suffer when part of those assets is sold to a new owner. How bad is that! Treasury was the lapdog of the National Party. When we estimated those losses of dividends, the Government used Treasury to criticise our estimation of those revenue losses, and it claims that it has a mandate!
What National told people at the election was that the pre-election fiscal update was accurate when it was not, and it was not until we had dug down into this and the pre-Budget fiscal forecast came out that it finally acknowledged that this increases the government deficit by $100 million per annum—$94 million to be accurate, but it goes up thereafter. The government deficit is $100 million per annum worse off because National is selling these assets, and it is obvious that the Crown’s cost of funds is less than the return on these assets and less than the rate of the return that it will sell these assets for. So this is lunacy. It increases the government deficit. It increases asset inequality. Is the same range of people who are taxpayers going to end up owning these
assets? No. Predominantly they will be owned by the people whom the National Government gave most of its income tax cuts to, 40 percent of which went to the top 10 percent of the people.
Hon Clayton Cosgrove: And offshore.
Hon DAVID PARKER: And offshore owners? Well, we are told in the model that 30 percent of the shares being sold will be ending up in overseas ownership—30 percent of these New Zealand assets. According to that, these shares will end up in overseas ownership, and that will over time increase New Zealand’s worst problem, which is our current account deficit.
What else does this legislation do? It increases power prices.
We have had an atrocious process around this legislation. This legislation was reported back to this House 5 weeks ahead of when it was due to be reported back.
Paul Goldsmith: We’re very efficient.
Hon DAVID PARKER: “Very efficient”, we hear from the member who wants to be the member for Epsom—the man who supports John Banks, another former National Party man and a fiscally irresponsible man who tripled council debt when he was the last mayor with the Auckland City Council. And when that man Paul Goldsmith was a councillor, he had a terrible risk of local government debt increasing under his watch, too.
What happened in respect of power prices is that we heard from submitters that the average price for a domestic consumer of electricity when they are getting their power from a State-owned enterprise is $265 less per annum if they are getting it from a State-owned enterprise than if they are getting it from a private sector competitor. So we wanted to ask officials whether that information, which was derived by Molly Melhuish in Grey Power and supported by Geoff Bertram, an economist at Victoria University, was correct, because Treasury never addressed it in its departmental report because it was not suitable to their case. So the Opposition members went along to the select committee and said: “Please, we want advice as to whether that calculation of the price being lower through the SOEs is accurate.” Do you know what? The National Party blocked it. The National Party blocked it. National members did not want to hear the answer to that. Look at them—all their heads are down, because they know that is true.
Hon Dr Nick Smith: Not true.
Hon DAVID PARKER: That is absolutely true. Nick Smith came along and said: “Oh, that’s about Comalco.” He does not understand that Comalco is not a residential consumer. This was residential prices, and they would not let us do that.
We had queries about whether the effect of free-trade agreements would mean—because we have not got a very competitive electricity market in New Zealand—that if a future Government regulated the price of electricity it would infringe our trade agreements and allow the overseas buyers who will have bought these shares to take the New Zealand Government to court and for international trade bodies to claim their losses. We wanted to get that advice from Treasury. Were we allowed to? We got the first, superficial advice. We needed to drill down to the next layer to answer the specific question that I have put, and the Government blocked us from asking the question 3 weeks ahead of when this legislation was due to be reported—
Hon Member: Five.
Hon DAVID PARKER: Sorry, it was 5 weeks ahead of when this legislation was due to be reported back.
This legislation will increase power prices, increase asset inequality, increase the government deficit, increase the current account deficit, and leave New Zealand worse off. This Government has no adequate plan for the economy.
Dr RUSSEL NORMAN (Co-Leader—Green)
: I rise to speak on the Government’s bill, the Mixed Ownership Model Bill, to privatise, or partially privatise, some of the nation’s energy assets. Under this Government the New Zealand economy has run into some real trouble. In fact, you could argue that the wheels have fallen off this Government’s management and that under this bill it proposes to sell the engine, because, somehow, selling the engine will improve the performance of the New Zealand economy. In fact, every argument put up by this Government around the privatisation programme has been a very weak argument.
Let us talk about the first argument that the Government put up. It said that companies need to be privatised so that they can access capital. Well, the problem for that argument is this: the money that is gained through the sale does not go to the companies—right? The companies do not get any of the proceeds, so they do not get the capital that way. If the Government sells 49 percent of the shares in the companies, the only other way that the companies can raise capital is to issue more shares. So they could issue more shares in these companies. Once they do that the Government will be required to buy 51 percent of all of the new shares issued if it is to maintain its 51 percent ownership. So the Government would be required to come up with half of all the capital that these new companies require if it is to maintain its 51 percent ownership of the companies. Of course, the Government has got no intention of providing half of the new capital to the electricity companies, and what is more likely to happen is that, over time, there will be a dilution of the Government’s ownership and it will go under 51 percent. The alternative, of course, is what it can do currently; it can issue bonds. These companies currently issue bonds—debt instruments not equity instruments—to raise capital, and they will be able to do that under the current structure just as they will have to do it once they are partially privatised, which is what the Government is going to do anyway.
The second argument that this Government then moved to, once the first argument was seen to be completely ridiculous, was the argument about debt. And it keeps coming back to the debt argument. I am reminded of the quote from Roger Douglas, who was the previous architect of privatisation, who, many years after he had conducted the privatisation, wrote in a book: “I’m not sure we were right to use the argument that we should privatise to quit debt; we knew it was a poor argument but we probably felt it was the easiest to use politically.” That is what Roger Douglas said. It does not make any economic sense to sell these assets to quit debt. It is not an economically rational argument or a fiscally rational argument. It is a politically rational argument, and that is why the Government has now moved to that argument. Why does this argument not make any sense? The reason is very, very simple. The return on the assets is much greater than the cost of Government debt. That is a simple fact.
If that was not the fact, then there is no way you could sell these assets, because you could not take them to the market and tell people that the return on these assets is actually less than the cost of Government debt—about 3 or 4 percent. No one would buy these assets if that was the actual return. The truth is that the total shareholder return, which is the key measure that Treasury uses in actually measuring the return on the assets, is 18.5 percent. That is the total shareholder return according to Treasury on these assets. So it is actually much more fiscally responsible to hang on to the assets and hang on to the dividend streams and the capital accumulation than it is to privatise the assets. It is for this reason that Treasury, in the Budget Policy Statement, was forced to admit this exact fact. If you look at Treasury papers of 2011 and 2012, where it looks at the operating balance excluding gains and losses and at the impact of privatisation, Treasury says that the Government is worse off by $100 million per year as a result of the privatisation programme. That is when you account for the lower interest costs,
because they have retired some debt or not accumulated more debt, but then you balance that off against the loss of the dividends and the capital gains from these companies. So when you balance those two things off, Treasury’s advice is that the Government is worse off by $100 million per year.
If the key issue is Government debt, the reason we have Government debt is the accumulated operating deficits. That is the reason why the Government gets debt—year after year it has run deficits and under this Government they have been very, very large deficits. Those deficits have to be covered by borrowing, and over time we accumulate debt. By selling the assets we make our debt position worse because we make the yearly deficit worse by $100 million per year. There is not a strong or even rational fiscal argument for privatising these assets. That is what Roger Douglas conceded after he was engaged in the privatisation programme. It is a political argument; it is not an economic or fiscal argument. The argument does not make any sense from that point of view.
Let us look at the other argument the Government has put up, which is around the efficiency of the electricity market. If you recall, one of the things that this Government did was to swap assets between Meridian and Genesis a couple of years ago in order to improve the competitiveness of the market. Because they were State-owned enterprises the Government was able to force Meridian to sell some of its generating capacity to Genesis and force Genesis to buy some of that generating capacity, theoretically to improve the competitiveness of the market. The problem is that it can do that when they are State-owned enterprises, but once they are partially privatised, it cannot require the companies to do that. If, God forbid, Treasury got this a little bit wrong and we find out later that the perfect electricity market has not been actually created through this transfer of generating assets, and we might require in order to improve the efficiency of the market a further transfer of generating assets, we will no longer have that capacity once the assets are privatised, because the Government no longer owns them 100 percent. If your argument is that you want to improve the efficiency of the electricity market, then you would not go down this path, because it does not give you the ability to do what the Government has just done, which is move generating capacity, if that is what the Government thinks is the relevant way to improve the efficiency of the market. Of course, we also know from the evidence presented to the Finance and Expenditure Committee, and never challenged by Treasury, that the private electricity companies currently charge higher rates than the State-owned enterprises. We would have liked Treasury to test that evidence, but we were not given sufficient time at the select committee to enable that to happen.
We need to, I think, take a step back to the bigger picture about the fiscal position of the Government, as well. If you recall, the Government introduced some very large tax cuts for upper-income earners. These tax cuts were very, very large. At the time, the Government told us that they were fiscally neutral, because it intended to increase the GST on middle and lower income earners in order to pay for the tax cuts for upper-income earners. That was the central part of the so-called tax switch. The Government argued that this would be fiscally neutral by making middle and lower income earners pay more for their groceries in order to pay for a tax cut for the chief executive officers of the banks. That was the deal. Unfortunately this never happened, and in fact it was never fiscally neutral, and the Government’s books got thrown much deeper into deficit than they would otherwise have been. In order to cover the hole in the Government’s Budget that this Government created through its very poor fiscal management, it is now saying to us “Oh, we have to sell the assets, because we’ve got a big hole and we can’t afford to pay for schools and hospitals because we gave the tax cuts to upper-income
earners, which are costing maybe $2 billion a year—it is hard to quantify, but in that order.”
When you think about it, the thing is that most mums and dads do not have the money to buy these companies that they currently own. Most mum and dad New Zealanders are struggling to get the kids to school, and they are struggling to pay the groceries because National increased GST to pay for the tax cuts for upper-income earners. Most mum and dad New Zealanders simply will not buy these shares. A very small minority will. Of course, the people who will have the money to buy the shares in these companies are the very same people National gave very large tax cuts to. So, if you earned $1 million a year, National gave you a tax cut of $1,000 per week; $50,000 a year was your tax cut from the National Government, so thank you very much to National. With that extra $50,000, a person will be able to afford to buy shares in these companies, but most New Zealanders got bugger all out of the tax cuts, and they can barely afford to make ends meet now. They will not be able to afford to buy a single share in these companies that National is effectively handing over from all New Zealanders, who currently own them, to a tiny minority who got the tax cuts, who have the cash in hand, and who will be able to buy these companies. It is a shocking piece of public policy. It is bad for the economy, it is bad for the Government books, and it just bad government.
PAUL GOLDSMITH (National)
: I was half expecting the Opposition parties to be talking about the Mixed Ownership Model Bill, but Dr Russel Norman devoted half his speech to tax policy, which seems to suggest that maybe they have moved on to the next thing. I can understand that this bill has generated a lot of passion, and I accept that there are many people who would prefer that the Government retained full ownership of all our assets. It is a natural urge to want to hold on to things and to resist change. My sense, however, is that most people realise that the proposal here is a modest one—that of selling only minority stakes in these companies. They know that this Government is retaining majority control and that mixed ownership will free up billions of dollars for investment elsewhere. They understand that Governments cannot keep piling on debt forever. They see the pickle that many European Governments have got themselves into, and support the Government’s determination to avoid that problem here in New Zealand.
Britain right now is adopting drastic measures, reducing the Public Service by 700,000 workers. Is that what we want to be doing? Certainly not. People probably would not know, but Treasury’s forecast in 2008, when National came into Government, predicted Government debt rising to 60 percent of GDP by 2026.
Dr David Clark: Because there was a National Government coming.
PAUL GOLDSMITH: This was before National came into Government. We heard Mr Parker saying that the Labour Government reduced debt. Well, yes, it did, but it left this country pregnant with Government spending promises and plans over the next couple of decades that would have taken us up to a debt of 60 percent of GDP by 2026. People did know that that Government spending was unsustainable, and they support this Government’s determination to bring our books back to surplus. Today Treasury’s forecast for Government debt in 2026 is zero. People know that this Prime Minister flagged the policy that we are talking about in this bill loudly and clearly before the election and since, and they trust this Government’s economic competence.
In the meantime, there is a group that has been implacably opposed to this bill. We have heard plenty from them over the past few months, and it is true—
Hon Maurice Williamson: Luminaries like Sue Bradford.
PAUL GOLDSMITH: Yes. At the extensive select committee process the Finance and Expenditure Committee heard primarily from the opponents. Fortunately, we do not
weigh submissions by the kilo. But how do you balance a hundred submissions basically saying the same thing with one submission from the New Zealand Chambers of Commerce and Industry Inc., for example, which represents 24,000 businesses around the country?
Hon Member: How many?
PAUL GOLDSMITH: It is 24,000, and you listen to all of them. Just dealing with some of the recurring themes that we have heard from some of the critics, such as why you would sell something that is—
The ASSISTANT SPEAKER (H V Ross Robertson): Order! The member has referred to “you” twice now.
PAUL GOLDSMITH: Quite right. My apologies, Mr Speaker. We have heard a number of times the question of why one would sell something that is returning 10 percent or 18 percent to reduce borrowing of 4 percent—or some variation of the same theme. The Greens have been pushing this line the hardest. The Business and Economic Research Ltd report they refer to talks about a dividend yield on mixed-ownership companies of 8 percent and a cost of Government debt of 4 percent. Well, that is quite wrong. Actually, if you look at the historic facts, the dividend yield has been about 4 percent, not 8 percent, and the interest rate the Government has borrowed on has been 5.4 percent. So that does put a very different light on things.
Russel Norman and Mr Parker miss the point entirely. You would not hear Mr Parker encouraging people to go out and borrow $100,000 from the bank in order to invest in shares, even though they hope that the shares might return higher than they are paying in interest. Nobody would do that, because they, correctly, factor in risk. A company that an individual might invest in might send a better return, but it might not. It might actually lose money. The one thing they know about bank borrowing is that you have to pay it, regardless of the return you have got on the investment, and that is what interest and investment are all about.
The other thing that has been striking through this process has been the element of, well, frankly, xenophobia in the Opposition, particularly focusing on not wanting to be selling things to foreigners, not wanting the Chinese involved—we have heard that—and wanting to turn ourselves inward as a country. I stand for an open economy. This country has been built on foreign investment. We do not have to be afraid of it. This Government has made it very clear that there are very strict limits about who can buy numbers of shares, and they will be majority New Zealand - owned. I do not think we need to be anti-foreigner in our attitude. Of course, the Opposition has to accept that if it wants to maintain capital investment in the economy without passing this bill, it will have to borrow more from overseas. It always strikes me as odd that it does not regard that as a problem, but having investment from overseas is an issue.
The alternative would be to borrow a lot more debt on fragile and volatile foreign markets, at a time when other countries are struggling under too much debt. We have just seen in the Monetary Policy Statement today that there is a risk of a severe deterioration in the European area. This could cause bank failures across Europe, and, in the worst case scenario, international funding markets could become prohibitively expensive. So there is no guarantee that the cheap money that we can have access to today will be available tomorrow, and that reinforces, I think, the logic of reducing our borrowing requirements. That is why this Government is being prudent in the way it is going about these activities.
There has also been some concern raised about removing this bill from the jurisdiction of the Official Information Act and the Ombudsmen Act. Doing so is entirely consistent with the way that Air New Zealand was arranged by the Labour Government not so long ago. We must remember that these will be listed companies
with substantial private ownership. They will be operating in a fully competitive market. They will have electricity and gas complaints commissioners providing an independent outlook for complaints, and all of these companies will be subject to the New Zealand stock market’s continuous disclosure regime.
Finally, another thing, one minority report we have had from the select committee process states that, on average, privately owned electricity companies charge 12 percent more for electricity than publicly owned ones. Well, when we drill down to the figures, what do we find? We find that that may have been the case in February 2012, but if we look at August 2010—it depends when you take your little snapshot—Contact Energy was actually the lowest-priced retailer. That is the funny thing about markets. Things bob up and down—sometimes one has got a special on; sometimes somebody else has got a special on. You cannot take a little snapshot at one moment and claim great things from it. That is not a robust way of working out how prices are generated.
In response to some criticism of the processes, it is worth reminding us that we went through a thorough select committee process through the past weeks. The bill’s first reading was on 8 March, and off it went to the Finance and Expenditure Committee. There were 1,490 submissions, 124 of which we heard in Wellington, Auckland, and Christchurch. I listened to all of them. They were listened to with respect. There were lots of questions asked, and Treasury provided plenty of information on all the requests that we heard. So where did we get to? This is a very significant piece of legislation and part of the National Government’s plan to deliver strong and enduring economic growth. It will reduce our requirement for international debt.
In the meantime, one of the primary benefits of this bill is that it will deepen New Zealand’s capital markets, strengthening our ownership culture. It is a policy that will boost New Zealand’s stock market. It is a policy that will broaden the pool of investments for New Zealanders. A primary benefit, as far as I can see, in the mixed-ownership model is that it will bring disciplines of private sector ownership to these companies. The market test generated by the stock market and the signal provided by the share price as to what is happening to the value of the company or its return on capital is likely to be more transparent and more accurate than any system in place to monitor a purely State-owned enterprise.
I have every expectation that these companies will thrive, on the basis of this bill. They will generate wealth for all New Zealanders and produce electricity—and all the other things that these companies are producing—in a more efficient manner. As a result we will have less debt and we will have a stronger economy overall. This is one piece of a very effective National Government policy to bring this country through to a brighter future. I recommend this bill to the House. Thank you very much.
Rt Hon WINSTON PETERS (Leader—NZ First)
: I would never have thought that anyone on this side would be thinking now “Bring back Rodney Hide.” He was an economic lunatic, but he made more sense than the last member, Paul Goldsmith. After all the sales of State assets, how thin is the sharemarket now? It was always so, but there is the mantra repeated over and over again by people like the last speaker. At 7.30 p.m. next election night, the bewildered members of the Government over there will remember this debate. Our simple message to the National MPs is “Don’t trash the ministerial homes and don’t dent the LTDs.”, because soon they will be out of them, out of a job, and John Key will be sunning himself in Hawaii. This bill, the Mixed Ownership Model Bill, makes that an absolute certainty.
You know, here they sit, like at a former time in history—fiscal soundness to the left of them, economic sanity to the right of them, and national sovereignty in front of them. Theirs not to reason why, theirs but to do politically and die, and into the valley of political death rode the bewildered. Mr Joyce got up, the “Minister for Everything”, and
he said that this bill is about three things, and he is right. It is about treason, it is about treachery, and it is about betrayal. This is the “Benedict Arnold Bill”. This bill was rammed through the Finance and Expenditure Committee and is here over a month before the 16 July reporting time, which this House asked for. Do you know what they thought? They thought: “Well, if the van’s got a full load, we may as well load up a bit more. We have had such a tragic time of it—week after week, disaster after disaster.” So they thought: “We can disguise this, we’ll get it out of the select committee, take it to Parliament, and hope that by the next election, people have forgotten it.” Remember this at 7.30 next election night. Those members will remember this debate, because they will be gone. Mr Key—“Mr Spray and Walk Away”—will be in Hawaii, because all he was ever interested in, with his ever-mighty ego, was some addition to his CV. Does the Prime Minister really want his legacy to be that he led a Government determined to impoverish New Zealanders? Is that what he wants? Because the Government’s intention to drive this bill through in the face of overwhelming public opposition and overwhelming economic analysis that shows that it is damaging to New Zealand’s economic interest is incompetence on a grand scale.
Hon Dr Nick Smith: Treasury support it.
Rt Hon WINSTON PETERS: Oh, no. Treasury said that this pathway leads, within 10 years, to overseas ownership. Treasury said that this does not make fiscal or financial sense. It costs. That is what Treasury said—hardly the epitome of left-wing thinking or socialism. Even Treasury has warned them, but, no, the bewildered decided they would go for broke, regardless.
On one level it is truly incredible that this bill is before Parliament—incredible in the sense that it makes no sense. Here we are in 2012, yet this Government is locked into an economic model that was discredited a long time ago. It is still in thrall to outdated, flawed economic policy. And why? Because the bewildered over there do not realise that the National Party is run by its financial sponsors—people like Macquarie Bank—the banks and the people whom Mr Key pays far greater heed to than to all the people who have meetings in all the halls, trying to sustain National. But Mr Key is not interested in that. He is interested in helping out his mates. [Interruption] I have been around long enough to know what a nervous gaggle looks like—and they are nervous. They are nervous. You take Melissa Lee over there. Melissa is a one-way visa to political oblivion. I am very helpful to Asian people. I want the Korean people to be successful. I want the Korean people to be successful, but here comes the one person the Korean people put up in Parliament, and she will be gone like lightning. This is not good for our international relations, for goodness’ sake. They have learnt nothing from past experience in the sale of New Zealand State assets. They are about to repeat all the mistakes of the past. It is this and future generations of New Zealanders who will pay a massive price.
Now let us have a moment’s silence for Telecom. That was sold for $4.25 billion, and it has seen $9 billion going offshore to other markets in dividends and capital repayments. That represents a disastrous transfer of wealth, and it is about to be repeated again. The Government has tried to sugar the bill with its euphemistic wording of the bill: “Mixed Ownership”. It sounds nice and innocuous. It has so-called safeguards that other members have referred to, and they are bogus. Make no mistake: if this bill is passed, it will be only a matter of time before the assets will be totally owned overseas. That is, of course, their purpose. They all know that.
Hon Amy Adams: You know that’s not true.
Rt Hon WINSTON PETERS: No, no. I know that it is true, unlike that member, who is so wet behind her ears that she is happy to sacrifice her whole constituency just for the chance of being promoted to Cabinet. I suppose that was a prospect that was way
beyond her ambitious reach, but that is why she is prepared to do it—never ask the real questions, just go along with it! But at 7.30 on the next election night, that member will know, as will her constituents—perhaps she will survive, but her friends will not; they will be all gone. You will look back in agony. You will look back in anger, because, frankly, that is where this bill takes you.
What possessed them to once again sell State assets? Who were they working for? Whose interests were they serving? For it was not the ordinary New Zealander about whom we speak. Those are the three questions that they will be asking themselves at 7.30 next election night. So do not dent the LTDs, do not go trash the ministerial homes, and do not go and spoil it for the next Government coming in. What we want you to understand is that being the masters of your own political destiny, you have plainly stuffed it up. This madness may be due to a wilful ignorance and incompetence, or something more sinister. How do we explain the intention to sell assets? How do we explain the intention to sell assets that delivered dividends that were almost $900 million last year to the New Zealand taxpayer? How do you explain that?
Mike Sabin: Is the member in New Zealand?
Rt Hon WINSTON PETERS: We are in New Zealand—that is my very point, Mr Sabin. Up north is the most impoverished part of this country when it comes to Europeans and Māori—the most impoverished part of this country. Mr Sabin needs to go back and explain, up there in Hokianga and Kerikeri—if he ever visits them—or in Moerewa, or in Dargaville, why he came down and sold his people out. That is what he will be asked. He will not be holding any public meetings. Oh no, no. What is more, he will not be engaged in any public debate, because he will get thrashed. The fact of the matter is, under this Government’s madcap thinking we will sell high-performing assets, delivering excellent dividends, at the same time the Government has to borrow money offshore. No sane financial manager will do that.
I want to remind those members again that sometimes in politics a bill comes before your caucus, an idea comes before the caucus, and you know that when they begin by saying “This is a non-controversial, innocuous bill.” on go the red lights, the alarm bells start to ring. This is such a moment. This, for them, is a harbinger of things to come, and it is all bad. I remember the National Party when it used to believe in the word “national”, when it had a sense of national purpose, when it was led by people like Holyoake, people who would never sell the country out. “Kiwi Keith” he called himself. Of course, he did not pose as being somebody elitist. But this new bunch—oh no, no! This new bunch is different. It has no national purpose, no sense of sovereignty, happy to be on the international stage with a confetti bowl of trade agreements, selling out the country’s soul at any given time. They hope that one day they can get away with it. You will remember this day. You will remember this debate at 7.30, on the next election night. I am going to phone all those who lose and say: “Remember, you were warned.”
The ASSISTANT SPEAKER (H V Ross Robertson): Just before I call the next speaker—rather than having interrupted the Rt Hon Winston Peters—can I remind members on my right that they would like to have a look at Speakers’ rulings 60/5, especially Nos 3 and 4.
Hon Dr NICK SMITH (National—Nelson)
: I have a simple question for the speaker who has just resumed his seat, Winston Peters. Is the Raymond Winston Peters signature on the Government sale of Auckland International Airport in 1998 the same Winston Peters who has described this Mixed Ownership Model Bill as treacherous? I could not possibly believe it. Let me hold this up on the iPad. What did Mr Peters say in 1998? Let me tell you. He said: “We are very pleased with the most successful public sale. It is popular capitalism in action.” This is the same member who campaigned in
the 2005 election on the mixed-ownership model for Kiwibank. I have to say the double standards that are exhibited by that member are pretty extraordinary.
But it goes even further than that. I checked the records of members opposite and I was quite amazed to find that in 2007 the then Labour Government sold, for tens of millions of dollars, 49 percent of the shares in the Spring Creek Mine to American multinational Cargill Coal. Let us be clear: this was a State-owned company—100 percent. This was an energy company. Actually, the sale specifically required Cabinet and ministerial approval. The documents have got the signature of the Minister of Finance, the Minister for State Owned Enterprises, the Minister of Energy, and they also required the signature of the Minister in charge of the Overseas Investment Office. I also note that there are 14 members of the Labour front bench who sat in the Cabinet room and approved that sale, and can now have the audacity—can now have the audacity—to somehow use extravagant phrases like “treachery” for exactly the same policy with other companies. That just shows how shallow as a birdbath members opposite are on this particular issue.
But it gets even better than that. After Labour loses the 2008 election we have a wonderful speech in 2010, and let me quote it. It is from Labour’s finance spokesperson. It was to the Institute of Policy Studies here in Wellington. He said: “in a capital constrained fiscal environment, we will better leverage the Crown’s balance sheet in new and innovative ways. … We can unleash State Owned Enterprises to create and grow new subsidiaries with private partners and shareholders,”. Private partners and private shareholders—
Hon Members: Who said that?
Hon Dr NICK SMITH: That was David Cunliffe, the spokesperson on economic development for the Labour Party.
The policy of mixed ownership is good policy, and I agree with David Cunliffe’s comments in that regard. It is good policy. It is rational. It is what we do in every one of our lives. This mantra of no asset sales is just that. It is not a policy. If the country adopted a policy of no asset sales ever, there would be no property market. There would be no TradeMe. There would be no sharemarket.
Colin King: Communism.
Hon Dr NICK SMITH: Indeed, it would be—indeed it would be. We even had the experience last night in the Parliament where one of my colleagues brought a bill to the House that would allow an area of land to be sold by a council so that it could subdivide it and sell it, and could use the proceeds to reduce debt and invest in other council and community investments. Every party in this Parliament voted for that bill. I just simply say that exposes the absolute nonsense of the no asset sales mantra.
Then let me repeat the other argument in the House today, and it has been this. If the Government can get a better return on a business than what it costs to borrow money, then it should own the business. That is the logic. Average returns on the sharemarket have been 7 percent. The Government pays about 4 percent for its money. What the Government should do to reduce its deficit is it should borrow heaps and have extra debt. In fact, at the last election Labour went to the country and said: “We’re going to borrow $10 billion. We’re going to invest that and get a rate of return of 7 percent. We’re going to pay only 4 percent on the borrowings, and on that basis we can close the deficit.” Well, if you take that logic to its conclusion, why do we not go and borrow $100 billion? Or $200 billion? Or why not go the whole hog and take a trillion, because that way we could instantly get rid of the deficit and solve the country’s worries. I simply say it is a nonsense.
You see, Governments, just like households, need to be cautious of debt levels. We have set a cap on our debt not going greater than 30 percent of GDP. It is a prudent level
that gives the capacity for New Zealand to absorb future economic shocks. This mixed-ownership model is crucial to keeping those limits. It enables us to use those billions of dollars to be able to invest back in the economy with things like broadband, like the new research institute, like water storage, and like transport infrastructure, without having to alternatively borrow billions overseas.
But there is another part on which I have to say that Opposition members’ financial illiteracy really does stun me. Let us hear the line: “Why should people have to pay to buy shares in companies that they already own?”. That is what they have said. What an extraordinary comment of ignorance! So, for instance, if a State house tenant wants to buy their house off the Government, these guys say that they should not have to pay for it, because they already own it. I checked with the Government’s transactions. Each year the Government sells hundreds of buildings and hundreds of hectares of land. Are members opposite really saying: “Well, if I buy some land off the Government, I shouldn’t have to pay for it, because I already own it.”? I have never heard of such economic lunacy, and yet that is the argument that is put up by members opposite.
I have also got to reflect on the issue of power prices. Let us just check the record. During Labour’s period in Government, power prices went up by 8 percent compound—8 percent compound. The Minister of Energy and Resources under this Government, Gerry Brownlee, rightly recognised that there was not effective competition in the electricity market, and in the years since, the increases have dropped to less than half of that. But I say this to the Greens and to other parties opposite: it is time that you were honest with the public. I have heard the Labour spokesperson on finance and the Greens repeatedly say that they are going to “get rid of subsidies under the emissions trading scheme”. Do you know what that really means? That really means that if they are elected at the next election, they are going to sock power consumers with very significant price increases, against the policies that this Government has.
I want to end on the last issue of mandate. Over the last 25 years there was a big batch of share sales in the 1980s, including by people like Trevor Mallard, Annette King, Phil Goff, and those members. I have checked the parliamentary record. Do you know what happened with those bills? They never went to a select committee. There was absolutely no electoral mandate, and they went bad. One of them, for a sale of asset, went through this Parliament under urgency for its first, second, and third readings—absolutely no select committee stage. In the second period, and during the course of the 1990s, there were businesses like Auckland International Airport, a shareholding in Wellington Airport, businesses like Contact Energy, and in that stage the process did not have a very clear electoral mandate.
Any honest assessment of the history is that there has been a more open, upfront, and honest policy about the sale of these shares than in any time in more than a generation. The reality is that the policy was announced in January of 2011. The public had a very clear choice at the election. The select committee process was open and thorough; in fact, I have to commend my colleagues for the tolerance that they showed at the Finance and Expenditure Committee. Although members opposite will say that every single little branch of the Labour Party made a submission, what they do not say is that 29 chambers of commerce, representing 34,000 businesses, came to the committee, unanimously saying that they supported this bill. It makes good economic sense, it keeps debt down, it is about making the New Zealand economy more competitive, and this House should support this bill.
Dr DAVID CLARK (Labour—Dunedin North)
: Well, it is interesting to rise to speak after that member, Nick Smith. He expressed concerns about rationality. Let us face it: no one has ever accused him of embodying rationality. This is the member who blocked every attempt to get information from Treasury on the Finance and Expenditure
Committee. He was not alone. The National members did not want to hear the facts. They did not want the facts from the officials who were there to guide them. And why was that? Why were they afraid of Treasury? Why were they afraid of the advice they would get? Because it would say that they were wrong. It would say that they were rushing the process and that they were not in possession of all of the facts to make the right decision.
Mr Smith raised the issue of the chambers of commerce at the end of his—well, how do we describe this?
Chris Hipkins: Tirade.
Dr DAVID CLARK: This tirade. He said that the chambers of commerce unanimously presented a view.
Hon Dr Nick Smith: All 29.
Dr DAVID CLARK: It is not quite like that. I asked in the select committee—Mr Smith may have been away that day, if he said that that was representing all of their members, because I know members who do not think this is a good idea—and the presenter conceded that he did not represent all of the members. So Mr Smith is wrong. Mr Smith is wrong.
He has been amusing himself throughout this speech about the legislation. This is not an amusing matter. This is terrible legislation. This takes New Zealand backwards, Treasury has said, by $94 million a year and rising. An earlier speaker, Mr Goldsmith, talked about the chambers of commerce, too. He clearly was not listening. I wonder whether any of the National members were listening, or whether the cotton wool in their ears during those select committee hearings was simply too thick.
It was a rushed process. There were no hearings in my home town of Dunedin, despite requests. There was short notice for the teleconferences. The presenters did not have the time, often, or the ability to get there to make their submissions that they had wanted to make. It is unpopular legislation. National took every chance it could to limit the opportunities for those to present who wanted to present against it. Just 0.6 percent of the submitters wanted to speak in favour of this legislation in their written submissions. In a recent poll 80 percent objected to this legislation—80 percent of New Zealanders. These are our assets and we do not think they should be sold.
It is economically foolish to sell our best revenue-generating assets. These have historically delivered dividends, we are told, of 18 percent, and that compares with borrowing costs of 4 percent. It makes no sense to sell these assets. What will it mean if we sell them? Further down the track it will surely mean cuts to public services, and that is what this Government wants. That is the real agenda. It wants to leave future Governments with no choices. It wants to leave future Governments with no choice to put money into the education and health sectors, because it believes in supporting those who are already wealthy, and who can already afford to buy those services.
The people who will be able to afford these shares that are going to be put on the market are the mums and dads who benefited most from those tax cuts; 44 percent of the value of those tax cuts went to the top 10 percent of earners, and the bottom 20 percent of earners got just 2 percent of the value of those cuts. We know who will be the first in the queue to buy those shares and it will not be the majority of New Zealanders. Treasury tells us this legislation will take us backwards as a country by $94 million per annum.
So what is the Government’s argument? Why does it want to do this? Nobody can understand. Firstly, it said it wants to pay debt. Well, frankly, Government debt is an issue we need to keep an eye on, but it is not the real issue in New Zealand. Private debt is the big issue here. We need pro-growth policies that support our exporters, and not to be focused on the limited concerns of Government debt. “We need to pay for social
infrastructure.”, is what National said next. That is what it said in the Budget last year. Well, in this Budget, it has come up with a different story again—a third story—and now it is about other infrastructure. Government members do not know what this money is for. They do not have a plan for it. All they know is that they want to sell these assets off.
They do not like the facts. The Budget Policy Statement tells us that $266 million a year will be saved in borrowing costs if these assets are sold off. But it also tells us that we lose $360 million in forgone dividends. That takes us backwards by about $100 million a year. It ties future Governments into borrowing when we go down the path of a partial privatisation model. Future Governments wanting to expand these enterprises will be tied into capital expansions driven by the other shareholders. Governments will have to stump up more funding and that could mean more borrowing further down the track. It is short-sighted legislation. That is what we get with a rushed process.
We know too that the dividends will flow offshore. We have got an example of that, a historic example. We know about Contact Energy.
Hon Clayton Cosgrove: Who sold that?
Dr DAVID CLARK: “Who sold Contact Energy?” my colleague asks. Well, well, well. Mr Smith referred to it earlier, but he was not sure, he was a bit vague on it. It was the National Government that sold Contact Energy. We know that since it was sold $1.5 billion has gone to private shareholders, and we also know that the majority of those shareholders are overseas. The first thing that happened was that those shares got onsold. This Government says that—magically—that is not going to happen this time, that the energy sector has changed, and that the shares will go on the market and mum and dad will buy them—mum and dad, mum and dad, mum and dad. Well, where is the guarantee? There is nothing in the legislation that will stop these shares being onsold. We know that what will happen is exactly what happened with Contact Energy; the profits will flow offshore. They will flow offshore.
They have gone quiet on the other side. Their heads are down. It is not surprising. They know that this will affect them. They know that the New Zealand public does not like this legislation. They know it is a bad move. They have put in a little clause, which they slipped in at the last minute, so they can wind the legislation back if they have to. That was an interesting move. That was an interesting move right at the end. We see a back-down clause. They have put a back-down clause in. We have called it the “Hekia Parata clause”. They sneaked that into the legislation at the last minute to give them an out, because they know that the public of New Zealand do not like this.
What about the $120 million that is going to merchant bankers for this sale? What of that $120 million? Well, it is about priorities. Imagine what you could do with $120 million. It is probably another teacher in every school. Rather than taking one away, you could put an extra one in every school if you were not paying that money to merchant bankers. This is short-sighted legislation and we are only happy to see that back-down clause, because we know what it means. We know that Mr Key is giving himself a way out for another flip-flop.
We heard from one submitter at the Finance and Expenditure Committee about the slippery slope, and the partial privatisation model as it has worked overseas. What can happen is that when you get close to that 49 percent mark, private investors who are shareholders in that company say: “We won’t put anything else in unless you privatise the whole lot.” They hold the company to ransom. It has happened overseas and we know how easily it could happen here. This is a slippery slope. But no, on they go. What they say is “sell, sell, sell”.
What happens when they are sold? Well, the other thing we know is that power prices are going to go up. We have seen it happen historically; the Government has not
stopped it happening. Between 2000 and 2007, we know from historic modelling, $4.2 billion worth of overcharging happened in the power sector in New Zealand. We got a report back. Unfortunately Labour was just going out of office, the National Government had the opportunity to act on those findings, and to rein the electricity market in. It did not do it. It did not do it, and what we see is Grey Power, which came to the select committee and told us old people will freeze to death in their homes because of this legislation. That is what Grey Power told the select committee. It said old people will freeze to death in their homes because of this legislation.
We also know that businesses will suffer because of this legislation. When the only thing that matters to a company is its bottom line, when its social responsibility clause comes out—National is taking it out of the legislation; there is no social responsibility clause—we know that those businesses will look to their bottom line. That is what they are incentivised to do. They will not be concerned if there is a brownout, and they will not be concerned if there is a blackout as long as they are making profits.
But “New Zealand Inc.” will care. We all as a country will see our GDP dip. We will see confidence in our economy go down. These are some of the fish-hooks in this legislation, which has not properly been examined in select committee because the process was rushed—rushed by a Government scared that it will get opposed, and that its own support parties will walk away because of the unpopularity attached to this legislation.
So how do we grow exports? Well, it is not this way. It is not through switching who owns these power companies. That does not change productivity. If anything, it holds it back. What we do know is that the way to grow exports is through having pro-growth policies, through having more research and development, through having good tax policies, and not through flogging off our best revenue-generating assets. We are shedding our strategic advantage. We know that Google, Apple, and other companies in China and around the world are investing in renewable energy, because they know that in the future that will be a strategic advantage. We are flogging off our best assets as fast as we can.
Well, there is still something that we can do and that is to get out in the streets and march, and it is to sign the citizens initiated referendum that Grey Power is leading. I will be out on this Saturday in Dunedin looking for an opportunity to march down the street from the dental school to the Octagon to make my voice heard, and I hope others will be around the country signing that petition. This is terrible legislation—
Mr DEPUTY SPEAKER: Order! The member’s time has expired.
Hon CLAYTON COSGROVE (Labour)
: I seek leave to table a document. It is the minutes—all the minutes—of the proceedings of the Finance and Expenditure Committee surrounding the Mixed Ownership Model Bill, which will give a historical record showing all the blockages the National members put in place, including blocking advice from Treasury—
Mr DEPUTY SPEAKER: Order! They are on the parliamentary website, are they not? They are public documents, so we are not going to put that leave.
Hon CLAYTON COSGROVE (Labour)
: I raise a point of order, Mr Speaker. Without wishing to waste the time of the House, I am advised that there is a problem with the parliamentary website. They have not been available—I am advised, but I could be wrong—thus far. Therefore, I seek leave to table them. I could be wrong—
Mr DEPUTY SPEAKER: No, I have ruled that they are in the public arena, and I have not had any advice other than that.
Hon CLAYTON COSGROVE (Labour)
: I raise a point of order, Mr Speaker. Could I—[Interruption]
Mr DEPUTY SPEAKER: Order!
Hon CLAYTON COSGROVE: Take a pill.
Mr DEPUTY SPEAKER: Proceed.
Hon CLAYTON COSGROVE: Could I ask you—I am not challenging your ruling—whether you have received advice that they are on the parliamentary website? I am not questioning the Clerk, but if there is a technical problem with the website, they are not in the public arena; therefore, there is justification for tabling them. Unless we are clairvoyant, and we have not received formal advice, I would take it that that may well be the case.
Mr DEPUTY SPEAKER: I have received no advice either way. I am presuming that they are public, and if they are not now, they will presently be so.
Hon CLAYTON COSGROVE (Labour)
: I raise a point of order, Mr Speaker. Again, I do not want to trifle with your patience, but there is a clear ruling from Mr Speaker Smith, and it is appropriate, that where documents are not in the public arena they can be tabled. These may well become public at some point, but if the advice is correct and they not on the parliamentary website, they are not in the public arena. I have checked with the Clerk and they are allowed to be tabled. I would invite you, if they are not in the public arena, to adhere to the Speaker’s ruling 148/4.
Mr DEPUTY SPEAKER: The issue is not whether the website is up or whatever; the issue is whether they are public documents. They are public documents, and for that reason we will not be putting leave.
Hon Clayton Cosgrove: I raise a point of order, Mr Speaker.
Mr DEPUTY SPEAKER: I have ruled on this. The member is now trifling with me. I have ruled on it, and unless this is a separate point of order, the member is at grave risk of being required to leave the Chamber.
Hon CLAYTON COSGROVE (Labour)
: I have a request. My request is simply this: that if you can, you would give consideration to that ruling, based on the submissions I have made to you.
Mr DEPUTY SPEAKER: I will give that some thought.
DAVID BENNETT (National—Hamilton East)
: When we talk about the Mixed Ownership Model Bill, it is legislation that—as the Labour members have said—is about choice. But this is about a choice for New Zealand going forward. We have a choice of whether we take the approach where we just borrow and hope and put our country at great risk, or we make some choices now that will put our country in greater security going forward. We have the choice in this House of working out a future for our country, or we can just borrow and hope and let somebody else work out that future for our country, as you are seeing in Europe. That is the choice for New Zealanders out there. That is the choice that they took at the last election. They knew the economic plan, and they agreed with it.
The Labour members and the other Opposition members come into this House today to try to make the vulnerable feel that this bill will be against them. They talk about power prices and they talk about the elderly, and that, but they do not look at the economic reality of the situation. I thought it was an extremely good speech we had from the Hon Dr Nick Smith. That was a great speech, and in that speech I think he brought some economic reality to this debate. The Hon Nick Smith talked about a lot of things there that actually showed a true understanding of economics, rather than the Opposition propaganda about economics.
When you look at economics, you have a choice, but you also have assets. As people—individuals—and as a country we use our assets in different ways. We buy and sell assets, we make the most out of them, we capitalise them, and we borrow off them if we need to. We have all those options available, and this is a sensible approach going forward. Nick Smith used the issue of a State house. Can you say that just because—
Hon Clayton Cosgrove: What would that member know about a State house?
DAVID BENNETT: That is what he said. When you use a State house as an example, he said that if you had to buy that back from the State, can you go to the State and say that you already owned it in the first place? You cannot. It is a natural part of economics that you cannot do that, yet that is what the Opposition is saying should happen here.
If you look at the example of someone buying or selling a house, as one of my other colleagues said, we do that in our lives. People buy and sell houses, and they build their equity through that. This bill is about this Government building the equity of New Zealand through using our assets most appropriately. We have a choice in how we use those assets, and if we do not use those assets properly and we do not build for the future of this country going forward, we will pay a big price in a few years’ time.
When you go overseas, you can see what that big price is looking like in Europe. If you put your head in the sand, and think you are just going to borrow and you do not have to build your economy—
Sue Moroney: I raise a point of order, Mr Speaker. The member has been here for some time now, and he is accusing you of borrowing and selling. I think the member has been here for long enough to know not to bring you into the debate.
Michael Woodhouse: I wonder if you might refer the member to new Speaker’s ruling 27/5(2).
Mr DEPUTY SPEAKER: Members are required to be a bit careful about which pronouns they use, to avoid bringing the Speaker into the debate. I ask David Bennett to consider that as he continues.
DAVID BENNETT: Let us look at what has happened overseas. If people look at what is happening in Europe at the moment—look at places like Italy and Spain—what kinds of interest rates are they paying? We had the Monetary Policy Statement come out this morning, and the Labour Party’s David Parker talked a lot about economics in his speech on this bill earlier. We should have a look at that, and see the interest rates in Italy and Spain getting up to that 7 percent interest rate. New Zealanders do not want to be in that situation. The biggest thing we can do for New Zealanders is provide that stable economic environment and not give them those high interest rates.
If we look at what the Labour Government delivered for New Zealand, in October 2005 the official cash rate was 7 percent and then it got up to 8.25 percent by July 2007. The economic management of the Opposition will put interest rates up, as you are seeing in those countries in Europe. They have borrowed, they have put their head in the sand, they have not looked at what their economic options are, and they are paying the price with high interest rates.
New Zealanders out there need to look at that as well. They looked at that in the last election, because they realised that that was the implication for them. If they did not have good economic management, if they did not make choices like this, they would get to a situation where you would have those high interest rates, and their personal situations would be put in jeopardy. That is the choice that is out there. That is the choice that New Zealanders understand. The Opposition does not understand that choice.
When we talk about the mixed-ownership model, we get a lot of rhetoric from the Opposition. They talk about dividends at certain percentages and comparing that with interest rates, and saying: “Well, hey, the Government could actually earn more if it held those assets.” That is simply not true—simply not true. New Zealanders understand—
Sue Moroney: I understand all right. They understand all right. That’s why they’re voting with their feet on this one.
DAVID BENNETT: —and the figures are here for Miss Sue Moroney. If Sue Moroney wants to have a look at the figures, she will see that we get about a 4 percent dividend, and we have about a 5 percent interest rate. That is a 1 percent loss, Miss Sue Moroney, if you want to look at the economics of it.
New Zealanders understand what a loss means in economic value; unfortunately, the Opposition does not. When we look at that, we see that New Zealanders know that that dividend rate should not take into account capital taken out of those companies. The Opposition uses figures that take into account the capital taken out of those companies, not just the real dividend on the income that those companies generate. I think that is very important. When we look at that, we also need to look at what they are. They are State-owned enterprises. And what are State-owned enterprises? They are expected to operate in the commercial market just like any other companies would. If you look at the principles of the State-Owned Enterprises Act, they say: “as profitable and efficient as comparable businesses that are not owned by the Crown …”. So they are not expected to be loss-making ventures, which the Labour Party or the Green Party or New Zealand First talks about. They are expected to be profit-generating, just like a private company. That is why, under the Labour Government, you saw a large increase in costs on consumers. That is part of the nature of the demand and supply of energy, and New Zealand has a very high sense of renewable energy. The last speaker from the Labour Party talked about the need to make a cleaner, greener economy. Well, we do that through our energy sector. It has a very high aspect of renewable energy. That is something that we are very proud of, and we invest in, and we look forward to these companies being a part of that in the future.
When we look at the State-owned enterprises, we need to take into account what their role is. They are Government-generated and Government-owned to a large extent, but they also have aspects of private ownership in them, in some cases. There is nothing wrong with a balance between private and public. We do that in a lot of things to deliver services throughout our communities, whether in education or in health. Why can we not embrace a public-private use of capital, resources, and skills? The private sector does bring some skills to the table that the Opposition will not acknowledge. The private sector tends to bring good management skills, an understanding of consumers and customers, and the ability then to deliver to consumers. The public is not so good at doing that necessarily, in a commercial environment such as a State-owned enterprise. A good mix of public and private will be in the best interests of New Zealand consumers, it will be in the best interests of the New Zealand Government, and it will be in the best interests of our economy going forward.
This bill is about choice, but it is about the choice of the economic management of our country going forward. We can choose either to put our head in the sand, borrow, and pay the consequences when someone else will be in charge of this process in 10 years’ time, or to make that investment in the right things that build a stronger country going forward, which we can have a say in and that will deliver the best results for New Zealand. Thank you.
Hon Clayton Cosgrove: Point of order.
Mr DEPUTY SPEAKER: I was going to respond with the consideration I have given to the member’s earlier point, and the member might want to listen to what I am going to say and then reflect on that. I did take some time to discern the situation as it pertains to the minutes of a select committee. Let me firstly say that, with regard to the parliamentary website, I have checked the availability of these records on the website, and the select committee documents have been available since Monday, and there have been no complaints, either internally or externally, about that. With regard to the matter of the minutes, the minutes will become a public document when the Mixed Ownership
Model Bill has completed its passage through the House. So, in that regard, they will become a public document, and it was on that basis that I ruled. What the member is actually seeking to do is to release minutes before the appropriate time, at which there may be an issue of contempt, and the member needs to actually reflect on that.
Hon CLAYTON COSGROVE (Labour)
: I raise a point of order, Mr Speaker. I have inquired of the Finance and Expenditure Committee clerk also. There two things I would say to you. You are right: the minutes are not on the website. The advice that I have been given a few moments ago is that it is not protocol that the select committee minutes are placed on the website.
Mr DEPUTY SPEAKER: That is just what I have said.
Hon CLAYTON COSGROVE: That is correct. However, I asked the Clerk—not the colleague currently here but the previous Clerk who was here—whether those minutes are available publicly, whether they are available to be accessed. I also checked with the Finance and Expenditure Committee clerk, who tells me that although it is not protocol to put them on a website, if members of the public were to ring or approach, the minutes would be able to be released. That is the advice I have got, and I have got it from one of your senior people and also the clerk of the Finance and Expenditure Committee. My point is simply this. I in no way wish to breach the rules of the House or bring the House and myself in contempt of them. However, that is the advice I have received from two officials. That being the case, they are not publicly available documents in respect of access, and I seek on that basis, on the basis of advice I have received from your people, to have them tabled. If I am incorrect, that is a matter for your staff, not me.
Mr DEPUTY SPEAKER: And I have given that ruling. The minutes will become public after the passage of the bill, and there can be a breach or a contempt if they are released before that point. That is why I have ruled, essentially, that they will be a public document, and I am advised that they are not available to the public until that point, until the point that the bill has completed its passage through the House—I am advised.
Hon CLAYTON COSGROVE (Labour)
: I raise a point of order, Mr Speaker. Then we have a difficulty. I suspect we both have a difficulty, actually—not Nick Smith, but we have a difficulty—and that is that you have received some advice, and I have also received advice, not just from, shall we say, a non-senior official but from a senior official in this Chamber, and we now have a situation of contrary advice to you and to me. I do not challenge—
Mr DEPUTY SPEAKER: There is no conflict. Well, there is no problem, because I have given a ruling and said that I will uphold the rules of the House that minutes do not become available before a bill’s passagebecause of contempt. I have also ruled that they will be a public document, and this House does not seek leave to release public documents. I realise there is an issue of timing, but the issue of contempt is the one upon which I have ruled.
The next member to seek a call is seeking a split call. The first to take a 5-minute call is Hone Harawira.
HONE HARAWIRA (Leader—Mana)
: Kia ora, Mr Speaker. Kia ora tātou katoa. The agenda of this Government, as evidenced through this bill, the Mixed Ownership Model Bill, is now clear for all to see. Assets, services, and resources currently being managed by the Government for the benefit of the citizens of this country will be sold to the highest bidder, many of whom will be overseas companies that have no interest in the Treaty of Waitangi or the people of this country, be they Māori or Pākehā.
Twenty years ago, when National decided that electricity was no longer an essential service, the industry was deregulated, and households started paying more for their
power than big business. Today welfare services are being privatised, and the Government is wiping its hands of its responsibilities to provide for its most vulnerable citizens. Education continues to be privatised through the introduction of charter schools and the continued funding of private schools at the expense of public education for the children of ordinary New Zealanders. Access to health is being denied to the poor by ever-increasing costs, while the country leads the developed world in Third World diseases. Accident compensation is being denied to victims through complex and costly processes and bad management, as the Government prepares to privatise ACC. The Department Corrections is getting a brand new billion-dollar jail, but the rights to run it have already been sold off to an overseas company. State housing is being sold off to the private sector, while homelessness reaches record levels. And water management and water rights have already been privatised by the Government in different parts of the country.
But the really surprising thing to me is how long it has taken us to wake up to the fact that selling off resources, assets, and services built up by generations of New Zealanders will leave our children and our mokopuna with a future almost too bleak to contemplate. Yet such is the future that this bill and this Government offer us all. Mana opposes this bill to sell off 49 percent of the shares in Mighty River Power, Meridian Energy, Genesis, and Solid Energy, because there are no provisions to guarantee that New Zealanders will get preferential treatment or even a dedicated percentage of the shares. There are no provisions stopping overseas companies from bidding for a majority of the shares in the new companies. There are no provisions requiring the Government to protect the interests of New Zealand citizens, to regulate the price to New Zealand customers, or to guarantee supply to New Zealand citizens over business interests. There are no provisions to require the new companies to honour Treaty obligations, even though the Government is still the majority shareholder. And there are no provisions to ensure that Māori interests in water will be protected. In fact, the Government’s opposition to the New Zealand Māori Council’s application to have those interests considered by the Waitangi Tribunal shows how much contempt this Government has for Māori opinion, and how much disregard it has for its coalition partner the Māori Party.
The Government is clearly committed to its plan to push ahead with the sale of State assets, but I want to take this opportunity to thank all those who have taken a stand already against this bill. There have been many, including the 1,500 who made submissions to the Finance and Expenditure Committee, the overwhelming majority of which were opposed to the bill; the tens of thousands who joined the “Aotearoa is Not for Sale” march from Te Rerenga Wairua to Parliament last month; Grey Power and the students associations, which were an unlikely mix brought together by a hugely unpopular bill; the New Zealand Māori Council and those iwi doing their best to stop the Government selling the assets and the “to hell with the people” agenda; and the unions, the Labour Party, the Greens, New Zealand First, and Mana, who attended the launch and have all committed people to gathering the 300,000 signatures required for a referendum on stopping asset sales.
Let me take this opportunity to urge those same groups to redouble our efforts, because once those shares have been sold and those companies have been privatised, investor demands for an ever-increasing return courtesy of higher power prices will force more of our old people to switch off their hot water to save power; lead to even greater sickness in cold and damp homes as poor families are forced to cut back on heating, light, and refrigeration; and reduce this nation to a level of servitude that our children simply do not deserve. Kia ora rā.
Hon CLAYTON COSGROVE (Labour)
: I raise a point of order, Mr Speaker. I want to refer you to Standing Order 236(3), which reads: “The follow proceedings may be disclosed: (a) those proceedings that do not relate to any business or decision still before the committee:”. I put it to you, Mr Deputy Speaker, and I have taken advice on it—you may or may not be aware of it—that it is not a contempt of Parliament to release the minutes. Just for the record—I am sure you will indulge me—I hope I have not brought a Finance and Expenditure Committee clerk into career danger because I may have misinterpreted the advice he gave me. He is very solid citizen. My advice is that, indeed, it would be a contempt to release minutes that pertain to live decisions before a committee. However, it would not be a contempt to seek leave to table all aspects of the minutes—somebody would have to get the scissors out, I suspect—that pertain to the bill before the House. If I am correct, given that that is the case, and given also that those minutes we have now had confirmed—and I am very happy to take you at your word, because it is consistent with my advice—are not publicly available, or parts of the minutes, on the parliamentary website, then there is an issue as to public availability. I do note that the scissors would have to come out and there might have to be some work on this, but I would just put it to you that we can refer to these minutes in the Chamber, but there is a large number of people on all sides of this debate external to this Chamber who are wanting to access those documents. They are not available to them and they should be. So on that basis, unless you advise me I am still in contempt—
Mr DEPUTY SPEAKER: I will respond to that. I think the member now has grasped the nettle of it—that to release the minutes of the Finance and Expenditure Committee, where there are other bills and other bits and pieces, would be in contempt. But I think the member is now suggesting that he table only the minutes that pertain to this piece of legislation, and I would accept that it is in order for that leave to be sought.
Hon CLAYTON COSGROVE (Labour)
: I seek leave for all Finance and Expenditure Committee minutes that pertain to the Mixed Ownership Model Bill that are before the House be tabled in order to show—
Mr DEPUTY SPEAKER: You do not have to give the reasons why.
Hon CLAYTON COSGROVE: Well, I am allowed to give a description—
Mr DEPUTY SPEAKER: No. Order! The member does not have to give it. He has sought leave for what he is seeking to do. I will now put the question. Leave is sought for that purpose. Is there anyone opposed to that course of action? There is. Right. Now there is a 5-minute call from Gareth Hughes.
GARETH HUGHES (Green)
: Kia ora. Ngā mihi nui ki a koutou. Kia ora. I rise to take a call on the Mixed Ownership Model Bill, which must be one of the most unpopular, damaging pieces of legislation introduced by this Government in this term. What this bill is is intergenerational theft. This bill is simply failed ideology back in action. This bill is going to see our electricity prices increase. But the madness is that this bill just does not even make economic sense. It is this Government that got us into the fiscal hole we are in right now, and it is this Government that wants to flog off the people’s assets to pay for its poor fiscal decisions. Of course, if you give $2 billion worth of tax cuts to those who need it the least, if you are throwing $1.5 billion at greenhouse gas polluters, and if you have $14 billion to throw at uneconomic roads, of course you are going to find yourself in a fiscal hole. The best advice this Government can take is to stop digging, but, instead, it wants to sell the spade as well. It is the Government that got us into this mess, and now it wants to sell up our assets to get us out of it.
The Government is rushing this ideological legislation through under urgency because it knows how unpopular this is.
Hon Dr Nick Smith: It’s not under urgency. That is rubbish.
GARETH HUGHES: Oh, if this legislation is not under urgency, the process around it has been an urgent process where the Government has not listened to people. It has rushed it through, because it knows how unpopular this is. Kiwis remember what happened the last time Labour and National Governments sold off our assets. I urge the National Government, if it wants to listen to the people, to put it to the people, and put it to a referendum.
Hon Chris Tremain: So the election doesn’t count!
GARETH HUGHES: There is no mandate from the election. We saw a half-arsed campaign from the Labour Party, and it is good to say in this House that the election was not a mandate on asset sales. You want a mandate? Put it to a referendum. Listen to the people. It does not make sense. It is economically stupid. These assets are returning healthy dividends to pay off debt that costs less than the cost of borrowing for that debt. We look back to when the last Government sold Contact Energy, BNZ, and Telecom for $7 billion and subsequently there has been $21 billion worth of dividends that Kiwis have missed out on. Business and Economic Research Ltd did an analysis of the legislation and the Government’s mixed-ownership plan, and what we know is that the Crown accounts are going to be permanently worse off as a result. What we know is that electricity prices are going to increase. Analysis of the Ministry of Economic Development’s own data shows that private electricity generation is 3.3c per kilowatt more expensive than that of the State-owned enterprises.
Let us look at one member in particular, the Hon Peter Dunne, who is making this bill possible. He will go down in history as the only member of this House to be part of two Governments that have sold off State assets in such a manner. Peter Dunne is going to live in infamy. I hope he is sending out his CV, because I do not think he will be returned.
But it does not have to be this way. We can actually keep these assets and use them. They can be at the forefront of selling our expertise in renewable electricity generation—things like geothermal, which we are doing a job of exporting around the world. We could be using this to transform to a clean, green economy. We could be building jobs, but, instead, this Government wants to flog them off to make up for its own failed fiscal policies. It wants to keep that hole, from its own mistakes.
We would like to thank the submitters. We heard an overwhelming message from all those submitters not to do it. It is a bad decision. We will see you in 2014.
Hon CLAYTON COSGROVE (Labour)
: I raise a point of order, Mr Speaker. I am sorry to return to the issue before—
Maggie Barry: So are we.
Hon CLAYTON COSGROVE: I know they are, because they do not want to have the documents released.
Mr DEPUTY SPEAKER: Order!
Hon CLAYTON COSGROVE: I am responding to an interjection.
Mr DEPUTY SPEAKER: No, do not respond to them. Give your point of order.
Hon CLAYTON COSGROVE: The last time I checked, you could not interject on points of order. I refer you again to Standing Order 236(1): “The proceedings of a select committee or a subcommittee other than during the hearing of evidence are not open to the public and remain strictly confidential to the committee until it reports to the House.”
I have taken further advice, and I need reassurance from you in respect of a request from the public. If a member of the public requested the sections of minutes that pertain to the bill before the House, the Mixed Ownership Model Bill, which we are debating because it has been reported to the House—if a request was made by any person to the Clerk’s Office to have those documents released—then I am advised that they would
have to get the scissors out and cut it up and release all those minutes, and leave, given that it has been blocked by the Government, would not be required. That could be done simply through a request by a member of the public. I would be grateful if you could confirm or not, please.
Michael Woodhouse: Speaking to that—
Mr DEPUTY SPEAKER: I do not need any assistance. Firstly, that is not a matter of order of the House. That is something that would occur outside of the House, and the member is correct in his assumption. So it not a matter of the order of the House—I will just say that. We have one speaker to go.
MAGGIE BARRY (National—North Shore)
: I rise to support the Mixed Ownership Model Bill, which of course is sponsored by the Minister for State Owned Enterprises, Tony Ryall. It is set down for its second reading and I would have to say that there has been a great deal of wilful misinformation and alarmist rhetoric that we have heard this afternoon from across the other side of the House. We have also seen it in the grounds of Parliament. Earlier this afternoon I noted that there were a couple of dozen people holding out placards, stating: “New Zealand is not for sale”. I agree with them—it is not for sale. That was what Labour did in the 1980s and 1990s. That is not at all what we are about.
Earlier we heard the former member of Parliament for Waimakariri, who is on the phone at the moment, talk about having political regrets and how his party has learnt from its former mistakes. Well, I doubt that somehow. I doubt whether he has learnt very much at all. Unlike Labour through the 1980s and 1990s—
Hon Simon Bridges: He’s not listening to you.
MAGGIE BARRY: He never listens. He never listens—paper ears. Unlike Labour, we have looked carefully at the legislation. We did not sneak it in. On 26 January last year our Prime Minister, John Key, outlined the mixed-ownership model. We campaigned on it. We went into detail on it. I am going to go into a bit more detail in a few moments, because I think it has been lost in a lot of the misinformation and stuff and nonsense we have heard today.
But we have a mandate, and that has been questioned by some people in this House. Our mandate is called election 2011. There were a lot of people who listened to what we were saying about the mixed-ownership model, because we were up front about it, and they decided that we were right, and they voted for us. We got 47 percent of the party vote—the most ever. Labour, on the other hand, dug up a whole lot of old signs, stating: “No asset sales.” It campaigned hard on that. What did it get?
Hon Dr Nick Smith: Worst result ever.
MAGGIE BARRY: The worst result ever. So what does that tell members opposite? Not very much, actually, because they are not listening to it, but in fact they should have learnt from their mistakes, but they absolutely have not.
In the years when I was on
Morning Report and working for the then National Radio, I saw Phil Goff and all the others come into the studio day after day. The phrase: “They’re selling off the family silver to pay for the daily groceries.”, was invented for what Labour did, and a lot of those members are still there. They were the architects of the old misfortune, and they continue to plague the Labour Party of today, which is why they lurk in such low numbers on the opposing side of the House.
We are committed to the mixed-ownership model because it is needed. As we heard earlier today from Ministers Joyce and Foss, it is all about the debt. Our partial share float, where the Government maintains a majority shareholding, is essential if we want to control our out-of-control debt. We do not want debt for New Zealand. Unlike the others, we do not want to borrow. We are not prepared to put future generations of New
Zealanders under the yoke of debt that Labour has consigned us to. Why expose us to it?
The mixed-ownership model has many advantages, and I will recap on them, because there has been a lot of misinformation, so let us look at it. The mixed-ownership model does provide much-needed money to invest through the Future Investment Fund. I will go into that in a bit more detail later, but we do not need to borrow more to invest in things that we need in this country, and that is a very important thing to keep in mind in these difficult financial times. There will be huge benefits to New Zealand’s capital markets. We need more attractive investment opportunities for people in our capital markets because they are a bit moribund, so the mixed-ownership model will provide more opportunities for investors.
The other thing is that we are keeping control of the assets. Yes, it is the “c” word: control. We are keeping 51 percent control, and we are getting in the dividends. [Interruption] No, I was getting a bit close to the wind with the “c” word, but it is about control. It is not a word that members opposite know a lot about, when it comes to fiscal responsibility, but we are well across it.
These mixed-ownership model companies that we are proposing to partially float are companies, they are businesses, and they will benefit from operating under a more commercial model. What is a Government doing in the day-to-day running and the minutiae of electricity companies? If you get other people involved, there will be more money that we as a Government do not need to borrow. They can invest and grow these companies. There are a lot of good things to come from the discipline and scrutiny of the model that we have proposed. They can get access to capital and grow and expand, without us needing to borrow it.
Kiwi-owned is a very important part of this. We are committed to keeping a very strong Kiwi ownership in these companies because we think it is important—so important that we have set clear targets and guidelines around it: 85 percent to 90 percent of Kiwis’ ownership will be there at the time of the offer. That is what we are looking at. We will also have very strict ownership limits, and those are going to be enshrined in legislation. There will be a 10 percent share cap. No other investor, apart from the Government of course, which retains 51 percent, will be able to own more than 10 percent of the company.
There are a lot of New Zealand companies that would like to get involved. Iwi and superannuation funds, instead of investing their money overseas in farms in Canada or Tasmania, will be able to invest in strengthening the future of good New Zealand companies, and I think they are clamouring to invest. Kiwis who apply for shares will be at the front of the queue. So here is a question. Would you rather that dividends were paid to New Zealanders or would you rather that we paid interest to overseas debtors? What do you think? Members opposite would go for the debt every time, because that is the limited perspective they bring to this.
The Future Investment Fund, which, again, was very well-signalled, is something that we have already earmarked. Just consider for a moment how far $33.8 million is going to go towards modernising and transforming New Zealand schools. There will be $88.1 million going into the health sector. That is going to develop hospitals, and, again, we will not need to borrow to do that. There will be $250 million towards the KiwiRail Turnaround Plan. The Greens are always banging on about how much they hate roads; we have got New Zealand rail benefiting. These are all good things. Up to $400 million is going to be used as equity investment in irrigation projects that will help increase our productivity, grow our rural economy, and create jobs—measures, of course, that members on the other side loathe and abominate—and there is another $80 million that we have earmarked under the Future Investment Fund that will go towards transforming
Industrial Research Ltd into an advanced technology institute. Again, that is investing in the future of the way that we are looking at rolling out broadband—the “high-tech HQ”, which is part of the vision that we have for New Zealand, investing in our future.
Members have also said, in closing, that we have rushed this through. I absolutely reject that notion. There were 1,490 submissions. We heard 124 of them. We were here in Wellington hearing them, we went to Christchurch, and we went to Auckland.
Dr David Clark: How many were in favour?
MAGGIE BARRY: Yes, there were a lot of Labour people and a lot of Green people who submitted. That is what they did. They were motivated to do it, the language was pretty similar, and they said their bit. Then we had the chambers of commerce. Some people have disputed that chambers of commerce actually represent people. They were absolutely in favour of the mixed-ownership model, and there are a lot of them. In Auckland alone 20,000 small businesses are represented. I spoke to Michael Barnett, who actually came and submitted, and he said that the vast majority of his members were absolutely in favour of it. So it is not rushed. We have the mandate that is known as the 2011 election, this is essential for our future, it makes sound economic sense, and I commend it to the House.
- The question was put that the amendments recommended by the Finance and Expenditure Committee by majority be agreed to.
A party vote was called for on the question,
That the question be agreed to.
||New Zealand National 59; ACT New Zealand 1; United Future 1.
||New Zealand Labour 34; Green Party 14; New Zealand First 8; Māori Party 2; Mana 1.
|Question agreed to.
A party vote was called for on the question,
That the Mixed Ownership Model Bill be now read a second time.
||New Zealand National 59; ACT New Zealand 1; United Future 1.
||New Zealand Labour 34; Green Party 14; New Zealand First 8; Māori Party 2; Mana 1.
|Bill read a second time.