3. R DOUG WOOLERTON (NZ First) Link to this
to the Minister of Finance
What is the current value of State-owned assets in New Zealand, and what was the total value of revenue generated from those assets in the last financial year?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
The current total value of the State-owned enterprise portfolio as measured by shareholder equity is $23.5 billion as at the most recent annual report for each company. The total revenue generated in the most recent financial year was $7.75 billion, and dividend payments in that year were over $400 million. Of course, the State owns a huge range of other assets worth tens of billions of dollars, such as schools, roads, hospitals, etc., but even some of these seem to be under threat from a potential National Government.
What impact would any proposed State-owned asset fire sale have on revenue, and how would this affect the ability to cut taxes?
Hon Dr MICHAEL CULLEN Link to this
As I said, the State-owned enterprises portfolio pays dividends of over $400 million a year. Therefore, that contributes to the ability of the Government both to fund services and—if necessary or desirable—to reduce revenue. If those State-owned assets were sold off, they could give a one-time cash ability, but in doing so the revenue stream would be lost for the future.
Hon Bill EnglishWhat did the Government do with the $1.4 billion proceeds of the sale of hydro assets owned by Meridian Energy?
Hon Dr MICHAEL CULLEN Link to this
Those assets, in terms of the dividend being paid to the Government, which was not $1.4 billion at the time, were used to invest in roading and in infrastructure—therefore, in assets that appear on the Crown balance sheet.
Would the Minister agree that any ideologically driven moves to flog off State assets to fund tax cuts is remarkably short-sighted, given that once the asset is sold the Crown loses future revenue from that asset, meaning that in return for a one-off tax cut funded from the sale the Crown loses future revenue to pay ongoing costs of tax cuts?
Hon Dr MICHAEL CULLEN Link to this
Indeed, from a fiscal perspective it would only be justifiable at all if any revenue was used to pay off debt or to invest in other assets. If it was used to fund tax cuts, then one has lost that asset on the books, but National has said it believes in raising more debt.
Gordon CopelandWhen Rob Cameron, the New Zealand Exchange, the employers and manufacturers, and many other financial experts all favour the sale of a minority stake in State-owned enterprises to Kiwi investors, why does the Minister cling to 100 percent State ownership as a non-negotiable, and is this not just an extreme form of socialist ideology at the expense of maximising New Zealand’s economic potential?
Hon Dr MICHAEL CULLEN Link to this
No. Indeed, some level of common interest of that sort I would have thought was quite consistent with a Christian social and economic philosophy. Certainly that is the position taken by a range of Christian democratic parties in Europe.
Can the Minister tell us what was the fiscal effect of selling a $1.4 billion State-owned asset and investing the money in roads, which make no return on capital?
Hon Dr MICHAEL CULLEN Link to this
The fiscal effect on the Crown balance sheet was, by and large, neutral, because the asset, of course, appeared on the Crown balance sheet. If the member believes that building roads does not contribute to future economic growth, I do not understand why he wants to borrow money to build them.
Would the Minister agree that those with enough capital to buy State assets are likely to be deep-pocketed foreign companies, and would he also agree that if State assets are sold to them, we are likely to see a repeat of the situation in the 1980s and 1990s when privatised assets were sold to the rich and most profits disappeared overseas?
Hon Dr MICHAEL CULLEN Link to this
The reality is that whether by way of public float or by way of trade sale, there is a high likelihood that much of any sale of State assets would end up in foreign hands. We have also seen in that regard in many instances a lack of commitment to expanding those assets within New Zealand. In some cases, therefore, the Government has had to step in and buy back those assets or engage in further regulation of the market to serve the interests of the New Zealand economy. The difference between some of us on this side of the House and others on that side of the House is that we have learnt from experience, but they insist on repeating their mistakes.
Charles ChauvelHas the Minister seen any reports highlighting the problems with a sell-off of State-owned enterprises?
Hon Dr MICHAEL CULLEN Link to this
There are many such problems. One obvious one is the fact that most Kiwis do not agree with it. Indeed, that is why Mr Key ran a mile as soon as Bill English floated the idea of privatising State-owned assets. Mr Key said the policy they had last time was timid, but it was still far too bold for him and he wanted to retreat from it.
Has the Minister seen any reports on how the $400 million in dividends paid by State-owned enterprises over the last financial year would be replaced if they were sold?
Hon Dr MICHAEL CULLEN Link to this
No, I have seen no such reports at all, merely a blind faith that somehow or other this will lead to stronger growth in the New Zealand economy. It seems very odd to offer New Zealanders the chance to buy assets in organisations they already own.
Gerry BrownleeI seek leave to table a document listing 23 State assets sold by Michael Cullen and Helen Clark when they were in Cabinet.
Madam SPEAKER
Rt Hon Winston Peters Link to this
I seek leave to table a comprehensive list, including the sale of almost $8 billion worth of assets by the National Government.
I seek leave to table the details of a sale of $1.4 billion worth of Meridian Energy by Dr Cullen 3 years ago.