1. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
What was the net present value at Crown cost of capital of any offer presented to the Crown in respect of the recapitalisation of South Canterbury Finance, either on or following 31 August 2010?
Hon BILL ENGLISH (Minister of Finance) Link to this
I first congratulate the member on getting to question No. 1 so soon. I do not intend to comment on commercial details of bids or transactions that may be still under negotiation. I refer the member to my ministerial statement of 8 September 2010, which addressed this issue. I repeat that no option was available that did not involve considerable cost and risk to the Crown. Treasury was in close contact with all the parties involved at the time, and no option put to us was recommended by Treasury. We accepted Treasury’s advice.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. The Minister has essentially declined to answer the substantive question on, I believe, public policy grounds, but I seek to clarify through you, Mr Speaker, whether he is invoking the public policy ground for not releasing any further information about the net present value of those offers.
Mr SPEAKERI take it that the Minister is declining to provide the specific information asked for because he believes it is not in the public interest to do so. I think he has made that fairly clear.
Hon David Cunliffe Link to this
Using the Crown cost of capital, what was the net present value of the offer presented to the receiver on 31 August 2010, of which the receiver said in a memorandum to staff on 3 September: “After careful consideration and consultation with the appropriate parties, including both the trustee and the Treasury, this offer was not accepted.”?
I could not be exactly sure which offer the member is talking about. There has been quite a bit of speculation in the public arena about offers that may or may not have been made. Some of the speculation I have seen is clearly wrong, and some of it may just be from bidders who felt that Treasury or the receiver should have accepted their bid but did not.
Hon David Cunliffe Link to this
I seek leave to table the memorandum to all staff from the receivers, Kerryn Downey and William Black of McGrathNicol, dated 3 September 2010, which notes consultation with Treasury and that the offer made in respect of South Canterbury Finance was not accepted.
Hon Simon PowerNo, the member has sought leave to table it. I take it that there is no objection? There is no objection.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. As the receivers’ memorandum makes it clear that the offer presented on that date, 31 August, was not accepted, I submit to you that there can be no commercial confidentiality ground around that offer that would prevent the Minister from answering the primary question and the subsequent supplementary question.
The Minister should not be interjecting. The member raises an interesting issue. The dilemma for the Speaker is that the Speaker cannot judge whether divulging information is or is not in the public interest. On this occasion the Minister has made it pretty clear that, in his view, to say any more about these particular matters is not in the public interest. I have to take the Minister’s judgment on that. The member can question the Minister about that through further supplementary questions, but I cannot tell a Minister that he or she is wrong if the Minister believes that it is not in the public interest to divulge something.
Hon David Cunliffe Link to this
Further to the point of order, Mr Speaker, I totally respect your judgment on that matter, but I draw your attention to the fact that the Minister used a specific rationale for declining to answer the primary question in the public interest, and that was commercial confidentiality around an ongoing matter. It is clear from the document that has been tabled that it is not an ongoing matter, at least in respect of the offer of 31 August, because that offer has been rejected already by the receivers. I guess it stands for the Minister then either to specify a new public policy ground or to answer the primary question.
I have to stress that the public interest is a matter for the Minister to judge, not for the Speaker. Given the answer the Minister has given, I believe that the member can challenge the Minister with further supplementary questions on why he has that view.
Hon David Cunliffe Link to this
What advice did he receive from Treasury in respect of the offer for recapitalisation of South Canterbury Finance dated 31 August, and what response did he or his colleagues make to that advice?
As I have said, I do not intend to speculate on any particular offer. The member is referring to one dated 31 August. There was any amount of discussion going on around that time that some people may have thought consisted of making offers and some did not think were offers. The fact is that the Government now has the obligation to recover the value of those assets, and it is certainly our intention to preserve the commercial processes around that. It simply will not work if anyone who makes some kind of offer to the Crown finds that that offer is discussed in detail in Parliament, when it was made in the context of commercial confidentiality. It may be that the offer he is referring to came from people who are bidding again as we speak, because the Government is open to offers all the time for the assets of South Canterbury Finance. It is not a matter of trying to be evasive; it is just a matter of trying to preserve a process that is designed to get maximum value for the taxpayer. We do not want to scare away bidders as a result of the fact that we are willing to discuss their offers at any time in the public arena.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. In noting that the Minister has declined to answer the substantive question, which asked what advice he had received and what his response was, I note that that advice pertained to a past offer that has already been rejected. Further, it is my understanding that the parties involved are not currently in negotiation for the assets of that company, as the Minister may have alluded to. I cannot see—and perhaps you may clarify this with the Minister—what the public interest ground is upon which he is refusing to answer the question.
On these matters the Speaker has to be guided by the Minister. The issue of public interest is a matter for the Minister. As Speaker I cannot judge that. I should not judge that, and I must not try to. Where it is a matter of public interest not to divulge certain information, and where the Minister is alleging that is the case, those are important matters. I must not interfere in that. I think that is a very important, fundamental issue, especially where it has commercial implications. As the Minister has pointed out, even though the member might be referring to a past offer, it does not mean to say the party involved may not be still involved in negotiations. So I have to be guided by the Minister on an issue like that.
Chris TremainWhat steps is the Government taking to ensure that the workings of the Crown Retail Deposit Guarantee Scheme are fully transparent?
Well, I suppose the deposit guarantee scheme was the reason why the Crown had—I shall allow the question, even though it is a fair stretch from the primary question.
Clearly some parts of the process will occur without total transparency. For instance, if bidders are making offers and they are turned down, or if they want to change those bids or come back again later in the process, the Crown wants to make sure that opportunity is available. However, it is appropriate that, given the amount of public funds spent on this scheme, it is independently scrutinised. That is why yesterday I welcomed the news that the Auditor-General will complete a performance audit of the deposit guarantee scheme. In addition, this week Treasury will make an initial release of over 100 documents relating to the scheme, including documents relating to South Canterbury Finance’s participation in it. That will demonstrate that the Government and officials have worked towards our objectives of providing depositors with certainty, and minimising the costs to taxpayers and disruption to the economy.
Hon David Cunliffe Link to this
What was the net present value, at Crown cost of capital, of the revised offer presented to the receivers on 13 September 2010 by Kensington Swan on behalf of Permanent Investments Ltd, and acknowledged in a letter from the receiver dated 14 September; and can the Minister confirm that the potential participants in that recapitalisation included the New Zealand Superannuation Fund and Ngāi Tahu?
It is not my role to confirm or otherwise any of the details of that matter. That would be up to those organisations. I stress to the member that it is vital the Government recovers as much as it can of the $1.6 billion that it is in the process of paying out. We intend to conduct a process whereby Treasury is overseeing and working alongside the receivers to ensure we get the maximum value for those assets. Regular parliamentary discussion and speculation about who made which bids is the role of the Opposition, but it is not a game that the Government will get into, because it will destroy value and prevent us from recouping as much of that $1.6 billion as we can.
Hon David Cunliffe Link to this
Can the Minister confirm that Ministers did provide guidance or advice to officials on those offers, given that he was quoted in the Dominion Post on 1 September saying that he would be “a close adviser” to the receivers, and that the Prime Minister was quoted in the Dominion Post on 1 September saying that the Government had assumed sole rights in respect of South Canterbury Finance because “without that we would be in the position of being the 800-pound gorilla who would have to take marching orders from a mouse.”?
The Government has been running a process where it takes advice from Treasury. Prior to the receivers being in place, that advice from Treasury would have been based on information coming from the company itself, and after the receivers were in place on information that came from the receivers. I might say, though, that the business of whether there were offers around at that time has been subject to a lot of speculation. I will repeat to the member that some of that speculation, from what I have seen, is simply wrong. Otherwise, the Government does not intend to get into discussing the details of offers, and in many cases we would not have been fully aware of all the dimensions of those offers.
Hon David Cunliffe Link to this
I seek leave to table a printout of a Dominion Post article dated 1 September that verified the quotations that I have just used.
Hon David Cunliffe Link to this
I raise a point of order Mr Speaker. We have got ourselves into an interesting situation. I submit to you that the Minister has quoted public interest grounds for refusing to provide any substantive answers whatever to the Opposition’s questions on this matter. Mr Speaker, I further submit that that is inappropriate, because the evidence suggests that the Government has deliberately—as verified by those quotations—left hundreds of millions of dollars of taxpayer money—
No, no. The member will resume his seat. The member is now starting to argue the substance of the matter. The reason why I am not putting leave to the House to table a clipping from a newspaper is that the member has already referred to the quotes in his question. Anyone can look them up in the newspaper; we are not going to waste the time of the House by tabling clippings from recent newspaper articles.
Hon David Cunliffe Link to this
If Ministers had decided to accept another outcome from the receivership than that presented in the office on 31 August or 13 September, can the Minister confirm whether this alternative outcome will have a greater or lesser net present value than the $1.3 billion contained in the offer of 31 August?
The Government is taking the steps that it believes are required to maximise the value of the sale of the assets. With South Canterbury Finance having gone into receivership, the Government said at the time it was not interested in a fire sale, and we do not believe that a considered and value-creating process should be knocked over by an aggrieved bidder. If the member has an aggrieved bidder who thinks that he or she missed out, well, that is interesting. I am sure that he will get more of them, because in the end there will be people who try to buy these assets cheaply from the Government, where the Government does not agree to sell the assets to them.
Hon David Cunliffe Link to this
If there were considerations other than protecting taxpayer value—which the Prime Minister set out as the Government’s primary objective—that informed this Minister’s decision not to accept either of the offers of 31 August and 13 September, what were those considerations, and why did they outweigh the Government’s goal of protecting taxpayer funds, when it would appear from documents that up to half a billion dollars of taxpayers’ money has been wasted by this secretive and mismanaged bail-out?
All I would say to that member is that I am sure he will find, as his experience increases, that aggrieved bidders will try to use political means—
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. Given that it is the Minister who appears to have wasted half a billion dollars on this matter—
When I get to my feet the member will resume his seat immediately, if he wishes to stay in the House. The member asked a question in which he made an assertion towards the end of it about the amount of money he claimed the Government had wasted. The Minister, faced with a question like that, will have a fair bit of licence in answering it.
As the member becomes more experienced in these matters, I think he will realise that aggrieved bidders—if that is what he has—are not necessarily the most reliable sources of information or judgment on whether they should have got the assets. I am sure that having raised the matter in this way, he will attract further aggrieved bidders who do not meet our objectives.
Dr Russel NormanWell, I cannot rule that out, simply because that would be a show of bad faith, given that we have an Overseas Investment Act in place. The member will be familiar with the changes that the Government has announced to that Act, which will be in place by 1 December, and anyone who seeks to buy those land assets would have to follow that process. For the House’s information, South Canterbury Finance is a one-third shareholder in the land assets, and it would be possible for the holders of the other share in those assets to perhaps buy South Canterbury’s. But that is yet to be seen.