6. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
Has he asked Treasury to re-estimate the projected sales revenue from his proposed privatisation policy in light of Contact Energy’s share price falling 20 percent so far this year?
Hon BILL ENGLISH (Minister of Finance) Link to this
First, can I correct the member: it is a policy of Government control of these energy companies with a sell-down of up to 49 percent. Secondly, the change in the Contact Energy share price highlights the risks to taxpayers from owning commercial assets. As a rule, Governments are poor at managing these risks. Part of the reason for the share price weakness, I am advised, is that Contact Energy made a rights issue to raise $350 million for a new geothermal plant. This is a key benefit of the mixed-ownership model because it gives companies access to capital to expand without having to come to the Government and compete with schools and hospitals for capital investment.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. The Minister has not addressed the question, which asked: “Has he asked Treasury to re-estimate the projected sales revenue?”. He did not go near that question.
Mr SPEAKERHon David Cunliffe Link to this
Has the Minister either sought or received any other advice in respect of either the timing or the total value of the proceeds of his part-privatisation programme in light of the carnage in international equity markets in recent weeks; if not, why not?
No, because the Government is not getting ahead of itself. We have always said to the New Zealand public that we would pursue this policy if we were re-elected. In the context of an upcoming election there is no point in the Government taking advice about whether to float those shares now.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. I seek leave to table page 159 of the Economic and Fiscal Update of the Budget, which shows—
Hon David Cunliffe Link to this
Can the Minister confirm whether the cash flows shown on page 159 of the Economic and Fiscal Update, which show $100 million capital transferred from the balance sheet into new capital spending in 2011 as a result of asset sales, $650 million in 2012, $800 million in 2013, $1.6 billion in 2014, and $3.6 billion in 2015—estimates of cash flows that, in part, derive from his partial privatisation programme—have been changed in light of the carnage in international markets, or had he not noticed?
Treasury will, no doubt, update its cash-flow statement in line with its statutory obligations in the run-up to the election. But the member cannot have it both ways. Either these are gold-plated assets with absolutely certain value and dividend streams that he is counting on for the next 10 years, or, as he is pointing out today, they are risky assets whose share prices could fluctuate because their custom has disappeared.
Hon David Cunliffe Link to this
Which of the following two positions the Minister has just taken is, in fact, true: that there is no timetable for realising the proceeds from State-owned enterprise asset sales, and that, therefore, there was no need to take advice from Treasury on the impact on those sales of the carnage in financial markets; or that there is a timetable represented by the page I have quoted in his Budget and that, therefore, he should consider those matters, which he now says Treasury will update? Which of those two positions does he hold to?
The Government has stuck to one timetable, which is that if it is re-elected, it will then set out a programme for the retention of 51 percent control by the Government of these companies and the sell-down of 49 percent of these companies to Kiwi mums and dads. The events of any particular week in respect of fluctuations in the markets over the next few months are pretty much irrelevant to that timetable.
Aaron GilmoreThe volatility in sharemarkets shows that it would be risky to borrow to invest in share markets, because although that looks like a sound proposition when markets are going up, it does not look quite as sound when markets are dropping or showing considerable volatility. That is one of the reasons why the Government suspended contributions to the Superannuation Fund a couple of years ago, because we did not believe that it was appropriate to be borrowing money in volatile financial markets to invest in volatile share markets.
Hon David Cunliffe Link to this
Is it correct that New Zealanders, therefore, have three options in regard to his part-privatisation programme: spending thousands of dollars and risking money on the stock market to buy assets they already own; not buying shares and seeing those assets sold offshore, leaving the country more exposed to international markets; or voting out his Government on 26 November?