1. Dr RUSSEL NORMAN (Co-Leader—Green) Link to this
to the Minister of Finance
Does the investment protocol the Prime Minister will be signing with Australia include any provisions that would stop Australians from buying shares in New Zealand State-owned assets such as Meridian Energy, Mighty River Power, Genesis Energy, and Solid Energy, should a future Government privatise them?
Hon BILL ENGLISH (Minister of Finance) Link to this
The Prime Minister has spelt out five clear tests that would have to be met for the Government to proceed with a mixed-ownership model for those four State-owned enterprises. One of those tests is that New Zealand investors would have to be at the front of the queue, and that we would be confident of widespread and substantial ownership by New Zealanders, in addition to the 51 percent stake that would certainly be owned by the Government. The details of the investment protocol will be announced tomorrow, but I can assure the member that the protocol is consistent with that test.
How can New Zealanders be at the front of the queue to buy shares in these partially privatised assets when by its very nature the investment protocol requires equal treatment of Australian and New Zealand investors?
As I said before, the details of the protocol will be announced tomorrow, and the member will have an opportunity to scrutinise the protocol in detail. That may help lay some of his fears to rest.
Can he confirm matters that are already in the public domain, which are that under the investment protocol any investment less than $477 million from an Australian investor in a New Zealand company faces no scrutiny from our Overseas Investment Office?
Again, the details will be announced tomorrow, but clearly the Government has been negotiating that matter, and I can assure the member that the tests we have set out for the mixed-ownership model are consistent with the protocol.
Aaron GilmoreWhen we are considering these issues of what Australians can invest here, we do well to remember that New Zealand benefits from a more than proportionate investment in Australia. In fact, recent figures show that New Zealanders have about $36 billion invested in Australia—that is, we have investments in Australia equivalent to about two-thirds of the size of our own stock market. The investment protocol will continue with a process that has been going on for 25 years, which is to move towards a single economic market. Up until recently that process was endorsed by all major political parties.
Hon Phil GoffHas Treasury warned him that the privatisation or partial privatisation of the State-owned power companies within a decade will result in cornerstone stakes being held by foreign multinational companies in those power companies?
I seek the leave of the House to table a Treasury document that says precisely what I asked in the question, which the Minister of Finance denied.
Mr SPEAKERThe document is a Treasury document relating to Crown ownership of commercial entities, I think given to Cabinet around December last year.
Does the Minister of Finance agree that it is one of the fundamental principles of these investment treaties that investors from different countries get equal treatment? How will he be able to discriminate against Australian investors after signing up to a treaty that actually guarantees them equal treatment?
When the member has the opportunity to scrutinise the protocol in detail, he will be able to draw his own conclusions. But as a general point, it is not at all unusual for someone who is selling assets to be able to discriminate among classes of buyers.
Does he agree that New Zealand’s current account deficit is in large part made up of the investment income deficit, due to profits sent overseas by New Zealand companies that are owned by overseas owners, and that if we partially privatised those State-owned assets and they go into Australian or other ownership, that will simply add to the amount of money going offshore and make our current account deficit worse?
We need to remember that the flows work both ways. As I said before, New Zealanders have $36 billion invested in Australia, and we believe that the Australian Government’s open policy of accepting New Zealand investment is beneficial to many New Zealand savers, who are able to get the benefits of investing in a large economy that at the moment has been performing pretty well. This matter is one of mutual policy positions where we are open to investment from Australia and they are open to investment from us. Some Australian investment has been here for a long time. I think AMP and ANZ have been here for almost 150 years.
Does he agree that the transfer of profits involving the Australian banks has been a very significant drain on the New Zealand economy—possibly in the order of $2.5 billion a year—and that if we have further foreign ownership of the New Zealand economy, it will make that problem worse?
The member is generally correct. The answer to that question is the answer that New Zealanders are now coming up with, which is to save more so that there is a bigger pool of capital in New Zealand for us to do things like buy back the banks or buy into any other asset New Zealanders feel they can control. Fortunately, at the moment, because of Australia’s open investment policy, New Zealanders are able to buy shares in those banks. So if New Zealanders think those banks are excessively profitable, they can benefit by buying shares in them.
For the purpose of clarity, will the Minister guarantee that the investment protocol between New Zealand and Australia will guarantee New Zealand investors preferential treatment in any partial privatisation of New Zealand’s State-owned assets?
As I have said to the member a number of times, when he has the opportunity to scrutinise the protocol he can then make up his own mind about it. I can say to the member that the protocol is consistent with the test the Government has set, which is that we would like to see substantial and widespread New Zealand ownership under the mixed-ownership model.