6. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
Does he agree with the analysis by Brian Gaynor in the New Zealand Herald in 1999 that foreign buyers during the asset sales of the late 80s and 90s enjoyed a return of more than $13 billion in the first 12 years following the sales, and would he be happy for similar large profits to once again be lost overseas under the current Government’s asset sales policy?
Hon BILL ENGLISH (Minister of Finance) Link to this
No, and no, and that is why the Government is doing it differently from Labour in the late 1980s.
Hon David Cunliffe Link to this
What measures in his privatisation policy would ensure that the shares sold by the Government would not end up in foreign hands, as they did with Contact Energy and the BNZ, given that Treasury has found “significant participation by foreign investors would be essential …”?
As we have said many times in this Parliament, the Government disagrees with the advice. New Zealanders will be at the front of the queue. The New Zealand Government will retain 51 percent. Even in the case of Contact Energy, which was sold down over 10 years ago, a significant proportion of those who initially bought the shares are still on the register, 14 years later. New Zealand shareholders are loyal to New Zealand companies.
Hon David Cunliffe Link to this
Is he concerned that his privatisation policy would see energy company boards answerable to foreign shareholders who care about maximising their profits, not the overall economic health of New Zealand?
No, because the majority shareholder will be the New Zealand Government. Among the other shareholders will be the New Zealand Superannuation Fund, ACC, 1.7 million KiwiSavers, and Kiwi mums and dads. I think Labour members are trying to cover up for the faults in the programme that Labour put together back in the 1980s. We are trying to learn from their lessons. They put the Air New Zealand model together 5 or 6 years ago. Air New Zealand has worked under mixed ownership, and these companies would work under mixed ownership as well.
Hon David Cunliffe Link to this
Further to the Minister’s answers, what advice has he received about the rights of minority shareholders, especially substantial minority shareholders, including the right to compensation for lost opportunities or the right to require a majority shareholder to increase their equity or else face a dilution of their shareholding?
I have not received any detailed information on that, but the advice I do have is that if the Government is a 51 percent shareholder, then it has more rights than all the other shareholders put together. Of course, the Government would exercise those rights.
Hon Sir Roger Douglas Link to this
Does he agree that Telecom was sold in 1990 for $4.25 billion, which in real terms is $2 billion more than its recent market capital value, and does this show that Government ownership of assets is not the economic utopia that Labour makes out, when risks involved are taken into account?
That is a good point. People who buy into any commercial company have to face commercial risk. In fact, the value of Telecom was $16 billion in 1999, and today it is less than $5 billion. Whether the Government owned those shares or private investors owned them does not change the risks of operating in the communications market.
Hon David Cunliffe Link to this
In light of his previous answer, which essentially condones asset stripping by the buyers of State-owned enterprises, is he aware that a State-owned enterprise is legally required to exhibit a sense of social responsibility by having regard to the interests of its community in which it operates and to be a good employer, but if energy companies were removed from the State-Owned Enterprises Act, under privatisation, their boards would be legally required to act only in the best interests of the company, regardless of the consequences for the country as a whole?
If we are talking about asset stripping and price gouging and energy companies, it would have been under the Labour Government when energy prices went up 70 percent in 9 years. Labour sold down billions of dollars worth of assets from those State-owned enterprises and took the cash.
Hon Sir Roger Douglas Link to this
In light of his answer about the sale of Telecom, does the Minister believe that the then Deputy Prime Minister took these risks into account when Telecom was sold in 1990 by the Government, and are these risks part of the reason behind the Government policy to partially sell some assets?
It is a fact of history that the Deputy Prime Minister at the time was the Rt Hon Helen Clark, who oversaw the sale, and at her right hand was the Hon Phil Goff. A lot of people will not vote for Labour until it apologises for the actions it took then.
Mr SPEAKERI am unhappy about that, because the question came from the ACT Party and was used to attack Labour. That is not, in my view, a very fair situation. To make up for it I have added one question to Labour’s supplementary questions today.
I raise a point of order, Mr Speaker. The primary question was an unusual one, I might say, but we should look at it. It referred to an analysis by Brian Gaynor in the New Zealand Herald in 1999—
I do not need to have a debate on this matter. The Minister will resume his seat. I took the nature of the primary question into account during a number of the answers given. Considerable criticism was made of Labour in the Minister’s answers, and I accept that as being perfectly reasonable given the primary question. That was taken into account. But the ACT Party asked a question that did not really require Labour to be attacked, and I did not think the Minister’s answer was reasonable. The Minister answered it perfectly properly at the start. He did not need to go on to that last attack. It caused disorder in the House, and to discourage that kind of thing I have awarded Labour a further supplementary question.
I raise a point of order, Mr Speaker. The first point is that if you give me a point of order, then generally the practice has been that the member is allowed to finish their point of order, even if the Speaker wants to rule on it in a way that the member does not agree with.
Let me be very clear on this: that is not the way I operate, at all. If I do not, as Speaker, hear within a few seconds what the issue of order is—
Hon Parekura HoromiaI accept absolutely that that was not the honourable shadow Leader of the House. But if I do not hear within a few seconds what the issue of order is, I sit members down. I have even asked the Prime Minister to sit down, and I am absolutely even-handed on that point. I will not have issues debated by way of point of order. I have made it very clear in relation to this question that I considered that the primary question had some provocation in it. It sought opinion and had some provocation. I gave the Minister a lot of licence in how he answered that question. There was nothing wrong with the third party’s question, and the Minister answered it perfectly well for a start, but he then deviated into attacking Labour, which was where I became unhappy, because attacking Labour was not essential to the answering of the question from the Hon Sir Roger Douglas. The easiest way to me to discourage that kind of answer seems to be to give Labour a further question.
Hon Rodney HideI ask you to reflect on this. I am not challenging your ruling, but I am thinking about it going forward. This is a debating chamber and members are here to debate. It is natural that they debate policies—
The member will resume his seat, as well. This is actually question time, I tell the Hon Rodney Hide; this is not a debate. The rules for question time are very clear. It is not a time when we have debates. We have questions asked, hopefully, and answers given. That is enough. I have simply decided to give Labour a further question, but I will say to some of the front bench on my left—not the shadow Leader of the House, but some of his colleagues—that when points of order are being heard, they will not interject.
Hon David Cunliffe Link to this
Given that the Budget documents and the Investment Statement attached to it show only a $200 million write-down in dividends but project a $6.8 billion sale price, which implies a 3 percent return on assets, can the Minister explain why private shareholders would want to buy shares in electricity companies for a 3 percent return on assets and not push up power prices higher than they have currently been?
Almost anything will be an improvement on how these assets were run up to 2008, when electricity prices were pushed up by 70 percent in 9 years, but the companies paid minimal dividends, equivalent to a 2 to 3 percent return. So if members want to see a track record of very high power prices and low returns, they will see them in relation to these assets under the Labour Government.
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. Although it was long, that was a relatively simple and clear question that went to why people would buy something for a 3 percent return if they were not going to put up the prices. It was a forward-looking question, not one that looked backward. There was no attempt to address it.
In fairness, I do not think it is possible to tie Ministers to answer exactly the way that members may wish them to answer. The question asked about dividends and prices, and in answering the Minister went back over a bit of recent history around dividends and prices. I listened very carefully to hear whether the Minister overstepped the mark in my view in terms of attacking the questioner. I do not believe he did. I think the answer to the question was not unreasonable. It may not have been what the questioner wanted, but it was still not an unreasonable answer in my view.
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. I do want to litigate. The question was about dividends and prices going forward. The reply was all about dividends and prices going back. It could not—
Often a way to understand how prices and dividends may behave in the future is to look at the way they have behaved in the past. It is not unreasonable in answering an economic question like that to look at what the history has been in the recent past to better understand how things might be in the future—[ Interruption] The member will not interject while I am on my feet.