3. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
Does he agree with State-owned Enterprises Minister Hon Tony Ryall who told the Finance and Expenditure Committee “there’s going to be no guarantee about what happens with foreign ownership”; if not, what mechanisms would he put in place to stop the shares in energy companies which he plans to privatise from ending up in foreign hands?
Hon BILL ENGLISH (Minister of Finance) Link to this
I presume the Government would take the same approach as the Labour Government did when it floated a quarter of Air New Zealand on the New Zealand Stock Exchange. As far as I understand, most of those shares have not fallen into foreign hands.
Hon David Cunliffe Link to this
Given that the Minister has clearly taken no advice about the fact that Labour bought back shares in Air New Zealand rather than floated them, what official advice has he received on the percentage of any shares sold under his privatisation policy that would end up in foreign hands?
Let us go through it: 51 percent will be owned by the Government, and who would know just what percentage—but we know it would be considerable—will be owned by the 1.7 million New Zealanders in KiwiSaver, the New Zealand Superannuation Fund, ACC, the Government Superannuation Fund, and Kiwi mums and dads? I guess the difference is this: we think Kiwis want to invest in New Zealand, and Labour thinks Kiwis want to sell out of New Zealand. They are wrong; we are right.
Hon David Cunliffe Link to this
Given that simply transferring the shares from the Crown’s own balance sheet to that of the New Zealand Superannuation Fund would be a merry-go-round at a higher cost of capital, and given that there is potential for mum and dad investors to onsell to foreign investors, how would he avoid a repeat of the partial privatisations in Queensland, where most of the shares bought by mum and dad investors ended up in the hands of foreign corporates?
We just look at the experience of Contact Energy, which was floated in the late 1990s and still has the largest register of shareholders on the New Zealand stock exchange—shares still largely held by Kiwi mums and dads. Again, we think New Zealanders want to invest in New Zealand, and we back them to do that.
Hon David Cunliffe Link to this
Given that Contact Energy is now largely owned by a foreign multinational that bought its shares from mum and dad investors, can the Minister tell the House whether he met with China Investment Corporation, a State-owned Chinese company that signalled that it has $6 billion set aside to buy New Zealand assets shortly before the Budget was announced?
Yes, I did visit China, and I did visit the Chinese Investment Corporation, along with the State Administration of Foreign Exchange, which manages $3 trillion of foreign reserves. I also met with two of the top six politicians in China, who will effectively become the leader and the deputy leader of China next year. I met with a number of New Zealand companies who operate in China, and a number of Chinese companies who want to operate or who do operate in New Zealand. They are very pleased with New Zealand’s economic policy, which is focused on taking the huge opportunities offered by the growing market of China.
Michael Woodhouse Link to this
What criteria were applied by the Government when considering foreign investment in Air New Zealand by the very successful mixed-ownership model under which it is operating?
The largest foreign investment in Air New Zealand actually occurred in December 2002, under the previous Government, when Qantas paid $100 million for a minority shareholding. This was led by then Associate Minister of Finance Trevor Mallard. The Government set six criteria at the time, including the maintenance of effective control of Air New Zealand by New Zealand nationals. It noted that without the outside investment, there would be a real risk that the Government as principal shareholder would be called on for further substantial funds, diverting Government expenditure away from higher priorities in health and education. The Opposition seems to have forgotten that when in Government it sold a chunk of Air New Zealand to Qantas, and that it was happy to do that because it maintained effective control—that is the mixed-ownership model.
Hon David Cunliffe Link to this
Is one of the reasons that the Minister met with the China Investment Corporation the fact that Treasury has advised that a significant proportion of foreign ownership is essential for the success of its partial privatisation plan; if so, what arrangements did he make with that Chinese investment fund to participate in that privatisation?
Mr SPEAKER