1. Hon DAVID PARKER (Labour) Link to this
to the Minister of Finance
What was the combined increase in the value of the Crown’s equity in Meridian, Mighty River Power, Solid Energy, Genesis and Air New Zealand for each of the last five years?
Hon BILL ENGLISH (Minister of Finance) Link to this
According to the Crown financial statements, the combined value of the Crown’s equity in these five entities was $11.1 billion as at 30 June 2010. This figure compares with $7.1 billion 5 years earlier. If the member wants the year-by-year numbers, they are $7.1 billion in 2005, $9.6 billion in 2006, $11.1 billion in 2007, $10.1 billion in 2008, $10.4 billion in 2009, and $11.1 billion in 2010.
Was the $4 billion increase in value of the State-owned enterprises that the Minister has just told the House about additional to the dividends received, which were accounted for as revenue?
Yes, because they are two different things. One is a cash payment to the Crown; the other is an increase or change in the value of the company. Of course, as the member will know, there is a process that sits alongside what is recorded in the Crown accounts, and that is the commercial valuation.
Was the increase in value also additional to the over $1 billion of capital distributions during that period?
Well, not quite, in the sense that a fair bit of the $1 billion of capital dividend actually came from the sale of some energy assets to foreigners.
Chris TremainWhat factors account for the increase in State-owned enterprise values, and what actions has this Government taken to improve State-owned enterprise governance?
Probably a major contributor to the lift in value was the fact that electricity prices increased quite dramatically through the period of the early 2000s, so it is hardly surprising that the value of the generators increased. The Government believes that the extraction of revenue from consumers by State-owned enterprises whose actions are not fully transparent, operating in a market that is short of competition, is not a good way for the Government to get revenue. That is why we have restructured the electricity market to make it more competitive, and taken a range of measures to make State-owned enterprise performance more transparent.
Is the reason the Minister continues to downplay total returns from State-owned enterprises the fact that he knows how unpopular his plans are to sell these profitable companies, because the vast majority of New Zealanders know they will be worse off?
No, and New Zealanders will be better off if the Government is able to follow through on its proposal. That is partly because as the Government will retain 51 percent at least, and therefore will have control of these organisations, it will receive the benefit of any uplift in value; consumers will get a better deal from companies operating transparently in a competitive electricity market; mums and dads will get the opportunity to invest in their own economy; and, finally, we would rather pay dividends to New Zealanders than interest to foreigners.
Are the State-owned enterprises his Government is planning to sell poorly performing with low rates of return, as he was trying to convince the House earlier in the week, or do they represent a fantastic opportunity to invest, as John Key is saying?
Well, they are in the process of changing from the first to the second. They have been poorly performing entities paying very low dividends for the amount of capital that has been invested in them—and that is capital that comes from people who pay their power bills; it does not drop out of the sky. We are in the process of improving their performance and turning them into very good investments.