6. Hon CLAYTON COSGROVE (Labour—Waimakariri) Link to this
to the Minister of Finance
In light of his statement yesterday regarding foreign-owned assets that “we need to generate the kind of savings that will help New Zealand buy back those assets”, is it still the Government’s policy to sell State assets if it is re-elected, given that up to 30 percent of the shares he proposes selling could go to overseas buyers?
Hon BILL ENGLISH (Minister of Finance) Link to this
If re-elected in November, it is the Government’s policy to extend the mixed-ownership model, retaining 51 percent Government ownership in four energy State-owned assets and allowing investors to buy a greater share of Air New Zealand. Under the model, the same one as Labour put in place for Air New Zealand, the Government will retain 51 percent, and Kiwi investors will be in the front of the queue. It is a win-win; New Zealand savers get to invest in good Kiwi companies—and we expect 85 to 90 percent local ownership—and the Government gets to free up $5 billion to $7 billion over 3 years to pay for new assets like schools, hospitals, and ultra-fast broadband, without having to borrow more debt from overseas lenders and pay them interest, rather than pay dividends to Kiwis.
Hon Clayton Cosgrove Link to this
Has the Government formulated any policy to ensure that shares sold under his privatisation plan are not purchased by foreign buyers, either at the initial float or subsequently; if not, when will he be releasing such a policy?
The policy is pretty clear: Kiwis will be at the front of the queue. We would expect 85 to 90 percent local ownership, and we are pleased to see that on the New Zealand Exchange, local ownership has tended to increase in recent years. We would expect that under the mixed-ownership model, State-owned assets would benefit from that trend.
Hon Clayton Cosgrove Link to this
Given that by his own estimate, confirmed today, up to 15 percent of the companies he proposes selling would be bought by foreign investors, would the subsequent loss in dividends to those foreign investors worsen or improve New Zealand’s current account deficit and overseas debt?
No, and that party will have to explain how it will pay for schools, prisons, and hospitals without borrowing an extra $5 billion or $6 billion from foreign lenders.
Michael Woodhouse Link to this
By how much are Government assets projected to grow over the next 4 years?
In a well-run and moderately growing economy, we expect that Government assets will grow by about $34 billion over the next 4 years. That is, the total value of Government assets will rise to $258 billion. However, rather than borrow all of the extra $34 billion, the Government will recycle the proceeds of the part-sale of some of its current assets, so we can put that money into high-priority future investments, like schools, hospitals, and broadband. Parties that campaign not to sell the assets will have to borrow an extra $6 billion or $7 billion from foreign lenders and pay interest to foreign banks rather than dividends to Kiwi savers.
Hon Clayton Cosgrove Link to this
I raise a point of order, Mr Speaker. I just want to reflect on the answer to my question, and I ask for your ruling—
Hon Dr Nick Smith
Mr SPEAKERI think I can deal with this. The problem the member got into when raising his point of order was that he wanted to reflect on a supplementary question from a whole question ago. Points of order are not about reflecting on matters, they are meant to be to do with the procedure of the House; they are meant to be expressed tersely. As for reflecting on an answer, if the member had a problem with the answer, he should have raised it straight after the question. It is most unusual to go back to a supplementary question. I do not want to deny the member the chance to be heard, especially since there was an unfortunate interjection during a point of order on the other side of the House, so I will hear him, but it had better be a real point of order.
Hon Clayton Cosgrove Link to this
In answer to my question, which was whether the subsequent loss of dividends to those foreign investors would worsen or improve New Zealand’s current account deficit or overseas debt, the answer the Minister gave was “No”. He then proceeded to attack the Opposition. No to what? How can the Minister address a question with an answer that is “No”?
If the member wanted to make sure there was an answer that could not be misinterpreted in any way, there should have been only one part to the supplementary question.
If there was only one part to the supplementary question, then “No” therefore applied to it and was a perfectly reasonable answer.
Hon Clayton Cosgrove Link to this
In light of Standard and Poor’s comments that “Downward pressure on New Zealand’s ratings could re-emerge if New Zealand’s external position continued to deteriorate”, why will he not reverse his asset sales policy, given that it will inevitably worsen our external position when dividends begin to flow offshore?
From the point of view of the rating agencies, the alternative is significantly worse—that is, having to go to international financial markets and borrow an extra $7 billion, paying interest to foreigners, rather than the partial sale of 49 percent of current State-owned enterprises, which will mean the Government will get the money off Kiwis and be able to pay them dividends.