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State-owned Assets, Sales—Timing

Tuesday 9 August 2011 Hansard source (external site)

Goff2. Hon PHIL GOFF (Leader of the Opposition) Link to this
to the Prime Minister

Will he suspend or change his timetable for the proposed selldown of State-owned assets in light of the current economic circumstances; if not, why not?

KeyRt Hon JOHN KEY (Prime Minister) Link to this

There is no timetable for extending the mixed-ownership model. The Government has always said it will take this policy to the electorate in November, and we are not making plans before that time.

GoffHon Phil Goff Link to this

I seek the leave of the House to table the Finance and Expenditure Committee’s response to estimates review questions, which points out the timetable for the sale of State-owned assets.

SmithMr SPEAKER Link to this

Is this a document that the Parliament has?

GoffHon Phil Goff Link to this

I would have thought so, but the Prime Minister—

SmithMr SPEAKER Link to this

We don’t table those documents.

GoffHon Phil Goff Link to this

As he has already booked the sale of shares in State-owned enterprises in this year’s Budget, is he still prepared to sell those shares even if it means lower prices in a depressed market?

KeyRt Hon JOHN KEY Link to this

Firstly, it is very important that we correct the error from the Leader of the Opposition, because he is prone to having quite a few of them, on the basis of his transcript from this morning—

GoffHon Phil Goff Link to this

I raise a point of order, Mr Speaker. I think you understand what the point of order is. That is not an appropriate way to begin an answer to a question.

SmithMr SPEAKER Link to this

I think the point is well made. There is no need for that kind of comment. There is no problem with disputing information contained in a question, but making a derogatory comment about a questioner is not on.

KeyRt Hon JOHN KEY Link to this

There is not a timetable. There is a zero capital budget in Budgets 2012-16. In fact, any of the dividend streams and the income that would be reflected from a sale of shares through the mixed-ownership model are not in Budgets 2012-16. As I said yesterday, of course the Government, if we are the Government post November 26, would take into account the financial conditions at the time, but the reality is that if there is any timing difference it is likely to be months, and certainly not one that would affect the overall thing.

Hon Member

So there is a timetable, or there’s not?

KeyRt Hon JOHN KEY Link to this

“If” there was one, I said.

GoffHon Phil Goff Link to this

Is the Budget 2011 estimate accurate that even after the sale of State-owned enterprise shares Government debt will double in the next 5 years; if so, what guarantee is there that a future National Government would not use that as a pretext to sell down even further shares than he has already announced?

KeyRt Hon JOHN KEY Link to this

No, that is not correct, and that was the very basis on which I made the statement earlier that the member often gets his figures wrong. In fact, gross debt in New Zealand this year is $78 billion. In 5 years it will be $86 billion. A doubling of $78 billion would be $156 billion. It is very similar to the way in which the member said this morning that the Government’s bond programme would be $16.7 billion—

SmithMr SPEAKER Link to this

I do not think that is quite necessary in order to answer the question.

GoffHon Phil Goff Link to this

I wonder whether I could seek leave to table the Budget document that shows that gross—

SmithMr SPEAKER Link to this

I just stopped the Prime Minister on the one hand, and the Leader of the Opposition is now misusing a point of order. He knows that we do not seek leave to table Budget documents.

GoffHon Phil Goff Link to this

How does having the one-off sale of shares in State-owned enterprises and annual tax cuts of nearly $2.5 billion for the top 10 percent of earners while the Government is borrowing over $16 billion this year protect New Zealand in an uncertain global economy?

KeyRt Hon JOHN KEY Link to this

The Government is not borrowing $16.7 billion this year. The Government is borrowing $5.1 billion, and the tax cuts the member refers to were fiscally neutral. If the member wants to go back to the policy he adopted when he thought he was a bus driver, which, frankly, he was better at than at being the Leader of the Opposition, then he is welcome to reverse the policy.

GoffHon Phil Goff Link to this

Why is the Prime Minister not following the advice of the Chief Executive Officer of the Bank of New Zealand, Andrew Thorburn, who said on the weekend that what this country needs in the face of global uncertainty is a change of tax regime, such as a capital gains tax, to disincentivise investment in housing and to encourage investment in the productive sector?

KeyRt Hon JOHN KEY Link to this

I think that Mr Thorburn is wrong. If one looks at the changes the Government made in Budget 2010, one sees that we took $1 billion out of the property market, in terms of changes to depreciation and the like. In my view, if one puts a capital gains tax on a company that would otherwise be employing people on its activities, one will actually dampen investment.

GoffHon Phil Goff Link to this

If the chief executive of BNZ, Andrew Thorburn, is wrong, was the chief economist of Westpac, Dominick Stephens, also wrong when he said “New Zealanders are incentivised to borrow money to buy land rather than invest in productive assets.”, and that a capital gains tax is necessary to reduce those sorts of distortions? Are they all wrong?

KeyRt Hon JOHN KEY Link to this

In my opinion, yes.

GoffHon Phil Goff Link to this

Are the former Secretary to the Treasury, John Whitehead, and the Reserve Bank also wrong when they say a capital gains tax would remove significant distortions in the tax system and would support and strengthen the productive sector, which is exactly what this country needs in the face of a global recession?

KeyRt Hon JOHN KEY Link to this

What John Whitehead was referring to was an extension of the capital gains tax that is already currently in place to include the family home. What I think we are hearing from the Leader of the Opposition—and I think New Zealanders should listen carefully—is that by stealth, if given the chance, Labour would bring in a capital—

SmithMr SPEAKER Link to this

Ministers should not speculate on—[ Interruption] I am on my feet.

GoffHon Phil Goff Link to this

I seek leave to table this quote from the former Secretary to the Treasury, John Whitehead—

SmithMr SPEAKER Link to this

Before we have the quote, what is the source of the document?

GoffHon Phil Goff Link to this

The source of the document is www.knowledgebasket.co.nz, and it is from November of last year.

SmithMr SPEAKER Link to this

The member may indicate now what the document said.

GoffHon Phil Goff Link to this

The document says that Treasury had explored the introduction of a capital gains tax as a means of removing significant distortions from the tax system.

SmithMr SPEAKER Link to this

Leave is sought to table that document. Is there any objection? There is objection.

BoscawenHon John Boscawen Link to this

Does he not believe that the real issue facing the country is reducing Government expenditure, rather than trying to find and invent new ways to raise it, such as a capital gains tax?

KeyRt Hon JOHN KEY Link to this

I think the member has a point, and that was why we ran a zero Budget going into Budget 2011, despite the fact that the country was facing the crisis that presented itself as a result of the Christchurch earthquakes. I think this Government has been very fiscally responsible, and it has got to a point where it will be back in surplus within a few years. We will not be running the debt levels that a Labour Government would run if it was elected post 26 November. New Zealand simply cannot afford the policies that Labour is promoting.