1. Hon PHIL GOFF (Leader of the Opposition) Link to this
to the Prime Minister
Does he stand by his statement in respect of the payment of a dividend by a State-owned enterprise that the Government expected to receive a return from them because “if we don’t, how do we pay for our doctors and hospitals and the likes”?
Rt Hon JOHN KEYIn taking $700 million in dividends from the three State-owned enterprise power companies last year, how much of that dividend went to pay for social benefits to the communities such as doctors, hospitals, and the likes?
Given that the Government collects revenue through a huge number of ways—personal and indirect taxation, other forms of taxation, levies, and charges—it is impossible to know exactly, but it is possible that it was all of it.
If those power companies, which all of us as Kiwis own right now, are so profitable that the dividends cover not only reinvestment back into generation but also huge social dividends to the community, why does he intend to flog off the shares in those companies so that the profit goes to private interests and to foreign companies instead of back into the community?
Because it is the Government’s intention to use the proceeds of those initial public offerings to actually invest in other assets that the Government would have to fund through the Government bond rate, or, potentially, to put into other aspects that are generating income.
Did Treasury advise his Government that even the partial privatisation of those companies would, within 10 years, result in the cornerstone shareholder being a foreign multinational company?
Under the model that has been proposed by the Government, although we are seeking further advice on it, I do not think that that would actually be possible, because 51 percent will be controlled by the Crown, and therefore the cornerstone shareholder will, in fact, be the Crown. There will be other investors, of course, but given that Kiwi mums and dads will be at the front, along with the 1.6 million KiwiSaver accounts, plus the Crown entities that will invest, the largest shareholder will be the Crown.
Is the Prime Minister saying that Treasury was wrong in saying that a cornerstone shareholder could be a foreign multinational company, notwithstanding that he was holding 51 percent of the shares?
Hon Sir Roger Douglas Link to this
Could the Prime Minister explain to the House and to the Hon Phil Goff why 50 percent increases in productivity among reformed State-owned enterprises were more important to New Zealand than dividend considerations, and that dividends naturally flow from an increased level of productivity while prices fall?
Because the majority of electricity generation assets in this country are owned by the Government. Therefore, if those businesses are not as efficient or as effective as they can be, then New Zealanders ultimately pay more for those services than they should do. If we look at the Labour Government between 1999 and 2008, we see that not only did it not maximise its returns but prices went up 72 percent under that Government, so we certainly know that that model has not worked so well.
Contrary to what the Prime Minister has just answered, is it not correct that Treasury told him that there was little evidence that privatisation would lead to improved financial performance from the State-owned enterprises; if so, why risk privatising them when the past experience has been that Air New Zealand was run into bankruptcy and New Zealand Rail was asset-stripped?
It is funny that the member should mention those. If it is such a bad model, can he explain, firstly, why he did not buy 100 percent of Air New Zealand when he had the chance, and, secondly, can he explain why, given that we bought KiwiRail, we are now having to put $4 billion into fixing it up?