1. Hon PHIL GOFF (Leader of the Opposition) Link to this
to the Prime Minister
Will he prevent shares sold in New Zealand-owned and taxpayer-owned assets such as our power companies being onsold to foreign corporates; if so, how?
Rt Hon JOHN KEY (Prime Minister) Link to this
One of the tests we set for extending the mixed-ownership model to companies other than just Air New Zealand was that there would be widespread and substantial New Zealand share ownership. We are still working through the details of that, but our expectation is that having New Zealanders at the front of the queue is one thing, and given the likely strong demand for shares from the likes of KiwiSaver funds, Crown financial institutions, and Kiwi mums and dads, such restrictions are likely to be unnecessary to achieving that test. By holding a stake of more than 50 percent the Government will ensure there is always a majority in New Zealand ownership.
So when Tony Ryall was asked at the Finance and Expenditure Committee on 22 June: “How would you guarantee that those shares would not be onsold for foreign multinationals?”, and he answered: “Well, you can’t guarantee on those issues.”, Tony Ryall was right, contrary to the Prime Minister’s questioning of that statement yesterday?
I think the debate is about what level of foreign ownership there would be, and because a majority is held by the Crown as a starting point, and because New Zealanders will be put at the front of the queue, we know by definition that the majority has to be in New Zealand hands. If it was such an amazing issue, why did Labour in 9 years in office never bother having the same restrictions it seems to be talking about now on the balance of Air New Zealand shares held by the public?
Mr SPEAKERI apologise to the honourable Leader of the Opposition. There will be a little bit more reasonableness on both sides. It was very difficult for me to hear the Prime Minister’s first answer because of the noise on my left and it was difficult for me to hear the start of the Leader of the Opposition’s question because of the noise on my right. So I ask for a little bit more reasonableness.
Did the Prime Minister somehow miss that in the 9 years of the last Labour Government we sold off no assets to foreign corporates—in fact, we bought them back, such as New Zealand Rail, which was sold at a cheap price by a National Government, to the huge detriment of this country?
If Phil Goff thinks buying KiwiRail was a good deal for the taxpayer, I can see why he holidays in Greece these days.
I apologise to the member. Now, look, a point of order has been called. The House must respect our basic rules. We can have a passionate exchange—I should not say that—we can have a noisy exchange, but we will not ignore the basic rules of the House.
Hon Trevor Mallard Link to this
It is a simple point of order. The comments that the Prime Minister made about the private travel and family travel of the Leader of the Opposition clearly led to disorder and were designed to do so.
My dilemma is that I could not hear what the Prime Minister said in his answer, and that is my difficulty. If I had been asked to rule on whether the Prime Minister answered the first question, I could not do so, because I could not hear his answer. The solution to this is in the hands of the House. If the Speaker is to do his job, he must be able to hear. I ask members to be sensible about that. I cannot rule on something I simply did not hear.
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. I ask that you ask the technicians to have another look at the sound system, please. If we can hear it over here, the sound system cannot be working properly if you cannot hear it.
I also accept that maybe my ears are inferior to the member’s. I apologise if that is the case. The noise level simply makes it very difficult for me. I ask members to be more reasonable.
When the Prime Minister answered in the House yesterday that Treasury advice said that “widespread and substantial New Zealand ownership is achievable”, why did he not finish the very same sentence in which that advice was included, which went on to state: “but significant participation by foreign investors will be essential to achieve the Government’s overall objectives”? Why did he not reveal that advice to the House?
Because that advice has been in the public domain for quite some time and the Government rejects it. One bit of Treasury advice we do accept is that a capital gains tax at 15 percent on a rental property—
That is not acceptable. It had nothing to do with the question asked. The question asked was a fair question. That last part was unacceptable. Labour has just earned itself a further supplementary question.
Did Treasury advise him and his Minister of Finance that strong foreign ownership restrictions would lead to net benefits from sales not being realised, and is that why he is refusing to put strong restrictions on foreign corporate ownership of New Zealand and taxpayer-owned assets?
No, because we took the same approach that Labour did when it was in Government, and that was that it held 73 percent of Air New Zealand. It did not find any need for restrictions because, as those members know, those shares held in the public domain did not for the most part flow overseas.
When the Prime Minister said in the House yesterday: “Arrogance would be to take a position where one passes the law and carries it out without reference to the New Zealand public.”, does he believe that it is also arrogant for his Government to have banked the proceeds of the sale of the privatisation of those assets in this year’s Budget and to have spent $6 million of taxpayers’ money in scoping out the study for privatisation without any mandate at all from the New Zealand public?
No, but I do think it would be arrogant to go and try to tell the press gallery that a capital gains tax would raise $4.5 billion when, in fact, it will raise only $700 million. If it will raise $4.5 billion, then that said capital gains tax would have to be on a bach, a rural property, a commercial property, any rental property anyone owns, and any shares, and, by the way, that probably would not be happening because even then Labour would be polling under the Greens at that point.
Rahui KateneDoes he agree that iwi and hapū are attractive commercial partners for the Crown because of their intergenerational investment outlook; if so, what commitments can he give to iwi and hapū that they will have first right of response before any New Zealand - owned assets come up for consideration?
I do agree that iwi and hapū would be attractive, long-term shareholders. They will be given the same rights as other New Zealanders to be at the front of the queue. What iwi and hapū are demonstrating through their commercial arms is that they—like many, many other New Zealanders—through their KiwiSaver accounts, through the Crown financial institutions, and through their savings actually want to buy shares in well-performing New Zealand companies, instead of having failed finance companies to invest in, as was the case under a Labour Government.
When the Prime Minister, earlier this afternoon, said he was considering transferring shares from the taxpayer—the Government—to Crown financial institutions to aid in privatisation, how does that actually help the economy, particularly when Crown financial institutes pay more for their borrowing than the Government does?
We are not talking about transferring; we are talking about selling. This might come as a really novel idea to Phil Goff, but actually I reckon it is quite a good idea if the New Zealand Superannuation Fund buys shares in Genesis Power rather than buying them in an Australian energy company. I do not know about everyone else, but I happen to think that investing in New Zealand is a great idea.
Hon Heather RoyCan he recall any precedents of previous Governments allowing New Zealand - owned and taxpayer-owned assets to be on-sold to foreign corporates; if so, which Ministers at the time were involved in the policy implementation?
I can recall that. I remember certainly Phil Goff and Annette King being Ministers in a Government that sold assets. I can remember Trevor Mallard being in Parliament. Mr Speaker if you will bear with me and just give me an extra few moments, I am happy to read the list. They would include New Zealand Steel, Petrocorp, Health Computing Services, DFC, the Post Office Savings Bank, Shipping Corporation, Air New Zealand, Landcorp Farming, the Rural Bank, the Government Printing Office, the National Film Unit, Communicate New Zealand, State Insurance Office, the Tourist Hotel Corporation of New Zealand, New Zealand Liquid Fuel Investment, and the forestry cutting rights—all of which added to a quick $9.761 billion flogged off by Phil Goff, who is now apparently opposed to asset sales.
I apologise to the Leader of—[ Interruption] I say to the National frontbench that I have asked the honourable Leader of the Opposition to ask his question. It should be possible to hear it. I am sure the Prime Minister wants to hear it.
Why has not National learnt the lessons of history and the failures of past privatisation, unlike the last Labour Government, which sold no assets, knowing that the sale of some assets like New Zealand Rail led to asset-stripping, others like Air New Zealand led to a previously successful business being run into bankruptcy, and the sale by National of BNZ for a mere $1.5 billion has resulted in $12.5 billion worth of dividends flowing out of this country; why has he not learnt those lessons?
I actually think the Leader of the Opposition asked a good question. This Government has learnt those lessons. That is exactly why there will be a majority ownership held by the Government. That is exactly why Kiwi mums and dads will be at the front of the queue. I say this to the Leader of the Opposition in all sincerity: the investment portfolios around New Zealand have changed. Back in the late 1980s and 1990s, there were not 1.7 million KiwiSaver accounts. There were no Crown financial institutions. Those entities were actually not in the form they are today. What investors are looking for are genuine investments in New Zealand companies.
Well, I say to Trevor Mallard that what they are not looking for is a capital gains tax on everything they may ever own.
Has he and his Government been advised by Treasury and other officials that the cost to the taxpayer of selling these assets could actually be between 2 percent and 9 percent of their value, which, if one takes the midpoint of those figures, means that he will be spending $340 million worth of taxpayers’ money just to flog off the assets to foreign corporates?
No. What we have actually been advised by Treasury is that the average cost of an initial public offering is about 7 percent. In the United States it is 3 to 4 percent. In fact, when Contact Energy was sold off, I think it was about 1.8 percent. That is exactly what we are working towards, and the member knows that, because in fact that advice was presented to his office some months ago when he was away.
I seek leave to table a letter to the Minister of Finance from the Crown Ownership Monitoring Unit dated 17 May 2011 that states that in New Zealand large initial public offerings in recent years have cost around 2 to 9 percent, which is the figure I quoted.