10. KATHERINE RICH (National) Link to this
to the Minister for State Owned Enterprises
Does he stand by his statement regarding what happens when State-owned enterprises fail, that “you’ve gotta remember with the SOEs that going bust doesn’t quite mean what it might mean for some other companies, you know for example if Meridian went bust you’d still have a lot of windmills and a lot of dams, so it’s a financial rather than putting all the assets at risk”; if so, why?
Hon TREVOR MALLARD (Minister for State Owned Enterprises) Link to this
The essence, yes; the language is probably not very clear.
Has he seen today’s release from Victoria University’s survey of State-owned enterprise directors, which says: “The process for selection is too arbitrary, lacks adequate input from the chair and board, and is too heavily weighted towards political acceptability and correctness rather than capability.”; if so, what is his response given that last week in the House he confirmed that State-owned enterprise boards have exactly the expertise necessary for his new plan?
Hon TREVOR MALLARD Link to this
I reject the allegation that as Minister for State Owned Enterprises I have made politically correct appointments. If people look at the list of people whom I have appointed, I think I have probably appointed more people closer to the opposite side of the House than this side.
Hon Marian HobbsWhat benefits are there to the taxpayer from ongoing Government ownership of State-owned enterprises; and has he seen any reports of alternative policies on State-owned enterprise ownership?
Hon TREVOR MALLARD Link to this
Currently, State-owned enterprises are returning dividends of about $250 million to $300 million a year, not counting the one-off special dividend from Meridian. On top of that, Crown equity in State-owned enterprises has more than doubled since this Government took office. The dividend stream is money that the Government can invest in public services like health and education without having to raise it through taxes. We also want to put State-owned enterprises to work. By contrast, I have seen a report about a person arguing that he has long-since abandoned the idea—if he ever held it—that the Government should own major industries. That comment, of course, was from Dr Brash before he promised not to sell them. But, unlike what the National Party wants to do, Labour will not sell the family silver.
In the light of the research released today, what is his response to State-owned enterprise directors’ concerns that cronyism on boards hampers their ability to make good commercial decisions?
Hon TREVOR MALLARD Link to this
I think we will find that the people who have answered that are longer-term State-owned enterprise board members who are getting mixed up with the time when Bill Birch and others were running them.
Will the Minister now revisit his plan of “deliberately trying to get one spot on each of the boards for someone who’s got quite a lot of … life experience but doesn’t have governance experience …”, in light of research released today that says that State-owned enterprise board members have major concerns about Labour’s appointment process and fear that it is not leading to good appointments that will give boards the right skill base around the table?
Hon TREVOR MALLARD Link to this
Every State-owned enterprise board member, including quite a sizable number who were appointed under the previous Government, has been appointed through this system. I will not revisit my practice of trying to appoint people to what are essentially training positions. I want to make it very clear that some of these are training positions for people who have had a lot of life experience, often as CEOs of major firms. Getting governance experience within State-owned enterprises is, I think, valuable both for the State-owned enterprises and for private sector boards, which these people move on to. I might say that it is not a requirement under our system to be a failed MP, which appeared to be the case under National.
Heather RoyWhen taking into consideration the potential of a State-owned enterprise to fail, why has the Minister chosen the advice of Peter Harris, a union economist, over that of Treasury, which is concerned about weak accountability disciplines, Ministers with multiple objectives, and better alternatives—such as roading—for spending State-owned enterprise dividends?
Hon TREVOR MALLARD Link to this
I think it is fair to say that Peter Harris is one of the most respected economists in the country, and he is certainly not a union economist.
Why should Kiwis be confident in the ability of State-owned enterprise boards to handle this new direction, when directors of New Zealand’s largest State-owned enterprises themselves question the process and criteria for choosing directors and suggest that the system is too heavily weighted towards political acceptability and correctness rather than capability?
Hon TREVOR MALLARD Link to this
Probably some of the directors are not totally aware of how they got their positions. All the directors I appointed went through an interview process that included the chair. I worked through the recommendations with the chair, and in not one case did the chair say on balance, in the end, that they did not want a person whom I appointed to a State-owned enterprise board. In a number of cases I decided not to appoint a person who was my preference, because the chair decided that that person would not make a contribution. I just think that it is disgraceful when people like Bill English criticise Jim Bolger as he did.
Hon Dr Michael Cullen Link to this
Is this a survey of people appointed by the Labour-led Government who are expressing concern about their belief that they were incompetent to be appointed, or is it a survey of people appointed by the previous National-led Government who are concerned that they have not been reappointed by the Labour-led Government?
Hon TREVOR MALLARD Link to this
This survey is about the first time I have had reason to question my appointments.
Peter BrownGiven those answers, does the Minister think it reasonable that if State-owned enterprises are to get involved in additional operations that might, for whatever reason, appear somewhat risky it is only prudent that they make more regular financial reports—say, 6-monthly—than they do currently?
Hon TREVOR MALLARD Link to this
I get quarterly reports from State-owned enterprises, and I think that the compliance cost of shifting to something more regular would make it just not worthwhile.
Chris TremainWhy does the Minister continue to promote himself as the primary candidate for the imminent replacement of the Minister of Finance—responsible in that role for the assets and liabilities of our nation—when he shows a lack of basic accounting knowledge and of understanding the relationship between the assets of a State-owned enterprise, such as Meridian’s dams and windmills, and the liabilities of that organisation?
Hon TREVOR MALLARD Link to this
I think it is fair to say that I have a much better understanding than that member does. I also know that next term, the term after, or even the term after that, will be soon enough for me.