1. PESETA SAM LOTU-IIGA (National—Maungakiekie) Link to this
to the Minister for State Owned Enterprises
What tests would need to be met before the Government proceeded with extending the mixed-ownership model to four more State-owned enterprises?
Hon SIMON POWER (Minister for State Owned Enterprises) Link to this
The Government has set out five tests that need to be met before we extend the mixed-ownership model. The first is that the Government would need to maintain a majority controlling stake by owning more than 50 percent of the company; second, New Zealand investors would have to be at the front of the queue for shareholdings, and we would have to be confident of widespread and substantial New Zealand share ownership; third, the companies would have to present good opportunities for investors; fourth, the capital freed up would have to be used on behalf of taxpayers to fund new public assets, thereby reducing the pressure on the Government to borrow; and, fifth, the Government would have to be satisfied that industry-specific regulations adequately protected New Zealand consumers. The Minister of Finance and I have asked Treasury to provide us with advice that addresses those issues.
Peseta Sam Lotu-Iiga Link to this
Are there any examples where a mixed-ownership model has worked well?
Yes, the advice I have is that after the fourth Labour Government sold Air New Zealand completely in 1989, the fifth Labour Government initially purchased an 82 percent share in 2001. It then diluted that to 74 percent, mainly by issuing convertible notes to a foreign investor, namely, Qantas. [ Interruption]
Mr SPEAKERIt is difficult for members at the back of the House to be heard when there is a barrage across the front of the House. I ask members to be more reasonable.
Peseta Sam Lotu-Iiga Link to this
Has he seen any reports that show widespread support for creating opportunities for mum and dad shareholders to invest in mixed-ownership models?
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. I apologise to the member for interrupting. Simon Power is generally regarded as honest—
No, no, the member will resume his seat immediately. The member is a very experienced member of the House; he is the shadow Leader of the House. He knows that that attempt at a point of order was totally outside the Standing Orders. If the member is to be the shadow Leader of the House, he should treat the House with more respect than that.
Peseta Sam Lotu-Iiga Link to this
Has he seen any reports that show widespread support for creating opportunities for mum and dad shareholders to invest in mixed-ownership models?
Yes, I have seen a report proposing to sell State-owned enterprise subsidiaries to mums and dads on the stock exchange, stating: “I think it’s part of our job to give them some exciting examples and to work with the stock exchange and work with individual companies to try and rebuild interest in capital markets in New Zealand. … I think there’s room for a lot of both breadth and depth in our capital markets.” I wish I could have said it as eloquently as that, but that was from Trevor Mallard in 2006. [ Interruption]
I know these issues are contested issues, but I have called the Hon Clayton Cosgrove, and he deserves to have the chance to ask his supplementary question.
Hon Clayton Cosgrove Link to this
Is it not the case that large numbers of shares in energy State-owned enterprises would end up in the hands of foreign institutional investors because, as Guy Elliffe, the head of AMP Capital Investors, has pointed out, local investors do not have the capacity to “mop up” enough of the shares?
Not necessarily. In fact, according to a report in the Waikato Times in 1999 after Contact Energy was floated, of the 225,000 small New Zealand investors who bought up to $2,500 worth of shares, 120,000 were new players in the sharemarket.
Hon Trevor Mallard Link to this
Was the comment in his primary response accurate when he said the Government issued convertible notes in Air New Zealand? Was it 100 percent accurate?
The advice I have is that the dilution occurred by the issuing of convertible notes to a foreign investor, namely, Qantas.
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. The question was very specific: did the Government issue convertible notes?
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. He answered that convertible notes were issued, but he did not say the Government issued convertible notes. The Government cannot issue convertible notes.
The member is now disputing by way of a point of order an answer that was given. He cannot do that, and he knows it. The member should, if he is concerned about the answer the Minister gave, go back, look at the record, and see exactly what the Minister said. In terms of the question that was asked, the Minister answered it, and that is as far as I can take the matter in the House.
Hon David ParkerI raise a point of order, Mr Speaker. With respect, I say the shadow Leader of the House was making the point that the Minister did not address the question, by pointing out that the question asked who issued the convertible notes.
With all due respect to the member, that was not the question asked. The question asked was not who issued convertible notes. If that had been the question, there might have been a different answer. As far as I am concerned, that matter is dealt with. If the member has a further supplementary question, that is in his hands.
Hon Shane JonesThe Hon Shane Jones may wish to think about why he should remain in the House. But it is early in the year, and I do not want to be hard on a newly promoted member. Now—[ Interruption] Someone will be leaving the House very soon, if they are not careful. The member asked a question. The House deserved to hear the answer, but it could not hear the answer beyond the first few words. I invite the Hon Simon Power to repeat his answer, and the House will treat it with respect.