Estimates Debate — Vote State Owned Enterprises

This is a very interesting section of the estimates. Before I talk about the Government’s proposals for State-owned enterprises, I want to look at page 507 of the Reports of Select Committees on the 2009/10 Estimates.

It is interesting to note that the Minister for State Owned Enterprises, Simon Power, embarked on his new career—as we will recall—by hauling in all the chairs and, possibly, chief executives of all the State-owned enterprises. He jumped up and down and stamped his little feet saying that the Government wanted more money. At the same time as Simon Power—I am sure he will take a call tonight, diligent Minister that he is—was calling for more money and higher dividend performance from State-owned enterprises, especially the energy State-owned enterprises, Meridian Energy had lifted its prices over a short period of time by about 16 percent.

The Minister of Energy and Resources, the Hon Gerry Brownlee—according to the Christchurch Press, the third most powerful man in New Zealand—was described by his best mate, Dave Henderson, as absolutely “useless”. It is very interesting that at the same time as Mr Power was demanding more dividends, especially from energy State-owned enterprises, the Minister of Energy and Resources was attempting to jawbone down prices, and stamping his larger feet saying that it was terrible that consumers had to put up with high energy prices. He cited Meridian Energy. In fact, I think—he will correct me if I am incorrect, and in that case I will concede—that he changed his personal arrangements in respect of his own power company from Meridian Energy to Mercury Energy. [Interruption] No, that is not correct; well, I stand corrected. But as he tried to jawbone down prices, and said that it was outrageous and that the energy State-owned enterprises, especially Meridian Energy Ltd, should consider the recession we were in, his counterpart was hauling in chairpeople from State-owned enterprises and demanding more dough.

It is interesting because I remember before the election Gerry Brownlee used to get up and give a stock speech. Every time the previous Labour Government announced an initiative or a review he would say: “Oh, another review.”, “Oh, another task force.”, or “Oh, another study.” There is a very interesting passage on page 507 of the estimates reports about what the Minister for State-Owned Enterprises was asked: “We asked the Minister whether in view of the concerns about electricity pricing, he had considered using his power as the Minister for State-Owned Enterprises to signal to boards that he shared these concerns. The Minister responded that the Government had made some broad statements in that area, and he did not think any further step would be appropriate.” That is interesting. He had said that it would be nice if they pulled their heads in and helped the old consumer out, but that is about all they would do. Then it is interesting: “The Minister told us that the Minister of Energy”—the Hon Gerry Brownlee—“has signalled a review of the electricity market.” This was from the man who said that he would take action in this area and look after the consumer.

It is interesting to note that the task force that the Minister set up was due to report last week. It did not quite know what to report on so we have no report today. I am told that it received no direction. It is very interesting, is it not? I say to the Minister of Energy and Resources that he should get his story straight, and that the Cabinet Ministers should meet. I invite him to talk to Simon Power and get the plan for energy State-owned enterprises right. On the one hand he said to pull the prices down, and then on the other hand Simon Power said that the Crown wants more money. I say to Simon Power that if he is really serious—as Gerry Brownlee appears to be, at least in print—about giving consumers a fair go in the electricity sector through the State-owned enterprise dividend process, he could do one very simple thing. He could say quite clearly to the energy State-owned enterprise that we do not want any more done. We will take the status quo in dividend, and we do not require the State-owned enterprises to give us a higher dividend this year. He could inject money immediately into the pockets of consumers. If Simon Power, as he has done, demanded more of a dividend—

💬 Sandra Goudie: This from a man who couldn’t manage a piggy bank!

Sandra Goudie might understand what a business does. A business will respond like this if the shareholder demands a higher dividend. It will either cut costs through staff or it will raise prices to increase revenue, thereby increasing dividends. So it would be good if the Minister of Energy and Resources could take a call, and have a chat with the Minister for State Owned Enterprises beforehand so they can get their stories straight.

Now we get to the other matter that is in the minds of the public, which is that of privatisation. It is very interesting that the National Party’s stated position prior to the election was that it would not flog anything off until after the next election. That position started to wobble a bit, because Mark Weldon came out and effectively said that State-owned enterprises should think like a business and act as if they face part-privatisation in 2 to 5 years. Then we had the appointment of Don Brash to the productivity task force. Don Brash has believed in selling off State-owned enterprises his entire career, but at least he is up front about it. Then we had the speech from the Secretary to the Treasury, who signalled a similar thing. Well, it is interesting because there is another inherent contradiction. On the one hand, the Government said that it wants to preserve jobs. That is an admirable and laudable aim. On the other hand, of course, it is demanding a greater dividend stream from a State-owned enterprise, which will force two actions, as it did at Meridian Energy: it upped the price, and now appears to be restructuring to shed over 100 staff in Christchurch alone.

A business has to cut cost or raise price in order to deliver back a greater dividend stream to the shareholder, in this case the Crown. We see that State-owned enterprises are indeed cutting jobs. Ninety jobs are to be cut from Television New Zealand Ltd (TVNZ); 52 jobs from Quotable Value. There are nearly 400 redundancies at New Zealand Post, and at Meridian Energy there are more on the way. It has been called the Meridian Energy strategic review of its core operations, which is double Dutch for shedding staff and shedding cost. This was all because it had been given the message that the Government wants more dough. Then other Ministers like Paula Bennett get up, wring their hands, and say that they actually want to preserve and save jobs. Well, one cannot speak out of both sides of one’s mouth.

It might be appropriate for the Minister of Energy and Resources, the Minister for State Owned Enterprises, and the Minister for Social Development and Employment to get together in a very large corner of the building and have a wee chat. We know, of course, what the agenda is: if these State-owned enterprises are raising prices and driving consumers to the brink of pain, then the argument will be put up sooner or later asking what the difference is. It is a bit like private prisons. The Government could not get it right and will not instruct the department to do what it wants on outcomes, so it asks why it does not flog them off to the private sector. That would have to be better! That is the sort of simplistic argument that is put up.

I say to the Minister in the chair, the Hon Gerry Brownlee, that the Government plays a very dangerous game. He would be better, as commentators and editorial writers have said throughout the country, to front up and be honest about what the Government will do. The signals are all there; they were in Mr Whitehead’s speech and in Mr Weldon’s comments. We know Mr Weldon is now the contemporary version of the acolytes of the Business Roundtable. He is the kinder, gentler face. He has the ear of the Prime Minister, he ran the Job Summit—the talkfest—and he is now waxing eloquent about his view on what State-owned enterprises should do. He says to bang them on the stock exchange—the NZX. Perhaps that is the agenda. I say to Mr Brownlee in the chair that there is a mass of contradictions between his position as Minister of Energy and Resources, Simon Power’s position as Minister for State Owned Enterprises, and Paula Bennett’s position in respect of saving jobs. It would be nice if they could reconcile those contradictions. It would be nice if Mr Brownlee could get up and utterly rule out the sale of State-owned enterprises, but I suspect he will not.

If the Government wants a State-owned enterprise, such as Meridian Energy, to be sold in year 1—if it wins the next election—it has to ready that State-owned enterprise now. It cannot go to an election, announce that the enterprise is sold, and then start readying it. It takes about 1 year or 18 months to ready a State-owned enterprise for sale, so the Government has to start now, and that is what it is doing. The way it readies a State-owned enterprise for sale is to try to ramp up the dividend stream, cut a lot of the costs out, and call the 100 people who are being gutted from Meridian Energy “fat”. That is something that—no, I will not go there. That is how the Government could restructure a State-owned enterprise under a sort of operational strategic plan. The enterprise would be readied for sale. If the unthinkable happens, and Mr Brownlee gets on to the Treasury benches next time round, we can imagine the scuttling of announcements of which State-owned enterprises will go on the block.

💬 Sandra Goudie: Oh!

Well, Ms Goudie might yawn and make other anatomical noises, but as for the 100 people who are being bucketed out of Meridian Energy, the 400 people who got bucketed out of New Zealand Post, and the 90 who have been bucketed out of TVNZ, I do not think they would respond well to Ms Goudie’s noises and aberrations.

I think I should make a few responses to the comments made by Clayton Cosgrove as we discuss Vote State Owned Enterprises. Mr Cosgrove’s frustration was evident in his speech. I guess it was his frustration that caused him to be so confused.

Very few people in this country who know anything about business would automatically confuse the price paid for a product with the overall performance of the business. Yes, it is an important factor, but no one should assume that simply because the price is high, the performance is as optimal as it could be. That is the very point that the Government has been making to the State-owned enterprises: make sure performance is at its optimal level before the price goes up for consumers. I ask what is wrong with that.

Do members know what the amazing thing is? Since the Government has embarked on this course of action, and since, for example, we have put in place the review of the electricity sector, there has not been a price rise that was not planned under the previous Labour Government. That is the hard, cold fact of it. That is what the board minutes will show. The Labour Government thought a price rise meant that the State-owned enterprises were doing well. So for 9 long years of suffering by consumers the retail price of electricity went up by 86 percent, and Steve Chadwick, Clayton Cosgrove, Winnie Laban, Ruth Dyson, and all the rest of them were absolutely chuffed, because they thought that meant the State-owned enterprises were performing well. Well, a price rise does not mean that. The attitude of those members shows a terrible blindness on their part.

I will also speak about Mr Cosgrove’s fixation with the idea that our demanding that the State-owned enterprises perform well for the people who own them means that they are being prepared to be sold off. I can only assume that he is going on the experience of a former Labour Government that managed to sell off 21 Crown-owned companies in one afternoon, which was an extraordinary effort on that Government’s part. For him to come into the Chamber today and start talking about job losses in the State-owned enterprise sector is utterly laughable when measured against that sort of record.

National has made it very clear that no State assets, no State-owned enterprises, are for sale until the people of New Zealand say it is OK—if they are ever asked. That is the hard part for Labour members, because asking New Zealanders what they want, asking New Zealanders what they think, and asking New Zealanders how they feel about things is not the way they operate. Their 9 years in Government were 9 years of saying “You must do this.”—not you, Mr Chairperson Barker; well, they probably did tell you what to do; in fact, there is no doubt about it. They told New Zealanders what they had to do, how they should do it, and how they should feel about it. That is why they got slung out of Government last November. That is why Labour is so down in the dumps in the polls at the present time, and the speech tonight from Mr Cosgrove typifies the problem that Labour has. All that Labour members are doing is going from one end of the country to the other, pouring out their paranoia. They are driven by a huge frustration: they were so good according to them, but so very bad according to the voters.

💬 Hon Steve Chadwick: Hundreds are turning up to those meetings.

Ha! One does not normally recognise an interjection in a debate like this, but the Labour junior whip, Steve Chadwick, said that hundreds of people turn up to Labour Party meetings to hear Labour speakers. Well, I know of a meeting that was held in that member’s electorate where the Hon Phil Goff was due to speak. Great advertisements were put in the paper, billboards were erected all over the town, and radio advertisements were aired to say “Phil Goff is coming.” Guess what? Phil Goff turned up, and Steve Chadwick bought a ticket. One ticket! There we have it: Labour members talk about the performance and value of the State-owned enterprises, and Steve Chadwick tells us that she does not know how many noughts should go after a number when measuring crowds. Rather than one, she tells us there were 100. That is utter rubbish.

Let us get back to the purpose of this debate, which is to ask how the State-owned enterprises are performing. There are 27 State-owned enterprises. They have a big task to play in lifting performance and productivity in the New Zealand economy, and we have asked them to do that. There is nothing unusual about that. Rather than telling them what they have to do and how they have to operate, rather than controlling them by putting all one’s manky mates on the board, and rather than leaving them in a position where they do not know whether they are coming or going— or, as Clayton Cosgrove would say, not knowing whether they were “Willy” or “Nilly”—this Government has decided to work with those boards in very, very difficult economic times. I predict that the results will be very, very positive for the taxpayer’s income base.

I will highlight one State-owned enterprise that I think is doing a really good job in the energy sector.

💬 Hon Steve Chadwick: One of how many?

The member over there, after 9 years in Parliament, after promoting herself as an expert on State-owned enterprises, and after chipping into the debate all night, asks how many of the 27 State-owned enterprises are energy companies. Well, I suggest to Ms Chadwick that she look at the Estimates book in front of her and counts them for herself. Mind you, when she has confused one and 100, I doubt whether she will come to the answer very easily.

The company is Mighty River Power, which is worth thinking about. It is a company that without any direction from the Government, and without getting excited about things, has decided to invest heavily in the renewable energy technology of geothermal production. One of the good things about that is that in the 1950s this country was recognised internationally as being the world’s leader in geothermal electricity production. Mighty River Power is putting us back into that space day by day. I think that is extremely good for a country like New Zealand, because the flow of technology from it is extraordinary. We should be congratulating that company on that, rather than the Opposition, when Ministers highlight the success of a company like that, saying that Ministers are talking the company up so that they can get a bigger price when they hock it off. Those Opposition members should say congratulations to all the people in those companies, which are doing a great job.

💬 Steve Chadwick: Oh, we’ll see.

That is what one gets from Labour members. They have an abhorrence of the idea that anyone should be thanked for working. That is why, for 9 years, they concentrated on making ordinary New Zealanders such extraordinary beneficiaries of the State. Well, this Government is not taking incomes away from people, but, by gosh, we are going to make sure that the economy grows, even in these difficult times, in a way that gives New Zealanders an opportunity to earn a living in the natural way that New Zealanders like to do, with a high degree of pride.

As this debate progresses tonight, we will hear more and more Labour speakers running the same theme—privatisation, etc. They know that it is utter rubbish. They know that they are fearful of their own record in this area. I will say it again: they sold off 21 Crown companies in one afternoon. They cut a quiet swathe through the balance sheet of the Government, under the guise of Labour doing the right thing for the ordinary people of New Zealand.

I will make one other comment. I have noted tonight that as we have gone through these estimates, party votes are being called on each one of them. The extraordinary thing about that is a party vote takes up time; it soaks it up. This debate is time-weighted, so that tells me that the Labour Party does not have enough speakers to fill up the time it has been allocated in this debate. That is utterly tragic. This is a Committee stage debate, and Labour is failing miserably.