Mixed Ownership Model Bill

I move, That the Mixed Ownership Model Bill be now read a first time. I intend that the Finance and Expenditure Committee consider the bill, and I intend to move that the committee report to the House by 16 July 2012.

This legislation and debate is about debt. It is not about the Treaty of Waitangi, it is not about foreign ownership, and it is not about other considerations; it is about controlling our nation’s debt. This bill enables the Government to remove four energy companies from the State-owned enterprises legislation and insert them into the Public Finance Act. Let us be clear on this: the new legislation we introduce today guarantees majority Government control of these four energy companies. At least 51 percent remains in the Government’s hand. It fixes into the law of this nation that no person and no entity, including foreign investors, can own more than 10 percent of the voting rights in any one of these companies. These companies will remain New Zealand - controlled companies, contributing to the New Zealand economy, and that is what this legislation is about.

The Mixed Ownership Model Bill is part of this Government’s wider economic programme, which is about controlling debt, increasing savings, and getting our country through the worst financial crisis the world has seen in 100 years. No nation can afford to let its debt get out of control. But many countries are letting their debt get out of control, and in the process very great chunks of their sovereignty are being taken away. These countries are losing control of their destinies. You see it every night on the 6 o’clock news; huge debt is at the core of why Britain, Spain, Italy, and Greece are being forced to impose austerity measures, and why the United States is locked in a debate about how to cut its enormous debt.

💬 Hon John Banks: I raise a point of order, Mr Speaker. I sit about 9 feet to the right of the Minister. [Interruption]

The ASSISTANT SPEAKER (H V Ross Robertson): Order! Members will be seated. Can I just remind members that when there is a point of order on the floor, there is absolute silence.

💬 Hon John Banks: I have sat here at question time day after day, and all I hear is barracking and barking from all sides of the House. I am one member of Parliament who is very interested in hearing what is being said and transacted across the House. The Standing Orders and Speakers’ rulings have plenty to say about rare and reasonable interjections. The barking and the barracking across this Parliament, from side to side and corner to corner, does this House no good. People sitting at home watching on television and witnessing it in the galleries think it is a disgrace. I put it to you, Mr Assistant Speaker: why do we not give the Minister an opportunity to say what he has to say, and then I will listen very intently to what the members of the Opposition have got to say. We might learn something. How about that for a proposition?

The ASSISTANT SPEAKER (H V Ross Robertson): Thank you. The member has made his point. Interjections are to be rare and reasonable, and I would refer members to Speaker’s ruling 62/4.

Huge debt is at the core of so many of the problems of countries in Europe and around the rest of the world. Most of these countries have absolutely no choice—no choice whatsoever—but to put in place policies that reduce debt and that will greatly reduce important front-line services while tens of thousands of people are protesting in the streets due to these measures. Britain is looking to reduce its Public Service by over 700,000 people in the next few years. Greece, Italy, Portugal, and Spain are cutting their public health spending. Public servants from throughout Europe and other parts of the world are having their wages and salaries cut. Other countries are being forced by their foreign bankers to sell their public assets in order to get their debt under control. We do not want that for New Zealand. That party opposite might want to put this country on a road to Athens, but this party in Government does not.

New Zealand is different and we are fortunate. Thanks to 3 strong years of leadership under this Government and our financial management, New Zealand is not in that position. However, we have a duty to future generations to control our debt. Our debt is projected to increase to almost 30 percent of GDP, or $72 billion, in the next few years, but we have planned and prepared for that. In a few more years we will continue to borrow as we get our deficit under control as we protect and grow our public services. But this Government has confidence that our policies will carry us through and out of the recession as we get our books back into surplus, and that includes controlling our debt. That is what this bill is part of.

The partial public share offers we are providing for in this legislation, together with the sell-down of parts of Air New Zealand, are expected to raise between $5 billion and $7 billion. We fully expect that 85 to 90 percent of those companies will be New Zealand - owned when they float. We can do that because the Government controls the allocation policy for each of these share offerings. We will decide what categories of shareholders get what, and we will have New Zealanders at the front of the queue. Everyday people will get the opportunity to have a direct stake in these companies. Everyday people will have an opportunity to have a direct stake in these companies, and that is the heart of the Opposition’s attack. It does not believe that everyday New Zealanders can be trusted to own shares.

Under this Government the $5 million to $7 million worth of proceeds are going to be put in the Future Investment Fund, which is going to be available for important public infrastructure like schools and hospitals, instead of borrowing that money from overseas banks—the same banks that are putting the pressure on countries like Ireland, Italy, and Portugal to pay back their loans and cut their services. As the Minister of Finance has said, New Zealanders would rather pay dividends to New Zealanders than interest to overseas lenders.

The four energy companies will continue to be New Zealand - controlled and New Zealand - run, just like Air New Zealand. We will offer those shares predominantly to New Zealanders as an opportunity to buy into these companies in order to raise funds to pay for much-needed assets such as schools and hospitals.

The Government has made it clear we are not walking away from our Treaty obligations. We held 10 consultation hui throughout the country, and we listened with an open mind. As a result of the consultation, section 9 of the State-Owned Enterprises Act has now been transmitted into the legislation with the clarification that private shareholders are not affected. Māori and all other New Zealanders will have their interest protected through the Resource Management Act, which these companies must comply with. They are still there.

There are some who argue that the Government is better off retaining full ownership, because it gets more revenue from continuing to own these State-owned enterprises outright than the benefits of the partial sale. That is not right. The four energy State-owned enterprises’ dividends have averaged about 4.1 percent over the last 5 years, compared with the cost of new debt, for the same period, of around 5.2 percent. There are lots of other figures being thrown around. Let us be clear: the facts are that in general terms it is pretty evenly balanced, but what they do not take into account is the huge social benefit of the schools and the hospitals that the proceeds will be invested in. The future profitability of these companies, which private shareholders may get through their dividends, is captured in the sales price. So we get the cash upfront, without risk, and that makes a lot of sense in these difficult times.

There are other important benefits flowing from this legislation. We have the opportunity for New Zealanders to invest in and grow their own economy. The New Zealand Superannuation Fund is investing in energy companies throughout Australia, but it is not allowed to invest in our own country. It is not allowed to invest in our own country.

The Government thought long and hard before committing to this policy, because we know that New Zealanders are not enthusiastic about partial asset sales. They remember what happened in the late 1980s under the Labour Government, and that is why we have this new approach. But I say to New Zealanders that looking at those polls, I bet that if we asked New Zealanders whether they want to prevent future generations from being saddled with debt, they would say yes. That is what this Government is determined to do. We must control the debt, and this mixed-ownership model is about providing overwhelming New Zealand control and freeing up 3 percent of the Government’s assets, which can go into a Future Investment Fund to be invested in important schools and hospitals.

This is important legislation. Our country must control its debt. This is part of a well-thought-through plan that will deliver benefits to New Zealanders for years to come. It will improve the investment opportunities for New Zealanders, it will help these companies improve, and, most important, it will provide a very clear message to future generations that this was a Parliament that recognised, at a time when the rest of the world was losing control of its destiny, that this country took it back.

This bill, the Mixed Ownership Model Bill, is a desperate, flailing attempt by a Government bereft of ideas on how to grow the economy. The only idea it has is to sell off New Zealanders’ future, sell off the assets built up by past generations for future generations, sell off our key infrastructure, and sell off what New Zealanders already own. That is it from this Government: sell, cut, and hope. That is the extent of the economic strategy. But we can add one more word to that now: sell, cut, hope, and guess—guess—because the best the Minister of Finance can do is guess at the benefit to New Zealanders. Well, the problem is that New Zealanders do not buy it. New Zealanders already own these assets. The everyday New Zealanders whom Mr Ryall speaks of, those everyday New Zealanders are worried about paying their power bills, not about buying the power company. The kind of everyday New Zealanders Mr Ryall is talking about might be the people he meets in the Northern Club; they are not the people in the “cossie club”, they are not the ordinary New Zealanders struggling to make ends meet and being told to buy back what they already own.

This is short-sighted. It is a sugar-hit economic policy. It is all very well for Mr Key to get unconditional love from Moonbeam, but he should not be taking economic advice from her as well. This is without doubt the most short-sighted piece of economic policy we have seen in this House for a long, long time. “Mum and dad investors” is a piece of double-speak. There is no doubt in my mind that that phrase has been invented by this Government to try to sell a policy to New Zealanders that New Zealanders know is the wrong thing to do for their future. There is no way this Government can guarantee shares will stay in New Zealand control. We know from the experience of Contact Energy that the number of shareholders, within 6 months of Contact Energy being privatised, fell by 35,000. There is no way this Government can guarantee that New Zealanders will retain control of these assets. These shares will go overseas. New Zealanders will lose control of these assets. New Zealanders know that foreign control of their assets is the wrong thing to do. They have had the experience. The 1990s did teach them that, I say to Mr Ryall, and they know that foreign control of our assets—foreign control of our core infrastructure—is bad for our economy, and it is bad for everybody.

But what about this as the time to sell these assets? Could there be a worse time to sell these assets? No wonder Bill English has to guess how much New Zealand might benefit from this, because he is selling these assets into a world economy where he will get the worst possible price. It makes no economic sense. What we do not know yet is the cost of selling these assets. Who is benefiting from these sales? The lawyers, the finance companies—who is benefiting? They are the people who are benefiting from these sales—

💬 Hon Parekura Horomia: Their mates.

The mates of the National Party, not the everyday New Zealanders Mr Ryall claims to be representing.

💬 Hon David Parker: The 1 percent.

As Mr Parker says, the 1 percent are the people who will benefit from this. They are the New Zealanders who will benefit from having these assets in their hands. Why not have a Government with a vision to actually use these assets to benefit New Zealanders, to develop these assets, and to make sure that they actually work on our behalf, instead of giving up and selling them off because that is the one idea it has got? And New Zealanders understand this: you do not sell the house to pay the mortgage, or you do not sell half the house to pay the mortgage, because what happens the next time there is a debt problem? What else do we sell? Do we sell the other half?

This is no way to manage an economy, it is no way to develop infrastructure, and it is an insult to the intelligence of New Zealanders for Mr Ryall to stand up and say “This is how we fund schools and hospitals.” Going right back into the last century and beyond, Governments have taken seriously their responsibility to provide schools and hospitals. They are a core part of a Government’s business. It is an insult to this House and to New Zealanders to try to say to them “The only way you’ll get those schools and hospitals is if we hock off the assets.” That is an insult. This Government must have more imagination and ability, and actually know that New Zealanders can keep these assets—they can keep these assets—and have the quality schools and hospitals that they deserve.

The Prime Minister told us there would be an elegant solution around the section 9 of the State-Owned Enterprises Act debate. Well, the elegant solution looks a little bit as elegant as Tony Ryall’s shirt and tie combination today. It is a bit of a clash, because what has happened is that we have got the old section 9—in this bill, section 45Q inserted by clause 16—and added on to the end is “but no one who is a private company will be responsible for that.” That means that Treaty principles apply to 51 percent, but not the other half—half of the dam, but not the other half of the dam. How does that work? That is far from an elegant solution. I call on the Māori Party in this House today to treat this issue as what it is: an issue of confidence. This is an issue of confidence. This is the major economic matter that it has to decide on in this term, and I challenge the Māori Party. Its members know that this is wrong. They want to vote against it, but they want to stay inside the coalition. My challenge to them today is to have the courage of their principles and convictions, and walk away—walk away today.

The ASSISTANT SPEAKER (H V Ross Robertson): Order! The member must not challenge the courage.

I also challenge Peter Dunne, because that is the vote. It is 61 to 60; Peter Dunne’s vote is the one that will carry this. The people of Ōhariu will tell this Minister and this member time and time again over the next months that they do not want these assets sold. Mr Dunne is the man who can stop this. He can make this the exclamation mark at the end of his political career, make it worth something, and say no to the sale of these assets. It is one vote, and if that side of the House is claiming a mandate, every single survey around asset sales says New Zealanders do not want them. Seventy-five percent of people surveyed in the New Zealand Values Survey said they do not want assets sold. There is no mandate. Every member on that side of the House went to election meetings, and they know what New Zealanders think. They know New Zealanders do not want these assets sold. What they want is a Government that has actually got some vision to grow the economy, instead of thinking that it is sell, cut, hope, and guess, because that is the best that it can do.

The other thing we need to make sure we are very clear on here is what else is lost in this bill. The social responsibility clauses that have guided State-owned enterprises are out the door. There will be no sense of that, and if New Zealanders know one thing, they know this: the one sure outcome of selling these assets will be that power prices will rise. That is the one sure outcome: that power prices will rise. Mr Coleman is questioning that. Power prices will rise. That is the outcome of this. I do not care about whatever past record Mr Coleman wants to talk about. Will power prices rise? If he can guarantee they will not, he will satisfy New Zealanders, but they know they will. They know that this will affect them in their hip pocket. It will affect future generations.

This is actually an issue of sovereignty, as Mr Ryall said, but he got it completely round the wrong way. The issue of sovereignty here is one about New Zealanders controlling our future, and New Zealanders having an ability to control their own lives, not to see those core assets sold off overseas. There will be a petition for a citizens initiated referendum on this matter. It will go around the country, and I can guarantee that every single member on the other side of the House will see people gathering these signatures. That referendum will occur, and it will tell the National Party that New Zealanders do not support the sale of these assets. There is a core message in this today, and that is that New Zealanders are proud of what has been built up in the past. They want to retain ownership of their own future. They know that this is a sugar hit, a one-off hit, for the economy that cannot be repeated, and that if we try to buy those assets back it will cost us time and time again. The message from this side of the House is that New Zealanders already own these assets, Mr Ryall; they are not yours to sell.

That speech from Grant Robertson really was an audition for the Labour leadership, quite honestly, and I can see by the smiles on the faces over there that Labour members actually think that was not bad fare compared with what they have seen from their leader over the past few weeks.

It is a pleasure to be here today and to be speaking in this debate on the Mixed Ownership Model Bill. As the Hon Tony Ryall said, this is a debate about debt. Grant Robertson wants to send New Zealand on the road to Athens, down the road to southern Europe, to more debt and a failing economy. We know what these people in Labour are about: they are about nothing at all. All we hear from them is what they are against. Quite frankly, they have no credible economic plan to get New Zealand out of debt. Tony Ryall is right: this is about debt.

There are two stark options here. The very, very stark option is borrowing more, and that is what the Labour Party would have this country doing. It has no plan to balance the books. We have said we will keep debt below 30 percent. We are doing that, but at the same time that presents a challenge: how are we going to afford the vital infrastructure that this country needs? How are we going to afford the hospitals, the broadband, and the schools? Well, this is how we are going to do it: this partial float of these four energy companies is going to free up $5 billion to $7 billion, which is going to go back into purchasing crucial infrastructure in order to build New Zealand and make it the great nation that it is and will continue to be.

So I ask you, what is the plan from that side of the House? Grant Robertson said something about getting a petition together and that this is a confidence issue. It is a confidence issue, and we won that confidence issue at the election. John Key and the National Party campaigned very, very clearly about what we were going to do with regard to the mixed-ownership model. We explained it very clearly to the New Zealand public, and the New Zealand public actually said “You know, when you put the whole package together with this Government’s priorities to build the economy, to rebuild Christchurch, and to pay down debt, it makes sense.”

I can tell you another thing: for Grant Robertson to get up here and say that power prices are going to go up, that blatantly ignores the fact—

💬 Hon Nathan Guy: Wasn’t that what happened under Labour?

Under Labour, over 9 years, power prices went up 72 percent—

💬 Paul Goldsmith: How much?

—and you have not heard them saying anything about that. Seventy-two percent over 9 years. It was a completely disgusting embarrassment, and Labour did nothing about that. What this bill is going to do is enable New Zealanders to invest their money in something that is going to produce them a good return.

What was Labour offering? Finance companies.

💬 Hon Nathan Guy: CGT.

That was Labour’s answer: finance companies. Oh yeah, and of course the future plan for Labour was also the capital gains tax.

When it comes down to it, it is a matter of this country facing a serious problem with debt, and I can tell you, we are going to be back in surplus by 2014-15. It will be us, the Koreans, and the Australians. If these guys in Labour were in charge, debt would be going up, up, up. If there is one thing that New Zealanders hate, it is debt.

All I have heard from David Shearer over the time he has been here is some vague, mumbling plan about a series of speeches he is going to give. There is no plan from Labour about getting debt under control, and no plan for how we are going to actually purchase the infrastructure we need. Well, this bill is a very concrete plan. I ask you, if this is such a bad idea, why did Labour not take the opportunity when it was in power to buy back the bit of Air New Zealand that the Government did not own? Why did Labour not do that? Because, quite frankly, it had no plan about this.

In fact, there was quite an interesting conversation between Larry Williams and David Shearer on Newstalk ZB on 24 February. Larry Williams said to Mr Shearer: “Do you think it would be a good idea to buy the remaining 25 percent of Air New Zealand that the Crown don’t own?”, and David Shearer mumbled and said: “That’s not a bad suggestion, but I don’t know if—”, and Larry Williams said: “No, it is a nutty suggestion. Thanks, Mr Shearer. Good afternoon.” Frankly, that is where the commentariat are at on this.

You know, Labour has been very, very inconsistent on this over a long period of time, but what we are going to do is keep New Zealand’s debt down. That is the key message. On top of that, we are going to free up that $5 billion to $7 billion to build the infrastructure that we need. If we do not get that money, how are we going to build the schools and how are we going to build the roads?

We are not going to be decreasing New Zealand’s overall asset base. The country owns $245 billion of assets, and over the next 4 years that is going to increase to $267 billion. So, in actual fact, the total public ownership of assets is increasing, but we have to use our balance sheet in a sensible way. There is a sensible, very strategic plan there, which we have taken to the public. We have the mandate, and when the public actually look at the choices, they can see that when we are faced with a very difficult financial situation, this makes sense.

Tony Ryall made a very good point. He is saying that in the UK they are going to be laying off 700,000 public servants. We do not want to get to that position, and that is why we actually have to take some choices that make sense.

We have made five major guarantees around this. We have said that the Government will be the major shareholder. You know that. These people know that. The priority will be for New Zealand’s shareholders. So we know that New Zealanders—ordinary New Zealanders—will be first in the queue to own these shares. We know that it provides new investment opportunities for New Zealanders, and it is going to provide new public assets. The Prime Minister has said that. He has made very clear commitments, and we are honouring those commitments.

When it comes down to it, there is a pretty clear case for the public having the opportunity to buy a stake in these four energy companies. When you look at the cost of the debt that we would be incurring if we did not do that, that is going to exceed the price of the dividend payment. If you look at it historically, State-owned enterprise dividends averaged 4.1 percent over the past 5 years, compared with a cost of debt of 5.2 percent. So when you look at it, it does not make sense to accrue more debt. Not the least of the reasons for that, if you look at Portugal, Ireland, Greece, and Spain—

💬 Andrew Little: We’re not in Portugal!

We are not in Portugal—exactly. And we are not going to be there, because we are taking a sensible attitude to balance sheet management. The burnt-out old unionist hack over there is trying to preach 1970s union economic policy—“Greek-onomics”—in a modern world where we are facing very serious challenges. I can tell you that if Andrew Little ever became Prime Minister, there would be strikes, which he would be supporting, there would be debt, which he would be supporting, and we would be becoming like Ireland, Greece, and Spain, which presumably he would be very happy with, as well.

But, you know, when you come back to what Labour is saying—trying to convince people that power prices are going to go up—we know that that is not going to happen, because we have got professional management in there. We know that compared with what happened when Labour was in power, there is no chance of a 72 percent price rise over 9 years. I think it is a disgrace that the party that claims to be for the average mum and dad, the ordinary working New Zealander, allowed that catastrophic turn of events with regards to power prices to happen over such a long period.

Do you know what the real issue is? I do not think those people over there understand basic economics. I do not think they understand how this bill is going to work, and they certainly do not understand the importance of paying down debt. That is the mantra across every modern economy: get down debt. If you are going to buy new stuff, you have to fund it off your balance sheet. This is what we are doing. We are freeing up that $5 to $7 billion of cash that will buy crucial new infrastructure.

There are some senior Labour MPs over there. I challenge David Cunliffe, when he speaks, to get up and tell the New Zealand public how they are going to afford the infrastructure that New Zealand needs over the next decade. Because David Shearer sure will not tell us. I am sure that New Zealand First members are going to have a lot to say about this, as well. Of course, I do not know what they will be saying, but obviously with their leader having signed off the prospectus for the Auckland International Airport float in 1998, and supporting, of course, what happened with selling Kiwibank, we will expect some sort of turn-round in the position they have been articulating in question time so far on this matter.

So when you come down to it, this is a debate about debt, about sensible management of the economy, and about how we are going to actually afford the infrastructure that New Zealand needs over the next decade. These people on the Labour benches have some real explaining to do. Thank you.

This debate should be about the economy. New Zealanders are opposed to asset sales because they know that changing who owns what already exists does nothing to change the output of the New Zealand economy. These assets already exist. They are not going to be more productive than they are now. The only way they will be more profitable than they are now is if electricity prices increase. One of the prior speakers—I think it was Tony Ryall—tried to tell us that New Zealanders will be better off as a consequence of the sale of these assets. The truth is that only around 1 percent of New Zealanders will end up owning these shares. The vast majority of the shares in these companies, once sold, will be owned by the 1 percent, not the 99 percent. Maybe it will be 2 percent, but the vast majority of these shares will be owned by the 1 percent, not the 99 percent. Is it necessary?

We had a lecture from the National Party on debt. During the term of the last Labour Government, the Labour Government ran Budget surpluses that National opposed. It was difficult to do, because National and others were saying: “Don’t run surpluses. Please give us tax cuts.” Instead, Labour, with the support of New Zealand First and the Greens, ran surpluses. We reduced Government debt from 40 percent gross to 17 percent. Net debt went down to zero. As a consequence, the incoming National Government inherited amongst the lowest Government debt in the world—amongst the lowest Government debt in the world. Even after the Budget deficits that the current Government is running—this year it will be around $12 billion; last year it was $18 billion—and even after the Government gets back into surplus, which will be around 2014-15, and would have been under Labour too, New Zealand has amongst the lowest Government debt in the developed world. Government debt is not New Zealand’s biggest problem; the growth in our economy is, and this bill does nothing to improve New Zealand’s growth. New Zealanders know that. That is why they are opposed to asset sales.

The Budget Policy Statement came out a couple of weeks ago. The Opposition parties have been very critical of both the Government and Treasury, which on this issue was the lapdog of the Government, for booking the proceeds of the sale of State-owned enterprises in the prior Budget and in the Pre-election Economic and Fiscal Update, but not showing what happened as a consequence of loss of the ownership of half of those companies. The Budget Policy Statement does it, for the first time. What does it say? This is a quote from page 7: “the forecast finance cost savings”—from the sale—“are less than the forecast forgone profits.” The Government deficit goes backwards as a consequence of selling these assets. How much? Well, according to page 6 of the Budget Policy Statement, the loss, which includes the forgone dividends and the forgone share of retained earnings—those are the two components—is more than the interest saved. How much do they go backwards? Well, in 2014, the estimated going backwards is $87 million; in 2015, $98 million. We are around $100 million per annum worse off. It is another example of why this Mixed Ownership Model Bill should be called the 1 percent bill, because not only does the majority of these shares end up owned by about 1 percent of New Zealanders, but that increase in the Government deficit—that is, the operating balance before gains and losses—of $100 million a year is roughly 1 percent of this year’s deficit. It is a large amount of money. We are $100 million a year worse off as a consequence of the sale of these assets. The Government would be better to borrow that money for the capital expenditure and keep these assets, and, even in the short term, New Zealanders would be better off by $100 million per annum.

We had the Prime Minister say that none of these shares, or very few of these shares, would end up in overseas ownership. That was not the experience with Contact Energy, not even in respect of the privately owned, smaller-investor portion of the Contact Energy sale. A lot of those ended up in overseas ownership. And now, in the Budget Policy Statement, for the first time we have the acknowledgment: “the Government”—this is on Treasury advice—“expects New Zealand ownership of the companies will be around 85 to 90 per cent.” following the sell-down. In other words, up to 30 percent of the shares—because the Government is selling only half—that are going to be sold are going to end up in overseas ownership.

It is already clear that the Government is trying to convince New Zealanders that if the Government deficit comes down, it has succeeded in managing the economy. The deficit will halve in the next year just because of the consequences of the Canterbury earthquake flowing through. That is no success of economic policy. The rest of the Government deficit will go away, through a bit of austerity and a little bit of growth. But the underlying structural problems in the New Zealand economy remain, and this bill does absolutely nothing to address them. The underlying structural problems in the New Zealand economy are that for decades we have exported less than the cost of our imports and our interest bill. Every year that happens you have a current account deficit, and in the projections from both Treasury and the Reserve Bank, every year from here to the end of the projection period New Zealand’s current account deficit gets worse. It gets worse.

In other words, despite the rhetoric of Mr English saying that the Government is rebalancing the economy, it is not. Every year New Zealand has a current account deficit. According to Treasury, by 2016 it will be 6.9 percent of GDP. Every year you have a current account deficit, there are only two ways to bridge that gap between the cost of your imports and your interest bill, and your exports. There are only two ways that it can be funded. One is by borrowing more money from overseas, and the other is by selling your assets to overseas people. What was previously New Zealand - owned becomes overseas-owned. That is how you fund a current account deficit, and that is what this Government has got as its plan for New Zealand, because under current settings that is what happens, every year, to the end of the projection period—2016. If New Zealand is unlucky enough to still have a National Government then, it would have been in power for 8 years and every year New Zealand would have been getting poorer. So in 2014 New Zealand gets poorer, in 2015 New Zealand gets poorer, and in 2016 New Zealand gets poorer. How does that show up? It shows up in increased overseas debt. It shows up in an increased proportion of our assets—our land assets, our power companies—being in overseas ownership.

This plan, if you can call it that, is the central plan of the Government’s economic strategy for these 3 years. It came about because the Government was being criticised for having no plan. That is what happened. This was an ideological burp from the Government during its last term of Government, following the criticism, which was hurting it, that it had no plan for the economy. So this was its plan. This was its plan—to change who owns what already exists.

We hear the suggestion that this is necessary so that people have got things to invest in. Investors, if they want infrastructure investments of this kind, can already invest in Contact Energy, or TrustPower, or Vector, or Telecom if they want that sort of infrastructure, or the Port of Tauranga. They have got plenty of alternatives. They do not need these.

The idea that New Zealand capital markets will prosper only if we let them trade what the Government creates is such a negative view of New Zealand’s capability or the capability of New Zealand’s private enterprise. If the only way that private enterprise and capital markets in New Zealand can succeed is by selling what the Government has created, what does that say about private enterprise? Well, in the Labour Party we have a much more aspirational view of private enterprise. We think that private enterprise will succeed, and grow the exports, and grow the jobs that New Zealand needs to grow the incomes that we all need to start going forward as a nation, if the Government pulls the levers that only a Government can pull, but this Government refuses to.

The briefing from Treasury to the incoming Minister said the Government had to address some of the imbalances in the economy that lead to our current account deficit, lead to our rising international liabilities, our overseas debt, and our overseas ownership of New Zealand assets. Treasury said that one of the really important things was to address the proper investment signal in the economy, so that people invest on the basis of the profitability of their investment rather than the tax-effectiveness of their investment. Part of the reason too much investment in New Zealand goes into the speculative land sector, and not enough into companies that grow for people to invest in, for companies to manufacture goods, for the jobs and incomes that flow from that—a major part of the reason for that—is there is a tax break for the alternative. So Treasury’s advice was to tax capital income equally à la the sort of policy that Labour and the Greens as well have been advocating in terms of a capital gains tax. Pulling levers like proper tax signals, proper investment policy, proper savings policy, and decent monetary policy is what we need. We can never sell our way to a brighter future.

I rise to speak on the Mixed Ownership Model Bill, the bill to steal the assets of most New Zealanders—the assets that currently belong to 100 percent of New Zealanders—and to hand them over to a small minority of New Zealanders. These assets are currently owned by everybody. Everybody owns these energy companies. They belong to all New Zealanders. What this Government is proposing to do is to take those assets from 100 percent of New Zealanders and give them over to maybe 1 or 2 percent of New Zealanders, against their wishes.

When we poll people and when independent polling is done, time and time again New Zealanders say that they do not want their property taken from them. Time and again a large majority of New Zealanders are opposed to the privatisation schemes of this Government, embedded in this bill. The reason they are opposed to privatisation is that they have seen it before and it was a disaster. If it is repeated it will be a disaster again. So that is why the majority of New Zealanders do not support privatisation—they have seen it before and it was a failure.

This Government proposes to take the property of all New Zealanders and give it to the 1 percent, and when you take people’s property against their consent, that is called theft. This Government is proposing to steal the assets from 100 percent of New Zealanders and give them to the 1 percent. You might say: “Well, you know, what choice has the Government got? It has got all this debt. It has got a deficit problem.”, and this is now the Government’s latest argument. The Government has used all sorts of arguments, and I want to address a few of them if I get time.

The latest argument is the one around debt. The Government has decided that this is the strongest argument, that it is going to rely on debt. The Government’s deficit is self-induced; let us be absolutely clear about this. The Government gave away tax cuts to upper-income earners that cost $2 billion per year for the top 10 percent. So we are losing, because of the decision of the Government, $2 billion a year in forgone taxes on the top 10 percent. So every year we are $2 billion further in deficit than we would otherwise have been, because of the policies of the current Government.

If the Government says it is going to raise $5 billion to $7 billion, that is only 3 years of this lost tax revenue. If the Government had decided not to give away these very large tax cuts to the top 10 percent of income earners, then over 3 years it would have raised the same amount as it is going to raise from this privatisation. So the Government introduces a policy that throws the Government books into deficit, heavy deficit, and then says: “Oh, the Government books are in deficit. We’re going to have to sell the assets. Oh, we didn’t think of that when we introduced the old tax switcheroo.” Remember, the tax switcheroo was supposed to be fiscally neutral, but of course it was not, as we said it would not be, and it has turned out to be even worse than anyone predicted. So the Government introduces its old tax switcheroo, which gives $2 billion a year to the top 10 percent of income earners, and then it says: “Oh goodness, we’ve got a deficit. We’re going to have to sell the assets to cover the deficit.” Who was going to be able to afford to buy these assets that it is having to sell? Oh, I know—the top 10 percent whom it has just given $2 billion a year to in very large tax cuts. So it says: “Oh, there is a terrible deficit that we”—the Government—“created, and who’s going to be able to afford to buy these assets? Oh, the very people we just gave a big tax cut to.” The Government just gave a big tax cut to the very people it is going to sell these assets to.

So that is how the Government has manufactured the deficit crisis, which it is using to sell these assets that belong to all New Zealanders and have been built up over generations. This is not just something about which any old Government of the day can say: “Oh well, whatever. We’ll just flick it on.” This was built up by generations of New Zealanders. It is no coincidence that Grey Power is absolutely opposed to this sale, because Grey Power understands that it was its members who worked over generations to build up these assets that this wretched Government is proposing to sell off, because it manufactured a Budget deficit in order to justify the privatisation of assets to its friends and mates. This is, I think, a tragedy.

One of the things that I think needs to be brought out very clearly about this is that the Government, for political reasons, is saying it is going to sell only 49 percent, so the assets will still stay in New Zealand ownership. What the Government is not telling people is that individual assets owned by these power companies can be sold off. The Manapōuri power station, for example, is owned by Meridian Energy, and once Meridian Energy is partially privatised it can be sold by that partially privatised company, and we will no longer own the Manapōuri power station—not even 51 percent—because 100 percent of it can fall into foreign ownership.

When I questioned the Minister about this in the House the other day he referred to the major transactions part of the Companies Act. What he failed to mention—and he said that if major transactions happen, then you have to get approval from 75 percent of shareholders, as it is in the Companies Act—is that the major transactions part applies if you are proposing to sell 50 percent or more of the assets in one of these companies.

If the partially privatised Meridian were to sell off the Manapōuri power station or other kinds of assets that it owns, it will not meet that test. It will be less than 50 percent of the assets. The Government, as the 51 percent shareholder, will not have a veto on the sale of individual power stations. So we will see the individual assets of these partially privatised companies vulnerable to being sold off into full—100 percent—foreign ownership if it makes commercial sense for the companies to do so. The Government has created this debt problem. It has created a situation where once this partial privatisation goes ahead, individual assets can be sold off into foreign ownership and 100 percent private ownership.

It is also worth making the point about debt and the ability to service debt. Mr Parker has made some of these points, quite rightly, but it is worth making a few of the others. Treasury runs this thing called the Crown Ownership Monitoring Unit, and it estimates the return the Government is getting from these companies—the total shareholder return—at 18 percent. A total shareholder return is the return that Treasury uses as if it was an investor. It looks at the profits and the dividends—both retained profits and the profits given out as dividends—and it also looks at the growth of the value of the capital, which is, of course, the point of view that investors take when they look at an investment. They ask: “Well, what are my shares worth now? What will my shares be worth in a year? What will they be worth down the track?”.

So Treasury takes a total shareholder return perspective in analysing the value of the companies. Treasury said the total shareholder return is 18 percent—18 percent. The Government is currently borrowing at 4 percent, so the Government is proposing to sell assets with a total shareholder return of 18 percent in order to avoid taking on debt that will cost it 4 percent. You do not have to be very bright—you only have to be brighter than the Government—to figure out that this bill does not make any sense, that this bill is not fiscally sensible. This bill is not economically rational. This bill does not make any sense.

If your concern is maximising or supporting the fiscal position of the Government you would retain the assets in order to service the debt, because that makes a lot more fiscal sense, and anyone who looks at the numbers knows that. That is exactly why there will be a lot of people who borrow money to buy these companies—institutional investors. They know that even though they pay a higher interest rate than the Government, much more than 4 percent, they will invest in these companies because they know that these companies will make a very high rate of return, as they have in the past.

Finally, I would just like to lament what will happen if this goes ahead—if the referendum does not stop it; if the campaign does not stop it—and that is about the missed opportunities for our country. Mighty River Power, just to take one example, is one of the top geothermal energy companies in the world. It is part of the global future for renewable energy. If this Government sells off this company, then New Zealand will miss the opportunity to own the Fonterra of renewable energy, because that is what our renewable energy companies are.

The renewable energy sector is growing rapidly internationally. We have a set of companies that have the critical mass, the expertise, and the capital to take advantage of that, and right at the moment when that could happen, the Government goes ahead and starts to privatise them. Once you privatise and the headquarters goes somewhere else, the research and development goes somewhere else and New Zealand misses this fantastic opportunity that we have in the renewable energy sector. I hope the referendum goes ahead, because we need to stop the theft that the Government is proposing in this bill.

The ASSISTANT SPEAKER (H V Ross Robertson): Order! There is to be no indication of applause from the gallery.

Tēnā koe, Mr Assistant Speaker Robertson. I say at the outset the Māori Party will oppose this bill, the Mixed Ownership Model Bill. We have said that at the beginning and we say it today. We repeat it today.

💬 Rt Hon Winston Peters: You sure now?

In triplicate, yeah. Nō reira, hoki atu māua ki te wā au e tamariki ana. I whānau au i Takapau tāku piringa ki Ngāti Kahungunu. I a au e tamariki ana e kaha ana ngā mātau ki te kōrero e pā ana ki te Tiriti o Waitangi. kei roto i ngā waiata, i ngā kōrero i runga marae ka puta mai te kaupapa o te Tiriti me te tino kaupapa o taua kawenata. Kī mai taku iwi ki ahau nā te mea nā Te Hāpuku i haina te Tiriti, i roto i ngā whakapapa nāku i haina, nāku Te Tiriti o Waitangi. Nā reira, kua tae nei ki tēnei wā ka kite au i ngā iwi Māori me ngā kiri mā, kai te noho tonu i roto i ēnā whakaaro, he taonga te Tiriti o Waitangi. He kaupapa nui rawa atu mō tātau nā te mea, kua hainatia te Tiriti, ka āhei ngā tauiwi ki te hara mai ki Aotearoa noho ai, kia nohotahi ai tātau i tēnei whenua. Nā reira ngā Kāwanatanga whai atu i tērā, Kāwanatanga Reipa, Kāwanatanga Nāhinara, nā rātau i tīni, ko te Tiriti o Waitangi tō tātou kawenata whakakotahi ai tātau i roto i a Aotearoa nei, a, ki roto i te reo Pākehā, our founding document.

[So we would go back to the time when I was a child. I was born at Takapau, which is my connection to Ngāti Kahungunu. While I was young, parents talked hard out on the Treaty of Waitangi. The principles of the Treaty and its real purpose emerged in songs and stories on marae. My people told me that because Te Hāpuku signed the Treaty, I signed it too, because of my genealogical links, so the Treaty of Waitangi is mine as well. So we have reached this point in time where I see Māori and fair-skinned people still living in that mindset that the Treaty of Waitangi is a treasure. It is a really great philosophy for us because the Treaty has been signed and foreigners are able to come to New Zealand and live as one in this land. Successive Labour and National Governments after that changed it by saying that the Treaty of Waitangi is our founding covenant that makes us one here throughout New Zealand, and, in the English language, our founding document.]

I have spoken initially about the Treaty of Waitangi because, over and over again, Māori are always having to litigate the case of the importance of the Treaty of Waitangi to us as a nation. As I have said, it is a founding document of this country, of our nationhood, but it also is the means by which tangata Tiriti and tangata whenua can noho tahi—can live together—and grow our nation, inviting other people from other countries to come and live with us but under our umbrella, if you like, as a people of New Zealand.

So when this bill came up and we saw that the first draft we saw from Treasury had no reference to te Tiriti o Waitangi, our opposition was in two areas. In the first place, to sell Papatūānuku—the land—would, to us, be wrong. It would be wrong to sell our land to overseas people. If they want to come and live here and be New Zealanders and buy land, that is different, but the possibility of selling it to overseas people and we are the tenants in those lands is foreign to tikanga Māori. So we value very much that we do not sell our land over there and our taonga that we have. That is at the base of it.

But, secondly, we noticed in that initial document that the reference to the principles of the Treaty that is present in the State-Owned Enterprises Act, under section 9, was absent. So we immediately made a challenge to the National Government, which we are in coalition with, to reinstate section 9 from the State-Owned Enterprises Act into this new amendment to the Public Finance Act, so that if this is passed, then the Crown will still be bound by the principles of the Treaty.

You know, it is just time and time again for all Māori who are in the front line for different activities. We see our people relitigating, relitigating the importance of the Treaty of Waitangi to our country and what it will do for us in the future.

So that is why—the two reasons—we have fought so much about section 9 of the State-Owned Enterprises Act, because, as everyone knows, we said we were considering whether we should stay with our Government, which is supporting us in other areas, or whether we should perhaps leave. On no other issue have we ever said that. But because it is the Treaty and we feel that we have made our point, along with iwi leaders at the consultations, section 9 basically word for word is now inside the new bill.

However, we will not be supporting the bill, because of our belief that our land should stay with us in Aotearoa. The land is the mother, and the sky is the father and the elements, and they nourish each other. That is the real reason why we oppose the bill. However, it is not over. If it passes, then in there is the opportunity for the sales to take place and one still has to look at who appoints the directors, how they are appointed, their responsibilities under the Treaty, and so on. So even though the Crown is 51 percent shareholder, how will it act out in terms of the responsibilities to the principles of the Treaty? How will it affect the water—and iwi are down a long road already with Government, talking about the rights and interests in water of all New Zealanders including Māori tribal people on the riverbanks of those rivers.

So it has been good that we have been able to get this far in those kinds of discussions about our natural resources, and I am pleased that an assurance has been given to Sir Tumu te Heuheu and the Māori water group of iwi leaders that discussions will continue in the same vein that they have before, and that clearly there could be co-management of our waterways and our fresh water in the future, as was being planned.

Just to summarise my view and our party’s view, we are sad that our land and our assets are going to be sold. We are glad that the Treaty section, section 9, is in there and we will be looking with interest to see how the Crown is actually bound, and how it intends, as 51 percent shareholder, to observe those principles of the Treaty of Waitangi. I am happy to be leading a review of the constitution of this country with the Minister of Finance, the Deputy Prime Minister, Bill English, and this will take place over the next 2 years. It will include a review conducted by iwi Māori and those views will be compared with each other, of course. But the whole idea of this is an opportunity for us to actually talk about: kei hea te Tiriti i tēnei wā? Where is the Treaty in today’s time? We talk about it; the principles are in there. The Rātana Church makes much out of the fact that it has not been honoured—the promise made to Tahupōtiki Wīremu Rātana. Also at Waitangi we have had disputes over the years about the mana of the Treaty in our land. So where does it stand in terms of our constitution? Our New Zealand constitution is made up of bits and pieces and one of those bits is the Treaty, but in terms of where it actually stands in our country’s mana and legislation, that has not been determined. I am hoping that people will get themselves involved in this constitutional review and put their thoughts forward. That is all I have to say, and kia mihi atu ki ngā iwi i haere ki ngā hui

[I want to acknowledge the people who went to the hui]

—the consultation hui, where they brought their kōrero about their journeys, their feeling for the taonga, and so on, and put it on the floor for everyone to hear, and I congratulate them on their efforts to make sure that the Treaty is involved in the new bill. Tēnā koe.

This is not really the Mixed Ownership Model Bill, this is the “How National Made Quisling Look Like a Patriot Bill”. This is the “How National Made Benedict Arnold Look Like a Loyalist Bill”. Not only is the whole concept of selling our power stations deeply flawed, the process of sale has been designed to gain the maximum benefit for the share traders and the minimum benefit for taxpayers.

What you just heard from Pita Sharples was a valedictory speech and I can say now with certainty that the Māori Party, its three members, will be resigning from this Parliament long before the next election. I do not see Peter Dunne surviving either, because he campaigned on water being a strategic asset. That is the critical component of these sales and he has walked out on his pre-election commitments. This Government has not got a majority for that reason and those members know it full well. The taxpayers are the rightful owners and should be the beneficiaries of any sale, but this will not happen. This is a process arranged by the greedy, for the greedy, just like this is a Government of the greedy, by the greedy, and for the greedy.

There are some vital facts that it is not talking about, and, fortunately, we are back here in time to reveal them. The first is that the sharebrokers and financiers, Aussie banks, merchant bankers, and the so-called markets are going to take $200 million in fees, commissions, underwriting guarantees, and other expenses.

💬 Hon Member: How much?

Two hundred million dollars is going to these people; $200 million of taxpayers’ money is going straight to the middlemen.

So what happened to cutting out the middlemen? In this case, you have got a Government made up of middlemen, and they look after their mates. Why did the National Party receive millions and millions of dollars in election campaign funds? The answer is simple. It was a sound investment by the middlemen, the ones I have just described, who are going to get $200 million, for a start, in all these fees and commissions, whilst they—these Aussie advisers—give the Government independent advice.

Do you like that? They are going to get all this money for giving this advice, and can you imagine them saying this is a bad idea, it is bad economics, the fiscals do not add up? No sir. It was a sound investment by these middlemen, because they knew that hundreds of millions would be returned to them from ordinary New Zealanders by a National Government sell-out. And they did not have to wait long, did they? When the election is just over, next year, or next minute, here come the middlemen—the National Party’s fund-raising experts.

It does not stop there. The Prime Minister has finally let slip that mums and dads will not be at the front of the queue unless they are mum and dad brokers and mum and dad foreign buyers. The smiley face, “Mr Spray and Walk Away”, got away with it all for over 3 years. Say any old statement you like—typical Merrill Lynch—get the deal done, it does not matter what happens, and devil take the hindmost. And here we are, just like the American taxpayers who had to bail out Merrill Lynch for practices we all know about, and now the Prime Minister of this country is exposing New Zealanders to the same behaviour. That smiley-face mask of this Government has all of a sudden gone lopsided and it is not a pretty sight.

If you look at how the Māori Party has betrayed its people over this, it is not a pretty sight, is it? Did you hear that speech? Was it one of principle, of belief? No, Mr Sharples and Tariana Turia know, as does Te Ururoa Flavell, that they have sold their people down the drain, but Pita Sharples gave us a lecture about it. He talked about the principality, and sovereignty of land, and the taonga of ownership. And that would require, I am sure, what we did back in 1998 when we gave up the second most powerful job in this country because National wanted to sell to a foreign owner the company called Contact Energy. Anybody in National can get up and have a go like Mr Coleman today. Mr Coleman, that is my bona fides. I would not do it, so do not get up here and tell the country a whole lot of hypocritical nonsense and drivel. That is the fact.

You know, if you look at how the Māori Party has betrayed its people, it is not a pretty sight. It is legally impossible to interpret this legislation. No court in the world will accept company articles that state 51 percent of the shareholders are subject to the principles of the Treaty of Waitangi. Fifty-one percent are subject to the principles; the other 49 percent are not. Now, that is a legal nullity. And there is the genius, the Attorney-General, Mr Finlayson, who has not a word to say about whether he thinks this is an elegant solution. Does he think that it is actually an elegant solution?

Nobody knows what these principles are in the first place, and for the Māori Party to claim some sort of victory over this makes me wonder how it can ever claim that it represents Māori in any way. There those members are, standing by their so-called principles, whatever they may be, pleading for crumbs from the table of the National Party. It is no joy for Māoridom to see them at the table having their heads rubbed—taken to the cleaners—just because they want to keep the LTD vehicles and the ministerial homes. We know what those baubles are. But we know what it is like to walk out on those baubles on matters of principle. Do not sit over there—[Interruption] No, do not sit over there. I know what it is like. I know what it is like. Do not come along here and try to mislead New Zealanders. When we see something that is rotten, we walk, and we have done it countless times. We do not go along with this sort of quisling, Benedict Arnold behaviour. How can they ever go back to the marae and say to the people “We really fought for you over this one. We got you some principles—51 percent of them.”? They got them some principles—51 percent of them.

Another deep flaw in this legislation is that there is nothing to stop these new companies, post the sale, issuing new non-voting shares. Any issue of any non-voting shares will dilute the Crown’s equity in the companies and reduce its influence in the appointment of directors. And we know that companies are run by directors, not shareholders. The directors on the boards of these companies have wide-ranging powers. They will not be acting in the interests of mums and dads, who have to pay escalating power bills—and the Māori voter is the worst one to be punished by rising prices. So what are they doing? Are they walking over to say to Mr Key “We are finished with you because you are selling out our country.”? No. They are staying. I always knew Peter Dunne would. Peter Dunne is a classic example: he will double-cross that bridge when he comes to it. He is a classic example of the old adage: “I’ll double-cross that bridge when I come to it.” But truly the Māori Party could set an example. It should set an example.

Whatever way you look at it, the people are the real losers, and the power stations will end up not in our hands but in foreign control, and the slide of our economy down the OECD will just go on and on. All the great lessons of Singapore, Norway, and what have you are totally lost on the people who call themselves the National Party, when we all know they are the “International Party”. Give up the name, for goodness’ sake, so we can all recognise you for what you are. The power companies in this country are already operating a price-fixing cartel, aided and abetted by the Commerce Commission. When were the prices regulated?

It will get worse. There are many long, cold winters ahead. We urge New Zealanders not just to go out and sign the petition—but please do that. Get out and do it now in the next 2 months. Make sure you take everybody along: mum, grandad—the whole lot. Sign the petition. But here is what you have got to do as well: get out your pen, your laptop, and your phone and start ringing every National Party backbencher, especially those in the marginal seats. Do not rest up. Call the whole lot up. Keep it going. You have got the power, and tell them the power is not for sale. You have got the power: tell them your power is not for sale. Do not stay at home and ring up the talkback shows only; get out there and go down to their clinics on Monday, when they do hold one—for those who do visit their electorate now and again. I know Mr Key will not be holding one in Helensville.

💬 Brendan Horan: There won’t be one in Dipton.

There will not be one in Dipton, I know. But pay for the extra stamp, write letters, and give them to know that if they go ahead with this sort of treason, you intend to get rid of them, and as soon as possible.

This debate today on the Mixed Ownership Model Bill is the inevitable consequence of living well beyond our means—well beyond our means. We have deficits, debts, and diaspora. New Zealand public and private debt over the past 15 years has gone from 82 percent of GDP to 134 percent of GDP. As a nation we have not paid our way since 1973. As a Labour Party front-bencher said earlier in the debate, how can you pay your way if you are not exporting enough to pay for the stuff you are buying offshore?

Last year this Government needed to borrow $18.8 billion from the savings of other citizens of other countries, mainly the Chinese. That is the fifth-largest deficit as a percentage of GDP in the OECD. Treasury says we will need to borrow another $12 billion this year. I suppose the good news is that this sale of these assets will produce, at the top end of the green, $7 billion, and that will pay the Crown account deficit for 7 months. But therein lies the challenge for every single member of this Parliament. And it is no good carping on about Government cutting into structural spending, when in Opposition you have no idea how you are going to fund that spending if it is not cut. Therein lies the challenge for the Opposition. Our mounting debts and deficits are met with New Zealanders seeing the writing on the wall, as I hear in this Parliament today the flapping of the wings as the chickens come home to roost.

I predicted early in the first entry into the global recession, some 6 years ago, that unless we urgently cut our cloth we would find ourselves borrowing an insurmountable amount of cash from the savings of others, mainly the Chinese. So many of our people—one every 15 minutes—are fleeing this country for new opportunities in Australia, and that is what this debate should be all about. How do we get the half a million well-educated, highly motivated New Zealanders who live in Australia back to the South-west Pacific to raise their families here? In the year to January we set the dubious record of 38,100 New Zealanders having fled this country.

Those on the other side of this Parliament who worry about selling things need to ask themselves a real hard question: how does New Zealand pay its way? This is the question I and other Ministers from the National coalition in this Parliament are asking in the Cabinet committees every day. I want to put some heavy-duty pigment into the lighter colour of the National Party’s recent reflex blue. We have got to move away from spending, borrowing, and hoping to a place where we deal with the serious current account deficit.

Economic growth, prosperity, and jobs will come from research and development, innovation, and science and technology, along with workplace skills training and opportunity for so many people who are looking for an opportunity to contribute. For too long ACT has watched as successive Governments abandoned fiscal prudence—successive Governments have abandoned fiscal prudence. In the last 5 years of the Labour Government in this country, Government spending as a percentage of GDP went from 29 percent to 35 percent—the highest of any country in the OECD. That is why we fought so hard to have ACT’s Spending Cap (People’s Veto) Bill introduced into the Public Finance Act to control Government expenditure and keep politicians on a budget. It is like with housekeeping—and you know a lot about housekeeping, Mr Assistant Speaker Tisch, as all members know about housekeeping. The country cannot keep borrowing for the housekeeping. That is a statement of fact.

This bill is only part of the solution to our wider economic puzzle. When we consider the policy of privatisation, we must remember that it is private enterprise that creates all of the wealth and social prosperity for the citizens of this country. As the World Bank famously wrote, privatisation is now so widespread that it is hard to find countries not using this approach. Over 30 years these privatisations have been studied to death. Overwhelmingly, privatisation has increased the productivity of the privatised enterprise. So if we are not sitting in this Parliament today talking about selling these assets so that we do not have to borrow more money from the Chinese, what proposition is the Opposition putting up to pay our way in the world as we come out of the second tranche of this global recession?

It is worth noting that the New Zealand Government holds assets worth $245 billion. If we take the figure of $7 billion as a percentage of $245 billion, we are talking this afternoon in this House of less than 3 percent of our structural asset so that we do not have to borrow and pay the interest on that borrowing.

I want to remind the New Zealand Labour Party that the Labour Government privatised Telecom. Would Labour buy back Telecom? The Labour Government privatised more assets than have ever been privatised by this Parliament and this country. Bob Hawke, of the Labor Government in Australia, privatised Qantas and the Commonwealth Bank. Even Julia Gillard is not talking about buying back Qantas and the Commonwealth Bank. Jean Chrétien privatised Canadian National Railway in Canada. The Canadians are not having a debate about the State re-owning that asset.

It cannot be repeated too much: this country finds itself in a financial mouse wheel. We are at the crossroads. Four years ago it was $2 billion worth of debt, this year it is $50 billion worth of debt, and in 3 years it will be $75 billion worth of debt. And today we are talking about selling, at the top of the green, 3 percent of our total economic infrastructure base in these transactions. It makes more sense than just borrowing and spending and hoping. I want to hear from the parliamentary Labour Party exactly where it proposes to curtail Government expenditure so that one day we will not wake up, come into this Parliament, and say: “What else can we sell? What else can we sell? What is there left to sell?”.

This Government needs to cut its cloth. I have told the Government that we need to lift the age of superannuation from 65 to 67—that is why I would not take it. And that alone would save $1.5 billion a year. A small interest rate on the $12.2 billion worth of student loans would save $550 million a year. We need to cut our cloth; we need to live within our means; we need investment, growth, and jobs; we need to grow the economy; and we need to pay our way. And I am here to support this Government so that the Opposition is not sitting on this side of the House come 3 years less 100 days.

The most interesting thing about the speech just completed by John Banks is that it was a National slot in this debate. But where are the National Ministers? The previous National slot was taken by a Māori Party co-leader, even though they are voting against the Mixed Ownership Model Bill—probably the most important piece of National legislation so far in this Parliament. Where are the senior Ministers? Was John Key going to speak to this? Oh, no.

The ASSISTANT SPEAKER (Lindsay Tisch): The member cannot refer to the absence of members.

Why did John Key not take a call? Why did Bill English not take a call? I can refer to the fact that they did not take a call; it is a matter of fact that they did not take a call. Why did Steven Joyce, the Minister for Economic Development, so-called, not take a call? Because they are politicians enough to know that New Zealanders know you cannot sell your way to a brighter future. You cannot sell off land, sell off the law, sell off our assets, sell off our hope, and have a brighter future. I agree with one thing the member who has just resumed his seat said: one New Zealander every 15 minutes is voting with their feet to get out of this broken dream they call Godzone.

💬 Louise Upston: I raise a point of order, Mr Speaker. The speaking slots that are allocated to National, the Māori Party, United—

The ASSISTANT SPEAKER (Lindsay Tisch): That is not a point of order.

What I want to do in the remaining 8 minutes or so of this speech is to go through some of the arguments the Government has put up and to show they have more holes than a block of Swiss cheese. The first one is that you need asset sales to solve public debt. Well, here are the problems with that argument. Firstly, 85 percent of New Zealand’s total international debt is private debt, not public debt—only 15 percent is public debt—and this sell makes the private debt problem worse. Why is that? Because if “Joe Kiwi”, instead of investing in their bank, buys these shares, the bank funds their debt offshore, thus making private debt worse. Or, if foreign buyers buy it and pay Kiwi dollars for it, that makes the foreign private debt worse. So this will have the opposite effect. Do not, ladies and gentleman, allow this Government to pull the blue wool over your eyes. This is not a debt reduction measure; this is a “lining the pockets of the 1 percent in the ticket clippers” measure. That is what this is about.

💬 Andrew Williams: Helping their mates.

Helping their mates. Two billion dollars, as Russel Norman said, lost per annum on the Government’s tax switch, and the 1 percent who cleaned up are the 1 percent who will clean up these shares. The same people the Government has acted on behalf of so far will be the people who benefit from this.

The next myth that needs busting is that somehow selling these is good money management. Well, how can it be? These assets average a 6 percent return—a 16 percent total shareholder return, including capital returns. They cost 4 percent Government debt to service. That is the Crown cost of capital; the public is making money on holding them. Why would a private investor buy them on the current prices for power? TrustPower said its hurdle rate is 8 percent. That is its weighted cost of capital. Infratil’s target rate is 20 percent. I was at its dinner last night; that is what its annual report says. Why would it buy these shares at these prices and not put power prices up? Because that is the only way you can get higher returns out of a power company.

The second point: the Government loses $100 million a year because the saving of interest is $266 million but the loss of dividends is $360 million a year—a net deficit of $100 million a year worse off. That is excluding the $100 million to $300 million one-off cost of paying the ticket clippers: a year’s worth of dividends transferred to Macquarie Group, the latter-day Fay Richwhite of this world, and the other brokers and bankers, so that this Government’s mates can give it a pat on the back. I want to see a very detailed financial disclosure from the last two elections. I want to know who has been lining the pockets of the National Party in response to that favour.

Well, the next financial problem is that you do not know what the returns are going to be, because the Government does not know what the sale price is going to be, partly for those reasons, partly for the high cost, partly because we do not know how much price rise the public will stand. That is why Bill English, embarrassingly, called it a guesstimate. At least he had the integrity to say he did not know, and that puts him a step ahead of the Prime Minister, who once again just made it up.

The third myth that needs busting is that New Zealanders are at the front of the queue. My backside they are! If the Government wanted New Zealanders at the front of the queue, it would have put a clause in the legislation preventing excessive foreign sale. But did it? No, it did not. There is no clause in this bill to prevent sale to foreigners. Indeed, Treasury’s advice is that that is absolutely necessary in order to maintain the sale price. No prohibition—and what does that mean? It means the “Kiwis at the front of the queue” line is just spin—just spin—and New Zealanders can tell the difference. Why should New Zealanders pay again for assets they already own? Why should they be asked to do that at a time when money is tight and most New Zealanders cannot pay their own mortgage, let alone be told that the only way the country can pay its mortgage is to sell the house, even if we end up paying more for rent afterwards? It is economic lunacy.

💬 Hon Tau Henare: What a silly man!

Congratulations on the member’s wedding. I hope he gave his wife a better present than the one the Government is giving the public in this bill.

What really worries me is that loss of control is inevitable. Here are three reasons why. The first is equity dilution. The Government first said it would sell 49 percent, and then someone told it: “Well, if you do, and the new board, which is not an SOE board, has a profitable proposal, you’re actually bound to put in more cash.” “Oh, goodness!”—the Government members said—“Oh, goodness! Well, we won’t sell the whole 49 percent at once.” But they still think they are going to sell 49 percent. What happens when they have sold 49 percent and the next project comes along? Will they refuse to kick in the extra $100 million? Where are they going to get it from, Mr Banks? This Government is winding the New Zealand economy down as fewer and fewer New Zealanders are left to power it up.

There is no Treaty protection. Here is the sadness of Pita Sharples’ position. The Government cannot have it both ways. Either the whole asset is covered, but the public, the taxpayer, is picking up 100 percent of the risk for 51 percent of the money, or the Māori Party has been sold a pup. And there is Peter Dunne, as always the swing vote. But, unusually this time, he matters. This bill is the “Peter Dunne Political Epitaph Bill”. He will go down in history as the perpetual 150-pound straw in the wind who, this time, blew the wrong way—who, this time, sold out a generation by selling off billions of dollars of their birthright. He can hang his head in shame. I like him—he is an integrity member. But I am sad for him, because his legacy is now one of sadness and shame.

New Zealanders do not want this bill. They know you cannot pay your mortgage by selling your house. They know your future should not be sold out by selling your past. They know the Government is not protecting them from foreign buyers. They know this is economic lunacy. Why does the Prime Minister not have the wisdom—I cannot question his courage—to take a call in this debate and answer these questions?

Can I begin by acknowledging the flattery of the member who has just resumed his seat, David Cunliffe. But just as he was inaccurate on my weight, he was inaccurate on many other things in what he had to say. I want to make it clear on behalf of United Future that we will be supporting the Mixed Ownership Model Bill, because we think it is sensible, we think it is what New Zealand requires, and we think it is in the best interests of this country in the long term. During this debate many things have been said, many epithets have been thrown around, and many sobriquets issued. Most of them are utterly irrelevant and utterly erroneous and grossly overstate what is happening at the moment. We are not selling our heritage or our assets. We are selling a partial share float in 3 percent of the Crown’s assets, and 97 percent will remain in the control of New Zealanders, if that be the phrase that is so important.

What is really critical here is how we ensure that these State trading companies, which these members opposite are so proud of, continue to work for the benefit of New Zealanders. In a rapidly changing international and technological environment, when we want to get smart, green technology in place, for example, it costs. It costs and it has to be paid for. Here are the options. They are very simple. If the Government of the day wants to boost the growth of those companies, it has about three broad options open to it. It either borrows more to fund them, and we are in debt as it is and seeking to reduce that level of debt; it allows the companies to raise charges to the public, and we have heard the bleats already about the fear of increased power prices, so that is clearly a no go; or it raises taxes. They are the three options. When you start to fiddle with the tax system, you set off a whole chain of other events that reduce New Zealanders’ capacity to be part of a productive, growing economy.

So the conundrum the Government faces—and the same Government previously in office faced exactly the same conundrum and chose to do nothing—is that you either let things stagnate as they are, or you seek more innovative ways of boosting the capital base of these entities. The mixed-ownership model, which will allow the sale of a limited shareholding, a minority shareholding, is, in my view, a novel way to do that provided there are adequate safeguards put in place. Those safeguards need to be a very clear statement, as contained in this legislation, that the Crown will always maintain 51 percent as a minimum control of these entities. So the argument about overseas shareholders or other shareholders coming in and having their way simply fails on the grounds that they will not have the majority. The majority shareholding, the Crown as the protector of the public interest, will always be in a position to protect that public interest.

The second point that gets overlooked in this debate, when we talk about selling out to foreigners or to other dubious types in New Zealand who will take over, is that the legislation makes it absolutely clear—at United Future’s insistence, and I am proud of this—that no entity, corporate or individual, can hold more than 10 percent. So the idea that somehow this is a wholesale sell-out simply is not borne out by the facts. The challenge we then have to come back to is what is a respectable vision of the way in which we develop our power companies in the future. I am hearing interjections to my right. I suspect they come from the Greens, who are always telling us—with some validity, I might add—about the need to improve production technologies, to go to smarter, more efficient ways of energy use. We are going to have to invest in those technologies, and that will cost, and the choice that a Government has to make is where that investment comes from. I think that the opportunity for individual investment in a minority capacity and the opportunity for some smart investment are ones that a wise Government would not throw up.

I notice that what is being proposed here is not a radical new solution. It is the solution that several mainstream Labour Governments in other parts of the world, like the Blair Government, like the Keating Government in the 1990s in Australia, and even the like Carr Government in New South Wales, have long since adopted. It is the solution that Labour itself, as late as the end of 2010, was proposing when it was talking about mixed-ownership models for the assets of State-owned enterprises. It is the solution that New Zealand First used to talk about, up to a maximum of 24.9 percent. So the reality is that all we are arguing about here are the numbers: 51, or 49, or 24.9. Everyone has been around the park on this issue. Everyone has advocated a version of this policy at some stage or another, and now, because it is being implemented and circumstances see some people on one side of the House and some on the other, those who used to advocate it now find they have to oppose it. That is not in the public interest of New Zealand.

I want to make one strong final point, and it is this: a lot of people have said in public commentary that because, allegedly, my vote is critical—it is actually no different from anyone else’s vote—I have to exercise moral courage or some sort of higher standard. What is important in this, as in any other issue, is integrity. What the public of New Zealand really do not like are politicians who say one thing before an election and do something else after it. I invite every member of this House to look at every statement United Future made prior to the election, and every statement made subsequently, and try to draw a difference between them—because there is no difference. What we said right throughout was that we did not support the wholesale sale of assets—that is not on the agenda. We did support the limited sale in respect of the energy companies and Air New Zealand, provided there were controls in terms of the minimum Crown participation and the maximum individual participation—and that is in the legislation. And then the same people who preach integrity have the gall to say to me that having achieved everything that we said—

💬 Hon David Cunliffe: Goodbye.

Goodbye to you, Mr Cunliffe. You have already gone. I say to the people who preach, with some gall, that I should exercise integrity that I have done that. I will continue to do that, and that is why we are supporting this legislation.

I seek leave to table a document from the Salvation Army called The Growing Divide, which may—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! Is this in the public domain?

💬 Hon Members: Yes.

The ASSISTANT SPEAKER (Lindsay Tisch): Well, it will not be tabled. He cannot seek leave. This is a split call between Mana and Labour. [Interruption] Order! I am calling a member. I will ring the bell with a minute to go.

Tēnā koe, Mr Assistant Speaker Tisch. This morning I sent an open letter to overseas investors via all of the biggest newspapers in the G20 countries where most interest is likely to come from for the purchase of shares in the assets that this National Government is trying to flog off. It reads like this: “Tena koutou katoa … The New Zealand government is proposing to sell shares in five State Owned Enterprises … to repay overseas debt. That proposal is opposed by an overwhelming majority of New Zealanders who believe that: Assets built up through the hard work of generations of New Zealanders should not be sold to investors whose primary objective is not the public good, but private profit; … Electricity assets in particular, should be held by the government on behalf of all New Zealanders, for the benefit of all New Zealanders,”—and hopefully—“at a price we can [all] afford; … As the indigenous people of Aotearoa, Maori have been even stronger in their opposition.

The Maori view is that no asset sales should proceed until Maori interests in those assets have been properly addressed. Maori have already made application to the Waitangi Tribunal to block the legislation. A separate case is [being prepared to go to] the High Court. Steps are being taken to take the case to the United Nations (under the Declaration on the Rights of Indigenous Peoples) and Maori groups have pledged to take action against sales to overseas interests which impact on our sovereignty. In a related case, following months of public protest, the High Court has called on the NZ government to reconsider a decision to approve the sale of farm land to overseas interests.

So today I think it only proper to send a warning to overseas investors—steer clear of any share offer in the above [New Zealand] SOE’s. The purchase of these shares is likely to see you caught up in legal battles and direct action from citizens determined to protect their own interests, both of which will be lengthy and costly and have an adverse impact on the value of your investment.

As the leader of the MANA Movement and Member of the New Zealand House of Representatives,” for the electorate of Tai Tokerau “I wish to advise that MANA is opposed to the privatisation of state assets and will strongly argue for any shares sold to overseas investors to be returned to New Zealand hands.” Overseas investors, “you have been warned …”

Mana opposes this bill because it is a fraud. When the Government says these companies will have improved public scrutiny, it is lying. The Mixed Ownership Model Bill specifically states—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! The member cannot say that the Government is lying, so I would ask the member to withdraw that comment. I also remind the member of the Standing Orders. In the review of the Standing Orders, one is not allowed to read their speech straight off a script, or in this case off a machine. According to page 28 of the review of the Standing Orders, which were accepted by this House late last year, you may refer to your notes, but you cannot just read them verbatim. I just remind the member of that.

💬 Metiria Turei: Point of order, Mr Speaker.

💬 Hon Tariana Turia: Point of order, Mr Speaker.

The ASSISTANT SPEAKER (Lindsay Tisch): I have two points of order. I will take Metiria Turei first, I am sorry.

💬 Metiria Turei: I raise a point of order, Mr Speaker. Just in reference to clarify this new rule about reading speeches, my understanding from the review of the Standing Orders and from the Standing Orders Committee discussions on the issue is that it was reaffirmed that it is a convention that MPs preferably not speak directly from written notes, but that it is not a rule. The Speaker may use his or her discretion, but members are entitled to use their notes as a guide. It is not a rule according to the Standing Orders Committee that MPs do not read their speeches.

Thank you. Well, as you rightly said they can use them to refer to, and that is exactly why I mentioned to the honourable member about reading a speech verbatim. The Standing Orders, and I refer to the report that was adopted by this House—it is on page 28—sets it out clearly there under “Reading of speeches”. So I have mentioned that to the member. He has 2 minutes remaining of his speech.

💬 Hon Tariana Turia: I raise a point of order, Mr Speaker. I want to follow up on the matter that Metiria Turei has raised in the House. My understanding is that the wording is “where possible, members should not read speeches”, and it depends on the technicality of the speeches. So my understanding is that for some speeches it is perfectly possible for you to read your notes. I want to be clear about that, because we have some Treaty speeches being made in the House tonight, many of them of a technical nature, and I do not want to see interruption. To be frank with you, Mr Assistant Speaker, you were sitting in the Chair when I was interrupted by the Labour Party in a speech that I was making and you allowed the interruption. It is very clear that only the Speaker can interrupt a member who is speaking.

The member is correct. Can I just refer members to page 28 of the review. The member is correct. The last couple of sentences pick up on the point the member made and relate to where a member can read their speech: “Such circumstances may relate to the technical nature of the material under discussion, or the relative experience of the member concerned. There will, however, be occasions when it is not inappropriate for speeches to be read.” So that picks up on the point, and later on in the debates, as the member mentioned, when we move on to the Treaty settlements it could well be appropriate. Hone Harawira has 2 minutes remaining.

💬 HONE HARAWIRA: Speaking to the point of order—

The ASSISTANT SPEAKER (Lindsay Tisch): No, I have already ruled. The member will continue his speech.

💬 HONE HARAWIRA: When the Government says these companies will have improved public scrutiny, I would like to point out that the legislation specifically states that these newly established companies will no longer be subject to the Official Information Act or the Ombudsmen Act. When the Government tells you that it has Māori support for these proposals, I would like to point out that not one Māori—not one—who attended the 10 consultation hui all around the country supported the proposal to open up the sale of State-owned assets to overseas investors.

When the Government says that mom and pop investors will be at the front of the queue, I would like to point out that there are no provisions in the legislation to guarantee that New Zealanders will get preferential treatment or even a dedicated percentage of the shares. When the Government tells you that it is not possible to bind non-Crown groups to Treaty provisions, I would like to point out that the Government already imposes constraints on third parties through Treaty memorials over State-owned enterprise properties.

Mana opposes this bill because it is an act of treason against the very people whom we are supposed to represent. Because it is deceitful to Māori and an insult to our founding—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! The member cannot accuse anyone of treason. I ask the member to withdraw and apologise for that comment.

💬 HONE HARAWIRA: I raise a point of order, Mr Speaker. I did not accuse anyone of treason. Would you like me to repeat the words? I might have to refer to my notes!

The ASSISTANT SPEAKER (Lindsay Tisch): That is trifling with the Chair. I will ask the member to continue his speech. If I was in error in the interpretation, then I was in error. I will just ask the member, with a minute remaining, to finish his speech, and along the lines that I mentioned before. It should be a speech. This is a debating chamber; it is not a speech contest. I ask the member to keep that in mind.

💬 HONE HARAWIRA: Mana opposes this bill because it is deceitful to Māori and an insult to our founding document, the Treaty of Waitangi, and because it ignores the reality that once those shares are sold, investors will demand an ever-increasing return, which will come about courtesy of more and more price rises. We already know the horror stories of families who cannot afford to pay their power bills—no heating, no lights, often no refrigeration. We know only too well the cost to society of the massive costs associated with poor people suffering from the effects of cold and damp housing. This bill will simply increase that poverty.

Finally, I call on all Mana members to take whatever action is necessary to expose the greed behind these plans—

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member. His time has expired.

Tēnā koe, Mr Assistant Speaker Tisch, for this 5-minute contribution. This is one of the signature policies that clearly distinguishes our approach to the stewardship of State assets from that of our colleagues on the other side of the House. In fact, these are legacy assets, and it is a shame that we have been unable to turn them into something akin to a legacy fund or a sovereign fund that would continue to generate revenue, continue to generate dividends, to meet the obvious costs that the State does face.

There are two things that, in the short time I have, I want to focus on. No. 1, I want to focus on this half-baked Treaty clause. Mark my words, that Treaty clause will be invoked in the most unthinkable ways as we sit here as parliamentarians today. I predict that in time to come, when the majority owner of these State-owned enterprises is called to make a decision—and there will have to be a commercial decision—as to whether or not an asset requiring substantial consensus amongst the owners ought to be further alienated, or to make an additional call on capital, some Māori, some iwi, some hapū, or some group will invoke the Treaty clause. When Geoffrey Palmer originally put the Treaty clause in there, minds such as Richard Prebble and others were prepared to tolerate it, because they saw it as an innocuous, harmless piece of filigree. Well, I have learnt in my short time both in politics and in Māori life that once you bring the Treaty into areas where hitherto it has not really been—and it really has not been a half-caste Treaty. This Treaty has been for the partners of the Treaty, but at the moment it is almost like a half-caste Treaty, and that is why that reference will not actually deliver what the Māori Party is on about.

But that is actually an irrelevancy, because what the Māori Party has been told is that it should have openly repudiated and opposed this sales process. Quietly it has encouraged those of our iwi—and, unfortunately, the iwi leaders are sovereign masters or mistresses over their own money, and they will spend it how they like. The Māori Party has been saying to them “We can’t stop the bill, and there’s an opportunity for you to buy.” A person who is not in this House but possibly will be reported to by members in the gallery is Dennis Barnes. Recently this individual, the chief executive officer of Contact Energy, stated, really, what is going to happen. What is going to happen at the moment is that within the energy sector you cannot get a decent level of return. The Crown can get a decent level of return, but private investors, unless they buy the energy assets at a very cheap rate—and there is no point selling them unless you are going to maximise your sale price, and that is why you have had to defang the Treaty and leave it there as a tekoteko. Mr Dennis Barnes has said, in respect of the only way you are going to get a decent return, that he would not go with a $300 million proposal to his eight-person board—this is what he said to the Contact Energy board, and he said it to the energy meeting—because you cannot get a decent return.

The only way you can get a decent return is by generating profits. The only way you are going to be able to generate profits, in the face of this slack economy, which in many respects is a consequence of poor Government policy, is to ratchet up prices. The only way you can get a reasonable and improved return is to ratchet up prices. So where are those prices going to come from? They are going to come from industry, at a time when we are concerned about the fact that it is only 33 percent—the stubborn statistic—of our GDP that remains in the tradable sector. That sector is going to face greater costs. Communities and companies are all going to face greater costs. One consequence of this particular policy is that power prices are going one way.

There is a great deal that has been said that this is absolutely necessary in order to meet the fiscal costs of the Government’s capital upgrade programme. I have taken the time, and I may be one of the few people outside of people who study Treasury documents who had a look at the infrastructure plan. What I can make of it is that the sum of at least $50 billion is being sought after. Despite what Mr Ryall and others may say, our current level of Crown debt is not of a Grecian variety. It was passed on by us in a very fit state to the current Government. It has grown, and I will accept some points the Government has been making: the Christchurch earthquake, and dealing with the turn-down in the economy. But let us not forget that there is ample scope for long-term capital assets to be funded from long-term bond issues and long-term borrowing, not sold for short-term consumption. At one level we are being told that the assets have to be sold, and that the funds are going to be put back into irrigation and schools; in another way we are being told it will improve and deepen the capital markets; and in another way we are being told that at the pith of this idea is ideology. That is what distinguishes us on this issue. The ideological conception that we have is different on this side from that on the other side.

I rise to support the Mixed Ownership Model Bill. Ownership matters, and if any members need convincing they should look at TV3’s report on the Port of Tauranga last evening, where the company’s productivity and progress was noted. The comments of David Hone, an employee of 18 years, were powerful. He said that he, like 90 percent of the workers at the Port of Tauranga, had shares in the company. He said: “Working in the place that you’re a part-owner of just makes you want to make sure that it works both for you and for everyone else around.”

Ownership matters, and people’s behaviour changes when they have a stake in their company. One of the many good results of this bill, it seems to me, is that the employees of Mighty River Power and the other energy companies will at last have the opportunity to buy shares directly in the company that they work for, and I am sure that will go a long way to improving the productivity of this country.

This is a very significant piece of legislation, and part of National’s plan to deliver stronger, enduring economic growth. The issue was front and centre at all the debates during the campaign last year. It was signalled and it was well explained that it was primarily a key part of the Government’s plan to carry on investing in this country—investing in modern schools, hospitals, priority public infrastructure—without exposing the economy to so much international debt. What happened? The people of New Zealand turned out and returned this National Government with the highest popular vote in many decades. Most people saw through the overblown rhetoric of “selling off our assets; flogging off our assets”, and understood that the Government will continue to own 51 percent of these assets, and it will prevent any other shareholder having more than 10 percent. So no amount of fear-mongering can overwhelm that reality.

Other speakers have touched on many of the good arguments in support of this legislation. I want to touch on three. The first is that this bill will reduce our requirements for extra international debt. There is so much that we want to invest in, in this country, and indeed this Government expects to spend more than $20 billion buying new assets over the next 4 years, but there is a limit to our resources. Mixed ownership will free up $5 billion to $7 billion to invest in the Future Investment Fund in priority areas such as schools and hospitals.

Meantime, each of these four companies that we are talking about will need substantial capital investments over the next few years, and in basic terms the Crown now will need to invest only 51 percent of that new capital, rather than the 100 percent that it does at the moment. Again, the private sector can now carry some of that burden, and reduce the need for the State to be borrowing as much. The alternative is a lot more debt, which we would have to borrow on fragile and volatile international markets, and anybody who has been watching the news recently will see the dangers of borrowing more money at a time like this. We may be able to raise that money today, but who knows what it is going to be like in the future?

The Government’s approach is the most prudent in these dangerous times. We have heard again—

💬 Chris Hipkins: Who wrote this?

I wrote it, thank you. We have heard again—

💬 Chris Hipkins: Stop reading it then.

I am not reading it. I am just referring to it.

💬 Hon Tony Ryall: It’s very well written.

Thank you very much. We have heard again other misplaced arguments about the dividend stream being higher than the borrowed costs. This line of reasoning misses the point entirely. It ignores the all-important element of risk. Most people do not follow that logic in their own lives. Most people do not borrow $100,000 on their mortgage in order to buy shares, because they know that there are more risks in shares. They do not do that, because they correctly factor in the amount of risk.

Another benefit from this bill is that it will deepen New Zealand’s capital markets, and broaden the pool of investment for New Zealand investors and New Zealand savers. This is not just the 1 percent. It is the hundreds of thousands of New Zealanders who invest in KiwiSaver and many other investments who have the opportunity now to have a stake in these companies, and that is a good thing.

Finally, the primary benefit, it seems to me, out of this mixed-ownership model is that it will bring the disciplines of the private sector into ownership of these companies. The market test generated by the stock market, and the signal provided by the share price as to what is happening to the value of the company and its return on capital, are likely to be more transparent and accurate than any system in place to monitor an entirely State-owned enterprise. I have no doubt that the disciplines imposed by the public trading floor will benefit these companies. In conclusion, mixed ownership is a smart and sensible policy that will strengthen the New Zealand economy, and I commend this bill to the House. Thank you.

I move, That the Mixed Ownership Model Bill be reported back to the House by 16 July 2012.

Motion agreed to.