Urgent Debates — State-owned Energy Companies, Sales—Delay of Mighty River Power Sale

I therefore call on the Hon Clayton Cosgrove to move that the House take note of a matter of urgent public importance.

I move, That the House take note of a matter of urgent public importance. As Gerry Brownlee sort of cackles across the aisle, the people’s assets are in jeopardy. We know that to be the case, and we also know that the people’s assets are in jeopardy because of a Government that is now based on John Key’s political vanity and John Key’s pride, because the whole of the asset sale process has been stuffed up and mismanaged from start to finish. So now what we are down to is not even, I suspect, ideology. We are not even down to ideology. We are down to that Government trying to protect and sustain John Key’s pride that, come hell or high water, he will sell the people’s assets, beginning with Mighty River Power.

The interesting point about this process is this. You would have thought that John Key, the “fifty million dollar man”, and I mean that with no disrespect, the financial whiz-kid, who probably has more experience in floating companies and initial public offerings than any member of this Parliament and many in New Zealand, would see this process for what it is and would—wrong though he is, because the people do not want their assets sold off—get this process right.

The ASSISTANT SPEAKER (H V Ross Robertson): Order! Would members leaving the Chamber please do so, so that the member addressing the House is able to do so.

A person of John Key’s financial experience, a person who purports to maintain the public’s confidence, a person who has massive commercial experience, one would have thought—

💬 Rt Hon Winston Peters: Even a junk bond dealer.

—even a junk bond dealer, as Mr Peters reminds me—that he would get this process right. We know, of course, that when the legislation was put in this Parliament he was warned about the significant issues, as was Mr English, as was the State-owned enterprises Minister, and as was the Government as a whole. They were warned that you could shoot peas through the ownership cap. They were warned not to rush this legislation. They were warned about the issues that face Māoridom in respect of property ownership and maintenance of rights. They were warned by Tūwharetoa, when they came to the Finance and Expenditure Committee and told that committee—and they were lawyered up—what they believed about the clause, as it was then, based on section 9. That clause was negotiated by the weekend warriors in the Māori Party, who went around the marae saying that they had done the deal with National, that this would all be all right, and that Māori interests and rights would be protected. Then National said: “Yes, we’ve done the deal. These interests are protected.” Tūwharetoa, of course, before the Finance and Expenditure Committee, warned the Government that that clause did not satisfy their legal advice.

The Government was warned about all this, of course, and it ignored it. It rammed the State-owned enterprises legislation through Parliament in such haste—I think, from memory, 2 or 3 months ahead of when it was due—that we now sit here with a Waitangi Tribunal recommendation to delay and halt, with pending and probable court action.

Of course, the Prime Minister’s position has changed every week. He was going to do it, hell or high water. He has a mandate. He did not give a damn that 80 percent in poll after poll after poll—80-plus percent of Kiwis—said they did not want their assets sold. No, the Prime Minister and the National Government would simply ram this through, come hell or high water. He did not care that the economic conditions, on the back of a global economic meltdown, meant that this was the worst market environment—the worst market environment—to be flogging off the family silver. How many initial public offerings have we had in New Zealand in recent times? Not many, I would wager, in the private sector. But, oh no, this Government knows more than anyone else!

We know that it is the worst time because, by its own admission, we can look at the Air New Zealand share price and look at what has now happened to Solid Energy. Even Mr English admits they are in no condition to sell. Look at Meridian Energy being bent over the barrel by Rio Tinto. Look at Genesis and Mighty River Power. Of course, Genesis will face the same sets of Treaty issues that Mighty River now faces.

All these signals were out there, and anybody with half a working brain would realise that, firstly, you do not sell the family silver, but if you are going to do it, you do not do it in the worst economic times we have seen in a generation. But, oh no, Bill English and John Key—John Key, the economic and financial whiz-kid—know better than all else.

We know that Brian Gaynor said that the delay and the mess-up in this process will cause gross market uncertainty. We have already had other commentators say that this whole process has been mismanaged from start to finish.

So where are we? Not only will the New Zealand people, if this goes ahead, lose their asset, lose their dividend stream, but if Mighty River Power is eventually put on the block, it will be sold off in a fire sale. There is no way that Bill English, Gerry Brownlee, or any of the financial geniuses over there can say that they are going to get $5 billion to $7 billion for these assets now. There is no way in hell that they can make that play.

The second point, of course, is the dishonesty of the last Budget. We now know that the Budget projections are in jeopardy. The other financial whiz-kid, the sort of tricky trickster Bill English, booked the proceeds from the sale of assets that have not been sold—now delayed, some halted, and maybe some or all, I hope, never sold. Those proceeds from the sale were booked in the Budget. Of course, he did not book—he did not book—the revenue loss and the dividend stream loss that would flow from that sale once it occurred.

💬 Phil Twyford: That’s right—dishonest.

That, as Mr Twyford said, is—it is not just dishonest. That is gross dishonesty. We know that this has been mismanaged. I say the one benefit of the tribunal action and the halt is that every day that the New Zealand people maintain these assets within public ownership is a good day for our communities, and is a day when they can still receive dividends, which will be put into hospitals and which will be put into schools, without the sale of those assets.

Of course, the other great lie and untruth of this Government is that first it said it was about debt, then that it was not about debt. It was not about debt; it was about buying other assets. Then, when you unpack that, of course, it was about selling revenue-generating assets and buying non - revenue-generating assets like schools and roads. Last time I checked, when you build a school, unless it is a charter school or a private school, which this mob pours dough into, your local primary or secondary or intermediate school does not make a profit or a return to the taxpayer, and nor should it.

So the economic equation and proposition that these geniuses put to the public—because it sounds good, does it not, as a spin line—was: “We are going to sell some assets and we are going to buy other assets.” To the sort of great unwashed that might sound like a good line, until you unpack it and realise that when selling revenue-generating assets and buying non - revenue-generating assets—I wager, colleagues, that even Gerry Brownlee with all his fingers and toes could work that out and calculate that—at some point the money runs out. It is gone. It is over, because you are buying a series of non - revenue-generating assets.

I say to—[Interruption] Well, Mr Brownlee sort of waxes on, of course. I say this. The people will now get an opportunity to express their will, and they will do that through the asset sale referendum, which I believe, with a high degree of certainty, will now occur. In that referendum I would wager—and I am happy to take a bet, maybe for a McDonald’s voucher or something like that, with Mr Brownlee—that it will be 80 percent, or maybe even more, of New Zealanders who will vote to retain their assets.

Then we are going to have an interesting series of debates in the 2-odd years leading up to the next election, because there will be a problem at that point with the Government arguing in respect of mandate—in respect of mandate. If there is a referendum, and there will be, and if the response is overwhelmingly in opposition to the Government’s position, and I believe it will be, then no mandate will exist for the Government to proceed. So that is the other leg of the stool that is going to be cut out from under it.

I thank those in other places who have ankle tapped this process. I thank them for this, because it gives the ordinary citizenry in our community the opportunity to get those signatures—to get those 310,000 signatures—to force this mob over here to have a referendum, and then the people will have their say.

In mismanaging the blunder over water this Government has opened the Pandora’s box in relation to property issues of State-owned assets because of its mismanagement. These issues will be examined in detail now as each and every one of those assets moves closer to the sale door. Because it has stuffed it up, I predict that in the next 2 years we are going to hear a lot about reallocating priorities. We are going to hear a lot about Budget projections that have somehow moved, and the Government is already prepping the ground, of course, because it keeps talking about: “Well, if it doesn’t go ahead, what’s going to happen? Oh, we’re going to have to get into more debt.” Well, I say to the Government that if it had not chosen to put in place a tax cut that gives those at the top the most and our communities at the bottom nothing, as a result of which we are borrowing 300 million bucks a week, then I suspect New Zealand might be in a different situation in respect of debt, regardless, I would argue, of the global financial meltdown.

So here are some questions for Mr English. What is going to be the position on Mighty River Power? We know the tribunal talked about “shares plus”. The Prime Minister, of course, immediately rubbished that, rubbished the hui, has corralled all his members, and will not allow his members to go, because they just do not want to know. It is hear no evil, see no evil, and pull the blankets up at midnight and hope the goblins go away—hope the nightmare is over. And when the blankets come down, the sun will come up and all will be well. Well, sorry, the best thing this Government could do is get off its backside, go to the hui, listen to the communities, and maybe come back with some proposals, because it is all over the place. First it rubbished “shares plus”, then it said it was going to go out and consult on “shares plus”. No one really knows what “shares plus” means, but first it was against it, then it rubbished it, then it said it was going to go out and consult on it, and then it said it would not participate in a national hui, which I would have thought was a pretty efficient way to deal with a large body of our citizenry—a large body of our citizenry—called the Māori people. But, oh no, it will not go. I say to its Māori members over there—

💬 Shane Ardern: Is Labour going?

Labour will be represented, do not worry about that, Shane. Labour will be represented. I say that what the Māori members in the National Party should do is say to their chief: “We’re off. We’re going. We are not going to be stood down. We are going to engage in the democratic process, and we’re going to go, zip-lock our mouths, and listen to the people at that hui.”, and not be sort of trodden on by the tribal chiefs in the National Party.

I do say in passing that it is extremely interesting that the Māori Party, which purports to represent all things Māori, all people Māori, all culture Māori, ain’t going to be within cooee of that hui—no disrespect. It is not even going to be anywhere near it. I say this. The challenge for the Māori Party is the same as it is for the National Party. The Māori Party pretends it is not in Government. Those members are Ministers of the Crown. They have the warrant, they have the quarter of a million bucks’ salary, they have the LTDs. They crow and crow that they represent Māori, except they sold Māori out over section 9 in the State-owned enterprises legislation. They said they had sorted it out in terms of property rights issues. They represent Māori. They represent them so well that they boycott the national hui that the Waitangi Tribunal recommended that they go to. The question is why. Did they fall into line with the National Government, sort of led by the nose? I would say that is a fair chance. Well, they should show some guts. They should show some guts, and they should actually attend that hui and listen to their people.

So I say to Mr English, could he use the debate today to explain to us how he is going to unbundle such a mess that has occurred? He and his Government have had, what, nearly 4 years to put this policy in place. At every turn, from the passage of the legislation, to the submissions being truncated, to the water rights issue—having been warned of that—to no guarantee in the legislation that mum and dad Kiwis will be in the queue, to a loyalty scheme that they said they did not need, because Kiwis were going to keep these shares ad infinitum into the future. Then the Government came out with an expensive loyalty scheme where those who cannot afford to buy the $1,000 to $2,000 blocks of shares will pay for all the people who can, but it did not need it, of course, because people believe in this so much! What a fiasco! What a stuff-up! I just ask Mr English, aided and abetted by his colleagues, whether he might want to spend the next 15 minutes explaining how he is going to unbundle this, why we are preserving the Prime Minister’s pride, and whether he will actually pull the pin, listen to the people, and keep the people’s assets in Crown ownership.

One has to take what the Labour Party says about asset sales with a bucketful of salt, because if it is those members’ desire that all these shares stay in the ownership of the Government, then they have had every opportunity to stand up in this House and promise to buy them back after sale. Of course, they have not. Neither the spokesman on State-owned enterprises, nor the ubiquitous Mr Cunliffe, nor the leader—none of them—have promised to buy the shares back when they have the capacity, if they are the Government, to go to the market and buy them any day of the week.

The member talked about the Māori Party. I can tell that member that the Māori Party does a much better job of representing Māori interests than the Labour Party ever did—than the Labour Party ever did—because the Labour Party patronises Māori and tells them that they need the Labour Party to look after them, when the Māori Party tells them that they can go and buy shares in this asset sale if that is what they want to do. The Māori Party believes that Māori can stand on their own two feet and make their own decisions. Labour has never believed that, and never will.

In respect of the decision the Government made around the delay in the float of Mighty River Power, I will explain the context in which that decision has been made. The Government has been aware of Māori rights and interests in water since the day it came into office, because these matters have been debated in the Waitangi Tribunal, they have been part of a number of significant Treaty claims, and from early on in the life of this Government we began discussion and consultation with individual iwi and with representative groups of Māori on their rights and interests in water.

When the Government announced the policy of partial sales back in January 2011 we were clear then about our obligations as Treaty partners to consult on that policy, and that is what we have done. That consultation has been carried out in the context of a broader progressive and functional relationship with iwi across the board, and water issues themselves have been dealt with in three different fora—four different fora, really. One has been through individual claims, and I just want to return to the member’s discussion about whether the Government would attend a national hui. I can assure that member that if there is one thing iwi are very clear about in this process, it is that their rights and interests in water are theirs. They do not belong to, nor can be represented by, the Māori Council. The Māori Council has no rights and interests in water, nor can any collective of the Māori Council and/or iwi negotiate with the Government about rights and interests, because they do not have any. The rights and interests belong to the relevant iwi and hapū, and we negotiate with them about their rights and interests.

In the context of Treaty claims, that is absolutely clear. The Minister for Treaty of Waitangi Negotiations has been able to come to agreement with the Wanganui iwi after 150 years of their seeking to have an injustice righted, and I must compliment not just the Minister but, particularly, the iwi leadership there, who have grappled with their history in a way that can only be described as courageous to come to a conclusion over such longstanding grievance. That is just one water claim—a claim involving rights and interests in water—that the Crown has been dealing with. Others are at different stages of negotiation. Tūwharetoa has been referred to. It is a different sort of claim from Wanganui’s. It is a complex claim that leads to some reasonably tense discussion but is able to be advanced in the context of a relationship of respect. So Treaty claims have been one way in which these rights and interests have been dealt with.

The second has been the Land and Water Forum. Explicit agreement was made 3 years ago with the Iwi Leaders Group that it would participate in the Land and Water Forum, which is a broad-based representation of all sorts of groups that have an interest in how the water resource is used. At the same time there was agreement that we would continue discussion with the Iwi Leaders Group itself to see whether we could find common ground around water rights and interests, as we have succeeded in finding common ground on a whole range of other complex issues, whether it is the seabed and foreshore, the emissions trading scheme, Whānau Ora, or the desire for greater social progress among Māori. So that is a third forum in which discussion has occurred: the Treaty settlement process, the Iwi Leaders Group, and the Land and Water Forum, in which iwi are represented.

Then, of course, there has been the consultation formally since January this year around the partial sales, and in the context of that consultation the Māori Council has taken a claim to the Waitangi Tribunal. The Government has been aware of the fact that at any time any claimant—in fact, they do not even have to be a claimant—can go to the Waitangi Tribunal or can go to the High Court to test whether the Crown has met its Treaty obligations. The Māori Council has been to the tribunal and has indicated it will go to the High Court.

If I can deal with the claim in the tribunal, first, I acknowledge the tribunal’s efforts to accommodate the pace of Government policy and Government direction on this issue. The second report of the tribunal makes a number of broad findings that are consistent with the Government view—that is, that Māori do have rights and interests in water. The tribunal agrees with the Crown argument that the sale of the shares does not compromise those rights and interests or the Government’s ability to settle claims over those rights and interests. The tribunal actually agrees with the Government on that point.

What that second report did do, though, was propose a very narrowly specified option, which the tribunal believes is a set of circumstances—I might say a hypothetical set of circumstances—in which the Crown may compromise its ability to settle a claim if a claimant made that particular claim. So it is a hypothetical solution to a claim that has not been made, and it is called “shares plus”. In fact, the concepts behind that have been consulted on—the concept being that changes could be made to the constitutions of these companies, which would give Māori interests some kind of particular or unique influence over the direction of the company. That was discussed in the consultation around section 9 back in January, it has been discussed in other forums among officials, and on both occasions rejected by the Crown.

Nevertheless, as we look ahead to the float and the prospect of legal action, the Government has taken the view that we should dot the i’s and cross the cross the t’s to ensure that the asset sale programme can continue, having fully and clearly satisfied our obligations as the Treaty partner.

The delay allows us to achieve a number of things. One is further consultation on the detail of the proposition that the Watiangi Tribunal put forward. The courts in the past have made it clear that the Waitangi Tribunal recommendations are not binding but they should be considered, and this is a distinct proposition, so the Crown is going to consider it along with iwi. So we will be setting out over the next few weeks, having issued documents that set out the detail of “shares plus”, on a series of hui to consult on that issue.

It will also allow time for the legal action, which appears to be almost inevitable, and that is time, in a more considered way, for the Crown and whoever takes legal action against the Crown to have those matters considered by the court. So the Crown’s consultation as a result of this, which flows from this decision to delay the float, is very narrowly focused on that proposition that has been put up by the Waitangi Tribunal. It is almost more important than the rest of the tribunal’s findings, because it essentially accepted that the Crown was recognising rights and interests—we have done that—and has consulted extensively with Māori over the way it is able to proceed with the sales without compromising the ability to settle claims.

The member made some reference to going to the national hui, and I have already made the point that no national body holds a right or interest in water. There are another couple of reasons why we are not trying to make a national settlement prior to a sale. One is because of the uncertainty over what the rights and interests might be at some national level. It is actually the Crown’s view that there are not any. Some Māori hold a different view. It is very hard to make a national settlement, which some have been seeking, when it is uncertain what those rights are. A second reason is that it is not clear at all that there is a coherent view among Māori interests about what that framework should be.

Can I finish by acknowledging and complimenting all the Māori interests—or almost all of them—that we have dealt with on the considered and progressive way in which they have dealt with this issue. Some do not support the asset sales. I must say that as time has gone on more and more of them want to participate in buying those shares, because they see that as a way of expressing their interests in particular assets. But we have found, with some exceptions—very few exceptions, which get more media attention than they deserve—that the rest of them have been positive, progressive, and very testing of the Government’s position, but not unreasonable, in the same way that the Crown is not unreasonable.

This particular issue is just one more in a collection of reasonably complex issues that the Crown and iwi have successfully dealt with over the last 2 or 3 years. This one is on track. We are crossing our i’s and dotting our t’s to make sure that the asset sales can continue, because they are important for New Zealand to keep our debt levels down, to have those companies better managed, and to have more New Zealanders participate in share ownership and have a stake in the economy of our country. Those are all things that Labour is against. It wants more debt, less ownership, and badly run companies. Actually, that is what it wants. However, this is on track, and we have every reason to believe that the sales process will continue in the first quarter, as the Government has scheduled.

I rise to speak on this urgent debate about the Government being forced to delay the sale of Mighty River Power, and about the whole Government asset sale programme. We just had a speech from the Minister of Finance, where right towards the end of the speech he got towards some of the rationale for why the Government is pursuing this. But I think what has been marked in this whole debate is that the Government has failed to make a coherent argument as to why it is going down this path. I want to go over some of the arguments it has put forward. It has kind of randomly put forward a series of arguments over time to try to explain why it is doing what it is doing.

The first argument was the fiscal argument. The Government said that it has given away these tax cuts to upper income earners, it has created a Budget deficit, and somehow it has to try to fill the deficit, and that is why it wants to sell these assets. Well, the problem with this argument is that, aside from the sheer immorality of giving large tax cuts to wealthy New Zealanders and making poor and middle New Zealand pay for it—aside from the immorality of that—in fact, the Government’s asset sale programme makes the Government’s deficit worse. According to Treasury, in the Budget Policy Statements of 2011 and 2012, the asset sale programme, if it goes ahead, would make the Government’s deficit worse by about $100 million a year. The reason for that is very simple: the assets make good returns, and the cost of interest for the Government is actually much less than the returns on the assets. So if you are taking just a purely fiscal approach, you would actually hang on to the assets, because they make very good returns to the Government, and the Government would be in a much better fiscal position to hold on to the assets.

The second argument the Government put forward was that these companies need access to capital, and that is why they need to be privatised. Of course, these companies already have access to capital, in the form of borrowing, so the only new way they would have access to capital is being able to issue more equity or more shares. The only problem with that argument is that if the Government sells down 49 percent, and if the Government is to maintain its 51 percent ownership of these companies, then of all of the new shares issued by these companies, the Government would have to buy half in order to maintain its position. It is very unlikely that this Government, or perhaps future Governments, would be willing to purchase half of all the new shares offered by these companies, and hence the “access to capital” argument is not a very good argument, because it does not really help these companies get access to capital.

The third argument the Government has put forward is the argument around debt. This is a very strange argument, and it is very strange because the Government can currently borrow at 3.5 percent. That is what it is currently borrowing at, whereas these assets return somewhere between 8 and 18 percent, depending on which numbers you look at, on the capital. In fact, what the Government is doing is selling assets that make very high rates of return, in order to avoid debt that is very cheap. From a purely economic or fiscal point of view, it is completely irrational to sell these assets in order to avoid debt that will cost you 3.5 percent, when these assets are earning you 8 to 18 percent. That is the third argument, which does not make any sense and is kind of irrational.

The fourth argument is the market argument. The Government says it has to do this privatisation in order somehow to facilitate the electricity market in New Zealand. The problem with that argument is that the electricity market is an oligopoly—there is a small number of players. That will remain so whether it is privatised or not privatised. So that fundamentally does not change anything. In terms of making the market more efficient, the Government has taken one step in this regard, which is to move generating assets around. It moved generating assets from Meridian Energy to Genesis in order to try to make sure there is more competition in the market. That was possible only because the companies were State-owned enterprises. If the Government were to privatise the companies and they were no longer State-owned enterprises, the Government would not have the ability to shift generating assets around in the way it just has, purely, it says, in order to improve the functions of the electricity market. The one tool that it currently has because these companies are State-owned enterprises, it would no longer have. So the fourth argument, around market efficiency, does not make any sense.

The fifth argument the Government put forward is related to that; it is around prices. It argued that private companies have lower electricity prices than the publicly owned companies. In fact, the truth is the opposite. Electricity from the privately owned companies is about 12 percent more expensive than it is from the publicly owned ones. At first, the Government denied this research when the Green Party and Grey Power released it, but then the Government itself was forced to acknowledge that Treasury had actually presented a paper to the Government that demonstrated that the claims made by Grey Power and the Greens—that the public companies were, in fact, 12 percent cheaper than the private companies—were true. So the fifth argument, around prices, does not hold water either. In that case, as well, the public companies have cheaper electricity than the private ones. That is the fifth argument that we have seen the Government manage to put forward.

The sixth argument the Government put forward was around capital markets. It said that it would deepen and improve New Zealand’s capital markets. The problem for this argument is that, in fact, a lot of the shares will be sold overseas, and increasingly so in future. In fact, the Government, it seems—in one of the proposals on the table—wants to actually list these companies on the Australian Stock Exchange in order to attract Australian investors into the companies. What we have seen with the Contact Energy float is that more and more of the ownership goes into overseas ownership. Moreover, from the point of view of most investors—small-scale retail investors in New Zealand—what they are looking for is a safe company to invest in. They want safe returns because they have been burnt by the finance companies. So they are looking for a safe return, something they can invest in. In fact, issuing bonds, as these companies currently can, is actually a much safer instrument for most small-scale retail investors in New Zealand. When they are looking for somewhere to invest their money, they would much prefer to buy a bond issued by a State-owned enterprise than to buy shares in companies on the share market. So in terms of New Zealand’s capital markets, and in terms of looking at it from the perspective of small-scale retail investors in New Zealand, it does not make any sense to do what the Government is doing.

The seventh argument the Government has mounted is around the question of mandate. It has said: “Well, if there’s no kind of rational reason why you’d want to privatise these assets, if you can’t make an economic case for it, we have a mandate. We won the election, and therefore we can do it.” In fact, when you look at the votes cast at the last election, the majority of votes cast were cast for parties that opposed privatisation. Even if you include United Future, ACT, and National together in the camp that supported privatisation, they got a minority of the votes at the election. A majority of votes at the election were cast for the parties that opposed privatisation—not just the parties represented in this Parliament but also parties outside of this Parliament, which did not get seats in this Parliament, because they did not make the threshold. So that is the mandate argument, which is the seventh argument that the Government has put up. It says it has got a mandate. In fact, it does not have a mandate. When you look at the actual votes cast, most New Zealanders voted for parties that opposed the privatisation plan. Moreover, of course, when you look at the opinion polls, probably about seven out of 10 New Zealanders are opposed to the Government’s privatisation plan. So there is no support from most New Zealanders.

Then perhaps the eighth argument, which we heard a bit about from Bill English just before, is that it enables more New Zealanders, somehow, to participate in all of this. That is the kind of vague language that he was using. One can only assume that he means more New Zealanders can buy these shares than currently own them. Of course, 100 percent of New Zealanders currently own these companies. If we look at who will be able to afford to buy shares in these companies, a very small minority of people will be able to afford to buy shares in these companies. Most New Zealanders will, in fact, lose their ownership of these companies through the privatisation process, because all New Zealanders currently own these companies, and what the Government wants to do is hand them over to a very small number.

So it does not matter which way you look at it. If you look at the fiscal position, it does not make any sense to sell them. If you look at the “access to capital” argument, it does not make any sense to privatise them to allow them to access capital. If you look at the debt position, of course, the Government is borrowing much cheaper than the rate of return on the companies, so it does not make any sense to sell them to avoid debt. If you look at the market argument, it will not, in fact, help the efficiency of the electricity market. If you look at the prices argument, the private electricity companies are, in fact, more expensive. If you look at the New Zealand capital argument, this will add nothing to the ability of New Zealanders to actually invest in this sector. If you look at the mandate argument, a majority of people voted for parties against it. If you look at this vague idea of New Zealanders wanting to participate, most New Zealanders will not, in fact, be able to participate, because they will not be able to afford it.

Every one of the so-called arguments that the Government has put up has been shot down. It has no arguments left, and all it has left is ideology. It simply believes in privatisation. When you look at the arguments, they do not hold water. So what is left? Well, we hear it from the ACT Party, which understands what is really behind this whole thing. It is an ideology of privatisation, even if none of the arguments hold or none of the arguments stand up to close scrutiny. In fact, there was always an alternative for these companies. They should be part of New Zealand’s green energy future. These companies should be exporting green technology and renewable energy technology to the world. Some of them are already starting to do it. They have the critical mass in terms of skills, experience, and capital, in fact, to do that. That is the alternative future for these companies. Rather than privatise them, keep them in New Zealand, headquartered here with research and development here. That is a much more prosperous future for our country.

The National Party has again been found out. It has been found out to be inept, incompetent, incapable, and politically impoverished. This is a very, very difficult time for the National Party, which got itself back into power promising, of all things, a brighter future. What it forgot to mention, of course, was that the brighter future was for its mates, whether they be domestic or foreign. But for the rest of us, this debate today is about National members being found out to be the very thing that they claimed not to be—that is, incompetent. To be not what they claimed to be—that is, they claimed to be great managers of business and of assets. Why they would make that claim given their track record, I would not know, but that is what they said they were going to do, and it is the reason why so many who should be part of this debate today have decided that they would be—ah, I cannot say this, can I? They decided to be where they could ignore the subject of the debate. I can say that. They decided to make sure that they could ignore the subject of this debate in the House today.

The sale of State assets has been a fiasco from beginning to end. On every dimension possible, the process has been totally flawed, and each time, surely, around this country there are more and more voices saying: “But why would they do that?”. When all the fiscals, all the economics, and all the timing—everything—suggested “Don’t do this.”, those members kept on saying they were going to do it, which begs the question: who is pulling the strings behind the National Party? Forget the backbench over there. We all know that the backbench over there is cannon fodder, and it demonstrates that every day.

💬 Paul Goldsmith: Top-quality cannon fodder.

But who is pulling the strings and calling the policy behind the National Party? These assets are valuable and making good returns to all New Zealanders. Forget the man from Epsom, who was so proud of his campaign that he was seen pulling down his hoardings. It is the first time in the history of Western democracy that a candidate has been seen not putting his hoardings up, but pulling them down, weeks before the vote. So let us not hear any more from the man from Epsom, because he categorises just what is wrong with a once-proud party, which is that so many men and women whose mothers—who, I think, probably still love them—taught them to have character and decency and integrity have been so beguiled by the chance of one day maybe being a Minister are behaving in this obsequious, toady way.

💬 Paul Goldsmith: Ah!

The man from Epsom knows that—he said “Ah!”. He recognised that instantly. Already groups of New Zealanders are being set against each other on the basis of racial entitlement. They are being set against each other. Around this country, the National Party is setting New Zealander against New Zealander, all over New Zealand. You have got Māori versus Māori on this issue, because—make no bones about it—the next lot of claims will be: “Well, if we own the water, then which of us owns the water?”. There comes the next volume of claims before the Māori Land Court, all the way on to higher courts. Then you have got Māori versus the rest of New Zealand. Most of the rest of New Zealand is utterly confused as to what is going on here, because those members’ great Prime Minister, the man who has a bit of trouble with his diction and the Americans cannot understand him, said that the water was owned by nobody—that no one owned the water. In the very next breath, of course, he purported to sell it.

Then you have got the wealthy versus the rest of New Zealand, and you have got the foreigner who will get it, according to Treasury, within 10 years against the rest of New Zealand, as well. Do you remember the foreshore and seabed, which, happily, was resolved by the Government of 2004—

💬 Hon Christopher Finlayson: No, it wasn’t.

—which did not have one Māori tribe on the coast, Mr Finlayson. Not one coastal tribe from 2005 to 2008 would go public and oppose that legislation. With the greatest of respect, Mr Finlayson, you know nothing about the coastal tribes. You are flashing along as the great new white hope of the radical Māori, but it does not entitle you to understand the subject, and, as someone whose family has lived on the coast for a thousand years, I might know a little bit more about it than you. That is for certain.

💬 Hon David Cunliffe: The China Sea!

Pardon? Unbelievable! There he was, of course, acting for Māori before he got the job, and then all of a sudden he is the new Māori friend. Look, I have seen a procession of men like you, Mr Finlayson. One was Doug Graham. He used to weep here and cry every night upon all these settlements. The very man who came from a party that promised to have a meaning to the word “national” that meant all of us.

And who was it that campaigned on “Kiwi not iwi”? Which party did that? Which party predicated its whole recovery on the basis of “Kiwi not iwi”? And what was the issue that it campaigned on? It said the foreshore and seabed was divisive in terms of the legislation. Mr Finlayson surely remembers that, given his claims to high jurisprudential memory. Surely, he can remember? It was just a few years ago. Just a few years ago—he can remember that. [Interruption] Oh yes, it was—“Kiwi not iwi”, all around the country. Did you hear a man from the Wellington legal fraternity, Mr Finlayson, saying that this was wrong and we cannot possibly say that because the coastal tribes are against it? Uh-uh, not a word then—not a mutter, not a murmur, not a syllable, not a sound. Yet hardly was the election over in 2008, round to the back room went the National Party and it did a secret deal with the Māori Party, and now they have got a new foreshore and seabed set of legislative rules, and already 27 claims.

💬 Hon Christopher Finlayson: Great!

Already 27 claims, and Mr Finlayson for the National Party said “Great!”. What happened to national unity? What happened to New Zealand against the world? What happened to racial fairness? What happened to us striving to be what we are, regardless of our background, regardless of our race? Well, under the National Party, that is just a plethora of promises, because today division and separatism is what its policies stand for, and at the next election—

💬 Hon Christopher Finlayson: Oh, rubbish!

No, no, he can shake his head, because, you see, it is one thing to go and skulk around the coffee bars of Wellington; it is something else to get out there amongst the real people. The mass majority of—

💬 Hon David Cunliffe: The member’s never done that!

Yes, that is all he has done. But out there, the mass majority of Māori and the overwhelming majority of the rest of the population are going to find out just how bad that legislation is. Of course, this is Mr Finlayson on this issue of separatism, who thinks that a new constitution by a specially hand-picked group of people with the Treaty of Waitangi as its cornerstone is a good thing for our country, even though the greatest Māori there ever was in this Parliament, Sir Apirana Ngata, warned against such a thing. Mr Finlayson, of course, knows better, because somehow—I do not know how he got it—he acquired a greater knowledge of both the Māori and the European, and everybody else, in the law, and he thinks that a divisive constitution based on separatist interests is sound. If that is not bad enough—

💬 Michael Woodhouse: What’s this got to do with MOM?

It has a lot to do with this, because it stands on all fours. Then there is Whānau Ora—social development delivered differently—and now we have water. What used to be something that we thought was a gift from God, or, if we were atheists, a gift from nature, is now a gift from whom? Mr Finlayson and the junk bond dealer, the guy who does a deal within an hour and moves on if he can—“Mr Spray and Walk Away”. It is a deal between him and Mr Finlayson, but it is no longer what belongs to everybody in this country, no matter how long they have been here or how recently they have arrived.

So one of the great characteristics of being a New Zealander is what the National Party is prepared to trade away. Instead of prioritising the things that matter to Māori, like housing, education, a decent health system, First World wages, and employment in their own country—no, no—off it went and did a deal with all the radical Māori fellow travellers. It is in bed with them—and if it thinks that the majority of New Zealanders out there are going to swallow that, no, they will not. Our job is to go out and ensure that they are not wilfully and blindly ignored by the National Party in the ensuing months.

It has been a total fiasco, and a Cabinet paper warned National about that, but I want to know this. Why was the National Party so stupid as to take this issue, after the foreshore and seabed, from where it was when we all owned it, regardless of our background? And now we are going to have people owning it on the basis of race. How can that possibly be where our country wants to go in the 21st century? So if you are out there and you were once a National Party supporter, my advice to you now is—I know you are desperately worrying about what your party is doing—do not give up. Do not stop being involved in democracy. Hang on, because help is on its way, and vote New Zealand First in 2014.

The next four calls are 5-minute calls.

I will need only a 5-minute call to deal with that rant. I think Mr Peters has been waiting for years to turn up and give that speech on the foreshore and seabed. After he got tossed out in 2008, he simmered at home as we fixed up the foreshore and seabed legislation after the Labour - New Zealand First stuff-up. We are quite happy to stand and say it was entirely right to give Māori the right of access to justice, something that he and “Auntie Helen” took away from them. But at least that was an entertaining speech, which is more than I can say for the predictable contribution from “Comrade Norman”, who simply recited all the same old arguments against asset sales. Look, this debate raises two important questions. The first one is do Māori have rights and interests in water, and, if so, what are they; and, secondly, does the partial sale of shares in Mighty River Power impact on the Crown’s ability to recognise those interests? So the general philosophical ranting about not liking asset sales is really a thing of the past. That issue was taken to the people in 2011, and the Green Party, the Labour Party, and New Zealand First lost. Tough luck!

So we move on to the second question that I have raised this afternoon. The first is of course Māori have rights and interests in water, and we have been recognising those over the last 4 years, be the river the Waipā, the Waikato, the Kaituna, or the Rangitaiki. We have tried to address legitimate issues in relation to Taniwha Springs. These are the sorts of issues that this Government will continue to address, including Ngāti Wai, and I know that Ngāti Wai are very keen to have their Treaty settlement and I am looking forward to dealing with the right honourable member’s brother Wayne Peters, as we negotiate a good settlement for Ngāti Wai. At some stage there will be a very interesting debate about the effect of legislation since, for example, section 21 of the Water and Soil Conservation Act 1967, which says that the sole right to dam any river or stream or divert or take natural water, or use natural water, is vested in the Crown, and there will be a very interesting debate about the effect of section 354 of the Resource Management Act, which carries over those provisions and says that nothing in the Resource Management Act affects any right, interest, or title to water acquired, accrued, or established by, or vested in, the Crown. We will have those debates, but this Government is keen to do the right thing and to look at legitimate rights and interests in water.

The second question, which is particularly relevant for this afternoon’s debate—although it may have escaped the attention of the previous two speakers—is whether the sale of a minority shareholding in Mighty River Power impacts on the Crown’s ability to address the legitimate rights and interests of Māori in water, and we say no. There was a hearing before the Waitangi Tribunal, and the Waitangi Tribunal agreed with us in every respect, but it introduced the issue of “shares plus” into the equation, and this Government believes that it is right and proper to go and have a consultation with affected iwi to determine whether or not what the tribunal has raised could possibly have any merit. It was an argument on “shares plus” that was raised at the eleventh hour by counsel for the Māori Council in the course of the hearing. The tribunal has picked up on it, and so we are going out to have a consultation. Over the next 10 or so days I will be meeting with people like Ngāti Raukawa, Tainui, Ngāti Korokī Kahukura and so on, and we will have that discussion, because we are a Government that believes that consultation on those issues is right and proper, and then in good faith we will make decisions about where we go to from there.

So this is not a general debate—although I imagine that we will have another new left contribution from the pretender to the throne, Mr Cunliffe, in a minute or 2—about the merits of asset sales. They are the issues that need to be addressed. It is a very narrow question that is before Parliament this afternoon—raised, amongst all that cloud and mist of nonsense, by Mr Cosgrove—and it is about whether or not the potential sale of Mighty River Power impacts on the Crown’s ability to address legitimate rights and interests of iwi in water. We will be dealing with that issue in a calm and non-confrontational way—something of a surprise, I am sure, to Mr Peters—over the next few weeks before we make a decision on the issue.

I raise a point of order, Mr Speaker. I think the public want to hear more of this confused legal babble, so I move an extension of time for Mr Finlayson.

The member cannot move an extension of time.

Put aside the fact that the sale of State-owned enterprises is the wrong thing to do. Put aside the fact that, contrary to the claims of the last speaker, Mr Finlayson, polls made it clear at the last election that most New Zealanders did not want the assets sold. Put aside the fact that the Crown and the taxpayer will actually lose money and increase the national debt as a result of the sale, because the dividends that they earn and the returns that they earn are greater than the cost of capital from the Government financing. Put aside all those facts, and what have we learnt today? The Government cannot even do a bad thing well. It could not organise a booze-up in a brewery. It cannot even do a bad thing well.

We have learnt today from Mr English some very interesting statements. He said the Government has been aware of the Treaty issues around water rights for the whole 4 years it has been in office, and that it was clear about its obligations. Why, then, was there no effective Treaty clause in the original design of the sale, and, when the Government inserted one, why, then, did the taxpayer pick up 100 percent of the risk for only 50 percent of the return? And if the Government was clear about that over the last 4 years, why did nobody go to it and point out that it had Treaty issues, before it banked the money in the last two Budgets? Forget for a moment that it did not bank the loss of dividends, only the $6 billion - odd it thought it was going to get in cash. Why did someone not say to the Government: “Hang on. You haven’t sorted the Treaty rights issue.”? Mr English told us today that the Government is clear about those obligations. That is not what the Waitangi Tribunal has said. It is not what the Māori Council says, and it is not what iwi up and down the country say. It is not even what the Land and Water Forum says.

What an interesting statement from Mr English in this debate about “shares plus”. He said that the Government consulted on the Treaty and then rejected “shares plus”. Then the Waitangi Tribunal has come out recommending that the Government consult on it—so it still rejects it, but it is going to “consult”. In ordinary language that is a sham. That is not real consultation. Real, legal consultation is when one listens and is prepared to learn. It is not when one pretends to listen, to dot the i’s and cross the t’s, which is what Mr English admitted it was doing in the face of “almost inevitable” legal action. No attendance at the national hui: does that sound like genuine consultation? Is the Labour Opposition the only group in Parliament that believes that this is a complete nonsense and is inevitably going to fall foul of the law?

We can be grateful to Geoff Bertram of Victoria University, who has pointed out that if this sale goes ahead, the consequence of these water rights issues will be to drive down prices and completely undermine the valuation of Mighty River Power, amongst others. The book value bears no relationship to the market value. The only person in the world who thinks the price is going to go up as a result of this complete nonsense is Mr Joyce, who says: “Wonderful! We’ll be able to print another glossy brochure and inform New Zealanders how wonderful it is.” Well, that is not what Professor Bertram says is going on. He says that the assets are already overvalued, because of a particular valuation method. Let me quote him: “If wholesale prices were 10 per cent lower … the discount rate 0.5 per cent lower and operating costs 10 per cent higher … [it] would wipe $1.2 billion off Mighty River’s $5b book value.” That is $1.2 billion—let alone the Treaty rights issues.

This is a house of cards that is coming down around the Government’s ears. It is the one policy it sunk political capital into, because it was going to transform our economy. Well, that was a nonsense from the outset. National cannot even do a bad thing well. It could not organise a booze-up in a brewery, and now it is up the Waikato River without a paddle.

Tēnā koe, Mr Speaker. Kia ora tātou katoa e kōrero nei mō tēnei take nui, whakaharahara e pā ana ki tēnei kaupapa o te wai.

[Thank you, Mr Speaker, and greetings to us all addressing this matter of huge importance and significance, which relates to this topic about water.]

On 24 August the Waitangi Tribunal issued The Interim Report on the National Freshwater and Geothermal Resources Claim, noting: “the matters in this claim are of national importance and at the core of the Maori-Crown partnership sealed in 1840.” We believe that the Government’s announcement last Monday to delay the public offerings of up to 49 percent of Mighty River Power has actually been quite important and pretty crucial, in the sense of trying to move towards some sort of way of bringing the parties together. This gives us time to address Māori rights and interests in the water, which was the substantive issue, and which was confirmed and guaranteed through the Treaty of Waitangi.

But I wanted to come to the House to specifically address some of the rubbish that came out of the mouth of the first speaker in this debate, Clayton Cosgrove, who was speculating that the Māori Party would be boycotting the national hui on Thursday. For Mr Cosgrove I want to set the record straight. Firstly, where was he when all this discussion was going on? Secondly, the Māori Party has actually been playing an integral role in trying to keep the doors of discussion open, even as I speak—even as I speak. We played a unique role in creating the opportunity for debate around the mixed-ownership model. Contrary to Mr Cosgrove’s rantings, the Māori Party will be at the hui on Thursday, represented by our co-leader Dr Pita Sharples. This is something that Mr Cosgrove should know about, and failed to explain, because it has been well reported in the media over the last week.

Can I say that our view has always been that issues around water are definitely in the hands of iwi and hapū. There will come a time when we do need to have a national picture. A national framework has been discussed in the past, but that sort of discussion is something that needs to take place for iwi. They should have their own time and their own place to have their kōrero. The hui on Thursday is a natural follow-on from the hui called on 18 July, which was called by whom? It was called by the Māori Party and the Minister of Māori Affairs, with iwi leaders, the Māori Council, and claimants. We brought them together in, I suppose, a unique spirit of collaboration and of fighting for what is right. Naturally, the hui, as I say, in conjunction with iwi leaders and the Māori Council, is something that the Waitangi Tribunal in fact recommended should happen. That was a key priority for us—to try to get all the key players into the same room. It is just as important that all Māori interests have their space in the discussion, away from politicians. That is the hui that is going to take place at Ngāruawāhia towards the end of the week.

I want to point out that a statement came out from the 18 July hui, when we met with the Government and, indeed, the Prime Minister. The statement read something like this: “The Maori Party and the Government continue to support a process of negotiation between hapu and iwi and the Government on their rights and interests in water, and the Government has undertaken not to legislate over those rights and interests.” That is a crucial statement, because it set the scene for ensuring that we never ever have another foreshore and seabed debacle.

I want to be clear that the Māori Party has been against the sale of the assets from the get-go, and we continue to maintain that position. However, we want to make sure that iwi, the claimants, and hapū have an opportunity to have their day and discussion with the Crown. Why? Because they have their interests at heart, and they need to put their issues on the table. It is really disappointing that Mr Cosgrove chose to go down that line, simply because we should set aside that sort of politics and really talk about the substantive issues: water ownership for the benefit of future generations, issues of governance, issues of management, issues of allocation, and issues of proprietary interest, all guided by kaupapa of rangatiratanga and kaitiakitanga. Those are things that we talk about all of the time. This is an opportunity for us to engage in work streams, such as the development of the national framework out of the Waitangi Tribunal; the settlement with iwi leaders, the Māori Council, and other claimants; and a timetable for ongoing discussions. The recommendation of the Land and Water Forum for a national land and water commission means there is heaps and heaps to do.

So we believe that the Crown needs to demonstrate active commitment to exploring the nature of Māori proprietary rights and interests in water, and the announcement of a commitment to developing a national framework would certainly help prepare the groundwork for the second stage of that inquiry. There is a lot to do. We see a commitment to continue direct, localised negotiations as critical in maintaining good faith with hapū. The hui that is coming up at Ngāruawāhia is a good way to go. However, at the first instance, let us allow the people to have their say. Let us take a bit of time about it to get it right. Kia ora tātou.

I want to commend the last speaker in this debate, Te Ururoa Flavell, for being reasonable and grounded, and for coming here to offer something to the House that we have seen from only this side of the House so far. There was no rhetoric, there was no screaming and yelling, and there was no pontificating for members of the public. Mr Flavell is a member who takes this issue seriously and represents his constituency in this extremely well.

The issue is about the mixed-ownership model and what is right and fair. It is about keeping debt levels down, getting the Government’s books back to surplus in a reasonable time, being careful about spending Government funds and the money we are entrusted with by the taxpayer, focusing on growth and investment in New Zealand, boosting productivity, and investing in the New Zealand economy—all things that members of the Opposition hate hearing from this side of the House. But when I am out and about in the country and in my electorate, those are things that New Zealanders are focused on and that are important to them.

In this we have made an announcement. The Government and the Prime Minister have been extremely clear. The Government’s position on water rights has been consistent all the way through. In common law nobody owns water. Actually, I go on to say that in common law nobody owns the wind and nobody owns the sunshine either. But as far as this debate is concerned, nobody in New Zealand owns water. I accept that there will be many groups, including iwi, who have interests in water. These are currently being addressed and have been addressed through a number of processes, including through the Treaty settlement process. Our preferred model is developing control and management of water rights, reflecting the relevant interests that iwi have.

I want to be clear on this. This is not an issue between the Government versus Māori, Māori versus the Government, or Māori versus Māori. This is an issue that is important for New Zealand and has been going on for some time. I want to recognise that in Maoridom there are a number of views and voices on this issue, and it is important, as the last speaker said, that these are considered and given time. When we were in the Finance and Expenditure Committee and we dealt with this legislation, Tūwharetoa came before us. They did raise issues, as previous speakers from the Labour Party have said, around their concern over water. But subsequently they wrote to the committee before we adopted the legislation and sent it back to this House to say that there had been a process under way with Government, they were happy with the process, they were committed to continuing with that, and they believed it would offer them the redress that they sought.

For the record, this Government has an outstanding position when it comes to settling previous grievances under the Treaty. In fact, the Minister, Mr Finlayson, has put a great amount of effort into this. It has been achieved issue by issue, iwi by iwi, and settlement by settlement. This is very much an approach that has been under way for some time when it comes to water, and an approach that will continue when it comes to settlements around water—iwi by iwi, not ownership, but around interests.

I want to ask members of the House to cast their minds back a year or two ago to my electorate and the edge of the electorate of the hard-working MP for Taupō, Louise Upston, and Mr Flavell in the Waiariki electorate. We came together with a great, diverse range of people throughout New Zealand from local iwi, and a settlement was made—it was signed in agreement with the Crown—over the Waikato River; many would say the mighty Waikato River. This is the largest river in New Zealand, and from the edge of Lake Taupō, flowing down to at least Hamilton, issues around that river have been settled. There is agreement between local iwi and the Crown over management of this and the way forward. It was not about ownership; it was about the way forward.

I just wanted to say that in our approach to this as a Government, it has very much been about embarking on an important process with Māori to recognise some of their claims. We have implemented a Fresh Start for Fresh Water programme and established a Land and Water Forum, a collection of over 60 parties, including iwi, to work through this process. So we have a record of recognising grievances, looking where different groups in society have a claim, where they have an interest, and finding the very best way forward to deal with this on a group by group, iwi by iwi basis. That is very much what we have said we will continue to do through this process.

The final point I want to make is to ask what the Labour Party’s position is on the Māori Council’s claims. What does Labour really do to support it? We have Mr Shearer on record saying that he supports the Prime Minister’s position, all of a sudden. He said that nobody owns water. But what we heard, in conclusion, was Mr Finlayson say that there was a settlement with iwi over Taniwha Springs. Taniwha Springs was a settlement over water, something the Opposition is saying is impossible. We know Mr Shearer believes in that settlement. We heard on TV last night that he believes in taniwha, so he believes in the settlement of Taniwha Springs. But the Government is being responsible. We are taking the issues into account. We will continue on this process for the good of New Zealanders. Thank you.

I rise to take a call in this urgent debate, which has been granted by the Speaker on the basis of there being an important decision forced upon the Government, essentially, and that is to delay its asset sale programme. I want to reflect on some of the justifications that have been given by the Government in respect of its underlying programme for asset sales, and to try to show to the House and those who are listening how bereft of vision this Government is for the development of our economy in a way that works for working New Zealanders, for those who need to earn a living in our country, for those who in increasing numbers, sadly, at the moment, because of the lack of hope in our own country, are departing for greener pastures in Australia—or, at least, more profitable means of sustaining themselves in Australia.

The Government at the last election said that it had to proceed with the asset sales because of debt problems, yet it is now saying that even though it cannot proceed at the same pace with asset sales, that does not pose a problem in respect of its management of debt. I find those two propositions inconsistent. I think National was always wrong in saying that the sales were about Government debt, because, of course, the New Zealand Government books are some of the best in the developed world, with very low levels of Government debt, even after 4 years of deficits under this Government. The prior Labour Government, of course, is partly responsible for that, because we ran Budget surpluses for 9 years in a row, reducing Government debt from 48 percent of GDP—I see Tony Ryall laughs, but it is true. We reduced gross Government debt from 48 percent of GDP to 18 percent of GDP, and net Government debt to zero—or it was zero, until they changed the method of measurement and then revised it to slightly above zero. But, anyway, net Government debt was close to zero, and gross Government debt was down to 18 percent. So the country does not have a Government debt problem.

We do have a private debt problem. It is notable that the most central or most important part of the Government’s vision for this 3-year term does nothing to address the problems of New Zealand’s private debt. Indeed, there are a lot of other steps that the Government could take to improve the economic outcomes for New Zealand, but one of them is not asset sales.

By the time of the election we had Opposition parties saying that asset sales made the Government deficit worse, but the Government denied that at the time of the election. It is a matter of record now, and I think it is somewhat shameful record. We are meant to have transparency of accounting processes in New Zealand in advance of an election, where the Government is forced to opened its books so that the public can see what the true state of affairs is. On the opening of the books in the pre-election period on this occasion, Treasury allowed the Government to book the proceeds of asset sales without accounting for the loss of revenue that would accrue to the Government as a consequence of the sale of partial shares in some of these power companies and other State-owned assets.

💬 Andrew Little: Unbelievable.

As Andrew Little just said, it was unbelievable. It really was unbelievable that Treasury was willing to sign off as fair accounts that showed capital coming in from the sale of State-owned assets so as to reduce future debt and future interest costs, without showing the loss of revenue to the Crown that followed. It was absolutely abysmal practice, and something that both Treasury and the Minister of Finance, who signed off that pre-election fiscal update, as well, should be ashamed of, because it really is a dropping of standards of public accountability. They are meant to be better in New Zealand.

After the election, by the time of this first Budget in this 3-year term of the Government, the Government finally came clean through the Budget Economic and Fiscal Update, which was released on 24 May this year. In it, for the first time, the Government acknowledged that its finances, its deficit—its Government deficit; the operating balance before gains and losses—had gone backwards as a consequence of asset sales, not forwards, because, obviously, the price at which the private sector is willing to acquire assets, the rate of return that it expects that is implicit in the price it is willing to pay, the rate of return that it expects, is more than the Government’s cost of funds. Treasury explicitly says that in the Budget Economic and Fiscal Update. It says that the proceeds of sale from the sale of interests in these State-owned enterprises is not enough to cover the forgone profits, which are a combination of retained earnings and dividends. The forgone share of profits is more than the Government saves on interest. So it did not need to do it from a Government debt perspective. It persists because of no other reason than ideology.

The other reasons that Government members push in favour of asset sales are similarly flimsy. They say that the sales will increase people’s investment options in a way that will improve capital markets. Well, at one level that is true. It is true that there will be another investment that is available to people in the private sector, either privately or through their investment funds, like KiwiSaver funds and the like. But, really, is our private sector so inept that the only way that we can improve capital markets is to sell, through public capital markets, what the Government has created? Is that really the vision that this Government has for the development of the New Zealand economy—that the only way we can improve the New Zealand economy is to sell what the Government has already created? What a backward, uninspirational, unaspirational vision that is of private enterprise in New Zealand.

I am a believer, in general, in the efficiency of capitalism. I want most businesses to be run by the private sector, rather than by the Government. But I certainly think that with infrastructure assets, especially those that have monopoly characteristics—as we have in the electricity industry, where we do not have a perfectly competitive market—it is in the interest of New Zealanders that those assets remain in State ownership. If there are monopoly rents being extracted—and I think there are in a lot of these infrastructure industries—then it is better that that monopoly rent effectively gets recycled through the tax system for the benefit of everyone, rather than existing for the concentrated benefit of what are, essentially, the most wealthy people in society, who end up owning a disproportionately far greater share of those assets over time, in addition to overseas interests. The idea that we improve capital markets by allowing them to trade what the Government has already created is wrong, and it is especially wrong when it comes to industries where there are monopoly rents extracted.

If we think that this is not the case here, let us reflect on the fact that New Zealand’s electricity prices have increased at far greater than the rate of inflation for many, many years now, including under both the Labour Government and this National Government. Let us reflect also on the analysis that was done by Molly Melhuish of Grey Power. I heard the Greens claiming credit for that. Actually, it was Molly Melhuish of Grey Power who did that analysis, and it has been made public by Opposition parties other than the Greens. The Greens have been singing that same tune, as well. She showed that the average amount that is charged by State-owned enterprises to a domestic consumer is $265 per annum cheaper. That gap will narrow through privatisation of these shares. There is nothing clearer. If you increase the private sector disciplines, it will not relate to just cost minimisation; it will also flow on to price maximisation, and that gap will narrow.

If this Government was serious about economic growth, it would be doing things like introducing a capital gains tax, so that people invest on the basis of the profitability of the investment rather than a tax bias. It would be improving the depth of the capital markets, so that there is more money for businesses to expand and grow jobs, and through universal KiwiSaver. It would be doing things to help control the rapid increase in our exchange rate, rather than having the Reserve Bank focus only on inflation. It would be taking meaningful steps to improve the outcomes of our economy, rather than having as the central part of its vision a policy such as this, which is failing. Reflect on the fact that at the last election the most important part of the National Government’s vision for this 3-year term was asset sales, and they are now held up.

This is a snap debate about the Government’s announcement that we are deferring the float of Mighty River Power until March till June next year—market conditions. I thought the point that I would make in this debate is to address not only where the mixed-ownership model sits in terms of the Government’s wider economic plan but also the specific issues of why the Government took the decision that it did last Monday in respect of the need to consult further with Māori on a very small and specific issue raised by the Waitangi Tribunal.

The mixed-ownership model, the Government share float, should be seen within the Government’s wider plan to control debt and support the New Zealand economy. This Government has been taking action across a whole range of areas in order to support the economy. If there is one thing this Government is on about, it is securing and building our economy for the future. So we have been making changes across a whole range of areas: better public services to get better value for taxpayers, making sure taxes are more competitive for New Zealanders such that the vast majority of New Zealanders now pay only 17.5c in every dollar in taxation, changes we are making to the Resource Management Act in terms of business compliance, and changes we have made to ensure that interest rates are low and that the cost of living and inflation are kept low. These are all part of a wider plan to build and secure the New Zealand economy so that people have confidence to invest in the future. It is really that investment that will underpin the growth and the improved prosperity that New Zealanders want.

Fundamental to making sure we have low interest rates, have low inflation, and have an economy with low compliance and lower regulation is to make sure that we have our debt under control. What we know is that over the next 2 to 3 years debt is going to rise from about $54 billion now to $72 billion. Keeping it under 30 percent of GDP is important. That is the reason why the Government proposed the sale of a minority stake in these five State-owned enterprises, in order to free up cash, which can then be used to invest in important social infrastructure that helps our economy continue to grow. Those minority stakes are about 3 percent of New Zealand’s assets, so it is part of—it is not the be-all and end-all—a wider plan the Government has to control debt and to support the growth of the New Zealand economy.

The mixed-ownership model programme has been going through a stage by stage approach since the Government started this after the last election. We went through a reasonably comprehensive consultation with Māori in February, involving 10 hui up and down the country, attended by a number of Ministers, to talk to Māori about their rights and interests in water and in this process and make sure that we listened to those. We listened to those comments, such that the Government saw section 9 of the State-Owned Enterprises Act, in respect of the Treaty principles, being brought into the new legislation. That would apply to the mixed-ownership model, Crown shareholding, and the Crown’s responsibilities—not to the private shareholders but to the Crown’s responsibilities.

We know that the New Zealand Māori Council took a claim to the Waitangi Tribunal. An indicative interim report was provided. The Government thought that that did not provide sufficient clarity on the concerns that were being raised by the Waitangi Tribunal, such that another report came. That report made very interesting reading because it indicated that the positions that the Government had taken before the tribunal were pretty clear and pretty much accepted by the tribunal. But there was this one small area, “shares plus”, that was new, and the tribunal has put it out there. The Government’s very strong view—and we took legal advice on this—is that we decided that it was important that on that one issue of “shares plus” we needed to consult with Māori in order to explain to them the reasons that the Government was adopting the position that it was adopting.

Clearly, there are some significant concerns around “shares plus”. I do not think the vast majority of New Zealanders believe that any one particular class of shareholder should have veto rights, responsibilities, or powers different from the others, so that is, clearly, why the Government has a number of concerns around this area.

We have made it clear to Māori, in our correspondence, that there are five areas where we think “shares plus” is not a viable option. The first is that we do not think that it is in the national interest for any group within the shareholder base to have the specific rights that were detailed in the tribunal’s “shares plus” arrangement. Secondly, we actually think that all the forms of redress that the Waitangi Tribunal was proposing could, if a Government wanted, be addressed in other ways. Thirdly, the relationship of “shares plus” to decision making and strategic decisions would not work in practice. Fourthly, the company would be less attractive to investors because of this inequity of power amongst shareholders. And following careful consultation with Māori early this year, a very careful and deliberate decision was made to ensure that the Crown’s obligation under the Treaty rested with the Crown and not with the companies, as I said earlier on.

So having looked at all of that and taken the advice that we have, we have made this decision that it is in the interests and it is a prudent step to put the Mighty River Power float into the next window that was available, and to spend the next 4 to 5 weeks consulting in order to show Māori that we have addressed this issue that was raised by the Waitangi Tribunal, and that we think there are legitimate arguments for the position that we have made, and also to give an opportunity for Māori to raise any issues that they themselves want to raise in response to the Government’s position.

What we know is that there are about two windows each year when floats of this size could take place. One is in that March-April-May window, and there is another in the September-October-November window. Clearly, we have missed that September window, and that is the reason why we have now made it clear in the Prime Minister’s statement that we will be having the first float in the first window of next year. Then there will be another public float, and we will be asking the public to participate with the Government in that in the second half of 2013.

This makes sense for New Zealanders. There are opportunities for New Zealanders in taking a stake with the Government in these companies. We think it is an opportunity for New Zealanders to consider saving in a different way. There are opportunities for KiwiSaver and other Crown financial institutions to be involved, and indeed for Māori themselves to participate as shareholders. We think it also gives New Zealanders an opportunity to invest in a large local company. What we know is there are over $100 billion of savings on term deposit, and many of those New Zealanders may in fact see that there are opportunities elsewhere with this.

So the Government is pretty clear on the reason why we have taken this action. I think it is very prudent. It is very sensible. It is in the interests of taxpayers that we add as much certainty as possible in respect of the float. The Ministers are about to begin a series of consultations around the countryside. That material is available on the Treasury website in terms of our correspondence to the various iwi, and I think it is also an opportunity for New Zealanders to reflect upon the fact that the Government share floats are part of a wider plan that the Government has in order to control debt and invest in the New Zealand economy. Every night on our television screens we see what happens when Governments do not control their debt, and our country does not want to be in the position of some of these European and other countries. That is the reason why we want to continue to get ourselves in a position to control debt and invest in the future, and that is certainly how the mixed-ownership model should be seen, as part of that wider economic plan.

The debate having concluded, the motion lapsed.