Urgent Debates — Air New Zealand—Minister of Finance’s Letter of Expectation

Thank you, Mr Speaker. I move, That the House take note of a matter of urgent public importance.

That matter is a letter sent by Grant Robertson on behalf of the Government to Dame Therese Walsh, the chair of Air New Zealand. This letter has been described by Fran O’Sullivan, one of our most senior journalists and respected business journalists, in the New Zealand Herald as a “shocker.” And she does not use that term lightly, because that’s exactly what this letter is. It is a letter sent to the business, a commercial airline that has achieved enormous success and many international awards along with an exceptional reputation amongst New Zealanders. It’s been sent to that business and it set out a series of mutually competing and, in some cases, contradictory expectations that, in my view, put the directors of that company in an impossible position. The implications are not just for Air New Zealand, they are for all of New Zealand, because what this letter means is that good people who sign up to be directors on companies to aid New Zealand by offering their skills may find themselves put in positions where they simply cannot discharge their legal obligations with the political pressure that surrounds them.

I recognise the narrowness of this debate, but it is worth acknowledging some of the storied history that got us here. Not so long ago, in some people’s lives at least, we had a Prime Minister who was also the Minister of Finance and ruled and micro-managed with an iron fist. Rob Muldoon went over to the UK and agreed that the National Airways Corporation, or Air New Zealand, would use Rolls-Royce jet engines instead of General Electric, even though Air New Zealand was not set up to service Rolls-Royce engines. So the people trying to run the business went through the machinations of trying to actually figure out how to land and take off on time and serve their customers and run an effective airline while dealing with the most unconscionable political interference. The reasons that we have an State-owned enterprise (SOE) model, the reasons that Air New Zealand and many other SOEs are operating as private businesses with an objective to their shareholders, is actually to avoid that kind of micro-managing interference that makes it impossible for the directors and management of a company to deliver a useful service to their customers.

And this letter says, given the critical role Air New Zealand plays in the success of New Zealand, both socially and economically, the Government’s enduring expectations for Air New Zealand are to be a “national airline”, and it must continue to operate to support economic development, including access to international markets for our exporters and international tourism linkages once international borders reopen.

Now, if the directors are to take the letter—which has come from someone who’s the Deputy Prime Minister and the major shareholder—seriously, then they’ve got to do that. But they’ve also got to maintain comprehensive domestic route networks that allow people and goods to move across New Zealand in a timely fashion at a reasonable cost. Well, to what extent should the directors put weight on that particular matter? And then they have to demonstrate their commitment to environmental sustainability, despite being an airline whose primary business is blasting large vehicles through the air. And they have to also engage with the development of new aviation fuels for New Zealand. So, so far, they’ve got to be a network for exporting and connecting with the rest of the world, maintain a domestic network that’s comprehensive—whatever that means—at a reasonable cost, and deliver goods and people across New Zealand in a timely manner, but they’ve also got to try and save the planet by engaging in the development of new aviation fuels.

But wait, there’s more. You might think that Air New Zealand would have to lean quite hard on its employees in order to get them to deliver what is starting to sound like a monumental task, but, actually, they also have to be a leader in best practice workplace relations, given it is one of New Zealand’s largest employers. So they not only have a role as an airline delivering things around the world and New Zealand, not only do they have to help invent new fuels, but they also—according to this letter from the Deputy Prime Minister, from their chief shareholder—have to actually make sure that they’re a world leader in workplace relations. And then they have to continue acting as a responsible corporate citizen.

Now, I have to assume that that was put in as a bit of filler. But anyway, that’s another thing that they have to do. If the board are going to discharge their duties in good conscience, then they also have to do that. And then, here’s the kicker—here’s the kicker—they have to achieve these objectives while operating as a commercially sustainable and capital efficient business. So not only do they have multiple, and at times conflicting, objectives put on them by the Deputy Prime Minister of New Zealand, they also have to do it while making good use of capital and actually be commercially sustainable.

These are not all the objectives that the directors will have. The directors also have an objective, which is in the Companies Act, section 131 if I remember correctly, that they must act in accordance with what they see as the best interests of the company. Now, if you are a director, somebody of serious calibre, in that sort of position, who has options, who is invited to be on a range of different boards—in some cases in New Zealand but in many cases, for our top directors in New Zealand, across the Ditch and further afield as well—what has just happened to the attractiveness of serving our national carrier, of being on the board of Air New Zealand? Well, you are put in a nearly impossible position where you may not be able to achieve all of the conflicting objectives you have, including those recently given to you in a rather aggressive letter by the Deputy Prime Minister of the country.

And then—here’s the kicker—here’s what comes next: see, that is a difficult situation but some people might say, “You’re taking it too seriously. Maybe it doesn’t really have the kind of weight and gravity that’s been made out by people like Fran O’Sullivan in the New Zealand Herald.” Well, here’s what it says next, the letter says—menacingly, I would say—“I would like to be involved in the renewal of the board.” Now, these are smart people, they can read on the line and between the lines, and they know what it means. It means: “If you don’t fulfil my fantasy as a shareholder, then I am going to find other employment for you; actually, I won’t—I’ll just make sure that you’re not reappointed on this board.”

But this is not just a shame because of the damage it does to Air New Zealand. Yes, it is true: it is wrong, it will harm the quality of people who want to be on and remain on the Air New Zealand board, and it will affect the value of the company and its operation. All of those things are true. But it is worth remembering that the SOE model is applied to Air New Zealand amongst a number of organisations, and there is quite a range of them. There are some very important businesses in the electricity generation space. Now, we have a major issue with electricity generation right now. There is a shortage of electricity. Prices are high. It is threatening the deindustrialisation of New Zealand. We need quality governance in the generation and “gen-tailer” space if we are going to have a competitive energy market that is also going to achieve the objectives of more environmentally friendly electricity. Those were some of the big SOEs.

What message does this letter—and they’ve all read about it, I can guarantee you; there won’t be a single corporate director in this country who is not aware of what is going on here. What affect does it have on the people on those boards? And it is a few others. It is organisations that are SOEs that hold data for the weather and actually do all sorts of useful services. Well, they are all going to be tarred with the same brush that Grant Robertson has tarred Air New Zealand with. That means that we are going to have a decline in the quality of governance.

Some people might say, “Well, this is just one instance. We’re on new ground here.” Actually, I think it is important that public policy is evidence-based. We, over the last 40 years, have had the benefit of enormous evidence of over $2 trillion of privatisations, and there have been studies—there have been studies of those studies—there have been people like Phil Barry, the economist here in Wellington, who have played a role in evaluation the effects of shifting Government enterprises from public ownership to private. And guess what! Private and privatised entities, in the long run, on average, over time, outperform public entities like for like in terms of productivity.

So not only is it, on the face of it, wrong what the Minister has done to Air New Zealand’s board, we actually have good reasoning and good evidence and good data built up over many decades which tells us that this action by the Minister is going to make us all poorer. And that leads you to the question: what can we do about it? Because anybody can point out what is wrong, but the next thing we need to do is actually figure out how we can have some honest conversations about uniting New Zealanders behind good ideas that will make us more prosperous.

What the Minister could do is a little bit like what another Minister did just before question time. Stuart Nash rang up Nicole McKee and said, “Sorry, I called you a nutter”, and Nicole McKee very graciously accepted that apology. I think we saw the true colours of both politicians. Well, Grant Robertson has the opportunity to show his true colours and say, “I’ve made a mistake here. It is wrong what I have done. I’m actually prepared to go and say that this is not a good way to operate. This is not a good way for a shareholder to operate a company. If you want a company to achieve certain objectives, then, actually, you’ve got to allow them the freedom to actually pursue those objectives, otherwise, if I know what they should be doing, then maybe I don’t need a board anyway. Instead of what I’ve done, I’m going to rescind the letter.”

Grant Robertson should rescind the letter that he has sent to the board, and send a signal to governance organisations and particularly SOEs up and down New Zealand that this Government does not engage in wanton interference in commercial affairs, and that it respects the people that have been appointed to governance positions and it is going to uphold the best practices that attract the best people to govern the organisations that we need to be well governed in this country.

That is the opportunity that the Minister of Finance has, and if he is not prepared to do it for Air New Zealand or for those in governance roles or for the wider country and the future of SOEs, here is another reason why he might do it. What does he think the long-term effect—other things being equal, you know, without the current monetary policy conditions—on the share value of Air New Zealand is going to be for all of those New Zealanders who have KiwiSaver interests in Air New Zealand? What does he think it is going to be in the long term? Does he really think that Air New Zealand is going to be a more profitable company for those investors in the long term, and on average, with him sticking his ore in and interfering in its governance?

And if the Minister wants to get up and tell all of those New Zealanders that their investment is better with him running it, then that is a very interesting claim for him to make. I will be interested to see if he does. But what would be far better is if he apologised to those investors, apologised to Dame Therese Walsh, apologised to those in governance positions in Air New Zealand and SOEs up and down New Zealand, and affirmed his Government’s commitment to trusting people that have been appointed to do the job, and let them get on with it without political interference. Thank you, Mr Speaker.

The Government, on behalf of New Zealand, exercises a 52 percent shareholding in Air New Zealand. Air New Zealand is a company that has served New Zealanders incredibly well over recent times. It was a very challenging period for every airline in the world when COVID-19 hit. And one of the things that happened when COVID-19 hit was that Air New Zealand—like other airlines, it has a very extensive programme of investments already put out for the future, it also has a very expensive day-to-day running cost. And in that situation, and in that moment, the Government of New Zealand, on behalf of the people of New Zealand, made sure that the airline did not become insolvent. That was the prospect facing New Zealand and Air New Zealand. So a $900 million loan facility was announced. That is a good example of the way in which a Government-backed airline can not only provide terrific services to its people and to people who want to come here but also represent a particularly sound investment option where it is the situation we have in New Zealand, where it is 52 percent owned by the Government and 48 percent owned by other shareholders.

To answer part of Mr Seymour’s question: he will be pleased to know that the share price for Air New Zealand is around about $1.77 today. It is up 74 percent from last year, up from last month, and with a great deal of confidence that an airline—and think about this: this is an industry that has been put on its knees by COVID-19, and Air New Zealand is up from a year ago, in part because of the confidence that has been built up by the fact that this is an airline with a majority shareholder who cares about making sure that the business works and cares about making sure that we have an airline that will service all New Zealanders.

The other problem for Mr Seymour is that it is quite clear he’s never served in a role in Government where you’re required to work with a State-owned enterprise, because, Mr Seymour, they all get letters of expectation—all of them. So Mr Seymour was very, very worried, for example, about weather forecasting before. He was very concerned there, I presume, about the MetService. All of them get letters of expectation—that’s what we do. It’s the way we express the Government’s expectation. But Mr Seymour hasn’t been there, so he doesn’t know that. When it comes to Air New Zealand, the way in which the Crown—the Government; the 52 percent shareholder—is expressing its expectations is exactly what a majority shareholder would do in the private sector as well; that’s exactly the way it plays out. We make clear our expectations as the majority shareholder.

Now, nothing in the letter than was sent to Dame Therese Walsh is a surprise to Air New Zealand. It is the subject of the conversations that we have been having with Air New Zealand over the course of the last year in the wake of COVID-19. Absolutely everything written in that letter has been the subject of what we as a Government have discussed with them.

It is important to note, as the member did, that the objectives of Air New Zealand remain to be commercially sustainable and a capital-efficient business—that’s important. That’s one of the ways in which New Zealand will be well-served by having a sustainable airline that’s able to go about its business. But as the 52 percent shareholder, the Crown, on behalf of the people of New Zealand, is rightly expressing the other things that we want from our ownership stake. And the first of those is the concept of a national airline. And nothing has been more important during the COVID-19 period than having a national airline. The ability for the Government to be able to support airlines to be able to fly in and out of New Zealand, to make sure that our exports continue to fly when airlines around the world were shutting their services down—that would have shut New Zealand’s exporters out from the world—having a national airline, one that we 52 percent own, allowed us to be able to continue to support those exporters. So, actually, this is why we do this.

Now, Mr Seymour has an ideological objection to public ownership; I get that. That’s fair enough. If that’s how he feels about it, that’s fine. But what COVID-19 has demonstrated is that it matters to New Zealand that there is a public stake in this airline and it’s part of why that is in here.

The second element of the letter that Mr Seymour chose to highlight was the idea that there was some outrageous proposition that the Government, as the 52 percent shareholder, might ask Air New Zealand to maintain a comprehensive domestic route around New Zealand. Now, under Mr Seymour’s vision of the way Air New Zealand would operate, with the Government completely disinterested, not part of it at all, we wouldn’t be flying into Hokitika, we wouldn’t be flying into Kerikeri, we wouldn’t be flying all around New Zealand, and that’s the question that Mr Seymour and Mr Bayly—who I know is worried about this as well—have to answer when Mark Mitchell says, “I want to get to Kerikeri.”, and they say, “Sorry. No need for a comprehensive domestic route around New Zealand. No need for the airline to be able to get people from place to place.” And I know there are members opposite who’ve lobbied very, very hard to make sure that Air New Zealand flies to their particular destination, their place in the world, and that wouldn’t be in Mr Seymour’s vision.

So the idea that there would be a comprehensive domestic network is clearly important in our reason for having an airline. The corporate citizen role, the workplace relations role—these are all basic elements of being a good corporate citizen in the world, and one that we would expect of all New Zealand companies and ones with public ownership.

On the matter of environmental sustainability, again, here Mr Seymour’s showing his inexperience again. This is a conversation with Air New Zealand. They want this. They know that the future profitability of any airline in the world relies upon adjusting to the carbon-constrained world that we’re living in. Every airline in the world that wants to continue is working on this. So the idea that they would be engaging in the development of new aviation fuels is actually what will make them commercially sustainable into the future. Mr Seymour might deny climate change, but, happily enough, the aviation sector actually gets it, and they want to be a part of this.

When it comes to the question of board membership, again, I don’t know if Mr Seymour has worked this out, but a 52 percent shareholder in any company of any description is going to have a say in who’s on the board—it’s how it works. And so the paper outlines the fact that we have that expectation. Of course we have that expectation. On behalf of New Zealanders, if we were to take the approach that Mr Seymour is proposing, we would be letting New Zealanders down. We’d have a 52 percent stake and we’d be washing our hands of it and saying it doesn’t matter—that hasn’t worked for New Zealand when it comes to an airline in the past, and that is why that is in there.

And then, as indeed the member who moved the motion noted, we’ve gone on to say that, actually, all of the duties those directors have still apply. They know that—they know that they can manage this business. It’s only Mr Seymour and a handful of people with ideological reasons for opposing public ownership who have any problem whatsoever with a Government actually expressing why it is that we own an airline. And when we look at the future of Air New Zealand, what we have outlined in our letter of expectations makes very clear to them what we as the 52 percent shareholder expect.

For minority shareholders in a company like Air New Zealand, one of the things that they get confidence from is the fact that when there is a public ownership of that other 52 percent—when it is owned by the Government—they know the Government’s not going to let that airline fail. We demonstrated that in COVID-19. We stepped in to make sure that it didn’t. There is, in fact, a premium for those minority shareholders in knowing that the majority shareholder will never let it go, and that is what has happened here. We know that as a Government we are committed to ownership of Air New Zealand. Quite clearly, if David Seymour was involved in the Government, you couldn’t guarantee that—it’s open slather. The people of the regions of New Zealand would have to be wondering if they’d have an air service.

And here’s a challenge for Andrew Bayly when he gets up next. If he one day—decades into the future—ends up in a Government with David Seymour, is he going to stand up for regional New Zealand? Is he going to make sure that regional New Zealand is served by Air New Zealand? Because that’s what David Seymour just told us: no domestic route required. You don’t have to guarantee anything. People all around New Zealand now know that David Seymour doesn’t care whether or not they get serviced by Air New Zealand. So Andrew Bayly needs to tell us that.

Of course, one thing I would say about all of this is that it probably does push up Christopher Luxon’s chances of running the National Party. If there’s that much obsession on that side of the House about running airlines, then I imagine that that would be probably now right at the top of their list.

As a Government, we’ve taken very seriously our role in making sure that the State-owned enterprises that we continue to manage and run on behalf of New Zealanders, the Crown-owned companies, and indeed the mixed-ownership model companies, have continued to be able to run in such a way as they balance their responsibilities. They are listed companies in the case of Air New Zealand in those mixed-ownership model companies—the directors operate in that way. But as a majority shareholder, on behalf of the Government and on behalf of New Zealanders, I would be letting New Zealanders down if I simply stood back, washed my hands, and said, “Let the market rule in this situation.” That’s not why we own an airline. That’s not the reason we do it. We have a majority stake in an airline because it’s a critical part of our infrastructure, of our economic development, of our tourism offering—all of those things are important. And if we as a Government were to step back and do as Mr Seymour would have it, then we would not be acting in the best interests of New Zealand.

He is also, I think, taking a very limited view of the capability of corporate governance in New Zealand. All of the people that we look to appoint to Air New Zealand, and indeed the people who are on the Air New Zealand board understand that when they are in Air New Zealand they’re part of something with a massive legacy to New Zealand. They’re part of something that matters to people in communities all over New Zealand. They’re part of something that matters to our economic development. They’re proud to serve on that Air New Zealand board and they know that it’s a board where there is majority public ownership—they knew that going in.

This letter is writing down, putting on paper, the expectations of us as the Crown on behalf of New Zealanders for what we’re looking for from our airline. It will continue to be commercially viable because it is a good airline with a great reputation, but it’s also an airline in the middle of the worst global crisis for airlines that we have ever seen. And like other countries around the world, all of those Government-owned airlines and, indeed, private-owned airlines are taking another look at their business model. They’re taking a look at what the future looks like when tourism won’t return in the way that it has been for some time. They’re taking a look at it in the context of climate change. All of that is about making sure we’ve got a modern airline that is focused on serving the needs of all its shareholders, and at the same time doing the right thing as a national airline.

If there are people who are ideologically opposed to us having that, playing that role, that is for them to decide. But on this side of the House, we are committed to ensuring New Zealanders and New Zealand exporters have access to that kind of airline. And we have not seen, I don’t believe, in this period of COVID, any diminution of the duty of Air New Zealand directors as both corporate directors and on the role they play in making sure that that national airline operates.

I am extremely proud of Air New Zealand. I think it is an airline that has served New Zealand well. It’s had its ups and downs. Many of those downs, Mr Seymour, is when the Government did exit from it, and then what happened? Michael Cullen had to come in and rescue it because it had gone wrong. Mr Seymour has this absolutely blind ideological view that if the private sector’s running it, it’ll be brilliant, and if the public sector’s running it it won’t work. Well, that didn’t happen in Air New Zealand, Mr Seymour, and the Government had to step in and sort it out.

The Government stepped in again under COVID-19 and sorted it out, and now we’re going to continue to work with Air New Zealand to make sure that they, yes, are a commercially successful airline, but they are also able to achieve these objectives on behalf of their majority shareholder. There is a reason why we own Air New Zealand, and it is to make sure that we achieve the objectives that are in this letter. There is no doubt in my mind that any Government who went through COVID-19 in the way that our Government did would end up writing a letter like this to put down on paper why a national airline matters.

I am pleased to have written the letter. I know that Air New Zealand will continue working with us to make sure our people, our exporters, and our communities are well-served, despite the ideological views opposite.

Thank you, Mr Speaker. First of all, I’d just like to acknowledge the leader of ACT, to demonstrate he’s a good follower of the news. I note that he seemed to repeatedly refer to Fran O’Sullivan’s article but yesterday Hamish Rutherford wrote an article which is headed, and I quote, “… Air New Zealand letter put airline board in ‘invidious position:’ ’’—that was the heading. Also, he must have been following the radio this morning, because, of course, Mike Hosking picked it up as an item of importance. So I’m glad that Mr Seymour is following our lead, which is very good.

I think this whole issue is about whether or not Mr Robertson is the new reincarnation of Mr Muldoon. I say that because when I took over the job as shadow Treasurer late last year, I called on Mr Robertson to act in terms of section 68B of the Reserve Bank of New Zealand Act, and he called me the reincarnation of Mr Muldoon but subsequently followed my advice. This is another example of the Minister of Finance acting as someone who does not understand the current situation, and I’ve got to say I found the speech from Mr Robertson rather troubling, because I don’t think he has a proper appreciation of the dynamic in which his letter has landed.

I thought it would be useful just to give a little bit of background. The first thing is that the Government, quite rightly, offered to advance the company last year $900 million at a rate of 9 percent, which at the time was an incredibly high interest rate. The company has taken up roughly about $350 million of that loan. That loan of $900 million was offered without any letter of expectation. The troubling bit about this change is that very recently the Minister offered another $600 million, which took the total offer to Air New Zealand to 1.5 and reduced the interest rate from 9 percent to 5.3 percent. Bearing in mind that the company’s only taken up $350 million, the most troubling thing is why the Minister took it upon himself with this second tranche of lending to the company to then write this letter dated 8 April. So that’s the first issue: why would you in the first instance—and he talked about it before; trying to support the business. He did that in a manner free of interference from the company but the second tranche came with significant conditions.

I think it’s also worthwhile pointing out that it is well understood in the market that the Minister has had quite a significant involvement on the timing of the possible capital-raise of the company. Of course, the capital-raise, raising new funds, would have dealt with some of the funding issues that Mr Robertson sought to address with the second tranche of $600 million. So whether in fact it’s appropriate and to what extent the Minister has been involved in director negotiations—and it is well understood by the market that the capital-raise has been delayed on a number of occasions and particularly from March, and everyone in the market is expecting that the next capital-raise will be completed by the end of September depending on whether or not Mr Robertson will agree to it.

So the issue is—and what has been raised—whether the letter is the appropriate instrument to adopt. The Minister was very clear to say that “as a minority shareholder I can do what I like,” and he made the point that many State-owned enterprises (SOEs) receive letters of expectation from the Minister. I would say to you that that is correct—if you are on the board of KiwiRail you get a letter of expectation from the Minister—but the difference with this one is that this a listed company. All the others SOEs, other than the electricity companies, are not listed. And in the sense that they’re not listed and don’t have to operate under the stock exchange rules, then issuing a letter of expectation is perfectly appropriate and takes place regularly.

The issue is that the Minister wrote a letter to a company that’s listed on the stock exchange, and the worst part about the letter was the nature and tone of the letter. If the letter had been advisory, that would have been OK. If the Minister had made clear his views around his expectation in an advisory sense, that would have been OK. But the letter is not written in that tone. The letter is very specific about requirements that Air New Zealand has to achieve. It talks about the continuing operation of the business, continuing to maintain a comprehensive domestic network, continuing to demonstrate its commitment to environmental sustainability, and demonstrating a commitment to best-practice work places.

That’s fine as a general principle and in terms of advice, but the issue this strikes at is that as a listed company board member you are operating in a totally different framework. And that is you are subject to the listing requirements, and you have to operate, under company law, in the best interests of the company. The issue with this letter of expectation is that what it says is, “This is what you shall do.” The issue is if you are running Air New Zealand you need to be, if you’re a director, free to operate that company in the best interests of the company and its shareholders—and that means all shareholders. And there will be times, and I would think that in difficult times right now, the company may take a decision to reduce certain domestic linkages. It may choose to do other things with industrial relations because its first priority is to protect the company, and this is where the Minister has overstepped the mark. He has overstepped the mark in the sense that he has given a direction to the company.

The second thing is that one of the most fundamental principles—and I’ve mentioned this before—is this requirement under the Companies Act to act in the best interests of the company. That really underpins all directorships, and when you overlay that with a clear statement that the Government wishes to be actively involved in the reshaping of the board, that gives rise to a potential conflict of interest and, I think, an implied threat. And I think this is where the Minister has been ill-advised and has shown poor judgment in writing a letter of this nature to this company, which is a listed company.

I think this is a real issue, because in terms of the proposed capital-raise, one of the issues—and I’ve been speaking to investment banks that may or may not be involved in the process but certainly have a view on it—is whether or not this level of interference that the Minister has shown that he is prepared to make will in fact lead to certain investors who might have otherwise invested, taking a second look at this and perhaps not investing in the company. If there are fewer investors, it will mean that the capital-raise will have to take place at a lower price, which means that the value of Air New Zealand is lower, and this is the point that Mr Seymour was making well before. This intervention has the potential to be a chilling impact on investors, and I think, again, that this is where the Minister has shown particularly poor judgment. That’s what I was talking about before—this tendency to throw the weight around in circumstances that are not appropriate.

The last point I want to make, which is the fourth point, is that in the letter he clearly refers to the issues around what is expected of executives of the company. It is clear that directors run the company and set the policy. Executives implement the policy of the board. This reference to executives in the letter is a fourth transgression of that letter, and, again, the Minister has shown absolutely poor judgment in writing a letter that’s ill-advised and trying to cut across or assert the requirements of directors and the responsibilities of directors. I think we’re wondering now whether Mr Robertson is—

💬 SPEAKER: Order! The member’s time has expired.

Tēnā koe, Mr Speaker. Tēnā koutou e te Whare. I really couldn’t disagree more with the previous speaker, Andrew Bayly, and Mr David Seymour in their speeches. On behalf of the Green Party, I rise to, if anything, criticise the Government for not having stricter requirements of Air New Zealand—in terms of the money that taxpayers are putting forward to Air New Zealand, that they do more in terms of climate change. I have no doubt that the company is interested in that, and that the Government, as the largest shareholder, is interested in taking action on climate change.

Really, what’s at the heart of the criticism from the National Party and the ACT Party is a kind of ideological belief—a religion—that really permeated economics departments from the 1980s and 1990s. Despite Mr Seymour’s claim for the evidence to be on his side, it actually really isn’t, and I refer Mr Seymour to papers by the IMF and others who have talked about where the ideology around neoliberalism actually went too far and has resulted in less economic growth and has resulted in less efficiency. Perfect examples of this are the privatised trains in Britain, which require heavier subsidies than they did when they were publicly run; the privatised health system in the United States, which delivers healthcare at a far higher cost than countries that have public health systems.

When it comes to things that are public goods—and transport is one of those things where it’s very difficult to commercialise the full benefits, and the impacts of transport infrastructure and transport vehicles are far beyond the individual people using them. Airplanes have an impact on the climate, they have an impact on the people who live near the airports, they have a benefit for the people who are flying on the airplanes, but they also have external impacts. It is entirely appropriate in this day and age, where we’ve seen—post the global financial crisis, post-COVID—in the age of needing to respond urgently to climate change, that that failed ideology of the 1980s and 1990s, which is still well and alive in the most right-wing parties in our Parliament—has been proven wrong. We cannot rely on individual organisations focusing on maximising their own private monetary profit to deliver better outcomes for the whole world. It’s just not going to. That should be obvious.

So when we think about a company’s shareholders being required to think of the best interests of the company, it’s got to be beyond the best interest in terms of financial return to shareholders. Because the company exists on planet Earth and it exists in relationship with other people. If planet Earth is overheating and we’re being hit by massive storms that make it impossible for people to travel, then that’s going to negatively impact the company. So we’re thinking about the company as more than just an individual organisation that is looking to make the most money possible. Because they can do that by externalising their pollution costs, they can do that by abusing their staff and underpaying them, they can do that in all means of unethical ways, and it actually hasn’t worked. One more example, for the right of the House: large oil companies that deliberately hid information and ran campaigns against scientists to confuse Governments, confuse people, about the reality of climate change until now when it’s almost too late, and we almost don’t have enough time to act. They did that so they could sell as much oil as possible—

💬 SPEAKER: Order!

Come on, Mr Speaker.

💬 SPEAKER: It has run pretty wide, right from the beginning, but I think we’ve now got well beyond State-owned enterprises and Government companies.

Well, Mr Speaker, it is absolutely relevant to my argument. It is impossible for me to respond to Mr Seymour’s debate without referring to the evidence that rebuts what he said in his speech—that private organisations are always more efficient than public organisations, that letting private organisations pursue private profit for shareholders is better for everyone. It is simply not true. We have evidence of decades of environmental devastation, of biodiversity loss, and that is relevant. It is relevant to our view in the Green Party—and, I think, shared by the Government—

💬 SPEAKER: If that was a point of order, the member’s won, keep going.

—that the Government has a responsibility on behalf of its citizens and the environment in which they live to use its collective power to get better outcomes for all of us.

It’s entirely appropriate to send a letter of expectation such as this to a State-owned enterprise or a mixed ownership model company like Air New Zealand expressing the values that we would like to see the company operate with. If anything, we need more of that, because in order to face the challenges that we are collectively facing, we need greater accountability. The requirement or legal responsibility of company directors to pursue the best interests of the company in this narrowly defined idea of maximising the return for shareholders has cost us.

But, actually, this is entirely consistent with the best interests of the company, because the company—Air New Zealand—is going to be better off in a world where climate change is not an existential threat. Air New Zealand is going to be better off as a company in a world by training its employees well and being a best-practice employer, which it has been. Indeed, I think this is entirely consistent, these expectations are actually consistent, with how Air New Zealand has operated and why it has such a good reputation, and why it had such good staff retention for a very long time. Absolutely, it’s appropriate for the people of New Zealand to say, “We have a stake in this airline, and we want to make sure that it’s meeting our needs as a country, our needs for our people to get around.”

Now, of course, one of the other points that I would make is that what we’ve seen in Europe is that where there’s been extensive investment in passenger rail, now countries are actually shutting down flights where passenger rail services exist. This is something that is beyond this particular debate, but we are actually limited in New Zealand because the privatisation of our railways for many decades means that we’re not in a position to have really great passenger services. We’re in a position of playing catch-up, and that limits New Zealanders’ ability to be able to get around the country while reducing emissions. So, obviously, that’s more than Air New Zealand could address, but being able to look into sustainable fuels is certainly something that they will have to do, and they would be aware that they have to do anyway, to be able to be successful as a company in the future.

So I see no problem with this letter. I think it’s appropriate and, if anything, it could have gone further in terms of expectations around the environment and climate change, but I am still hopeful that Air New Zealand will be thinking about those issues for other reasons. To the right side of the House, I say wake up. It’s not 1988 anymore. We have decades of evidence about what is actually going to be better for our people and our planet, and it is not the maximising of private profit at the expense of everyone else.

I rise to speak into this debate, and the point that I do want to make at the outset is that Minister Robertson has set out a very clear letter with very clear expectations to Air New Zealand, and the point that he made in his contribution, which I would underline, is that those expectations have been discussed with the airline for at least a year. What Mr Robertson has done, in putting these down in writing, is make sure that they are crystal clear for everyone. If anybody here believes in markets and the value of markets and the value of information to markets, they will be celebrating—they will be celebrating—the value of having these things laid out clearly for all other shareholders and all other stakeholders to understand. It seems very unfortunate that that is not the view that came across with the person who called for this debate.

I want to say a few things in relation to Mr Bayly’s comments reported in the media and engaged with in this House. But before I do that, I do want to reiterate the fact that it’s a 52 percent shareholding that Mr Robertson holds on behalf of the people of New Zealand. As the Minister of the Crown responsible for the interests of the people of New Zealand, it is incumbent upon him to make sure that our national carrier is doing well through a very difficult time—a COVID time. The Government stepped in with that $900 million loan facility to make sure the airline could continue to operate, to support our economy, to support New Zealand’s interests. We are all proud of Air New Zealand for the way it continues to operate, and I think New Zealanders would expect that the Minister responsible for the majority of the airline would be clear with them what his expectations on them were on behalf of all New Zealanders and their interests in that airline.

So we’ve got that clear ideological opposition opposite. We heard the challenge from Minister Robertson to the Opposition to outline which airports they would see cut in a situation where they weren’t having an eye to the wider economic benefits in New Zealand, and there was no response. There was no engagement on that question. They simply ducked and dived and had no response on that issue.

The other thing I really want to dig into early on in my contribution is Mr Bayly’s comments, reported in the media, that there may be occasions where the board has to operate in an absolutely commercial focus, and that might differ from the Minister’s letter of expectations, he says. However, he lays out no compelling case for that, and I think if we go through the letter, it’s very difficult to imagine how that might be the case. It simply is not something he’s addressed. It’s not something he’s chosen to address in his comments here. I think he is wanting to outline an ideological view for which he can find no practical outlet.

The expectations outlined by Minister Robertson include that which has always been traditionally outlined for every State-owned enterprise (SOE): it must be a “commercially sustainable and capital efficient business”. I think everyone in this House will support that. It is what SOEs are required to do. It has “To be a ‘national airline’ continuing in operation to support economic development, including access to international markets for our exporters and international tourism linkages, once international borders re-open”. Who in this House wants to call that into question, and how would they think that that stood against the objectives that we would want to have for Air New Zealand?

The expectations include that they “maintain a comprehensive domestic route network that allows people and goods to move across New Zealand in a timely fashion at a reasonable cost”—and again, Mr Robertson has there outlined the expectation at a level; it is up to Air New Zealand to operationalise that. So there is the classic division between the directorship and the operation, and that is preserved. Now, Mr Bayly may wish for that not to be true. Certainly the ACT Party have been champions of letting things fall over. If Hokitika loses their airport, well, boo hoo—that’s the ACT Party view of the world. Kerikeri, Gisborne—whoever loses their airport, that’s the end of it, and it should be a commercial decision, pure and simple. Well, I think the population of New Zealand would beg to differ, and the exporters in those regions, the people engaged in tourism, the international economy, would beg to differ as to whether that was really in the interests either of Air New Zealand or of our international situation.

They include committing to environmental sustainability—“demonstrate its commitment to environmental sustainability, including engaging with the development of new aviation fuels for New Zealand”. Now, I think that that, as Mr Robertson outlined—and I won’t go into this too much because I think he did a pretty clear explanation of why that is so important in the current world. Any airline that wishes to sustain itself into the future is engaged in making sure it lowers its carbon footprint. That is a fundamental point for airlines in terms of their future sustainability, their financial viability. Good on Air New Zealand for being involved with that.

They include having the best workplace relations, given it’s one of New Zealand’s largest employers—again, that has stood Air New Zealand in good stead over the years. It has meant that they have retained high-quality employees. It has meant that they have attracted talent.

Expectations also include, “To continue acting as a responsible corporate citizen”—for goodness’ sake, none of these things are going to likely bring commercial sustainability and capital-efficient business matters into any type of difficulty. That is where Mr Bayly fails to make his point, because he has simply not outlined any case for those things coming into conflict. So even the premise of his criticism does not stack up. It is simple ideological claptrap.

💬 Dr Duncan Webb: Bunkum.

Bunkum, as my colleague says. Air New Zealand, of course, knows these expectations were coming. They have been the matter of conversation, as we have heard.

Now, their share price has been up. I think that is reflective of the fact that Air New Zealand are doing very well in these trying times—of the fact that the Government has stepped in, on behalf of the interests of the majority shareholder and of all New Zealanders, to ensure that it is supported with that $900 million loan facility. The share price is up 74 percent. I think that in itself is something that gives us pause for thought.

So they have been talking about it for a long time. It makes crystal clear what the expectations are. That is good information for other stakeholders. It is good information for management. The divide between management and directorship is preserved. I think Mr Robertson’s letter is an exemplar of what a good letter should look like to an SOE, and as the Minister of SOEs I have studied this letter previously, because, of course, I am in the process of sending out similar ones to SOEs, as has been done for decades. The SOEs have been required to have letters of expectation. That has been done by Ministers of all stripes. There is nothing new here, other than laying out a slightly clearer agenda, as Minister Robertson has done, to make sure that the majority shareholders’ interests are clearly presented and represented on behalf of all New Zealanders.

So I want to challenge the Opposition, once again, to try and come up with any kind of practical conflict, to really come up with any kind of justification for the ideological view that they have laid out, because it simply doesn’t stand scrutiny. Minister Robertson is right to lay those things out, and the Opposition needs to put up or be quiet.

I pick up that gauntlet laid down by Dr Clark, and I don’t think 10 minutes is enough, but I’ll do my best in the time I have. I probably was the first person to raise the Muldoon-esque nature of this Government by describing the Prime Minister as Muldoon with slogans and kindness, and that got quite a bit of pushback. But now we’re seeing that from somebody who actually looks a lot more like Rob Muldoon than the Prime Minister does, and that is Grant Robertson.

Now, here is the number one point, Dr Clark, and it may well be that the Ministers have not read their own briefings, because the briefings to the incoming Ministers from Treasury around Crown entities and State-owned enterprises is very clear. Page 10 of Treasury’s briefing dated December 2020—

💬 Hon Dr David Clark: Chapter and verse number?

Page 10, last line, and listen up, Dr Clark, says, “Shareholding Ministers have no powers to direct the listed companies.” Shareholding Ministers have no powers to direct the listed companies, and Rob Muldoon wouldn’t have cared.

💬 Hon David Parker: Read the letter.

Grant Robertson doesn’t, either. Oh, “Read the letter.”—certainly, Mr Parker. “I am writing … to convey the Government’s expectations”. The Government—

💬 Hon Member: Yeah, it’s not a direction, is it?

Oh, so now we’re dancing on the head of a definitional pin. These aren’t expectations, these aren’t directions; they’re guidelines. They’re ideas. “We’re just riffing. We don’t really mean it.”—so that’s their excuse.

It’s not a form of direction; it’s just a think piece. It’s a thought piece. I doubt it, and guess what? The institutional shareholders of Air New Zealand will certainly doubt it, and I don’t know how many times Mr Robertson used—

💬 Dr Duncan Webb: We’re all buying the shares, though—look at the share price.

Ah, thank you, Dr Webb. I will, because I have, and I’m thinking about Mark Twain’s “lies, damned lies and statistics” when both Dr Clark and the Minister of Finance talk about how great the share price is—how it’s gone up. Ha! Actually, in COVID, it dropped 78 percent, and, yes, it did recover, a bit. From $3.10, it went down to 89c, and now it’s up to something like $1.80. But guess what’s happened since this letter was written—did it go up or down?

💬 Damien Smith: Down.

It went down—exactly. It’s gone down. So any suggestion that share price is somehow an endorsement of this approach is the worst kind of straw man argument.

But I want to come back to the comment that Mr Robertson kept making about majority shareholders, because they’re in the majority, as if this was an all or nothing—“We have 52 percent, so we can do what we like.”—and the binary response to Mr Seymour’s intervention, that, somehow, because he made a reference to new aviation fuels, now he’s a climate change denier because he thinks that’s a bad thing. Well, firstly, he didn’t say that, and, secondly, he said that there shouldn’t be that level of direction. I agree with him.

Air New Zealand is subject to the emissions trading scheme (ETS). If the Government isn’t happy with the manner in which Air New Zealand or any other company that relies on stationary fuels like aviation fuel to carry out its business, change the ETS. Don’t inflict on the minority shareholders the will of the majority.

I thought the Labour Party stood up for the little guy, stood up for the minorities.

💬 Hon Louise Upston: Not any more.

Not in this case—not in the case of the minority interests not only of institutional investors but of mum and dad investors, of ACC, of KiwiSaver funds. Yes, there are overseas investors, and I can tell the House that when the mixed-ownership model was being followed and Air New Zealand was looking for purchasers of the proportion of the company that went from—what was that, Mr O’Connor? Is there a problem with your nose? That looked like a very interesting action, and it’s a pity we can’t put it on the Hansard. That went down from 75 percent to 51 percent, and the effort that needed to go in to get institutional investors over the fact that the company would still be majority-owned was a considerable mountain to climb. They were nervous. They were nervous because of the very kind of intervention that is articulated in this so-called thought piece.

This is nothing but a direction letter, in my view, in very direct breach of the advice that was given by Treasury to the Ministers in December last year. I’ve also got no doubt that those nervous investors will take flight, and that won’t be bad—[Interruption] they scoff—just for those shareholders; it will be bad for New Zealanders, who are the shareholders, and the value of this company will go back down, again.

It is true that a majority shareholder will have a significant degree of influence over the appointment of directors, but there is a process. In a publicly listed company, there is usually a nomination process and a selection process that is actually at something of arm’s length from the shareholders, majority or otherwise, that is then voted on at an annual general meeting. What the Minister of Finance has said is “Forget about”—

💬 Hon David Parker: By whom?

By the shareholders. That’s what I’m saying—that there is a degree of influence. That was my prefacing comment, Mr Parker.

But there is no doubt that what is inferred in here—if it’s so obvious, why put it in the letter? The reason is the Minister of Finance wants to do something different from other listed companies. Otherwise, he’d just sit back and say, “OK, bring me your nominations and I’ll vote at the AGM in the way that I can.”, but no. He will influence who goes on this board, and I have to say, without naming names, he may well have influenced who has been on this board in the past and who is no longer on the board, because I can think of a very highly qualified, competent director that is no longer a member of the Air New Zealand board, and I can only speculate on the degree to which there was some political interference in that process. My question is: will it get better or will it get worse?

Now, the Minister talks about the loan facility, and both Mr Mitchell and I are still completely flummoxed. I don’t want to steal Mr Mitchell’s thunder, because he may well introduce this in his speech, but I have no idea why Air New Zealand had to take a loan facility from the Government of up to $900 million at rates of interest that by comparisons with the aviation lending market at the moment are completely eye-watering. It begs the question of whether or not Air New Zealand is being milked for interest, for Crown revenue, and that this was an opportunistic action by Air New Zealand.

When we compare Air New Zealand’s loan facilities with that of our trans-Tasman neighbours in Qantas, I think, from memory, Qantas were paying something like 2.75 percent. We’re paying about three times that in a market with a strong balance sheet. Yes, there was a significant hit last year and a trading hole, but I can’t understand—in fact, frankly, the chairperson of Air New Zealand could not answer the question in the Transport and Infrastructure Committee—why that loan facility was required and not one on the open market. Well, I think this is a stalking horse for nationalising it.

💬 Hon David Parker: Ha!

“Oh,” he says, “couldn’t possibly do that.”, because they’ve only done it several times before, and if the Hon Julie Anne Genter’s speech is anything to go by, they will have them cheering in the Green Party benches for that action.

It’s not only that. Why, if every organisation, and including this one, that holds itself up as a very, very high-quality employer with no labour disputes, is it necessary to ask Air New Zealand to enhance its role as a best-practice workplace relations company? Or if it was practising sustainability—as I know it is—to then further “enhance”? But, of course, it’s only a thought piece—it’s only suggestions. They’re not being directed, according to members on the other side, and the comprehensive domestic route network is the ultimate level of operational interference.

Yes, we get grumpy when routes, because they are not sustainable, because they are not supported by those communities, are actually having to be ceased. But I actually sense that we’ll see some of these loss-making routes come back, and if Julie Anne Genter compares Air New Zealand to KiwiRail, goodness knows what it’s going to look like in a few years’ time, because KiwiRail is a money pit. Three-quarters of a billion to a billion dollars is poured into that organisation every year, and under this Government—

Order! The member’s time has expired.

I’ve been here about 20 years. I’ve spoken in a lot of these urgent debates. I’ve got to say it’s not often that I get up to respond to such a lot of old cobblers compared with the last speaker, Michael Woodhouse. What a load of twaddle! He is completely wrong. It is nonsense.

I’ve been a director of many companies. I’ve been a chief executive of many companies—

💬 Hon Michael Woodhouse: Yeah, not very successful.

Well, he says, “Not very successful.” That’s actually not true. Some of the companies I helped found include A2 milk, which has done not too bad. But in my experience as either a chief executive or a director, it’s nonsense to think that a 52 percent shareholder wouldn’t make their expectations of the company known. They own 52 percent; they expect to be able to tell the directors as to what their priorities are as a shareholder. That’s what a letter of expectations does. That’s what any shareholder does, really, in the private sector, even at a shareholding substantially lower than 52 percent. There is nothing wrong with it. It’s a pity the last Government didn’t pay a bit more attention to their letter of expectations for Solid Energy before they ground that into the ground and caused a billion-dollar loss to taxpayers. What a load of twaddle that a responsible Government wouldn’t set out their expectations to a company.

Now, I want to go through some of these. I’ve been involved as Associate Minister of Finance helping the Minister of Finance with these very issues, so I’m happy to disabuse some of the members opposite in respect of their ignorant assertions in the House so far today. Air New Zealand hasn’t been required to take one cent of the loan facility that has been provided by the Crown. If they can get cheaper money anywhere else, they’re welcome to it. We made that point in those very negotiations. How was the rate struck? I was intimately involved in that. It was struck by Treasury on advice from Goldman Sachs, who were the investment bankers who were advising the Government, and it was struck on the basis of average rates that were market rates out of the United States and elsewhere in the world at the very point at which that rate was struck.

So it’s a market rate, and if Air New Zealand could have got money cheaper from anywhere else, they could have taken it and they still can. That rate has been restruck more recently—and it’s true that it’s dropped because the market rate has dropped since the parlous times when it was struck first at the time when COVID struck, when, I can tell you what, lending rates for airlines that didn’t have passengers were pretty expensive because lenders thought there was a lot of risk attached to the loan.

💬 Dr Duncan Webb: And there was.

And there was.

The next point is about maintaining a domestic network. Now, New Zealand is more reliant on having a national carrier than most countries because of our isolation. In truth, when Air New Zealand gets into trouble it’s because their international routes close down or become unprofitable. They lost money in Ansett. When they lose big sums of money, it’s on their international route, not their domestic route.

When we interrogated this issue, we found that the capital expenditure and operating costs of the marginal routes on the regional network are a mere bagatelle to the performance of Air New Zealand. We’re not expecting them to run unprofitable routes, but where a route is close to their return on capital, we think that they should be running those routes and we told them that. And so other investors in the company now know that and when they recapitalise, other investors will be aware that the Government wants them to maintain not unprofitable routes but not just routes that are the most highly profitable routes. We want them to maintain a regional network and as a shareholder of the country, we should tell them that and Air New Zealand will do that willingly and other shareholders will know that also.

In respect of the biofuels issue, that arose because Greg Foran came to us and said, “Look, we recognise that we need to do our bit by reducing our climate-changing emissions.” They want to be one of the first airlines in the world that are using electric planes. That will happen on domestic routes. It will happen on domestic routes; internationally, they’re reliant on fuel substitution. They want to make progress in that regard. They want our support to do so. We express our support to do so and, you know, we’re willing to talk.

The other thing is having responsible workplace relations. The National Party wouldn’t object to us saying, “We want you to get a good return on capital.”, but they object to us saying, “We want you to have decent labour relations.” What a load of old twaddle! This is an absolutely proper letter of expectation put out there transparently. In terms of directorships, of course, the shareholder will show an interest, and the idea that the company should feed directors to us that we then appoint so that they’re in control of themselves, without regard to shareholder wishes, is another example of rubbish theory from Mr Woodhouse, who spoke just previously.

Thank you, Mr Speaker. I just want to start by saying that in his speech to the House the Minister of Finance, Grant Robertson, said that he was very kindly going to keep the Air New Zealand route to Kerikeri open for me. But I don’t think he realises that Kerikeri is three hours away from my house, so I don’t know if it’s really going to be that useful for me. Maybe a service out of Dairy Flat would be better.

When I first read this letter, I thought it was an April Fool’s letter, and I started to go through it. It opened with a profound statement. It said: “I recognise that the last 12 months has been an incredibly challenging time for Air New Zealand,”. Well, I’m pretty sure they understand that, when their revenue went almost to zero overnight when we were hit as a country with COVID. It then went on to say, “The Crown has provided significant support to Air New Zealand through this period in a variety of ways, including provision of the Crown Standby Loan Facility.” That is true, and I’m going to come back to that point and to the comment that one of the Cabinet Ministers made to me today around it.

But then I go on to more of the bullet points: “To be a ‘national airline’ continuing in operation to support economic development, including access to international markets for our exporters and international tourism”. That’s great, coming from a Government that had a Cabinet Minister turn around and say that our tourism sector was cocky. Now, all of a sudden, they want to support them, through the letter to Air New Zealand. “To maintain a comprehensive domestic … network that allows people and goods to move across New Zealand in a timely fashion and at a reasonable cost;”. Well, I’ll tell you what. If the Minister of Finance wants to send a letter to the board and the chair of Air New Zealand, then maybe they should start delivering some of their projects in a timely fashion and at a reasonable cost. “To demonstrate [its] … commitment to environmental sustainability, including engaging with the development of new aviation fuels for New Zealand;” This is from a Government that’s delivered five electric cars and is returning us to coal, telling Air New Zealand to make that investment. Then we go to “To enhance its role as a leader for best practice workplace relations, given that it’s one of New Zealand’s largest employers.” This, again, from a Government that just had a union come out and talk about taking a vote of no confidence in a senior Cabinet Minister.

To me, sending a letter like this to Air New Zealand—not only, as it’s been laid out very seriously by my colleagues Michael Woodhouse and Andrew Bayly, they want to have a look at themselves and, first of all, be able to deliver this for the country themselves before they start sending letters laid out like this to our national carrier. I want to come back to the provision of the Crown standby loan facility, because one of their Cabinet Ministers today told me, “You know what? There’s no better time for us as the Government to be borrowing money because capital is so cheap—it’s so cheap.” That’s true. Capital is very cheap.

But I want to come now to a very serious point, and that was the fact that Air New Zealand appeared in front of the select committee this year, in February, and we had the new chief executive officer, Greg Foran and Dame Therese Walsh. I wanted to acknowledge them and thank them for the front-line services that Air New Zealand do provide us as a country, and I asked them this question: “There’s a couple of things I want to explore around the loan facility that’s been set up by the Government between … [them] and the Government, understanding that they are … [a] major shareholder. … I just wanted to seek some clarity around the fact that, at the onset of COVID-19, you secured a $900 million loan facility from the Government at 7 percent to 9 percent interest rate. That was in two tranches, the first being 600k at 7 percent, and the second 300k at 8 … [and] with both rates increasing to 1 percent, or a 1 percent increase if the facility remained after 12 months. Around the same time, Qantas secured financing in Australia of a bit over a billion dollars [that’s] in Australian dollars, at [a rate of] 2.75 percent for up to 10 years.” And when you convert that into salaries and wages, that’s $50 million that we could have saved if we had entered into an agreement like that with the New Zealand Government.

Dame Therese Walsh was very interesting. She said this: “So, look, I think the context needs to be put around this, and that is that we were in a trading halt, [they were in a full trading halt] in an extreme situation where our revenue was going from 100 percent to close to zero …. So I think that context is important. We’d made a decision that we needed to approach the Government for a lifeline … There was a discussion and negotiation around the interest rates that you’ve referred to. And, obviously, as a company, we wish to pay the lowest cost of lending and funding that we can, but the Government also had to take its position and view on that matter. As I’ve said before, it wasn’t the most significant item at that moment. And I agree with you that it’s certainly money … we would prefer to keep; however, it was part of the negotiation at … [that] time.”

Why has the Government—

Order! The member’s time has expired.

Kia ora, Mr Speaker. Mr Mitchell probably isn’t used to doing an urgent debate that his party hasn’t called, because he really was struggling for material there, reading from a transcript of the Air New Zealand examination. But look, you know what?

💬 Hon Peeni Henare: Written by Chris Luxon!

I want to hit the very foundation of this. You’re right, Mr Henare! I want to hit the absolute foundation of this question, because, for some bizarre reason, on that side of the House they don’t seem to know any company law. So the question is: what is in the interests of a company? And you know what? It appears, bizarrely, that that side of the House thinks that it’s not in the best interests of a company to take notice of climate change. They think it’s in the best interests of a company to burn aviation fuel till the cows come home, and not take any notice of the fact that the world is changing. Julie Anne Genter touched on that at length, and she’s right. But, you know, she’s not alone. Chapman Tripp, that very well-respected law firm, had a sustainable finance forum in 2019. Do you know what they said? They said it would be a breach of the duties of a director not to take climate change into account. So when we think about it, companies need to be prepared for the future. It is absolutely responsible for them to do that.

💬 Hon Mark Mitchell: So how can they do that with a 9 percent interest rate on a facility?

This is found in section 131 of the Companies Act.

💬 Hon Mark Mitchell: They won’t draw down on it.

It’s the law. You have to read it, Mr Mitchell.

💬 Hon Mark Mitchell: They won’t draw down on it.

So why don’t you go and open a book? You must be reading now: your lips are moving!

Now, look, we need to go back and look at the Companies Act. What the Act says is that a director must act in the best interests of a company. What does that mean? Does it mean they’ve got to improve profits at all costs or does it mean that they can be a responsible citizen, look after their communities, look after their environment, look after their people, and at the same time run a profitable business? Well, it’s not hard, is it? The days of the neo-liberal “money at all costs” are gone. The sun has set, thank goodness for that. We now expect all of our corporate citizens to act responsibly.

Of course it’s appropriate for the Minister to set out to Air New Zealand those things that he sees as responsible corporate citizenship. So to be a national airline—to the people of New Zealand, you and I are the key shareholders, and it is entirely appropriate for it to be a proper airline that offers full services that don’t just serve me in Christchurch, Helen White in Auckland, but even people in Kerikeri, in Gore, in Invercargill, Hawke’s Bay—the list goes on and on.

Look, as Grant Robertson said—fantastic Minister of Finance, with great stewardship of this company and the nation’s assets—this is a critical part of our infrastructure. New Zealand needs a national airline to connect each other and to connect us to the world. It is absolutely critical that the shareholders in that company, through Grant Robertson, let the company know that. To simply ask that it has comprehensive domestic routes so that people can be connected, so that people who want to can come to this place and make their views be known, because everyone’s views are important—that is entirely appropriate and makes that company a good corporate citizen.

So we do need to look at the Companies Act and recognise that when it says “the interests of the company”, it doesn’t just mean maximising the profits of the company. It’s really important to note that in that Act and elsewhere, it is very clear that that is an open definition. When we ask what’s in the interest of you or I, it’s not making more money or having more money in the bank. It’s no good having money in the bank if we’re depressed and sick. We want a company that is healthy in every respect.

So the letter from the Minister is absolutely on all fours with this. And section 131 of the Companies Act itself sets out situations when the company can properly act in the interests of other parties. Here’s an interesting fact: if the company is a subsidiary owned 51 percent or more by another party, it can act in the interests of its holding company. Now, that’s not a million miles from a situation where the holding company is the people of New Zealand. Entirely appropriate to say, “Look, you’re not simply a widely held company. You’ve got a majority shareholding and, of course, the majority shareholder wants to have a say.”

I’m quite flummoxed by the floundering around of the Opposition. They don’t seem to understand—

💬 Kieran McAnulty: They don’t know what “flummoxed” means!

They don’t know what “flummoxed” means, Mr McAnulty! They don’t know what company law means. They don’t know what best interests means. They don’t even know what leadership means. So here we are, asking them to be a leader in good workplace relations. We know that a workplace with happy employees, employees that are well looked after and well paid, is a good company, a strong company.

Look, the fact of the matter is that all this can be done whilst maintaining a good bottom-line, as indeed the Minister makes very clear in the letter, which Mr Mitchell basically read out. So we know that to do this is nothing more than what would be expected. So we absolutely, as a country, need to get away from the suggestion that the interests of a company are simply the interests of making more money and maximising the bottom line whilst at the same time the environmental bottom-line is degraded; the human resources, the human capital bottom-line is degraded; the structure of New Zealand, the transport infrastructure of New Zealand, is degraded. That just goes to show the narrow, short-term thinking of the Opposition and of the ACT Party in bringing this urgent debate to the House.

The fact of the matter is that this letter showed that this Government is committed to long-term thinking. Aviation is a big emitter of climate emissions, and we need to address that, but at the same time we know we need to stay connected with the world. We know that this is an important part of our infrastructure. So we’re saying, as you look forward—

💬 Hon Simon Bridges: You guys have shut up shop.

—not just two years, Mr Bridges, not just to the election, but look forward 10 years and 30 years for the prosperity of New Zealand, it’s appropriate to absolutely look at the climate profile of aviation and the wider transport industry. We want to be leaders. So yes, go ahead and investigate alternate fuels. Can we use biofuel as an aviation fuel? Why don’t you look at that? What other low-emission alternatives are out there? What other kinds of fuel in aviation exist? Can we have electric planes? Let’s explore all of those options. If we lead the world in this, this will be one of the best airlines in the world—even better than it is already, and we all know how good Air New Zealand is.

Absolutely, we want this to be done sustainably—sustainably in an environmental sense and sustainably in a commercial sense—so it’s entirely appropriate that the Government supported Air New Zealand by funding it through one of the most troubling and traumatic periods that could be imagined. And we were right there. At the time, if I remember rightly, so was the other side. There wasn’t a whisper. They did not demur that we should be funding Air New Zealand. They probably weren’t looking—who knows? So there you go. At the time, they were entirely behind us, and now they’re changing their mind—divided, distracted, and not really knowing the right hand from the left.

Members on the other side of the House have repeatedly called for Air New Zealand to fly to their own part of the country. Nathan Guy—now, he was a good guy, wasn’t he? He wanted them to fly to Kāpiti if I remember rightly. But, you know—so here he was standing up in the House, and now, when we have it here, they’re saying, “No, no. Don’t advocate for regional New Zealand.” Well, we will advocate for regional New Zealand, because we are the party that cares for all New Zealanders—in cities, in the regions, and across the board.

So what this letter shows, this letter of instruction or of recommendation from Grant Robertson, is that he’s a responsible Minister, a Minister who takes a long-term view and has the interests of all New Zealanders at heart and the interests of Air New Zealand as a fantastic company. Well done, Minister Robertson.

The debate having concluded, the motion lapsed.