Cosgrove Clayton: Questions for Oral Answer — Questions to Ministers 
Cosgrove Clayton: Questions for Oral Answer — Questions to Ministers 
[Volume:673;Page:19067] 
6. 
Hon CLAYTON COSGROVE (Labour—Waimakariri) 
 to the  
Prime Minister 
: Does he stand by his statement in relation to the partial sale of SOEs that “New Zealand investors would have to be at the front of the queue for shareholdings”? 
Rt Hon JOHN KEY (Prime Minister) 
: 
 Yes. That was one of the tests I set out for the mixed-ownership model: that “New Zealand investors would have to be at the front of the queue for shareholdings” and that we would have to be confident of widespread and substantial New Zealand share ownership. Treasury’s advice is that these tests can be met. In particular there is likely to be significant demand from the likes of KiwiSaver funds other institutional fund managers Crown financial institutions like the Superannuation Fund and ACC iwi and mums and dads who are looking for good solid investments. 
Hon Clayton Cosgrove 
: Given that the then Minister for State Owned Enterprises Tony Ryall said in 1999 that the sale of Contact Energy had been “a great success” after claiming that 225000 mums and dads had invested in the company can we now conclude that that float was actually a great failure given that the number of mum and dad investors has fallen by two-thirds to around 70000? 
Rt Hon JOHN KEY 
: No. The first thing I would point out is that it was a very different model back in 1999. The Government is proposing—if it continues to be the Government post - 26 November—to have a 51 percent minimum shareholding held by the Government then for New Zealanders to be at the front of the queue for the other 49 percent of shares. I refer the member to a story written by Pattrick Smellie in relation to Contact Energy’s Kiwi shareholders. He called them a loyal bunch and said: “One of the least defensible criticisms of the Key Government’s partial privatisation plans have been regular references to Contact Energy as an example of a privatised company which lost control to foreigners. Yet nothing could be further from the truth.” I could go on but I think I have made reference to the article before in the House. 
Hon Clayton Cosgrove 
: Given Treasury’s advice that “significant participation by foreign investors will be essential to achieve the Government’s overall objectives” can he provide the House with an estimate of the proportion of State-owned enterprise shares that foreign investors will end up owning? 
Rt Hon JOHN KEY 
: My estimate is that that proportion will be quite low for a number of reasons. Firstly as I have said we will be putting New Zealand investors at the front of the queue and it is very likely as Treasury’s advice has said that huge demand will come from these areas. Treasury is working on ensuring that those tests can be met and I am confident that we will meet them. 
Rahui Katene 
: What assurances does the Prime Minister have that hapu and iwi will be at the front of the queue for shareholdings in State-owned enterprises and what progress has been made to this effect? 
Rt Hon JOHN KEY 
: I cannot give them an assurance that they will be at the front of the queue but I can give them an assurance that they will be treated like all other New Zealanders. 
Hon Clayton Cosgrove 
: How does he propose to prevent mum and dad investors from onselling their shares in State-owned enterprises to foreign investors which is something Treasury has said will happen and is something that clearly happened in the case of Contact Energy? 
Rt Hon JOHN KEY 
: I go back to what I said earlier: in the case of Contact Energy the model was very different. Treasury is looking at that model and there could well be a lot of examples—I think in Australia for instance—of sales where loyalty bonuses and the likes were used. 
Hon Clayton Cosgrove 
: Is the projection accurate that $300 million in fees will be paid to lawyers investment bankers and other advisers? 
Rt Hon JOHN KEY 
: I have not seen that projection. I can say the Minister of Finance is working closely with Treasury to ensure that the fee structure is low. I know that the Leader of the Opposition asked for some information from my office just this week in relation to what the fee structure was for Contact Energy. I am sure the member has seen that. From the top of my head the fee structure was 1.9 percent. That is very low relative to what we have seen in the private sector where it runs at anything up to 7 8 or 9 percent. These are billions and millions of dollars’ worth of assets so my expectation is that the fee structure would be low relative to what we have seen in the private sector.