Cosgrove Clayton: Estimates Debate — In Committee 
Cosgrove Clayton: Estimates Debate — In Committee 
[Volume:656;Page:5514] 
Hon CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 This is a very interesting section of the estimates. Before I talk about the Government’s proposals for State-owned enterprises I want to look at page 507 of the Reports of Select Committees on the 2009/10 Estimates. 
It is interesting to note that the Minister for State Owned Enterprises Simon Power embarked on his new career—as we will recall—by hauling in all the chairs and possibly chief executives of all the State-owned enterprises. He jumped up and down and stamped his little feet saying that the Government wanted more money. At the same time as Simon Power—I am sure he will take a call tonight diligent Minister that he is—was calling for more money and higher dividend performance from State-owned enterprises especially the energy State-owned enterprises Meridian Energy had lifted its prices over a short period of time by about 16 percent. 
The Minister of Energy and Resources the Hon Gerry Brownlee—according to the Christchurch  
Press 
 the third most powerful man in New Zealand—was described by his best mate Dave Henderson as absolutely “useless”. It is very interesting that at the same time as Mr Power was demanding more dividends especially from energy State-owned enterprises the Minister of Energy and Resources was attempting to jawbone down prices and stamping his larger feet saying that it was terrible that consumers had to put up with high energy prices. He cited Meridian Energy. In fact I think—he will correct me if I am incorrect and in that case I will concede—that he changed his personal arrangements in respect of his own power company from Meridian Energy to Mercury Energy. [ 
Interruption 
] No that is not correct; well I stand corrected. But as he tried to jawbone down prices and said that it was outrageous and that the energy State-owned enterprises especially Meridian Energy Ltd should consider the recession we were in his counterpart was hauling in chairpeople from State-owned enterprises and demanding more dough. 
It is interesting because I remember before the election Gerry Brownlee used to get up and give a stock speech. Every time the previous Labour Government announced an initiative or a review he would say: “Oh another review.” “Oh another task force.” or “Oh another study.” There is a very interesting passage on page 507 of the estimates reports about what the Minister for State-Owned Enterprises was asked: “We asked the Minister whether in view of the concerns about electricity pricing he had considered using his power as the Minister for State-Owned Enterprises to signal to boards that he shared these concerns. The Minister responded that the Government had made some broad statements in that area and he did not think any further step would be appropriate.” That is interesting. He had said that it would be nice if they pulled their heads in and helped the old consumer out but that is about all they would do. Then it is interesting: “The Minister told us that the Minister of Energy”—the Hon Gerry Brownlee—“has signalled a review of the electricity market.” This was from the man who said that he would take action in this area and look after the consumer. 
It is interesting to note that the task force that the Minister set up was due to report last week. It did not quite know what to report on so we have no report today. I am told that it received no direction. It is very interesting is it not? I say to the Minister of Energy and Resources that he should get his story straight and that the Cabinet Ministers should meet. I invite him to talk to Simon Power and get the plan for energy State-owned enterprises right. On the one hand he said to pull the prices down and then on the other hand Simon Power said that the Crown wants more money. I say to Simon Power that if he is really serious—as Gerry Brownlee appears to be at least in print—about giving consumers a fair go in the electricity sector through the State-owned enterprise dividend process he could do one very simple thing. He could say quite clearly to the energy State-owned enterprise that we do not want any more done. We will take the status quo in dividend and we do not require the State-owned enterprises to give us a higher dividend this year. He could inject money immediately into the pockets of consumers. If Simon Power as he has done demanded more of a dividend— 
Sandra Goudie 
: This from a man who couldn’t manage a piggy bank! 
Hon CLAYTON COSGROVE 
: Sandra Goudie might understand what a business does. A business will respond like this if the shareholder demands a higher dividend. It will either cut costs through staff or it will raise prices to increase revenue thereby increasing dividends. So it would be good if the Minister of Energy and Resources could take a call and have a chat with the Minister for State Owned Enterprises beforehand so they can get their stories straight. 
Now we get to the other matter that is in the minds of the public which is that of privatisation. It is very interesting that the National Party’s stated position prior to the election was that it would not flog anything off until after the next election. That position started to wobble a bit because Mark Weldon came out and effectively said that State-owned enterprises should think like a business and act as if they face part-privatisation in 2 to 5 years. Then we had the appointment of Don Brash to the productivity task force. Don Brash has believed in selling off State-owned enterprises his entire career but at least he is up front about it. Then we had the speech from the Secretary to the Treasury who signalled a similar thing. Well it is interesting because there is another inherent contradiction. On the one hand the Government said that it wants to preserve jobs. That is an admirable and laudable aim. On the other hand of course it is demanding a greater dividend stream from a State-owned enterprise which will force two actions as it did at Meridian Energy: it upped the price and now appears to be restructuring to shed over 100 staff in Christchurch alone. 
A business has to cut cost or raise price in order to deliver back a greater dividend stream to the shareholder in this case the Crown. We see that State-owned enterprises are indeed cutting jobs. Ninety jobs are to be cut from Television New Zealand Ltd (TVNZ); 52 jobs from Quotable Value. There are nearly 400 redundancies at New Zealand Post and at Meridian Energy there are more on the way. It has been called the Meridian Energy strategic review of its core operations which is double Dutch for shedding staff and shedding cost. This was all because it had been given the message that the Government wants more dough. Then other Ministers like Paula Bennett get up wring their hands and say that they actually want to preserve and save jobs. Well one cannot speak out of both sides of one’s mouth. 
It might be appropriate for the Minister of Energy and Resources the Minister for State Owned Enterprises and the Minister for Social Development and Employment to get together in a very large corner of the building and have a wee chat. We know of course what the agenda is: if these State-owned enterprises are raising prices and driving consumers to the brink of pain then the argument will be put up sooner or later asking what the difference is. It is a bit like private prisons. The Government could not get it right and will not instruct the department to do what it wants on outcomes so it asks why it does not flog them off to the private sector. That would have to be better! That is the sort of simplistic argument that is put up. 
I say to the Minister in the chair the Hon Gerry Brownlee that the Government plays a very dangerous game. He would be better as commentators and editorial writers have said throughout the country to front up and be honest about what the Government will do. The signals are all there; they were in Mr Whitehead’s speech and in Mr Weldon’s comments. We know Mr Weldon is now the contemporary version of the acolytes of the Business Roundtable. He is the kinder gentler face. He has the ear of the Prime Minister he ran the Job Summit—the talkfest—and he is now waxing eloquent about his view on what State-owned enterprises should do. He says to bang them on the stock exchange—the NZX. Perhaps that is the agenda. I say to Mr Brownlee in the chair that there is a mass of contradictions between his position as Minister of Energy and Resources Simon Power’s position as Minister for State Owned Enterprises and Paula Bennett’s position in respect of saving jobs. It would be nice if they could reconcile those contradictions. It would be nice if Mr Brownlee could get up and utterly rule out the sale of State-owned enterprises but I suspect he will not. 
If the Government wants a State-owned enterprise such as Meridian Energy to be sold in year 1—if it wins the next election—it has to ready that State-owned enterprise now. It cannot go to an election announce that the enterprise is sold and then start readying it. It takes about 1 year or 18 months to ready a State-owned enterprise for sale so the Government has to start now and that is what it is doing. The way it readies a State-owned enterprise for sale is to try to ramp up the dividend stream cut a lot of the costs out and call the 100 people who are being gutted from Meridian Energy “fat”. That is something that—no I will not go there. That is how the Government could restructure a State-owned enterprise under a sort of operational strategic plan. The enterprise would be readied for sale. If the unthinkable happens and Mr Brownlee gets on to the Treasury benches next time round we can imagine the scuttling of announcements of which State-owned enterprises will go on the block. 
Sandra Goudie 
: Oh! 
Hon CLAYTON COSGROVE 
: Well Ms Goudie might yawn and make other anatomical noises but as for the 100 people who are being bucketed out of Meridian Energy the 400 people who got bucketed out of New Zealand Post and the 90 who have been bucketed out of TVNZ I do not think they would respond well to Ms Goudie’s noises and aberrations.