Cosgrove Clayton: Mixed Ownership Model Bill — In Committee Speaker Recalled In Committee 
Text is incorporated into the Bound Volume 
Cosgrove Clayton: Mixed Ownership Model Bill — In Committee Speaker Recalled In Committee 
[Sitting date: 19 June 2012. Volume:681;Page:3055. Text is incorporated into the Bound Volume.] 
Hon CLAYTON COSGROVE (Labour) 
: 
 Mr Chairman— 
Rt Hon Winston Peters 
: I raise a point of order Mr Chairperson. There is a bit of confusion here about the order. The last thing I want to do is stop my colleague Clayton Cosgrove from speaking but you went from Labour to National then to the Greens so why not New Zealand First? 
The CHAIRPERSON (H V Ross Robertson) 
: The member makes a good point. I did actually consider that before I gave the call. I looked at the whole issue of proportionality and I am going to call Andrew Williams immediately after Clayton Cosgrove. 
Rt Hon Winston Peters 
: No no no—point of order. 
The CHAIRPERSON (H V Ross Robertson) 
: The thing is Mr Peters as you well know once I have made the call and I have called someone I have to stick with that call. 
Rt Hon Winston Peters 
: I raise a point of order Mr Chairperson. With the greatest respect the last thing we should have is a rule where you can make an erroneous decision and the House cannot help you to correct it. You know the House is the master of its own destiny and therefore you could correct it. The real point here is that I do not know how you get the proportionality of it all but I cannot see how in any way that it is worked out you could come to that decision if the Greens were going third. Now honestly if you are going from a sequence—and I have seen the rest of the sequence with the other parts of the bill in this House—I cannot follow this one here and I would hate you to start with a mistake that becomes a precedent which does not serve after all the interests of the minority. And after all your No. 1 job is to look after the minority in this House. 
The CHAIRPERSON (H V Ross Robertson) 
: I thank the honourable member and refer him to Speaker’s ruling 26/4 and Standing Order 102. I accept what he says and recognise the contribution that he has made. It will certainly not be a precedent. We are in the Committee stage of the House. 
Hon CLAYTON COSGROVE 
: Just acknowledging I am sure that the New Zealand First speaker to follow will make an exceedingly good contribution. Can I just say that I listened to Mr English’s speech and it was very interesting. I listened to it because I was waiting as all New Zealanders have waited since before the election campaign for a justification for a rationale for the case to be made. After all you can spray and pray as it were all over every other political party in this Chamber but at the end of the day the Government is required to make a case for its actions. And no case has been made. In fact the case has been contradicted and the arguments have been contradicted day after day and month after month by this Government. All Mr English succeeded in doing was to reinforce to this Parliament and the people of New Zealand that he has failed—and continues to fail—to make a justifiable case for the sale of these assets. 
After all as the Green colleague said if you go through the history of this—Russel Norman is right—the first justification put up by Mr English was that these assets must be sold because in order to grow they require capital and the Government has no capital. Then Mr English—after I think an interview with me—got out his School Certificate “BusCom” textbook and worked out and looked up in the dictionary a word called “dilution”. He then realised as Tony Ryall did that hang on if the minority then move to make a capital raising and the Government because it said it had no dough—that is why it has to sell—did not move on that in an equivalent way then its ownership would be diluted below 51 percent. And in this House in answer to my question Tony Ryall said that the Government would do whatever it takes—whatever it takes—to maintain its 51 percent ownership including borrowing including taxation including whatever it takes. But I thought Mr English and Mr Ryall came from a position that these assets had to be sold because the Government had no money and was not prepared to borrow or tax to fund the growth strategies of the State-owned enterprises. So that is contradiction No. 1. 
Then we come to another couple of key issues. The Budget Policy Statement—who in their right mind would believe it would be a good proposition to save debt-servicing costs of $266 million per annum and give away profits of $360 million per annum and then make a $100 million loss? Who in their right mind in this Parliament or which business people would see this as a net positive solution a net positive strategy and proposition for a business or for this Parliament? That is contradiction No. 2. 
Then of course we come to the issue of loyalty bonuses. Well here is the problem with loyalty bonuses: loyalty bonuses are an admission of defeat by Tony Ryall John Key and Bill English. They have told us for months and months that they expect that 95 percent or 85 percent of these companies will be purchased by mum and dad Kiwis and then they have demonstrated weasel words because they have talked about ACC and then they have talked about superannuation funds including KiwiSaver and other things. But no no no—we know what the definition of a mum and dad Kiwi is. The admission of defeat is that if you have to give mum and dad New Zealander a loyalty bonus you know that if they purchase at X price and a foreign interest or institution offers them a greater value to sell then they will because Kiwis will do—and I mean no disrespect to Kiwis—what is in their interests to look after themselves. 
All the loyalty bonus does of course is put off the fateful day maybe by 12 months maybe by 2 years. You get your one free share to 15 and you flog the lot off. There is no guarantee in this legislation in any part particularly Part 1 that Kiwi mums and dads will be the first in the queue. There is no guarantee at all. The Minister for State Owned Enterprises has already said of course that he will not stop anybody onselling to anybody. And we know of course as David Shearer said that if foreigners buy just 15 percent of these State-owned assets then that is 100 million bucks a year on top of the $120 million the Government is wasting on consultants and merchant bankers and on top of $100 million it is wasting because its debt-servicing costs are less than the profits they forgo. There is $300 million offshore or wasted or not put back into our communities as they are now. 
Then we come to the 10 percent ownership cap of course. Well here is the difficulty with that. There are no penalties in this legislation. We have had submissions to the Finance and Expenditure Committee that said you could drive a bus through it. You could absolutely drive a bus through that 10 percent ownership cap. 
Drawing on some specific amendments though David Shearer made reference to the Ombudsman and the Official Information Act. Here is the proposition that we have put; it is another contradiction for the Government. One of the alibis for selling these shares is that in selling the State-owned enterprises somehow the metaphorical commercial sphincter muscle on certain people in the State-owned enterprises—the chief executive officers the chairs and the boards—will tighten as it were as they come under scrutiny from this thing called the market and the odd financial analyst. But let me say this to those geniuses over there. A quarterly report an annual general meeting and some good solid business journalism is far less superior in respect of scrutiny than being able to ask that Minister in the House every day questions on State-owned enterprises; than dragging as we did before the Finance and Expenditure Committee the chairs the boards and the chief executives of these State-owned enterprises and grilling them under financial review; than utilising the Official Information Act so that journalists members of the public and members of this Parliament can get information about what is going on; and than utilising the Ombudsman so that journalists and members of Parliament and the public can find out what is happening. Using the quasi-inquisitorial powers of this Parliament to haul them in bring them before a select committee and put their feet to the fire is gone. We cannot be told in this Parliament that somehow a little bit of market scrutiny is going to be more effective than this House. 
It is interesting what Jenny Shipley the chair of Genesis Power said when she came in. I put a question to her. She is a person who is on boards both in the private sector and for a State-owned enterprise. Her board membership is made up of directors who are on boards in the private sector and for a State-owned enterprise. I asked whether it was conceivable that somehow in governing her State-owned enterprise she would use a second-class model. She would walk through the door of a private sector board and say “I’m going to operate to commercial world’s best practice.” but when she walks into the boardroom of a State-owned enterprise she will knock back a notch and operate to a lesser standard. She said no. Asked what difference it would make whether they were sold off or in public hands she said it would make no difference at all. They will operate to world’s best commercial private sector standard. So that is yet another contradiction—yet another contradiction. 
We will be proposing amendments in this debate in respect of removing those State-owned assets from the State-Owned Enterprises Act. We will be proposing amendments in this debate of making them subject to the Official Information Act making them subject to parliamentary processes and making them subject to the Ombudsman so that Kiwis even if all they are left with is the Crown ownership—owning 51 percent—will be able as they are entitled to get answers in a transparent and accountable way. You see the alibi that will be used by this Minister and his Government when they are sold privately is: “Oh no no no—the market will sort it out. The market will scrutinise. The market will find more accountability than this Parliament can.” I cannot find too much more accountability than putting to the fire the feet of the Minister directors and chief executive officers before a select committee before this House utilising the Official Information Act and utilising like Air New Zealand— 
Rt Hon Winston Peters 
: Like KiwiRail. 
Hon CLAYTON COSGROVE 
: —yes indeed KiwiRail—and utilising the Office of the Ombudsmen. So I challenge the Minister to tell me and to tell this Committee that some sort of private sector market scrutiny is going to be harsher and at a higher level than that. You have a former Prime Minister Jenny Shipley who was very much in favour—we did not bother asking her what her view on State-owned enterprise sales would be given her history and lineage—and is the chairman of the board saying it will make no difference whether it was sold private or public. Chris Moller came in and the only point he made—no disrespect to the good man—was that if they are private we might be able to attract a few more highly skilled people into them. Well I have got to say that if that is one of the justifications that is a huge call—a huge call. That may be because the salaries are going to go up. 
When we talk about price rises here is something that Mr English never touched on before the Finance and Expenditure Committee nor Mr Heatley today and Mr Ryall refused. They blocked our request at the Finance and Expenditure Committee to have an analysis done on Molly Melhuish’s calculation about price rises—State-owned enterprises mark to mark to the private sector suppliers. They blocked that advice at every step of the way. They refused. Bill English said it was not worth getting the work done and refused to get that advice. I would have thought that if we are wrong they would be racing to Treasury and to their officials the Ministry of Economic Development and the like to get the justification to try to knock us over. Or is it the case that we are right and they do not want explicit advice to their Ministers saying that it is going to be a rough old winter and a rough old winter for the next few years and beyond for the poor old Kiwi consumer? Yet again we are blocked at every turn and this Government at the end of the day must front up—