Norman Russel: State-Owned Enterprises and Crown Entities (Protecting New Zealand’s Strategic Assets) Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
Norman Russel: State-Owned Enterprises and Crown Entities (Protecting New Zealand’s Strategic Assets) Amendment Bill — First Reading 
[Sitting date: 29 August 2012. Volume:683;Page:4893. Text is incorporated into the Bound Volume.] 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I rise on behalf of the Green Party to speak in support of the State-Owned Enterprises and Crown Entities (Protecting New Zealand’s Strategic Assets) Amendment Bill. In between the ad hominem attacks that have characterised most of the Government speeches so far in this bill there has actually been some interesting debate around the role of State ownership and I would like to talk a little bit about that. 
The Green Party believes in a mixed ownership of the New Zealand economy in the sense that we have a combination of the State sector but also the private sector. I think that if you look at most successful modern economies they involve a combination of the two. For that reason the Green Party just does not have the problem with the role of State energy companies in our economy that clearly the ACT Party has and also the National Party has. 
In this debate around State ownership the Hon John Banks did make an interesting point. He said that private management is always better. That was the essence of his argument. It is interesting to look at the most recent case which is of course Mighty River Power. Mighty River Power was recently given the award for best energy company of the year in New Zealand. There are a number of energy companies in New Zealand. Mighty River Power is one of the State-owned ones but there are a number of others that are privately owned. TrustPower is one of them for example and Contact Energy is the other major one. There is competition within New Zealand between State-owned energy companies as well as privately owned energy companies or companies listed on the New Zealand Exchange. When that competition was put to the test by the peers—the peers in the industry considered these different energy companies—they came to the conclusion most recently that the best energy company and electricity company in particular in New Zealand was Mighty River Power. That I think demonstrates that it is not always the case that private sector managers are always better than public sector managers. 
There are many other criteria you could use to make this assessment. If we were to look at the case of Air New Zealand after it was privatised and handed over to private sector managers they immediately bankrupted the company when they made a very poor decision to buy Ansett Australia. As a result the State had to step in again to rescue that company. So we have numerous examples where private sector companies have made very poor decisions that resulted in quite considerable economic damage to New Zealand and public sector companies or State-owned companies have made good decisions and have been good managers. No doubt the reverse is also true. So to say point-blank as a kind of blanket argument that private sector managers always do better is to argue against the evidence. The evidence actually is a bit more mixed than that and it is not necessarily directly related to whether it is State-owned or privately managed. I think that that is very important to this debate. 
Putting aside the question of who are better managers—because you simply cannot argue in a New Zealand context that looking at the energy companies the private sector energy managers are always better—the question is what the characteristics of the New Zealand economy are that mean it would be a bad idea to privatise the energy companies. One of the characteristics is that in fact it is a small open economy that runs a large current account deficit and the reference to Mike Moore is I think pertinent in this respect. As a small open economy if these energy companies were privatised it is very likely that they would simply fall into overseas ownership over time. This is of course what happened with Contact Energy. 
An economy that consistently runs a current account deficit has this problem. How do you fund a current account deficit? There are three ways: the main two ways are you sell assets or you borrow and of course the third way is you print money. The main two ways are to borrow or to sell assets. Once these important companies were privatised if the Government went down that route it is very likely over time that they would fall into overseas ownership. That would add to New Zealand’s current account deficit and that is a long-term strategic problem for New Zealand. 
In particular in relation to the energy companies that the Government is talking about privatising the Green Party has gone to some length to put up a positive alternative and that is that these energy companies should be part of a renewable energy sector—an export sector to the rest of the world. Mighty River Power is already exporting geothermal technology to the world and Meridian Energy is doing the same with some of its renewable projects. This should be New Zealand’s next Fonterra. We should be world leaders in renewable energy exports but we can do that only if we keep these companies with their headquarters in New Zealand and with their research and development maintained in New Zealand and that means keeping them in State ownership. That does not mean that they do not partner with the private sector. Of course they should partner with the private sector. But if we are to get the real economic advantages from a renewable energy export sector in New Zealand we need to keep these companies in public ownership and that is why the Green Party has taken that position.