O'Connor Damien: Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill — In CommitteeText is incorporated into the Bound VolumeO'Connor Damien: Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill — In Committee[Sitting date: 02 July 2013. Volume:691;Page:11750. Text is incorporated into the Bound Volume.]Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman):Thank you Mr Chairman. Your wisdom shone through if a little slowly.The CHAIRPERSON (H V Ross Robertson): Oh I might take that call back actually.Hon DAMIEN O’CONNOR: Mr Chairman—[Interruption ] That is right. That is right; I apologise. If there was any offence taken I am prepared to withdraw.I know that some people may think that my colleagues have strayed off track but I am going to stay in the part of the bill the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill that we are discussing here. I refer to a part of it that I am unclear of. The “Minister for Prison Riots”—Minister Anne Tolley—is the Minister in the chair. Maybe she could explain clause 5 which is around “Premiums from issue of rights to subscribe for shares”. It seems reasonably—Hon Trevor Mallard: No no it wouldn’t have “premium”. It’d have to be “premia”.Hon DAMIEN O’CONNOR: Well premiums premia premiums—no no well I am not quite sure. But do you know what sprang to mind—and maybe the Finance and Expenditure Committee chair or members could answer the question—was has this been changed to give more benefit to those people who can afford to buy Mighty River Power shares?What we have had of course with the sell-off of State-owned enterprise shares are premiums and incentives for so-called New Zealand investors. I am sure some of my colleagues here who are a little more knowledgable in this area of taxation may be able to answer it but I would appreciate the Minister getting up and answering my question about the premiums from issue of rights to subscribe for shares. If I go here in the bill it says: “A distribution by a company to a shareholder is not a dividend if—(a) the company issues to the shareholder a right (the ‘shareholder right’) to subscribe for or dispose of to the company a share in the company at a given price (the ‘shareholder price’);”.The point is that we have a loyalty bonus share scheme. That is the way that John Key promoted the retention of ownership in New Zealand hands of the sell-off of half of our State-owned enterprises starting with the electricity sector. What was effectively a lie—and I will say “a lie” because it has been an untruth—was that these companies will be sold off to New Zealand investors. It is an untruth because they have not been—Hon Tau Henare: Call it a lie.Hon DAMIEN O’CONNOR: I will call it a lie if you would like. In fact of all the hype around the sell-off of Mighty River Power shares I go back to the reality that there were 113000 investors who took up the share offer and I am guessing that all of thosepeople were then entitled to a loyalty bonus share scheme. That might on the face of it seem like a good deal for Kiwi mum and dad investors because that was what we heard from the Prime Minister and all the idiots over there on the other side. We heard that this was an opportunity for mums and dads to go and buy shares in a company that they already owned. Well let us look at what actually happened. Those 113000 so-called Kiwi investors included trusts companies and investment institutions—hardly mum and dad investors I would say to you. In fact half of those shares went to a mere 13000 investors—Hon Anne Tolley: I raise a point of order Mr Chairperson. I am sorry. I have been listening to the member—sort of—for quite some time. I fail to see what the sale of State assets has to do with the bill in front of us.The CHAIRPERSON (H V Ross Robertson): We are actually speaking to Part 1 but—Hon Clayton Cosgrove: I raise a point of order Mr Chairperson. Like the Minister I was also listening intently to a large number of these speeches. They have been wide-ranging covering all sorts of issues and you quite rightly have used your discretion not to pull people up. So it may be that the truth hurts but she cannot have it both ways.The CHAIRPERSON (H V Ross Robertson): Order! The member was doing very well—Hon Clayton Cosgrove: Thank you.The CHAIRPERSON (H V Ross Robertson): —was—but can I just say that I ask the member to continue in the vein of his speech. Relevancy is my discretion.Hon DAMIEN O’CONNOR: I appreciate that Mr Chairman and I do appreciate your wisdom as I said at the start. Can I say that if the Minister of Police is not on top of her game if she does not know what we are debating here she should go to clause 5 of the bill and then get up and explain to me whether the bonus offer loyalty scheme for the sale of the State-owned enterprises will apply to new section CD 29B(3) in clause 5 which states: “A distribution by a company to a shareholder is not a dividend if—(a) the company issues to the shareholder a right (the ‘shareholder right’) to subscribe for or dispose of to the company a share in the company at a given price …”. What are the rights attributed to the loyalty bonus share scheme shares offered to the so-called Kiwis—[Bell rung ]The CHAIRPERSON (H V Ross Robertson): I call the honourable member but focus on Part 1.Hon DAMIEN O’CONNOR: Absolutely. Well I read it out Mr Chairman. I can read it out again if you like.The questions I ask about the loyalty bonus share scheme in relation to the sell-off and the sell-down of our State-owned enterprises apply to this taxation bill. I would like some answers. The lie that we are referring to was that this company would be sold to Kiwis. They would be offered a bonus scheme a loyalty share offer and I wondered whether this legislation in any way undermines the benefit that will come with that loyalty bonus share scheme. It is a relevant question and I think there are a whole lot of Kiwis who currently own this State-owned enterprise who have been conned. They thought that the 49 percent might actually go to Kiwis. The reality is quite different. The question will be: do these institutional investors have the right to the loyalty bonus share scheme and do they have the right to the provisions or are they affected by the provisions in this piece of legislation? Meridian Energy we are told is going to be next off the block so it is only fair that we clarify for mum and dad investors—that is to quote the Prime Minister and Mr Bennett who is up there trying to sell it to all the people in Hamilton—what they might get.We have seen a slide in the share price. In fact many of those mum and dad investors have lost money at this point in time. I do not know what the share price is today. Maybe someone could let me know.Hon Clayton Cosgrove: Oh they’re pretty low.Andrew Little: Not good.Hon DAMIEN O’CONNOR: Are they still on the negative side? [Interruption ] Less than $2.50. So indeed the promise by all the share traders by the Minister and in fact by the trader who is the Prime Minister—you cannot believe most of what a trader will tell you because they are basically a glorified salesperson who clips the ticket on the share price or the derivative price going up and down. That is exactly what John Key is doing. He is clipping the ticket. I have to say that it is a really sad thing to admit that it is a popularity ticket. He is clipping it and meanwhile the dividends are going down for most New Zealanders across the board. It is harder for them to live they are working longer hours and the share trader clips the ticket on the way up and down.I come back to the bill; I have not strayed too far from it. The other danger in relation to the sell-off of our State-owned enterprises and the need for us to clarify in this legislation how the distributions and how the loyalty bonus share scheme will work for people so that the Kiwis who might who can afford to—and I would have to say that 10 percent of the shares of Mighty River Power went to 400 people which is an average investment of $250000. Was that your average mum and dad? I doubt it—I doubt it.To come back to the reality and the hype around the next sale—that is of Meridian—we need to know what might happen to any bonus scheme that will be offered there. I would suggest that the Prime Minister is going to have to offer a sweeter deal another deal or some other kind of twisted arrangement that looks good on the face of it. But as many of the investors the mums and dads who have invested in Mighty River Power will be finding it is not all beer and skittles. In fact that share price has gone down. I am not sure whether they will get their dividend. It has not been terribly positive for anyone really other than the Minister of Finance who has got a bit more money to play with and he is spending it about 10 times over.I will come back to the bill and ask: can the Minister of Energy and Resources who is now the Minister in the chair hop up and answer the questions as to whether the distribution through a loyalty bonus share scheme will be affected by this piece of legislation. I have many things to comment on in the livestock part of this legislation but I will just start in this first part of the legislation. I know the Minister of Energy and Resources he is a smart Minister—he says so all the time. Can he get up and answer these questions? That is the least that an up-and-coming knowledgable Minister could do in the Chamber this afternoon.