Bayly AndrewANDREW BAYLY (National—Port Waikato): Thank you Mr Speaker. First of all I'd just like to acknowledge the leader of ACT to demonstrate he's a good follower of the news. I note that he seemed to repeatedly refer to Fran O'Sullivan's article but yesterday Hamish Rutherford wrote an article which is headed and I quote … Air New Zealand letter put airline board in 'invidious position:' ''—that was the heading. Also he must have been following the radio this morning because of course Mike Hosking picked it up as an item of importance. So I'm glad that Mr Seymour is following our lead which is very good.I think this whole issue is about whether or not Mr Robertson is the new reincarnation of Mr Muldoon. I say that because when I took over the job as shadow Treasurer late last year I called on Mr Robertson to act in terms of section 68B of the Reserve Bank of New Zealand Act and he called me the reincarnation of Mr Muldoon but subsequently followed my advice. This is another example of the Minister of Finance acting as someone who does not understand the current situation and I've got to say I found the speech from Mr Robertson rather troubling because I don't think he has a proper appreciation of the dynamic in which his letter has landed.I thought it would be useful just to give a little bit of background. The first thing is that the Government quite rightly offered to advance the company last year $900 million at a rate of 9 percent which at the time was an incredibly high interest rate. The company has taken up roughly about $350 million of that loan. That loan of $900 million was offered without any letter of expectation. The troubling bit about this change is that very recently the Minister offered another $600 million which took the total offer to Air New Zealand to 1.5 and reduced the interest rate from 9 percent to 5.3 percent. Bearing in mind that the company's only taken up $350 million the most troubling thing is why the Minister took it upon himself with this second tranche of lending to the company to then write this letter dated 8 April. So that's the first issue: why would you in the first instance—and he talked about it before; trying to support the business. He did that in a manner free of interference from the company but the second tranche came with significant conditions. I think it's also worthwhile pointing out that it is well understood in the market that the Minister has had quite a significant involvement on the timing of the possible capital-raise of the company. Of course the capital-raise raising new funds would have dealt with some of the funding issues that Mr Robertson sought to address with the second tranche of $600 million. So whether in fact it's appropriate and to what extent the Minister has been involved in director negotiations—and it is well understood by the market that the capital-raise has been delayed on a number of occasions and particularly from March and everyone in the market is expecting that the next capital-raise will be completed by the end of September depending on whether or not Mr Robertson will agree to it.So the issue is—and what has been raised—whether the letter is the appropriate instrument to adopt. The Minister was very clear to say that "as a minority shareholder I can do what I like" and he made the point that many State-owned enterprises (SOEs) receive letters of expectation from the Minister. I would say to you that that is correct—if you are on the board of KiwiRail you get a letter of expectation from the Minister—but the difference with this one is that this a listed company. All the others SOEs other than the electricity companies are not listed. And in the sense that they're not listed and don't have to operate under the stock exchange rules then issuing a letter of expectation is perfectly appropriate and takes place regularly. The issue is that the Minister wrote a letter to a company that's listed on the stock exchange and the worst part about the letter was the nature and tone of the letter. If the letter had been advisory that would have been OK. If the Minister had made clear his views around his expectation in an advisory sense that would have been OK. But the letter is not written in that tone. The letter is very specific about requirements that Air New Zealand has to achieve. It talks about the continuing operation of the business continuing to maintain a comprehensive domestic network continuing to demonstrate its commitment to environmental sustainability and demonstrating a commitment to best-practice work places.That's fine as a general principle and in terms of advice but the issue this strikes at is that as a listed company board member you are operating in a totally different framework. And that is you are subject to the listing requirements and you have to operate under company law in the best interests of the company. The issue with this letter of expectation is that what it says is "This is what you shall do." The issue is if you are running Air New Zealand you need to be if you're a director free to operate that company in the best interests of the company and its shareholders—and that means all shareholders. And there will be times and I would think that in difficult times right now the company may take a decision to reduce certain domestic linkages. It may choose to do other things with industrial relations because its first priority is to protect the company and this is where the Minister has overstepped the mark. He has overstepped the mark in the sense that he has given a direction to the company. The second thing is that one of the most fundamental principles—and I've mentioned this before—is this requirement under the Companies Act to act in the best interests of the company. That really underpins all directorships and when you overlay that with a clear statement that the Government wishes to be actively involved in the reshaping of the board that gives rise to a potential conflict of interest and I think an implied threat. And I think this is where the Minister has been ill-advised and has shown poor judgment in writing a letter of this nature to this company which is a listed company. I think this is a real issue because in terms of the proposed capital-raise one of the issues—and I've been speaking to investment banks that may or may not be involved in the process but certainly have a view on it—is whether or not this level of interference that the Minister has shown that he is prepared to make will in fact lead to certain investors who might have otherwise invested taking a second look at this and perhaps not investing in the company. If there are fewer investors it will mean that the capital-raise will have to take place at a lower price which means that the value of Air New Zealand is lower and this is the point that Mr Seymour was making well before. This intervention has the potential to be a chilling impact on investors and I think again that this is where the Minister has shown particularly poor judgment. That's what I was talking about before—this tendency to throw the weight around in circumstances that are not appropriate.The last point I want to make which is the fourth point is that in the letter he clearly refers to the issues around what is expected of executives of the company. It is clear that directors run the company and set the policy. Executives implement the policy of the board. This reference to executives in the letter is a fourth transgression of that letter and again the Minister has shown absolutely poor judgment in writing a letter that's ill-advised and trying to cut across or assert the requirements of directors and the responsibilities of directors. I think we're wondering now whether Mr Robertson is—SPEAKER: Order! The member's time has expired."