Clark David: Mixed Ownership Model Bill — Second Reading 
Text is incorporated into the Bound Volume 
Clark David: Mixed Ownership Model Bill — Second Reading 
[Sitting date: 14 June 2012. Volume:680;Page:3015. Text is incorporated into the Bound Volume.] 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 Well it is interesting to rise to speak after that member Nick Smith. He expressed concerns about rationality. Let us face it: no one has ever accused him of embodying rationality. This is the member who blocked every attempt to get information from Treasury on the Finance and Expenditure Committee. He was not alone. The National members did not want to hear the facts. They did not want the facts from the officials who were there to guide them. And why was that? Why were they afraid of Treasury? Why were they afraid of the advice they would get? Because it would say that they were wrong. It would say that they were rushing the process and that they were not in possession of all of the facts to make the right decision.  
Mr Smith raised the issue of the chambers of commerce at the end of his—well how do we describe this? 
Chris Hipkins 
: Tirade. 
Dr DAVID CLARK 
: This tirade. He said that the chambers of commerce unanimously presented a view.  
Hon Dr Nick Smith 
: All 29. 
Dr DAVID CLARK 
: It is not quite like that. I asked in the select committee—Mr Smith may have been away that day if he said that that was representing all of their members because I know members who do not think this is a good idea—and the presenter conceded that he did not represent all of the members. So Mr Smith is wrong. Mr Smith is wrong.  
He has been amusing himself throughout this speech about the legislation. This is not an amusing matter. This is terrible legislation. This takes New Zealand backwards Treasury has said by $94 million a year and rising. An earlier speaker Mr Goldsmith talked about the chambers of commerce too. He clearly was not listening. I wonder whether any of the National members were listening or whether the cotton wool in their ears during those select committee hearings was simply too thick.  
It was a rushed process. There were no hearings in my home town of Dunedin despite requests. There was short notice for the teleconferences. The presenters did not have the time often or the ability to get there to make their submissions that they had wanted to make. It is unpopular legislation. National took every chance it could to limit the opportunities for those to present who wanted to present against it. Just 0.6 percent of the submitters wanted to speak in favour of this legislation in their written submissions. In a recent poll 80 percent objected to this legislation—80 percent of New Zealanders. These are our assets and we do not think they should be sold.  
It is economically foolish to sell our best revenue-generating assets. These have historically delivered dividends we are told of 18 percent and that compares with borrowing costs of 4 percent. It makes no sense to sell these assets. What will it mean if we sell them? Further down the track it will surely mean cuts to public services and that is what this Government wants. That is the real agenda. It wants to leave future Governments with no choices. It wants to leave future Governments with no choice to put money into the education and health sectors because it believes in supporting those who are already wealthy and who can already afford to buy those services.  
The people who will be able to afford these shares that are going to be put on the market are the mums and dads who benefited most from those tax cuts; 44 percent of the value of those tax cuts went to the top 10 percent of earners and the bottom 20 percent of earners got just 2 percent of the value of those cuts. We know who will be the first in the queue to buy those shares and it will not be the majority of New Zealanders. Treasury tells us this legislation will take us backwards as a country by $94 million per annum.  
So what is the Government’s argument? Why does it want to do this? Nobody can understand. Firstly it said it wants to pay debt. Well frankly Government debt is an issue we need to keep an eye on but it is not the real issue in New Zealand. Private debt is the big issue here. We need pro-growth policies that support our exporters and not to be focused on the limited concerns of Government debt. “We need to pay for social infrastructure.” is what National said next. That is what it said in the Budget last year. Well in this Budget it has come up with a different story again—a third story—and now it is about other infrastructure. Government members do not know what this money is for. They do not have a plan for it. All they know is that they want to sell these assets off.  
They do not like the facts. The Budget Policy Statement tells us that $266 million a year will be saved in borrowing costs if these assets are sold off. But it also tells us that we lose $360 million in forgone dividends. That takes us backwards by about $100 million a year. It ties future Governments into borrowing when we go down the path of a partial privatisation model. Future Governments wanting to expand these enterprises will be tied into capital expansions driven by the other shareholders. Governments will have to stump up more funding and that could mean more borrowing further down the track. It is short-sighted legislation. That is what we get with a rushed process.  
We know too that the dividends will flow offshore. We have got an example of that a historic example. We know about Contact Energy. 
Hon Clayton Cosgrove 
: Who sold that? 
Dr DAVID CLARK 
: “Who sold Contact Energy?” my colleague asks. Well well well. Mr Smith referred to it earlier but he was not sure he was a bit vague on it. It was the National Government that sold Contact Energy. We know that since it was sold $1.5 billion has gone to private shareholders and we also know that the majority of those shareholders are overseas. The first thing that happened was that those shares got onsold. This Government says that—magically—that is not going to happen this time that the energy sector has changed and that the shares will go on the market and mum and dad will buy them—mum and dad mum and dad mum and dad. Well where is the guarantee? There is nothing in the legislation that will stop these shares being onsold. We know that what will happen is exactly what happened with Contact Energy; the profits will flow offshore. They will flow offshore.  
They have gone quiet on the other side. Their heads are down. It is not surprising. They know that this will affect them. They know that the New Zealand public does not like this legislation. They know it is a bad move. They have put in a little clause which they slipped in at the last minute so they can wind the legislation back if they have to. That was an interesting move. That was an interesting move right at the end. We see a back-down clause. They have put a back-down clause in. We have called it the “Hekia Parata clause”. They sneaked that into the legislation at the last minute to give them an out because they know that the public of New Zealand do not like this.  
What about the $120 million that is going to merchant bankers for this sale? What of that $120 million? Well it is about priorities. Imagine what you could do with $120 million. It is probably another teacher in every school. Rather than taking one away you could put an extra one in every school if you were not paying that money to merchant bankers. This is short-sighted legislation and we are only happy to see that back-down clause because we know what it means. We know that Mr Key is giving himself a way out for another flip-flop.  
We heard from one submitter at the Finance and Expenditure Committee about the slippery slope and the partial privatisation model as it has worked overseas. What can happen is that when you get close to that 49 percent mark private investors who are shareholders in that company say: “We won’t put anything else in unless you privatise the whole lot.” They hold the company to ransom. It has happened overseas and we know how easily it could happen here. This is a slippery slope. But no on they go. What they say is “sell sell sell”.  
What happens when they are sold? Well the other thing we know is that power prices are going to go up. We have seen it happen historically; the Government has not stopped it happening. Between 2000 and 2007 we know from historic modelling $4.2 billion worth of overcharging happened in the power sector in New Zealand. We got a report back. Unfortunately Labour was just going out of office the National Government had the opportunity to act on those findings and to rein the electricity market in. It did not do it. It did not do it and what we see is Grey Power which came to the select committee and told us old people will freeze to death in their homes because of this legislation. That is what Grey Power told the select committee. It said old people will freeze to death in their homes because of this legislation.  
We also know that businesses will suffer because of this legislation. When the only thing that matters to a company is its bottom line when its social responsibility clause comes out—National is taking it out of the legislation; there is no social responsibility clause—we know that those businesses will look to their bottom line. That is what they are incentivised to do. They will not be concerned if there is a brownout and they will not be concerned if there is a blackout as long as they are making profits.  
But “New Zealand Inc.” will care. We all as a country will see our GDP dip. We will see confidence in our economy go down. These are some of the fish-hooks in this legislation which has not properly been examined in select committee because the process was rushed—rushed by a Government scared that it will get opposed and that its own support parties will walk away because of the unpopularity attached to this legislation.  
So how do we grow exports? Well it is not this way. It is not through switching who owns these power companies. That does not change productivity. If anything it holds it back. What we do know is that the way to grow exports is through having pro-growth policies through having more research and development through having good tax policies and not through flogging off our best revenue-generating assets. We are shedding our strategic advantage. We know that Google Apple and other companies in China and around the world are investing in renewable energy because they know that in the future that will be a strategic advantage. We are flogging off our best assets as fast as we can.  
Well there is still something that we can do and that is to get out in the streets and march and it is to sign the citizens initiated referendum that Grey Power is leading. I will be out on this Saturday in Dunedin looking for an opportunity to march down the street from the dental school to the Octagon to make my voice heard and I hope others will be around the country signing that petition. This is terrible legislation— 
Mr DEPUTY SPEAKER 
: Order! The member’s time has expired.