Parker David: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Parker David: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 28 February 2012. Volume:677;Page:574. Text is incorporated into the Bound Volume.] 
5. 
Hon DAVID PARKER (Labour) 
 to the  
Minister of Finance 
: Is it his normal practice to “guess” when determining the business case for selling billions of dollars’ worth of assets? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 No. The business case for the mixed-ownership model is very clear. It frees up capital on the Government’s balance sheet to invest in priority assets without having to borrow an extra $5 billion to $7 billion on top of the already considerable Government borrowings. It gives New Zealanders the opportunity to invest in strong Kiwi companies rather than in finance companies and housing and it is going to improve the performance of the companies because they will be more transparent and accountable. 
Hon David Parker 
: Is he aware that the forgone dividends and profits to the new shareholders are predicted to total $1.4 billion gross over the 4 years to 2016 and that even after deducting the interest savings the Budget Policy Statement—his own document—shows the operating balance before gains and losses as $815 million worse because of the sales? 
Hon BILL ENGLISH 
: As we pointed out when the Government released the Budget Policy Statement there are a number of ways of measuring what the member is referring to. You can measure it as a change in the cash flows in which case the Government is a bit ahead; a change in the accounting profit in which case we would be a bit behind; or include the net proceeds of the sale in which case we would be a bit ahead. The outcome of all that is that it is roughly fiscally neutral but we avoid a further $5 billion to $7 billion of debt. That member will have to justify to New Zealanders why he wants to borrow that $7 billion of debt. 
Hon David Parker 
: Does the Minister think the billion-dollar hole in his operating balance before gains and losses should have been included in his Government’s pre-election fiscal update given that the sale proceeds were included and if not why not? 
Hon BILL ENGLISH 
: Well there is no billion-dollar hole and in respect of the accounting for the decisions the Government is making we have had to follow the requirements of the Public Finance Act. Those are administered by Treasury and we have been quite transparent including in the Budget Policy Statement about the accounting impacts. One of the impacts that is clear is that if we can sell some of these shares to New Zealanders and pay them dividends it means we avoid borrowing an extra $5 billion to $7 billion and paying interest to overseas lenders. 
Hon David Parker 
: Did he have ministerial responsibility for the pre-election fiscal update and if so why did he allow it to include the proceeds of sale and interest savings from State-owned enterprise sales but not include the reductions in revenue? 
Hon BILL ENGLISH 
: That is not correct. What the pre-election fiscal update included was a decision by the Government at the time of a sufficient certainty that Treasury recorded it and that was that we would have zero capital allowances. It could not record any effect of the mixed-ownership sales because no decisions had been made. It simply had a promise from a political party. It was not until Cabinet had made decisions that it reached the threshold of certainty for being booked. The member might not like the Government following the rules but that is what we did. 
Hon David Parker 
: When will the Minister accept that including the proceeds of sale and interest savings in the pre-election fiscal update but not the revenue forgone from the shares sold was wrong? 
Hon BILL ENGLISH 
: Well what the member is saying is incorrect. The pre-election update included a decision that the Government would have zero capital allowances for the next 5 years and that is what Treasury recorded. All I can say to the member is what I said before: we followed the rules. The Government did not get ahead of its undertaking to New Zealanders which was that it would take no action on the sale of shares until or unless it had campaigned on the issue and been re-elected as a Government.