Standing Orders—Sessional 
Standing Orders—Sessional 
[Volume:614;Page:10330] 
Standing Orders—Sessional 
Dr MICHAEL CULLEN (Leader of the House) 
: 
 I move  
That Air New Zealand Limited be a public organisation for the purposes of the Standing Orders.  
This is a relatively simple motion. It is in response to a number of concerns raised by a number of members of the House. I think particularly Peter Dunne raised this issue most clearly at the first instance since the Government took a substantial controlling interest in Air New Zealand. Nevertheless because Air New Zealand has not been a public organisation for the purposes of the Standing Orders it has not been possible for the select committee and indeed Parliament as a whole to have a proper examination of the way in which the Crown shareholding is being operated within Air New Zealand and related matters. 
So for the purpose effectively of Standing Orders 329 330 and 334 which deal with financial review processes in particular this motion means that Air New Zealand becomes a public organisation for the purposes of those Standing Orders. That means the annual report is tabled and that annual report stands referred to the committee conducting a financial review of the performance of the organisation. Also that report and the matters contained therein is part of the annual debate on the performance of Crown entities public organisations and State enterprises. I think members will appreciate that this will be a little bit different from dealing with a State-owned enterprise or a Crown entity where the Government has a 100 percent shareholding because the interests of minority shareholders will mean that probably there will be a somewhat different approach required on the part of the organisation itself. It is those interests—the minority interests of shareholders—that also have to be protected. 
But certainly speaking personally as the Minister who holds the shares on behalf of the Government it is perfectly appropriate that I should be subject to scrutiny by the select committee if required in terms of the way in which that shareholding itself has been exercised. Of course I would issue a prudent warning to all members that as a shareholder I am bound by the Companies Act the Securities Act and various other things and people may wish to ask me questions about matters that I cannot possibly be held responsible for. Indeed if I made myself responsible I would be in breach of statute and find myself a deemed director. So I simply suggest to members that if they wish to ask why they have not got more flights from their home centre to Wellington the standard of food or the lack of it these days on Air New Zealand or other matters I am afraid those are very much management matters and not matters that the shareholding Minister can be held responsible for. Indeed the Minister is specifically debarred from being involved in those sorts of matters much to my regret since the Monday morning flight from Napier is usually the one that most gets delayed in order to allow the 737s to land from Christchurch and Auckland at the same time. 
Stephen Franks 
: Explain this to your junior whip. She does not know what shareholders do and what directors do! 
Hon Dr MICHAEL CULLEN 
: I am sure my junior whip does but of course she is not a shareholding Minister. Therefore she is not subject to the same constraints as the shareholding Minister is in this respect. There is a certain sense in which when one becomes a shareholding Minister certain parts of one’s political anatomy are caught so to speak—cut off—and one finds oneself with a somewhat higher register in approaching these matters than other members of Parliament. 
So I commend the motion to the House. I think it is an important move that Parliament is able to scrutinise the activities of Air New Zealand in this respect and indeed of the role of the Government as an 83 percent shareholder in the company. 
GERRY BROWNLEE (Deputy Leader—National) 
: 
 The National Party will be supporting this motion but only so that we can get a little bit more information about the way in which the Government has structured its investment in Air New Zealand and also so that we can formally state now that this is the final act in the renationalisation of Air New Zealand. Effectively as of tonight Air New Zealand becomes a State entity and therefore subject to the scrutiny of Parliament. That is not necessarily good for New Zealand and we will be watching very carefully through the processes now available to us just how Air New Zealand is structuring and restructuring itself bearing in mind that the assumption would be now that it has a strong level of social responsibility as all other State-owned enterprises have under the current Government—something that we do not necessarily agree with but in terms of this motion we are very pleased that there is an opportunity now to scrutinise its activities. 
In that regard I hope the Government relations people inside Air New Zealand are listening and take the strong message that they now deal with Parliament not the Government exclusively and that they need to change the way they have been dealing with the Opposition over the past 2 to 3 years. The idea that they are not accountable in any way for taxpayers’ funds to members who sit in Opposition should go out of the window. This motion should completely disabuse them of that notion and they should start engaging with us as soon as possible so that we can have meaningful financial reviews and scrutiny of the company. Otherwise of course we just get into the very unseemly exercise of dragging the chief executive and chairman before a select committee on an annual basis giving them a pretty severe grilling putting them in a position where frankly they will not be able to answer some questions and to the public they will look somewhat incompetent in the way they are running the airline. 
I do not think there is much point in hammering on too long about this tonight. We know that when the Hon Michael Cullen stands up and moves one of these motions in a mumbling fashion there is a lot more to it than he wishes the general public to understand. This is the final act of renationalisation of Air New Zealand and it is a message to the board of Air New Zealand to change its style and start dealing with Parliament on a much more equitable basis. That is now a requirement put upon the company by the taxpayer who through Michael Cullen holds those shares. 
We could go on at some length if we chose about the activities of Air New Zealand over the last 12 months. I do not think that serves a lot of purpose here other than to say we will be most interested in how the company treats the proposal from Virgin Blue Airlines to enter the New Zealand market. 
 It would be nice in Opposition to know whether it is true that it has taken particular steps to prevent Virgin Blue taking a holding in the Auckland airport and are effectively holding up the introduction of a further competitive service on our airways. Because of the complete disregard for the Opposition by Air New Zealand over the last period of time we have no idea whether that rumour is true. We simply have to take on face value that it is probably the way it has been operating. For a State entity to behave like that is not acceptable and we would expect there to be some answers to us on that issue and many others certainly sometime prior to Christmas. 
On that note I indicate that we will support this motion. We do not believe that the nationalisation of Air New Zealand is a good thing but while there is in excess of $800 million of taxpayer capital committed to this company in the interim we think that it is appropriate it answers to the whole of Parliament. I restate that I hope Air New Zealand is getting that message as well. 
IAN EWEN-STREET (Green) 
: 
 The Green Party supports this motion. The issue of Air New Zealand becoming a public organisation is one that we have raised with Dr Cullen in the past. We are pleased he has responded in this way to our requests. It is vitally important that a company that has so much taxpayers’ money invested in it with over 80 percent public ownership receives parliamentary scrutiny. The accountability mechanisms of Air New Zealand were an issue that we raised with the Auditor-General over a year ago and as a consequence we support Air New Zealand becoming a public organisation for the purposes of the Standing Orders. It is however a shame that the Government is not prepared to do the same thing with the Overseas Investment Commission so that we can give it the scrutiny it also deserves. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 New Zealand First also supports the Government’s stance on this issue. We are very pleased that Air New Zealand will be recognised as a public organisation for the purposes of the Standing Orders. We believe it is timely that this organisation comes before Parliament and is subjected to political scrutiny by a select committee. New Zealanders are very proud of Air New Zealand very proud indeed. When New Zealanders get on board the airline in places like London or Los Angeles they immediately feel it is part of being at home. I know I feel that myself. When I came back from London a few months ago and I boarded an Air New Zealand aircraft it was like being back in New Zealand. 
Simon Power 
: Did customs frisk you? 
PETER BROWN 
: No but customs did frisk my wife as we left New Zealand. Anyone who has nothing to be fearful of should not be afraid of the Customs Service. I tell the member that because he might need a little bit of enlightening on that aspect. 
Air New Zealand has a tremendous reputation when it comes to safety and service. In terms of safety it has had some unfortunate moments but one has to admire the positive way it reacts to addressing those issues. In terms of service I do not think there is an airline that can match it. There is certainly none that can beat it. However when it comes to the business side of Air New Zealand it has a rather chequered past. It was sold and it had a disastrous arrangement for want of a better term with Ansett Australia and that almost brought Air New Zealand to its knees. The Government rightly so in the opinion of New Zealand First bought the airline back. We were pleased that it did that and we are absolutely pleased it is now inclined to make this organisation a public organisation for the purposes of the Standing Orders. 
Unlike the Greens who want to claim credit for just about everything we recognise that it is a move by Dr Cullen probably in particular and the Government and we are supportive of this initiative. There is not a great deal more to say except to add that it seems to me that this will go through the House with a degree of if not total support certainly a high level of support from all politicians from all parties. New Zealand First supports this Government motion. 
STEPHEN FRANKS (ACT) 
: 
 This motion that Air New Zealand be a public organisation for the purpose of the Standing Orders is a sort of motherhood motion. It is the kind of move that is very difficult for a parliamentarian to criticise because of course we like to think that the scrutiny we give to any organisation is very necessary and we want to be proud of our sniffing for abuse of resources looking for waste and for corruption. 
However this is actually an abject admission of failure. This is the last stage in recording that this has become a renationalised public asset or liability. The $800 million that was first put in is just the start. I have forgotten but I think there has already been another $140 million since then. If the board of Air New Zealand is to be believed and if the Minister is to be believed this is not a viable airline unless it is allowed to go and sell itself to Qantas. If they are to be believed this will end up as the New Zealand Parliament sniffing around the skirts of an Australian-controlled organisation and trying to understand the strategy implemented by an Australian-dominated board. 
The New Zealand board at present may protest that it will not be so and that it will be some kind of alliance. Anyone with commercial experience knows when a minnow and a giant get together in a so-called partnership who ends up calling the shots. 
This is sad also because of the pathetic way in which commercial organisations get scrutinised by Parliament. We are politicians. When we look at State-owned enterprises and at companies we do not give the credit for the mistakes that have to be made. Any constructive business will make many mistakes. Any constructive business will incur many losses. Any constructive business will run all sorts of risks that politicians do not know about and never want to run. 
With political scrutiny of a business one gets the focus on the things that went wrong—the stuff-ups—whereas commercial scrutiny of a business focuses on what the outcome was. Did the company make money? Overall were the risks that were incurred made worthwhile by the benefits that were achieved? For politicians those defending will simply try to point to the politically obvious high points those attacking will look for the errors the inevitable errors in a commercial operation and say that the risks have not been worthwhile. 
We will of course get the special pleading. We will get Mark Peck complaining that the number of flights to Invercargill is too small. We will undoubtedly get the Labour Party whip complaining about the service to Dunedin. We will get MPs who probably fly Air New Zealand who do not worry about whether their trip is useful because it is money going in a circle complaining about the temperature of the coffee. That is about the level that politicians can understand when they are dealing with business. That is about the only level that Labour Party members none of whom have ever made a buck or contributed to anyone’s wealth can use when they assess a commercial operation. 
 Of course it was that naivety that has ended with Parliament having to consider a motion like this. It was naivety that had the Government put in $800 million to bail out Brierley Investments when it could have picked up Air New Zealand for nothing; when it could have let it go to the wall which is what it said was about to happen and not paid a cent in goodwill to anyone and then have rescued it if that is what it thought had to be done the day after it had gone into receivership. 
But the political naivety and the embarrassment of the Minister after the Prime Minister had jerked the market around and breached the Securities Amendment Act with her insider trading and market manipulation! The Minister then of course had to rescue Air New Zealand because the Government could not afford to let the normal scrutiny take place which would have occurred if it had collapsed. 
We had the Minister throw $800 million of taxpayers’ money into Air New Zealand. Fortunately in commerce the Government still found some very good directors and a very good chairman who were prepared to give it a go but I am sure on the basis that they would run it as a commercial operation. 
The next step of course will be much more toady-like. When they have been through two or three sessions of the purported examination by a select committee and the useless debate that covers commercial issues in this House in the report back people like Ralph Norris and John Palmer will say that they have better things to do with their time. They will have better things to do with their time than to argue about the selection of aircraft and what sorts of influences have been brought to bear. 
This is an early stage of the return of “Stan the man”. Hardly anyone here would know what that refers to but he was the full-time lobbyist who used to ensure that Air New Zealand bought only Boeing. 
Dail Jones 
: I remember that. 
STEPHEN FRANKS 
: Dail Jones would remember “Stan the man”. That is how airlines are run when Governments are involved in them. That is exactly the future. That is all he did and that is exactly where this airline is heading for. The minority shareholding in public may be a slight hurdle or a slight obstacle to the full-scale renationalisation and recorruption of an airline. The minority shareholders will be able to object when the Government starts to require that rugby league teams and netball teams be carried at reduced rates otherwise life will be hard in the select committee and otherwise appointments as directors will not be renewed. 
When the Government gets its finger into that kind of direction the minority shareholders will have a legitimate grievance but how will they know? They will be jerked around by the political requirements the Minister’s desire to look good and the so-called democratic—what is the other term used by Mr Brownlee? He talked not about public service or public good but used some buzz-phrase of the moment like “triple bottom line”; anything that measures a business other than on what it should be measured on—in other words whether it is getting a good return on assets running efficiently and whether the market is saying that those people are doing better with those assets than the next people would and avoiding takeover. 
Of course there will be an opportunity for people like the Greens who I know applaud this move—they will be able to ask why they are not using organically produced ethanol instead of kerosene whether GM-free food is in first class. They will have a wonderful time in this House looking at the really critical issues for Air New Zealand! We can see that. 
We might well have New Zealand First wondering whether the stewards are free from contamination in their overseas stops. Some of them might have been to a mosque; who knows! The really politically important issues will be covered in this House once Air New Zealand is back under the tender scrutiny of democratically elected representatives trying to pretend that they are business people. 
It really is strange how many wannabes one sees in the House; how delighted they are salivating at the thought of interrogating the upstarts who think they can run businesses better than the democrats from the left. Those people have never ever made any money to contribute. They have always been employees and now are so delighted to be back in control of an airline and so delighted to be able to play with the trains. 
It is odd how each time technology develops a new leading edge the State wants to get in there be able to fly around on it and put the logo on the tail. It is like the Minister of Police choosing the décor for police cars. I suspect that the Minister for State Owned Enterprises did manage to avoid dictating whether it would be Frodo or Bilbo on the Air New Zealand plane. But that degree of freedom for Air New Zealand will not last long. That degree of freedom for Air New Zealand will soon be seen as excessive by a Labour Government that is thoroughly enjoying getting back into throwing taxpayers’ funds into competing with the private sector. 
For companies like Origin Virgin and all those other airlines that will have to compete with the bottomless pocket of Air New Zealand they too will get drawn into the political process. They will have to organise all their commercial campaigns through Parliament. In other words our entire transport sector will get drawn into politics instead of business. To have that trumpeted by the Minister and applauded by the Greens and New Zealand First is an instance of how sad it all is. 
GORDON COPELAND (United Future) 
: 
 United Future will be supporting the motion that Air New Zealand Limited be a public organisation for the purposes of the Standing Orders. I believe that it was shortly after the bail-out of Air New Zealand following the collapse of its deal with Ansett and the injection of taxpayer funds into the airline to give it ongoing viability—a move that United Future like others strongly applauds because Air New Zealand is such an iconic part of the New Zealand commercial structure and an integral part of our tourism industry—that my colleague the Hon Peter Dunne first raised with the Government the matter of how we now make this organisation accountable in some way to the Parliament of New Zealand. The reality of course is that the airline is now under Government control and therefore Parliament does have responsibility on behalf of the taxpayers to scrutinise and review the stewardship of those funds. As Stephen Franks has mentioned Air New Zealand has a sound board and management. But like any other company it remains accountable to its shareholders who in this case are the people of New Zealand. Being a shareholder carries with it the responsibility of being a proprietor. That includes evaluation of the need for new capital and all the other issues that normally arise at the annual general meeting of a public company. It is very important that shareholders take their proprietorial responsibilities seriously. We have seen a lot of examples in the commercial world in recent times and throughout the corporate sector of many shareholders basically just regarding their share scrip as an investment in an organisation. They wipe their hands of its running and stand back from it sometimes with quite disastrous results. 
Stephen Franks made some interesting observations about the kind of tensions that this new arrangement might well bring to bear but I do not see an alternative for it. It is a step forward from the present situation where this company with its hundreds of millions of taxpayer investment is effectively accountable just to a single person—namely the shareholding Minister Michael Cullen. It is a step forward to say: “No the airline should be accountable to its shareholders who are the taxpayers of New Zealand through Parliament.” I think this is an evolutionary step. Personally I would like to see this thing evolve a lot further. For example we should give thought in due course to whether there is some way we could have a kind of annual general meeting whereby the other shareholders—and of course we have many thousands of private shareholders also in this airline in addition to the taxpayer—could be represented along with perhaps some representatives of this Parliament who would be there to represent the interests of the taxpayer. It is an interesting evolution. It is a new challenge for Parliament to manage through this process as it were or scrutinise through this process a public company that is not just 100 percent taxpayer owned. Continued taxpayer ownership of Air New Zealand will carry with it the obligation for new capital injections as the airline moves forward. For example this Parliament has set aside a further $150 million to go into Air New Zealand in the very near future. In our view that kind of occasion of capital injection certainly deserves parliamentary scrutiny. The short point is that this motion makes sense at this point in time and will have the support of United Future on that basis. 
Motion agreed to.