Franks Stephen: Television New Zealand Bill — In Committee 
Franks Stephen: Television New Zealand Bill — In Committee 
[Volume:606;Page:3831] 
STEPHEN FRANKS (ACT NZ) 
: 
 The first schedule of the bill as reported back from the select committee states under “State-Owned Enterprises Act 1986”: “Omit from the First Schedule the words ‘Television New Zealand Limited’. Omit from the Second Schedule the words ‘Television New Zealand Limited’.” This bill takes TVNZ out of a reasonably thoughtful well-developed identifiable corporate structure and makes it what the select committee agreed was a hybrid. In a very plaintive rebuttal in advance the select committee stated: “the majority of us believe that shareholding Ministers’ ability to direct the TVNZG subsidiaries is sufficiently provided for ... TVNZG should therefore have the direct link to the TVNZG subsidiaries.” The committee went through the dividend-paying provisions and then said that it thought what was being proposed would work. It said: “Government members believe that the structure proposed is a workable hybrid model.” That is like saying it is neither fish nor fowl but we think it might work; or saying that although it is a sort of karaoke company lip-syncing its way through the system it might work.  
The State-Owned Enterprises Act of course suddenly became more appropriate for Transmission Holdings Ltd and after the select committee had reported that company went back into the State-owned enterprises regime. Only Television New Zealand sits out in this lonely “unusual hybrid” as Treasury referred to it. Schedule 1 is the part that implements the legislation taking Television New Zealand out of the State-Owned Enterprises Act. What is the effect of that? First we lose the benefit of section 4. Many might say that that does not matter. Section 4 of the State-Owned Enterprises Act states that companies under that Act must be as profitable as comparable private businesses. That may be anathema to those on the left who hate the idea of commercial success profit or return on assets but it is really a problem for the competitors of and the suppliers to Television New Zealand. Once this company is out of the State-owned enterprise regime as this schedule provides it can essentially crush the independent producers. This company is no longer required to get a normal return on its investments. It can do anything it likes in the so-called pursuit of its charter and it does not matter what happens to those it trades with or competes with. The legislation takes this company out of a regime that was supposed to intend that New Zealanders got a proper return on assets and therefore that boards could not excuse poor performance failure or no returns by saying that they were pursuing higher objectives.  
What else does it do? It takes Television New Zealand out of the section 7 regime which means that Ross Armstrong’s little jaunt to Paris might well be something that he could justify without having to show that there was a normal commercial return. Section 7 states that State-owned enterprises can only contract for the delivery of social purposes if they do so on an arms-length basis and get proper consideration. It is a discipline so that Government cannot extract little benefits for its mates from State-owned companies without accounting for them. Taking the section out and not replacing it with anything means that when Ross Armstrong was off investigating Bulgarian—[ 
Interruption 
]—programmes dubbed in English which he was exploring in Paris he could say that those social services or that particular advance was something that the Government wanted him to do. He did not have to show a proper return on those endeavours; it was merely enough that the Government had expressed a desire to do them.  
Taking Television New Zealand out of the State-Owned Enterprises Act makes that sort of conduct much easier because there is no longer a section 7 to comply with. There is no longer a requirement that any of those so-called social services have to be paid for transparently by Government appropriation or by payment from the other organisations that get the benefit. So maybe it was another Government organisation Dr Ross Armstrong had been appointed to—perhaps fishing—that was going to get the benefit.