Norman Russel: Mixed Ownership Model Bill — First Reading 
Norman Russel: Mixed Ownership Model Bill — First Reading 
[Volume:678;Page:999] 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I rise to speak on the Mixed Ownership Model Bill the bill to steal the assets of most New Zealanders—the assets that currently belong to 100 percent of New Zealanders—and to hand them over to a small minority of New Zealanders. These assets are currently owned by everybody. Everybody owns these energy companies. They belong to all New Zealanders. What this Government is proposing to do is to take those assets from 100 percent of New Zealanders and give them over to maybe 1 or 2 percent of New Zealanders against their wishes.  
When we poll people and when independent polling is done time and time again New Zealanders say that they do not want their property taken from them. Time and again a large majority of New Zealanders are opposed to the privatisation schemes of this Government embedded in this bill. The reason they are opposed to privatisation is that they have seen it before and it was a disaster. If it is repeated it will be a disaster again. So that is why the majority of New Zealanders do not support privatisation—they have seen it before and it was a failure.  
This Government proposes to take the property of all New Zealanders and give it to the 1 percent and when you take people’s property against their consent that is called theft. This Government is proposing to steal the assets from 100 percent of New Zealanders and give them to the 1 percent. You might say: “Well you know what choice has the Government got? It has got all this debt. It has got a deficit problem.” and this is now the Government’s latest argument. The Government has used all sorts of arguments and I want to address a few of them if I get time. 
The latest argument is the one around debt. The Government has decided that this is the strongest argument that it is going to rely on debt. The Government’s deficit is self-induced; let us be absolutely clear about this. The Government gave away tax cuts to upper-income earners that cost $2 billion per year for the top 10 percent. So we are losing because of the decision of the Government $2 billion a year in forgone taxes on the top 10 percent. So every year we are $2 billion further in deficit than we would otherwise have been because of the policies of the current Government.  
If the Government says it is going to raise $5 billion to $7 billion that is only 3 years of this lost tax revenue. If the Government had decided not to give away these very large tax cuts to the top 10 percent of income earners then over 3 years it would have raised the same amount as it is going to raise from this privatisation. So the Government introduces a policy that throws the Government books into deficit heavy deficit and then says: “Oh the Government books are in deficit. We’re going to have to sell the assets. Oh we didn’t think of that when we introduced the old tax switcheroo.” Remember the tax switcheroo was supposed to be fiscally neutral but of course it was not as we said it would not be and it has turned out to be even worse than anyone predicted. So the Government introduces its old tax switcheroo which gives $2 billion a year to the top 10 percent of income earners and then it says: “Oh goodness we’ve got a deficit. We’re going to have to sell the assets to cover the deficit.” Who was going to be able to afford to buy these assets that it is having to sell? Oh I know—the top 10 percent whom it has just given $2 billion a year to in very large tax cuts. So it says: “Oh there is a terrible deficit that we”—the Government—“created and who’s going to be able to afford to buy these assets? Oh the very people we just gave a big tax cut to.” The Government just gave a big tax cut to the very people it is going to sell these assets to.  
So that is how the Government has manufactured the deficit crisis which it is using to sell these assets that belong to all New Zealanders and have been built up over generations. This is not just something about which any old Government of the day can say: “Oh well whatever. We’ll just flick it on.” This was built up by generations of New Zealanders. It is no coincidence that Grey Power is absolutely opposed to this sale because Grey Power understands that it was its members who worked over generations to build up these assets that this wretched Government is proposing to sell off because it manufactured a Budget deficit in order to justify the privatisation of assets to its friends and mates. This is I think a tragedy.  
One of the things that I think needs to be brought out very clearly about this is that the Government for political reasons is saying it is going to sell only 49 percent so the assets will still stay in New Zealand ownership. What the Government is not telling people is that individual assets owned by these power companies can be sold off. The Manapouri power station for example is owned by Meridian Energy and once Meridian Energy is partially privatised it can be sold by that partially privatised company and we will no longer own the Manapouri power station—not even 51 percent—because 100 percent of it can fall into foreign ownership.  
When I questioned the Minister about this in the House the other day he referred to the major transactions part of the Companies Act. What he failed to mention—and he said that if major transactions happen then you have to get approval from 75 percent of shareholders as it is in the Companies Act—is that the major transactions part applies if you are proposing to sell 50 percent or more of the assets in one of these companies.  
If the partially privatised Meridian were to sell off the Manapouri power station or other kinds of assets that it owns it will not meet that test. It will be less than 50 percent of the assets. The Government as the 51 percent shareholder will not have a veto on the sale of individual power stations. So we will see the individual assets of these partially privatised companies vulnerable to being sold off into full—100 percent—foreign ownership if it makes commercial sense for the companies to do so. The Government has created this debt problem. It has created a situation where once this partial privatisation goes ahead individual assets can be sold off into foreign ownership and 100 percent private ownership.  
It is also worth making the point about debt and the ability to service debt. Mr Parker has made some of these points quite rightly but it is worth making a few of the others. Treasury runs this thing called the Crown Ownership Monitoring Unit and it estimates the return the Government is getting from these companies—the total shareholder return—at 18 percent. A total shareholder return is the return that Treasury uses as if it was an investor. It looks at the profits and the dividends—both retained profits and the profits given out as dividends—and it also looks at the growth of the value of the capital which is of course the point of view that investors take when they look at an investment. They ask: “Well what are my shares worth now? What will my shares be worth in a year? What will they be worth down the track?”.  
So Treasury takes a total shareholder return perspective in analysing the value of the companies. Treasury said the total shareholder return is 18 percent—18 percent. The Government is currently borrowing at 4 percent so the Government is proposing to sell assets with a total shareholder return of 18 percent in order to avoid taking on debt that will cost it 4 percent. You do not have to be very bright—you only have to be brighter than the Government—to figure out that this bill does not make any sense that this bill is not fiscally sensible. This bill is not economically rational. This bill does not make any sense.  
If your concern is maximising or supporting the fiscal position of the Government you would retain the assets in order to service the debt because that makes a lot more fiscal sense and anyone who looks at the numbers knows that. That is exactly why there will be a lot of people who borrow money to buy these companies—institutional investors. They know that even though they pay a higher interest rate than the Government much more than 4 percent they will invest in these companies because they know that these companies will make a very high rate of return as they have in the past.  
Finally I would just like to lament what will happen if this goes ahead—if the referendum does not stop it; if the campaign does not stop it—and that is about the missed opportunities for our country. Mighty River Power just to take one example is one of the top geothermal energy companies in the world. It is part of the global future for renewable energy. If this Government sells off this company then New Zealand will miss the opportunity to own the Fonterra of renewable energy because that is what our renewable energy companies are.  
The renewable energy sector is growing rapidly internationally. We have a set of companies that have the critical mass the expertise and the capital to take advantage of that and right at the moment when that could happen the Government goes ahead and starts to privatise them. Once you privatise and the headquarters goes somewhere else the research and development goes somewhere else and New Zealand misses this fantastic opportunity that we have in the renewable energy sector. I hope the referendum goes ahead because we need to stop the theft that the Government is proposing in this bill. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! There is to be no indication of applause from the gallery.