Wilkinson Kate: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeWilkinson Kate: Questions for Oral Answer — Questions to Ministers[Sitting date: 21 August 2013. Volume:692;Page:12659. Text is incorporated into the Bound Volume.]1.Hon KATE WILKINSON (National—Waimakariri)to theMinister of Finance: What progress is the Government making with its share offer programme to help New Zealanders diversify their savings away from property and bank deposits?Hon BILL ENGLISH (Minister of Finance):Yesterday the Government announced that it expects to complete the partial float and sharemarket listing of Meridian Energy by early November subject to market conditions. This is the second offer in the Government’s share offer programme. Listing up to 49 percent of Meridian Energy will give New Zealanders the opportunity to invest in another big New Zealand company. Many people recognise the value of diversifying their growing savings away from property and bank deposits. As with Mighty River Power the Government remains committed to having 85 to 90 percent New Zealand ownership after the Meridian Energy offer which will include the Government’s 51 percent shareholding.Hon Kate Wilkinson: What are the main advantages in proceeding with the share offer programme?Hon BILL ENGLISH: There are several. The companies themselves will benefit from a broader shareholder base and being stronger from the rigour and transparency that a sharemarket listing brings. The companies will be able to access capital to grow in more ways than they can as 100 percent taxpayer-owned companies. From the taxpayers’ perspective the share programme will free up between $5 billion and $7 billion to invest in other Government capital. That means the Government can get the money off New Zealanders while providing them with an investment opportunity rather than borrowing off foreign bankers which our opponents prefer to do.Hon Clayton Cosgrove: What is the estimated cost to taxpayers of the retail instalment scheme for the Meridian Energy float whereby investors pay for 60 percent of the cost of the shares at float and pay for 40 percent 18 months later; if he has no estimated cost why not?Hon BILL ENGLISH: No we do not have an estimate. The reason is that we cannot know—[Interruption ]Mr SPEAKER: Order! There were two parts to that question. I want to hear the second part to that answer. [Interruption ] Well then the member will ask his colleagues to be a bit quieter.Hon BILL ENGLISH: We cannot know the final share price and in any case purchasers of those shares may well take it into account and therefore bid just a bit more for the shares which would offset the cost.Hon Clayton Cosgrove: Given that the Minister has announced the float and does not have an estimate of the costs could he give us as he has done in the past his best guess?Hon BILL ENGLISH: No I cannot. I think what the member is more concerned about is that the Government could end up with several billion dollars’ cash in its bank account which we would then be able to use to invest in schools hospitals prisons and other capital projects that the New Zealand public supports. And we will be able to do it without borrowing the money off foreign bankers.Hon Kate Wilkinson: What are some of the features of the Meridian Energy share offer to encourage everyday New Zealand investors to consider buying shares?Hon BILL ENGLISH: The Government has confirmed that it will use instalment receipts which allow investors to pay for their Meridian Energy shares in two instalments. The first instalment for around 60 percent of the share price will be paid when investors apply for shares. The second instalment will not need to be paid for another 18 months. Between the two instalments investors will receive full dividends paid out in that period. Instalment receipts are common overseas and were used by the Government in the float of capital properties in 1998. Another feature of the offer is that there will be a share price cap for New Zealand retail investors giving them more certainty about how many shares they will get when they apply to buy shares.Hon Clayton Cosgrove: Did the Minister provide Cabinet with any estimate of the cost of the retail instalment scheme; if so what was that and did he further provide Cabinet with any notion of how such costs would be funded?Hon BILL ENGLISH: No estimate was provided. [Interruption ] Well for the reason that the member mentioned before—it would just be a guess and that would not be satisfactory.Hon Kate Wilkinson: How will the proceeds from the share offer programme be invested in new public assets through the Future Investment Fund?Hon BILL ENGLISH: As noted in a Cabinet decision in June 2012 Ministers agreed that all new capital expenditure over the next 3 or 4 years will count against the Future Investment Fund. This means that Ministers wanting access to the fund need to follow the normal Cabinet process to draw down from it and establish appropriations. A large proportion of this capital spending will be for schools and hospitals but not exclusively. For example we have earmarked $1 billion for modernising schools as part of the Government’s 21st Century School Building Programme including I think 14 new schools in Christchurch. Those children will know they are going to a school funded by New Zealand investors not foreign bankers.