Parker David: Mixed Ownership Model Bill — In Committee Speaker Recalled In Committee 
Text is incorporated into the Bound Volume 
Parker David: Mixed Ownership Model Bill — In Committee Speaker Recalled In Committee 
[Sitting date: 19 June 2012. Volume:681;Page:3063. Text is incorporated into the Bound Volume.] 
Hon DAVID PARKER (Labour) 
: 
 We heard Bill English say repeatedly that there was only one question that mattered and the question that he kept putting to this Committee is what the Labour Party would do if we are re-elected. Not once did he address the issue as to whether this is the right thing to do which is the question that this Government should be asking. 
I am going to put a number of other questions that the Government should be answering on this which are very important and which the Government has not addressed. Will this increase the Government deficit? I want to ask the Minister in the chair the Minister of Commerce whether on Treasury’s advice this plan of the Government to sell off half interests in these State-owned enterprises will increase the Government’s deficit. Will it? Mr Foss is in the chair. Can he answer that question? Will it? It is a very simple question. Is it the advice of Treasury that this will increase the Government deficit the operating balance before gains and losses by about $100 million a year? I can tell the Minister if he will not tell the Committee that it will. I can also tell the Minister that that was hidden from the New Zealand public at the time of the election because his Government and Treasury under this Government’s watch did not account for the loss in profits. Although it said it would bank the money from these State-owned enterprises sales it did not calculate what the loss of profits would be that would increase the Government’s deficit. 
This is another question that I want answered by the Minister in the chair: will over time this increase the current account deficit for this country? Will it increase the current account deficit? Again if the Minister is willing to take a call on that he will have to admit if he is not going to mislead the Committee that it will increase the current account deficit because the interest saved on the money that is not borrowed from overseas is less than the share of profits that will go to those overseas shareholders. Indeed Treasury says that up to 30 percent of the shares being sold—which is a total of 15 percent of the actual company after only half of it is sold—could end up in overseas ownership. 
I want to ask the Government another question that the Minister of Finance did not address. Why is it that the most important part of the Government’s economic plan for these 3 years is changing the ownership of what already exists? You know if this is the central part of the Government’s economic agenda what does that say about the inadequacy of its plan for our economy? The reality is that this sort of ideological burp that we got just before the election was a consequence of the Government being on the ropes and feeling the criticism that it had no adequate plan for the economy because its members are conservatives and all conservatives generally do is trim back on expenditure a little bit fiddle and not really do anything progressive to change the shape of the economy. So in the face of that criticism the Government came up with its so-called plan which is to sell the State-owned enterprises. That does absolutely nothing to improve the output of the New Zealand economy it does not increase our exports and it makes our current account deficit worse as well as the Government deficit. 
Now to the other question that Mr English should have been asking. Instead of the single question that he was asking which was what the Opposition would do post the next election he should have been answering what the effect is going to be on power prices for residential consumers. At the Finance and Expenditure Committee we had not one generator and not one electricity retailer give evidence. We did not hear from the Electricity Authority and we did not hear from the Ministry of Economic Development as to what would be the effect on power prices. The only information that we got on what would be the effect on power prices was from some of the submitters opposed to this provision—notably Molly Melhuish who is well known to many New Zealanders as having been a commentator on these issues whom I hear the National members slinging off about in interjection now. 
Paul Goldsmith 
: I said she was very well known that’s all. 
Hon DAVID PARKER 
: What is that? 
Paul Goldsmith 
: I said she was very well known.  
Hon DAVID PARKER 
: You said that she was very well known. Well thank you for that. She is part of Grey Power and her activism in these areas and her knowledge of the electricity markets goes back many years before her involvement in Grey Power. She gave evidence to the select committee that even now State-owned enterprise power prices are $265 per annum cheaper on average for a residential consumer who gets their power through a State-owned enterprise or one of their subsidiaries compared with those who are buying from the private sector. Mr Ryall stood a second ago and asked whether New Zealanders are so naive that they get power from people when it is more expensive from a private sector participant than a State-owned enterprise. The answer to that is sadly that that is the reality—that New Zealand’s electricity market is not perfectly competitive. Indeed if it was a perfectly competitive market we would not have an Electricity Authority and we would not have rules governing the conduct of the market to at least try to make it a little bit efficient. That book of rules is thicker than the Bible. This is a very complex and uncompetitive market and it surely is not purely competitive. 
Because we did not have any evidence from a power company a power generator we could not ask them whether that data was correct. Because we did not have any evidence or advice from the Ministry of Economic Development to the select committee we could not ask it whether that information was right. So the only way we could verify that information was through asking Treasury officials and when we did that what did National do? It closed down the select committee 5 weeks before we were due to report back so that we could not dig into that. What did we do in response? We asked the Minister of Energy and Resources in the House today whether that information was correct or not. And we asked if it was not correct the average price charged by non - State-owned enterprise deliverers of power to residential consumers compared with State-owned enterprise deliverers of power or retailers. And what did we get? We got blather from the Minister. We got the Minister being criticised by the Speaker for not having answered the second part in a primary question. 
Why is that question not being answered? It is because National knows that the truth is that State-owned enterprise power prices to residential consumers are significantly lower: 12 or 13 percent—$265 per annum—cheaper. And that margin will dissipate if we strengthen the profit maximisation model if we remove the sense of community responsibility or the community responsibility obligations and if we move to a price maximisation model. We are already seeing their cost structures increase. The increase in the salary for the chief executive of Mighty River Power this year was $400000. That is not a salary of $400000; that is an increase in the salary of $400000 from $1.3 million per annum—already an incredibly high salary—to $1.7 million per annum. The Minister of Finance has already acknowledged that that is because Mighty River Power is moving to a more commercial model. Its cost structures are going to go up and its prices will follow. 
This Government is out of touch. It is out of touch on not just this issue; it has been out of touch on other issues. It has not got an adequate plan for the economy and so it is left flailing around doing this sort of ideological thing. This is also going to increase asset inequality. Tony Ryall said: “What’s the problem with New Zealanders owning these companies?”. Well they already do. What is wrong with New Zealanders already owning all of these assets through their Government? There are no efficiencies to be gained here or if there are they are very very minor. There are power price increases that will come as a consequence of this and asset inequality is going to increase because the people who can afford to buy most of these shares are the wealthiest people in society. The people who cannot afford any shares are the poorest people. The wealthiest people in New Zealand of course are plainly whom this Government serves. Forty percent of the income tax cuts went to the top 10 percent of income earners in New Zealand. Those are the people who are going to be acquiring these shares not mums and dads on average incomes. Mums and dads on average incomes do not have the money in their pockets to acquire these shares. 
I think it is an outrage that we have not yet had any acknowledgment from the Government of a matter of fact which is that the State-owned enterprises charge less currently for residential power than their private sector comparators on average. I am going to give you another example of this. Alexandra is a small town. It sits on the banks of the Clutha River right next to the Contact Energy dams on the Clutha River. There is an enormous amount of power produced in that area. Power charges for people in Alexandra are higher—this is not lines charges; this is their power charges—than people pay in Auckland and Christchurch per unit of electricity. How can that be right? How can that be right? That shows that this market is not competitive. Indeed in that area—again in the Alexandra area—31c or 32c per kilowatt hour is charged by Contact Energy. Meridian Energy charges about 28c about 10 percent less in that area. Even now—