Cosgrove Clayton: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeCosgrove Clayton: Oral Questions — Questions to Ministers[Sitting date: 13 August 2015. Volume:707;Page:5796. Text is incorporated into the Bound Volume.]7.Hon CLAYTON COSGROVE (Labour) to the Minister for State Owned Enterprises: What was Solid Energy’s debt in 2008/09 and what was it in the latest annual report?Hon TODD McCLAY (Minister for State Owned Enterprises): As at 30 June 2009 the company held $50 million of bank debt on its balance sheet. Currently it has bank debt of $320 million but its full exposure is closer to $0.5 billion. The falling international coal price means that Solid Energy is not viable in its current form and there is no prospect of it being able to be in a position to repay or refinance this bank debt.Hon Clayton Cosgrove: Will the Government now admit that it was wrong in 2009 when it wrote to Solid Energy demanding higher dividends which eventually totalled $164 million and forced Solid Energy to raise its debt levels by hundreds of millions of dollars when international best practice for coal companies is to have near zero debt?Hon TODD McCLAY: No I do not accept that. Indeed for Solid Energy it has been quite some period of time since it did not have debt at all. This is a very challenging industry. It has been for a period of time. A previous board made investment decisions at a time when the coal price was much higher than it is today. Indeed it was at the top of the price then and since then successively year by year that price has come down. Unfortunately this company with the changing circumstance of coal prices is no longer sustainable in its current form.Hon Clayton Cosgrove: I seek leave to table a letter dated 28 May 2009 from the then Minister for State Owned Enterprises which notes the Government wanting Solid Energy—Mr SPEAKER: Order! [Interruption] The document has been described. Leave is sought to table that particular letter dated 20 May 2009. Is there any objection? There is none. It can be tabled.Document by leave laid on the Table of the House.Richard Prosser: Given those answers does he have faith in Treasury’s oversight group the Crown Ownership Monitoring Unit; if so why?Hon TODD McCLAY: Yes I do and that group and others in Treasury have gone under a reform over a period of time. Certainly this Government is more focused on State-owned enterprises than any Government has been previously. The reason for this is that we expect them to be well managed to be low risk to focus on their core responsibilities and activities and to return a fair dividend for the taxpayer. There are State-owned enterprises however that have not focused on their core activity responsibilities. That is one of the challenges we faced with Solid Energy.Hon Clayton Cosgrove: Given that the fall in coal prices impacted companies around the world and they have survived by focusing on their core business why did the Government which was receiving monthly reports on the state of Solid Energy from 5 June 2012 cheer it on as it burnt through money on risky ventures and racked up an unsustainable level of debt and then block all parliamentary inquiries into what went wrong?Hon TODD McCLAY: Solid Energy is not the only coal company in the world in its current situation. Indeed there is a company in Australia that was bought by an American group a few years ago for close to $1 billion. Two weeks ago it was sold for $1. All over the world coal companies are facing similar challenges to Solid Energy’s. The announcement that has been made by the board today gives a greater opportunity for those people employed by Solid Energy to keep their jobs and for trade suppliers to Solid Energy to continue to be paid and for them to continue their business activity.Hon Clayton Cosgrove: I seek leave to table an Australian Mining report of 12 August 2015 which is entitled—Mr SPEAKER: Order! I just need the source of the document—[Interruption] Order! I just need the source of the document.Hon Clayton Cosgrove: The Australian Mining newsletter: “Coal exports breaking records in”—Mr SPEAKER: On the basis that it may not be freely available—[Interruption] Order! It is a simple question that I have put to the Hon Clayton Cosgrove. Is it easily obtainable by members if they wish to seek it?Hon Clayton Cosgrove: I found it. I do not know whether it is easily obtainable—Mr SPEAKER: Then it is easily obtainable. I will not be putting the leave.Hon Clayton Cosgrove: Why has no one been held accountable for Solid Energy’s unprecedented collapse in that no Minister has resigned or been sacked for being asleep at the wheel and taking no action despite years of repeated warnings from their own officials; none of the then board were fired for a complete lack of governance; and no members of senior management were removed or disciplined despite outlandish spending and reckless decision-making—in fact the only people who lost their jobs were the men and women at the coalface?Hon TODD McCLAY: The member is simplifying a very complicated situation with Solid Energy. Indeed the current board is a different board from the one he was speaking of. It made investment decisions around Solid Energy that have created some of these challenges. Also the senior management team at Solid Energy is different. They have been working as hard as they can over the last 2 years to ensure that this company has a future and to ensure that people can go to work tomorrow and it is a very challenging situation. They have worked hard really to recognise the hard work not only of that team but of the people who work for Solid Energy in all regions of New Zealand.Hon Damien O’Connor: Having destroyed over $1.7 billion of company value accrued $320 million worth of debt—Mr SPEAKER: Order! Can I have the question please? [Interruption] Order! The question.Hon Damien O’Connor: —injected $128 million of taxpayers’ money and destroyed the jobs of over—Mr SPEAKER: Order! [Interruption] Order! The member will resume his seat. I have called for the question. The member continues to outline information that may be—[Interruption]—facts if the member wants to call them that. That is not necessary for the question. It is creating disorder. I have two choices: either to stop now and not allow the question or to give the member one chance to rise and ask his question. I will do that but if it is going to be supplemented with a whole lot of information that the member thinks is relevant and I do not he risks the question being ruled out of order.Hon Damien O’Connor: Can I start again?Mr SPEAKER: Yes the member can start again but if I do not hear the question very quickly it will be ruled out of order and we will be proceeding.Hon Damien O’Connor: In light of all those facts is the Minister now comforted—[Interruption] He cannot hear it.Hon Gerry Brownlee: I raise a point of order Mr Speaker. You cannot say “Can I start again?” and then refer to a question that has been ruled out of order.Mr SPEAKER: Order! I had not ruled it out of order. The member is getting to his question—“is the Minister”—and then he got interrupted. Would the member please proceed with his question.Hon Damien O’Connor: In light of all the facts laid down in the House this afternoon is the Minister comforted by the fact that his Government’s asset sales programme is now back on track?Hon TODD McCLAY: No those are not the facts but I do agree with the member and recognise his concern for coal mining workers in the area he represents as the Government is. What I would say to him and others who are listening is that the proposal announced today is the very best opportunity for people in these regions to keep their jobs. However over the next 5 weeks the administrator must engage with creditors around the country. They will be asked to vote on this proposal. Should they vote on it then there is a future for some of these assets. If they vote against it then the only alternative is likely to be liquidation and that is not something that the Government is hopeful for and I know that member is not on behalf of his constituents.