Parker David: Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
Parker David: Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
[Volume:673;Page:19322] 
Hon DAVID PARKER (Labour) 
: 
 Mighty River Power is the next of the companies that the Government proposes to privatise half of. I want to respond to some of the comments made by the Minister for State Owned Enterprises. He said that we have to do this in order for the Government to afford to build roads hospitals and schools. Here is a little lesson in history for Mr Ryall. Governments have to do that every year. They have done that every year since New Zealand was settled—every year. In fact Labour did that when it was in Government. We did that. We bought back Air New Zealand; we did not sell it. We did not run the books of this country so poorly that New Zealand was in the position of having to sell the family silver. Make no mistake—selling the family silver is what the Government is about. It is selling assets that are currently owned by all New Zealanders to the very very small subset of New Zealand that this Government so plainly governs for. It is not for the majority; it is for the small minority that has profited handsomely under this Government—that is 42 percent of the Government’s income tax cuts went to the top 10 percent and they are the people who will be buying shares initially. Then they will take a profit as they sell the shares like that which occurred in respect of Contact Energy and eventually most of those shares will end up in overseas ownership. 
Treasury was express in its advice to this Parliament that came out with the Budget documents. Treasury said that for the Government to achieve its objectives—and I am essentially quoting what Treasury said—significant proportions of overseas ownership in electricity State-owned enterprises would have to occur. Any pretence to the contrary really is just pretence. 
The profit this year of Mighty River Power was $84.6 million. In addition it had dividends. Its dividend of $80 million was paid in 2009-10 after a special dividend of $150 million in the 2008-09 financial year. The performance of these companies managed as part of the Crown portfolio of State-owned enterprises has been very good. It need not be better; the only way profits can go materially higher is if electricity prices go up further. As I said in an earlier contribution there is no doubt that if these companies are sold into private ownership of 49 percent or 50 percent the price of electricity will go up. 
The last contribution from the Minister criticised Labour for the increase in electricity prices during our term in Government. We did two things in response to price increases. Firstly we brought lines increases under control by regulating them which was necessary. The rate of increase dropped dramatically to essentially the rate of inflation. Then under our watch the Commerce Commission tried to get a handle on whether there was overcharging in the electricity wholesale and retail markets. That report did not come out until May 2009 after we had left office. It found an overcharge of 18 percent on average totalling $4.3 billion worth of excessive charges to New Zealand consumers under the period in review. As a consequence the Government should have done something to bring those excessive charges under control. But no Government members have washed their hands of it and in fact since then electricity prices have gone up according to the Minister today by 14 percent. 
Su’a William Sio 
: How much? 
Hon DAVID PARKER 
: They have not decreased; they have gone up by a further 14 percent. If people want to keep those assets in New Zealand ownership if they want to keep control of their power prices and if they want to keep our industries and jobs that are reliant upon large electricity usage and prices being kept under control they can use their choice at the forthcoming election; they have a choice because we are just not going to sell those assets. Most New Zealanders know that those assets have been built up over generations. They are well run and they are profitable. The system works better in a long stringy country such as ours if we have integration of those companies rather than competition in theory but market gouging of consumers in practice. 
The review of Mighty River Power takes us to the same conclusion as the conclusion we got from Meridian Energy: it is a nonsense if we sell off these companies. They are well run and they are profitable at the moment. The Government will not make any more money as a consequence of this sale than it would get out of dividends because its interest bill savings would be lower if it kept the assets and took the dividends.