Key John: Public Finance (State Sector Management) Bill — In Committee 
Key John: Public Finance (State Sector Management) Bill — In Committee 
[Volume:622;Page:17928] 
JOHN KEY (National—Helensville) 
: 
 I cannot say how thrilled I am to have a second opportunity to speak to Part 7 of the Public Finance (State Sector Management) Bill under urgency and I am absolutely delighted that I have been given another opportunity to speak after my first contribution. This contribution will be even more revealing than the first. I want to thank you Mr Chairperson from the bottom of my heart.  
 I want to draw the Committee’s attention to a very interesting clause in Part 7—clause 235 “Existing investments borrowing guarantees indemnities and derivatives”. I see the Minister of Finance’s ears have perked up. He is looking very engaged and for those who cannot see him he is flicking through the bill to make sure he has not missed anything. 
Hon Dover Samuels 
: He looks very happy. 
JOHN KEY 
: He looks happy and contented—he will be sitting on $1.5 billion of additional cash next year over and above all his operating and capital expenditure. Members should be happy. I hope that as he sits in the chair and has a moment to reflect he will consider taking up my suggestion for the New Zealand people this year which is that he gives every New Zealander $75 so that they can put a turkey on the table and a present under the tree and we can all go to Christmas and be very happy. That would cost only— 
Darren Hughes 
: A turkey on the Table of the House would be very nice. 
JOHN KEY 
: Mr Hughes should not talk about the members on his side of the Chamber in that way because they are not turkeys. He should not call them turkeys. If he is going to call them turkeys he should do it in his Christmas card to me so it can remain private and confidential. 
Darren Hughes 
: It’s on its way! 
JOHN KEY 
: Oh it’s on its way. I go back to clause 235. What is interesting about clause 235 is that it states that the terms of investments borrowing guarantees indemnities and derivatives may be amended and will be taken up when the Crown entity comes into place or when this bill passes. The clause states further that those terms may be amended by the Minister of Finance after this bill goes through. So let us think about that scenario. The Crown entity undertakes a derivative transaction—let us say an interest rate swap where it has some borrowings and decides that it is going to swap from a fixed rate liability to a floating rate liability. Then all of a sudden after passing Part 7 and clause 235 of the Public Finance (State Sector Management) Bill the Minister of Finance looks at that transaction and decides he wants to alter it as he may under Part 3. 
Now altering financial obligations does not come for free and the Minister of Finance himself will know that depending on interest rate movements and the various issues there could be a significant cost in altering that transaction. If that were the case and it may happen under this part then I would question that if a financial liability is incurred by the Crown entity that changes or amends its derivative transaction and it is then not taken up or the alteration is made by the Minister of Finance who is going to pay for the liability? Who will go to the Crown entity and say: “Well OK you’ve amended this derivative transaction and there’s a lot of money at stake here.”? There may be hundreds of thousands or millions of dollars. Who will pay that liability? It is not at all clear from clause 235. 
Now I am not suggesting that the Minister of Finance is likely to alter the range of investments borrowings guarantees indemnities or derivatives that will be in existence when this law takes place but it is possible. If it is possible I think the Minister should rise to his feet as we are sitting under urgency at about 20 past 11 on what is technically Tuesday but most New Zealanders would know it is Thursday to debate the Public Finance (State Sector Management) Bill and tell the Committee who will pay the price of that alteration if he does amend a guarantee a liability a derivative or anything in relation to a Crown entity. 
When the Minister is on his feet I think it would be interesting if he could share with us whether he is likely to cast his eye over all these borrowings investments guarantees indemnities and derivative transactions and whether he is likely to ask Treasury to provide him with a list of those. The transactions will be stated in the new statement of intent as we saw earlier on in the bill. But I wonder whether the Minister will—over his Christmas holiday possibly—ask Treasury to deliver to him a listing of all those transactions so he can cast his eye over them. It is possible that during his Christmas break he will have a look and see that there are some transactions he would like. I can see the Minister is eager to get to his feet and answer those questions and I look forward to that.