Key John: Urgent Debates — Toll Holdings—Rail and Ferry Purchase 
Key John: Urgent Debates — Toll Holdings—Rail and Ferry Purchase 
[Volume:647;Page:15849] 
JOHN KEY (Leader of the Opposition) 
: 
 I move  
That the House take note of a matter of urgent public importance 
. [ 
Interruption 
] It sounds like election night to me. Everyone is cheering. I say to Trevor that it sounds like election night to me but I tell him not to worry and that I hope he takes the train. On 30 June the New Zealand taxpayer will part with the better part of $1 billion to buy a train set off Toll Holdings—not that we would know it from the announcement of the Government. You see the Government wanted people to think it was paying $665 million for a train set but we now know that is not the fact. What we do know is that the Government is buying a train set it did not need to buy—you see there was a highly efficient operator in place and it was within $17 million of reaching an agreement around the National Rail Access Agreement. 
It was not Michael Cullen who wanted to buy the train set and it was not overtly Helen Clark; it was Heather Simpson who wanted to buy the train set. That is right; Heather Simpson wanted to buy the train set not because it made sense economically—she had not gone to see whether it made money—but because she had read the focus groups. It was not an economic decision or a sustainable decision; it was meant to be a political decision driven by Helen Clark. What took some time was that Michael Cullen was offended by how much more the Government was paying for Toll than he knows it is worth. That is why he spent so much time trying to be a little devious about exactly what figure the Government is paying—but we will get back to that in a moment. 
The second thing is that the Government is spending $1 billion on 30 June—giving money to Toll Holdings—to solve a problem we do not have. There is no problem with the efficient operator that is there. It is certainly a laudable objective to get more freight on rail but we do not need to own the train set to do that in the same way that we do not to need to own every trucking company every courier company and every taxi out there—we can just subsidise those activities if we want to. 
The third thing that is happening on 30 June is that we are spending $1 billion and we are giving it to the Australian shareholders of Toll Holdings to put into a giant black hole that we do not know how much it will cost to fill although we know it will be a lot. But this is the good news for New Zealand taxpayers. The message from Labour is that they should not worry because the Australian shareholders of Toll are very happy. The shareholders are very happy. As my colleague Bill English said today Paul Little will only ever have one Helen Clark moment and that was it and it was a moment of madness. We went out there and spent not one-quarter of a billion dollars of taxpayers’ money more than was required but $400 million or $500 million more for a railway we do not know how to run and that Michael Cullen says will never make money and Helen Clark thinks is unlikely to make money. Why on earth would someone do that? 
What was the first thing that the Toll Holdings people did when they got the massive payout? The first thing they did was to go into a room and high-five each other. Paul Little is a pretty big swinger over there in Australia. Can members imagine the negotiations—Paul Little versus Michael Cullen? A bit of an easy contest was going on there and there was only one winner. We know Michael Cullen does not like “rich pricks”; well Paul Little is about to get a lot richer when his bonus is delivered to him in a few weeks’ time. What is more he will get to keep more of it because there is a tax cut in Australia’s Budget tonight. 
What was the first thing that Toll Holdings did after it got its quarter of a million— 
Hon Member 
: Bought a trucking company! 
JOHN KEY 
: That is right—it bought a trucking company. It went out and bought a trucking company. What is interesting about the deal with Toll is that the Government has left Toll with the really valuable bits of the business. It left the company with the freight forwarding business. The Government left Toll with the valuable bits of the business and said it would inherit a business it does not know how to run which it has no expertise to run and in which it has never been successful. The Government knows it is a deeply complex business and says it cannot even tell the analysts how it is all going to work or how much it will cost. It says “Don’t worry. Trust us. It will be all right.” 
“Trust” is the interesting bit. We might be able to trust Labour members if they were prepared to tell us how much the purchase has cost. But were they just being dumb when they paid $400 million or $500 million over the odds or were they being sneaky when they were not prepared to tell us how much the purchase had cost? Were they being devious when they were doing that or were they being just downright dishonest? They were asked how much the purchase had cost and they looked down the barrel of a camera—that was when Michael was not playing with his little train set that Paul Little gave him over the table—and said it had cost $665 million. That is not what it cost I say to Dr Cullen. 
Dr Cullen will be smiling and so will Paul Little because this is what really will happen. For 6 years Toll gets to rent the space next to the railway depots for free—and that costs a lot of money—but that was not mentioned in the $665 million cost. Neither was it mentioned in the deal that Toll is to get a subsidy to put its freight on the railway. Nor was this little bit mentioned. There is a $200 million liability: $148 million that Toll NZ owes to Toll in Australia which the Government picked up and for which there is no asset backing and $40 million owing on the ferries. When the Government was caught out—because that is what happened—it ran to the same journalists it had misled on the Monday and said “ ‘Nudge nudge wink wink’; it’s actually $100 million not $200 million.” 
So one has to ask oneself this question: why has the Government not been honest? It is a pretty fair question is it not? The answer as my colleague has just said is why break the habit of a lifetime? In the election campaign when I was arguing about why New Zealanders should get to keep $50 a week of their taxes Michael Cullen was saying that was outrageous unaffordable and the worst thing that could possibly happen. Next week he will get up in worse conditions and announce that that is to happen. But he is also the Minister of Finance who told New Zealanders it would cost $200 million for a student loan scheme that actually costs $3 billion. He looks confused. Why does Dr Cullen not pick up the Crown accounts and look at what the fair value of a $9 billion loan book is? The answer is $6.1 billion. That is what writing off the interest on student loans costs. What happened? He did not tell us that and he was not going to tell us until the Chief Ombudsman made him tell us. The Government was not going to tell New Zealanders what that scheme cost until somebody made it. 
This is a sneaky Government it is a very dubious Government sometimes it is a pretty dumb Government and it is rapidly being proposed now that it is a dishonest Government. It was asked the question about the cost of the purchase and it would not answer it. Why would the Government not answer that question? Well there are a couple of answers. One is that maybe Government members were not bright enough to actually understand the full value of the deal and that is entirely possible actually. That is option 1: they were not bright enough to understand the deal. Option 2 was that it was a case of the John Tamihere theory. Michael Cullen changed just one word and everything changed. When asked how much the purchase of Toll was costing he said “$665 million”. The bit he missed out and should have added on before that was “a bit more than” but he did not say that. He did not want taxpayers to know that because he is ashamed of how much they are paying for it. The purchase is not being driven out of his office; it is being driven by Helen Clark and Heather Simpson. Dr Cullen laughs like Paul Little laughs in Australia. He laughs like the Australian shareholders laugh all the way to the bank. They are the ones that are pretty happy. 
This is quite an interesting Government because a couple of weeks ago its members got up and said the No. 1 issue in the election campaign will be asset sales. On that basis they stopped a windfall gain to the New Zealand shareholders—29000 mums and dads—of Auckland International Airport. Those people cannot have a windfall gain but if one is an Australian shareholder of Toll Holdings it is a completely different issue. Those shareholders can have half a billion dollars but the Government tells the New Zealand public it is a quarter of a billion dollars because it does not want to tell them how much the deal is worth. Government members are the same people who said that the No. 1 election issue would be asset sales but by the way they are happy to sign off for the Chinese to buy Vector. The Government bought Toll Holdings not because it was a good deal not because freight cannot be carried using the existing operator not because it knew how to run the business not because the business was worth that not because the Government ever believed it would make money and not because the purchase is part of the Government’s transport strategy in 2007; the Government bought Toll because it wanted to make life difficult for the National Party. That is the only reason it bought Toll and that ain’t a good reason to buy a railway. 
Helen Clark and Michael Cullen have been telling people that by the way when the Government owns Toll the subsidy will go away. Do they have any idea whom the subsidy goes to? It does not go to Toll Holdings; it goes to the customers of Toll Holdings. That same subsidy will be paid to New Zealand companies to put freight on the railway. 
But this is the worst-case scenario. We now have the worst of all scenarios: we own a business that we do not know how to run. We own a business that we could never sell even if we wanted to for the kind of money that Toll got. We could never sell it at those kinds of rates because we paid half a billion dollars. The message for New Zealanders is that under Labour their shopping trolley is one-third more expensive their interest rates have doubled their fuel prices are going through the roof and by the way while they are at it they have waited 9 years for a tax cut. But the priority of Michael Cullen is this. It is not mums and dads who are working hard it is not people who are trying to make ends meet it is not the terrified people at the meatworks today who have lost their jobs and it is not the people whom Ruth Dyson went on the radio about and said we should not worry about them having lost their job because actually everything is very good. Dr Cullen’s priority is not any of those people; it is pure politics. That is what matters more. What matters is not the shareholders in New Zealand; it is the shareholders of Toll Holdings. 
The facts of life are that this is a Government that has no priorities. 
Hon Trevor Mallard 
: Merrill Lynch! 
JOHN KEY 
: Oh well at least at Merrill Lynch we knew what we were doing. If we had advised the Government on this purchase we would have told it that it would cost $1 billion and we would not have told the Government to mislead the New Zealand public. What happened this week is quite clear. We now know that Labour is prepared to mislead New Zealanders. It does not care about that. It is prepared to spend millions and millions of dollars more than it needs to and it is prepared to be reckless because this is the bottom line: we are 5 months from an election and that means that anything now goes. As long as it fits into the category of being political anything goes. 
Well this is my message for the New Zealand public. National knows that they work hard for their money. We know they care about what they do. We know that they demand performance from us and we are not going to treat them so badly that we will not only waste their money but deliberately mislead them when we do it. Michael Cullen the man who has form the man who has a track record to go with his train set has misled the people of New Zealand. New Zealand taxpayers deserve— 
Hon Lianne Dalziel 
: Don’t be so insulting—the people of New Zealand have long wanted to buy back rail. 
JOHN KEY 
: Well while that member is out there defending Government ownership maybe Dr Cullen will want to answer just this one question. If taking out an efficient private sector operator was such a good thing to do then maybe he will want to explain why with Government ownership of ONTRACK there are more speed restrictions on the New Zealand track than there ever have been in the history of ownership of that track. The answer is that those members sat around in a room and said “To hell with the New Zealand taxpayer. To hell with whatever we have to pay for it. It doesn’t matter if it is a dog. We think it might make money.” 
Well National cares too much about New Zealanders to do just that. Labour members cannot defend the indefensible and even when they do people should not believe them because last week they were caught lying and they will just do that again.