Smith Nick: Mixed Ownership Model Bill — Second Reading 
Text is incorporated into the Bound Volume 
Smith Nick: Mixed Ownership Model Bill — Second Reading 
[Sitting date: 14 June 2012. Volume:680;Page:3013. Text is incorporated into the Bound Volume.] 
Hon Dr NICK SMITH (National—Nelson) 
: 
 I have a simple question for the speaker who has just resumed his seat Winston Peters. Is the Raymond Winston Peters signature on the Government sale of Auckland International Airport in 1998 the same Winston Peters who has described this Mixed Ownership Model Bill as treacherous? I could not possibly believe it. Let me hold this up on the iPad. What did Mr Peters say in 1998? Let me tell you. He said: “We are very pleased with the most successful public sale. It is popular capitalism in action.” This is the same member who campaigned in the 2005 election on the mixed-ownership model for Kiwibank. I have to say the double standards that are exhibited by that member are pretty extraordinary. 
But it goes even further than that. I checked the records of members opposite and I was quite amazed to find that in 2007 the then Labour Government sold for tens of millions of dollars 49 percent of the shares in the Spring Creek Mine to American multinational Cargill Coal. Let us be clear: this was a State-owned company—100 percent. This was an energy company. Actually the sale specifically required Cabinet and ministerial approval. The documents have got the signature of the Minister of Finance the Minister for State Owned Enterprises the Minister of Energy and they also required the signature of the Minister in charge of the Overseas Investment Office. I also note that there are 14 members of the Labour front bench who sat in the Cabinet room and approved that sale and can now have the audacity—can now have the audacity—to somehow use extravagant phrases like “treachery” for exactly the same policy with other companies. That just shows how shallow as a birdbath members opposite are on this particular issue. 
But it gets even better than that. After Labour loses the 2008 election we have a wonderful speech in 2010 and let me quote it. It is from Labour’s finance spokesperson. It was to the Institute of Policy Studies here in Wellington. He said: “in a capital constrained fiscal environment we will better leverage the Crown’s balance sheet in new and innovative ways. … We can unleash State Owned Enterprises to create and grow new subsidiaries with private partners and shareholders”. Private partners and private shareholders— 
Hon Members 
: Who said that? 
Hon Dr NICK SMITH 
: That was David Cunliffe the spokesperson on economic development for the Labour Party. 
The policy of mixed ownership is good policy and I agree with David Cunliffe’s comments in that regard. It is good policy. It is rational. It is what we do in every one of our lives. This mantra of no asset sales is just that. It is not a policy. If the country adopted a policy of no asset sales ever there would be no property market. There would be no TradeMe. There would be no sharemarket.  
Colin King 
: Communism. 
Hon Dr NICK SMITH 
: Indeed it would be—indeed it would be. We even had the experience last night in the Parliament where one of my colleagues brought a bill to the House that would allow an area of land to be sold by a council so that it could subdivide it and sell it and could use the proceeds to reduce debt and invest in other council and community investments. Every party in this Parliament voted for that bill. I just simply say that exposes the absolute nonsense of the no asset sales mantra. 
Then let me repeat the other argument in the House today and it has been this. If the Government can get a better return on a business than what it costs to borrow money then it should own the business. That is the logic. Average returns on the sharemarket have been 7 percent. The Government pays about 4 percent for its money. What the Government should do to reduce its deficit is it should borrow heaps and have extra debt. In fact at the last election Labour went to the country and said: “We’re going to borrow $10 billion. We’re going to invest that and get a rate of return of 7 percent. We’re going to pay only 4 percent on the borrowings and on that basis we can close the deficit.” Well if you take that logic to its conclusion why do we not go and borrow $100 billion? Or $200 billion? Or why not go the whole hog and take a trillion because that way we could instantly get rid of the deficit and solve the country’s worries. I simply say it is a nonsense. 
You see Governments just like households need to be cautious of debt levels. We have set a cap on our debt not going greater than 30 percent of GDP. It is a prudent level that gives the capacity for New Zealand to absorb future economic shocks. This mixed-ownership model is crucial to keeping those limits. It enables us to use those billions of dollars to be able to invest back in the economy with things like broadband like the new research institute like water storage and like transport infrastructure without having to alternatively borrow billions overseas. 
But there is another part on which I have to say that Opposition members’ financial illiteracy really does stun me. Let us hear the line: “Why should people have to pay to buy shares in companies that they already own?”. That is what they have said. What an extraordinary comment of ignorance! So for instance if a State house tenant wants to buy their house off the Government these guys say that they should not have to pay for it because they already own it. I checked with the Government’s transactions. Each year the Government sells hundreds of buildings and hundreds of hectares of land. Are members opposite really saying: “Well if I buy some land off the Government I shouldn’t have to pay for it because I already own it.”? I have never heard of such economic lunacy and yet that is the argument that is put up by members opposite. 
I have also got to reflect on the issue of power prices. Let us just check the record. During Labour’s period in Government power prices went up by 8 percent compound—8 percent compound. The Minister of Energy and Resources under this Government Gerry Brownlee rightly recognised that there was not effective competition in the electricity market and in the years since the increases have dropped to less than half of that. But I say this to the Greens and to other parties opposite: it is time that you were honest with the public. I have heard the Labour spokesperson on finance and the Greens repeatedly say that they are going to “get rid of subsidies under the emissions trading scheme”. Do you know what that really means? That really means that if they are elected at the next election they are going to sock power consumers with very significant price increases against the policies that this Government has. 
I want to end on the last issue of mandate. Over the last 25 years there was a big batch of share sales in the 1980s including by people like Trevor Mallard Annette King Phil Goff and those members. I have checked the parliamentary record. Do you know what happened with those bills? They never went to a select committee. There was absolutely no electoral mandate and they went bad. One of them for a sale of asset went through this Parliament under urgency for its first second and third readings—absolutely no select committee stage. In the second period and during the course of the 1990s there were businesses like Auckland International Airport a shareholding in Wellington Airport businesses like Contact Energy and in that stage the process did not have a very clear electoral mandate. 
Any honest assessment of the history is that there has been a more open upfront and honest policy about the sale of these shares than in any time in more than a generation. The reality is that the policy was announced in January of 2011. The public had a very clear choice at the election. The select committee process was open and thorough; in fact I have to commend my colleagues for the tolerance that they showed at the Finance and Expenditure Committee. Although members opposite will say that every single little branch of the Labour Party made a submission what they do not say is that 29 chambers of commerce representing 34000 businesses came to the committee unanimously saying that they supported this bill. It makes good economic sense it keeps debt down it is about making the New Zealand economy more competitive and this House should support this bill.