Shearer David: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Shearer David: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 13 March 2013. Volume:688;Page:8462. Text is incorporated into the Bound Volume.] 
2. 
DAVID SHEARER (Leader of the Opposition) 
 to the  
Prime Minister 
: Does he have confidence in all his Ministers? 
Hon BILL ENGLISH (Acting Prime Minister) 
: 
 Yes they are competent and hard-working Ministers. 
David Shearer 
: What responsibility should the Minister of Finance take for the increase in Solid Energy’s debt? 
Hon BILL ENGLISH 
: The Government in its first term of office had a look at State-owned enterprises’ balance sheets and made a decision that many of them could carry more debt in a way that would enhance the performance of the companies. It did make a decision to allow Solid Energy to take on more debt. 
David Shearer 
: In a letter dated 28 May 2009 did the Minister of Finance approve increased debt ratios for Solid Energy that led to debt ballooning from $13 million to $300 million between 2008 and 2012? 
Hon BILL ENGLISH 
: Yes there was such a letter signed by myself and the Minister for State Owned Enterprises. The decisions about how much debt to incur were made by the board but we inherited a range of State-owned enterprises that were badly run overspending and over-investing and we took a whole range of measures to lift their performance. In the case of Solid Energy it has turned out that a company that is operating in the world coal market which is now so volatile would have been better with no debt. In retrospect that is easy to see; at the time it was not. 
David Shearer 
: Why did the Minister of Finance require Solid Energy to increase its dividends and debt at a time when he knew that coal prices were declining? 
Hon BILL ENGLISH 
: At the time it was not clear that coal prices were declining. In fact the best advice from the company—with which the Government ended up disagreeing—was that coal prices would continue to rise. But as I said that decision was made in the context of the mess that the previous Labour Government left with the State-owned enterprises. 
David Shearer 
: I would like to table a letter from the Minister for State Owned Enterprises to Mr John Palmer on 20 May 2009 copied to the Minister of Finance where he insists that State-owned enterprises increase their gearing— 
Mr SPEAKER 
: Leave is sought—[ 
Interruption 
] I think I have got enough information. Leave is sought for the tabling of that letter. Is there any objection to that? There is none. It may be so tabled. 









Document by leave laid on the Table of the House. 
David Shearer 
: How can he have confidence in his Minister of Finance when he put pressure on Solid Energy to increase debt at the same time as he was telling New Zealanders that controlling debt was his top priority? 
Hon BILL ENGLISH 
: As the member will know having State-owned enterprises carry more debt simply shifts the debt around the Government balance sheet—either they carry it or we carry it. Secondly it is one of the completely normal commercial means by which owners of companies put pressure on companies to perform. The fact is that the State-owned enterprises had been under no pressure to perform under the previous Government and we expect better value for the taxpayers’ investment. I would have to say that we were successfully able to improve the performance of most State-owned enterprises over that period. In the case of Solid Energy a sharp drop in the coal price and a loss of export markets put it into financial difficulty. 
David Shearer 
: Was his Minister of Finance advised that such an approach to increase dividends and increase gearing at a time when coal prices were actually falling would stretch State-owned enterprises and “may not be realistically achievable in the short term without inflicting undue harm on the credit rating and/or investment plans”; if so did he accept that advice? 
Hon BILL ENGLISH 
: I am sure that if it was good advice then the Minister did accept it. The Opposition cannot have it both ways. It is opposing asset sales because the Government is giving away dividends and now it is opposing measures the Government took to get dividends out of State-owned enterprises. 
David Shearer 
: Does he have confidence in the Minister of Finance given that he thought it was right to take a $30 million dividend in September 2011 when it was apparent then that Solid Energy was in financial trouble? 
Hon BILL ENGLISH 
: No I do not agree with that. Bear in mind here that this was a company valued at over $2 billion paying almost no dividends. Opposition parties have been saying that these companies should never be sold because we are giving away big dividends. In fact at the time it looked like billions of dollars of value with very little return for the taxpayer. What is the point in owning a company like that? 
Metiria Turei 
: Will the Prime Minister censure his Minister of Housing for saying yesterday that the metropolitan urban limit has contributed very negatively to housing affordability in Auckland when the Minister’s own official documents show that he is wrong? 
Hon BILL ENGLISH 
: No he certainly will not be censuring the Minister of Housing because that is not what the document shows. What the document shows is that the Auckland regional strategy failed. It was meant to create densification in the city. In fact there is less new building going on in the city now than ever and more of the new development in Auckland in the last 10 years has occurred out on the urban limit. We have got ongoing discussions with the Auckland Council to try to get a sensible outcome that will give New Zealanders who live in Auckland which is a big proportion of them a reasonable opportunity to get access to reasonably priced housing even if that does not fit with the planners’ dreams about ideal cities. 
Metiria Turei 
: I raise a point of order Mr Speaker. I understand that sometimes an explanation is needed by Ministers but the Standing Orders are very clear that answers should be succinct and I would hope that you would see those rules as being correct. 
Mr SPEAKER 
: It certainly was a very lengthy answer. It has now concluded. Has the member got further supplementary questions? 
Metiria Turei 
: Is it therefore acceptable to the Prime Minister for his Minister of Housing to intentionally misrepresent the facts of housing to the public? 
Hon BILL ENGLISH 
: The Minister did not misrepresent the facts. In fact I would advise the member to read the report the most stunning conclusion from which is that where Auckland Council said there were 15000 sections ready for building it turns out there are 2000 sections ready for building. That is why so many middle and low income New Zealanders cannot afford houses in Auckland. That member might like it that way. We think it is a bad outcome and we want to change it.