Norman Russel: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeNorman Russel: Questions for Oral Answer — Questions to Ministers[Sitting date: 18 September 2013. Volume:693;Page:13451. Text is incorporated into the Bound Volume.]1.Dr RUSSEL NORMAN (Co-Leader—Green) to theMinister for State Owned Enterprises: What is the forecast cost to the Crown of the Government’s plan to allow buyers of Meridian Energy shares to pay for their shares in instalments and will the instalment scheme be open to overseas institutions?Hon TONY RYALL (Minister for State Owned Enterprises): Thank you for the opportunity to talk about the Meridian Energy share offer. It is on. As I advised the member in the House last month there is no forecast cost for instalment receipts because any such estimate would be affected by many factors including the final price of the shares. To the second part of his question: yes that has been known since last month when the Government announced the instalment receipt structure for investors.Dr Russel Norman: I seek leave to table an estimate of the cost of about $61 million prepared by the Parliamentary Library.Mr SPEAKER: The source of the document is the Parliamentary Library?Dr Russel Norman: Yes.Mr SPEAKER: Leave is sought to table that particular estimate prepared by the Parliamentary Library. Is there any objection? There is none. It can be so tabled.Document by leave laid on the Table of the House.Dr Russel Norman: For clarity can the Minister confirm that the Government is going to make ordinary New Zealanders effectively subsidise the purchase of these shares through these interest-free loans and that these interest-free loans are going to be made available to overseas institutions such as investment banks?Hon TONY RYALL: There is no plan to have New Zealanders subsidise the sale of shares in Meridian Energy. It is quite clear that the use of instalment receipts will help drive interest and demand in these shares.Hon Clayton Cosgrove: If Meridian Energy is such a good buy why does the Government need to use a taxpayer-subsidised and uncosted—apart from a costing provided by the parliamentary librarian—“buy now pay later” scheme to entice investors to purchase Meridian Energy shares if the company is such a good long-term investment? Come on “Twinkletoes”.Mr SPEAKER: Order! [Interruption] Order! Interjections like that at the end of the questions are most unhelpful.Hon TONY RYALL: As the member knows the Government is pursuing a mixed-ownership model programme. It is about freeing up our investment in a minority stake in a number of these energy companies and the proceeds that will be used are to go intothe Future Investment Fund which is earmarked for investment in important infrastructure: schools roads and hospitals. The Government has been very clear about that from the very beginning.Rt Hon Winston Peters: How can the Government expect so-called mum and dad investors to invest in Meridian Energy when the few who invested with Mighty River Power have collectively already lost a staggering $120 million?Hon TONY RYALL: Despite the economic sabotage of the Labour Party and the Green Party 113000 investors bought shares in Mighty River Power and it has been proven very successful for the New Zealand taxpayer. We now have $1.7 billion in cash which is earmarked for important investments such as the Christchurch City hospitals. It has been a significant win for all New Zealanders.Rt Hon Winston Peters: Is he aware that over the last decade Meridian Energy paid over $3 billion to the Crown in dividends; if so how on earth is he going to make up for a $1.5 billion hole in the Budget? Or to paraphrase Sir Winston Churchill never has so much been stolen from so many for the benefit of so few sleazy crony mates.Mr SPEAKER: Order! Again I am very tempted to rule that question out of order. I am going to let it go on this occasion but imputations like that about sleazy mates etc. do not lead to good order in this House. I leave it for the Minister to answer.Rt Hon Winston Peters: I raise a point of order Mr Speaker. With the greatest respect you might draw the line on character assassination of MPs and that is fair enough. But I am referring to somebody outside the House and you have got no authority whatsoever on that matter.Mr SPEAKER: Order! I have authority while I am the Speaker of this House. What I said to the member was that I was very inclined to rule the question out. I am giving him the benefit of the doubt on this occasion but if he continues to argue with the Chair then I will not give him that benefit any longer.Hon TONY RYALL: A number of those dividends that the member refers to were one-offs and they cannot be repeated because you cannot sell Southern Hydro twice. Of course the revenue and dividend flows will all be detailed in the financial accounts and the pre-investment statement that is coming out on Friday. It is disappointing that the member did not express this view about investors when he worked with me when we privatised Auckland International Airport in the late 1990s.Dr Russel Norman: Can the Minister confirm that if for example Goldman Sachs based in the United States was to buy Meridian Energy shares Goldman Sachs would be allowed to access the interest-free loans in order to buy those shares?Hon TONY RYALL: They are not interest-free loans but certainly all investors will be able to use instalment receipts. That is what the Government has been very clear on. But I do need to make this very clear to the member. It is a very very basic rule of initial public offering economics. If the instalment receipt structure lifts the price by even 1c a share the taxpayer gains millions and millions and millions of dollars from the float that we would not have otherwise received. That money can be used to invest in important social infrastructure and we do not need to print it like that member would want to.Dr Russel Norman: Does the Minister disagree then that given that the buyers will be given the shares and will be taking the dividends from the shares before they have to pay for them and they will not have to pay for them for 18 months how that is not an interest-free loan?Hon TONY RYALL: It is not an interest-free loan; it is instalment receipts and members should be aware of what goes on there. But the fact is that they are two different things and if I have to explain the difference to the member then I think we have got a problem. But the point that the member needs to realise is that whatever thebenefit is it does go to interest and demand for the shares and that is what gives benefit to the New Zealand taxpayers who are retaining 51 percent of this company.Dr Russel Norman: Does the Minister have any information as to whether the Prime Minister will be on the phone—as he was on the phone to the head of RioTinto recently—to his old friends at Merrill Lynch telling them that they can get interest-free loans to buy shares in Meridian and that the cost of the interest-free loans will be paid for by the New Zealand taxpayer?Hon TONY RYALL: That is simply not correct—the suggestions that the member has made. What I have explained to him is that instalment receipts and the benefits of such will go directly to demand and interest in the shares of Meridian Energy. For every 1c increase that we get in the value of those shares as a result of the instalment receipts there are as many millions of dollars in cash for New Zealand taxpayers. So we retain 51 percent of Meridian Energy we get an increased value for the 49 percent and that money goes into providing services and benefits for New Zealanders without our having to borrow. It is controlling debt that is fundamental to the mixed-ownership model programme.Dr Russel Norman: Can he think of a more extreme case of a Government that favours the rich and the powerful over everybody else than the example of giving interest-free loans to offshore investment banks so that they can purchase shares in what is currently a company owned by the people of New Zealand?Hon TONY RYALL: The Government has been quite clear on the reason why we have got these instalment receipts. We have also been very clear that at float this company will be owned 85 to 90 percent by New Zealanders. That is our goal. The reason why we are doing that is that it is part of our wider economic plan to help control debt and to invest in the schools roads and hospitals that New Zealanders want. That member may want to borrow the money from foreign bankers; this Government believes we can do that ourselves as New Zealanders.