Key John: Financial Review Debate 
Key John: Financial Review Debate 
[Volume:607;Page:4171] 
JOHN KEY (NZ National—Helensville) 
: 
 This is a Government that likes spending money. It absolutely loves spending money—heaps of it—and it needs plenty of it. The Government gets it from the taxpayers of New Zealand. In fact so much money has been pouring in from taxpayers that the Government has not known what to do with it. There is surplus of about $3 billion. Members of the Labour Cabinet and Labour caucus have been parading around the country all sorts of ideas about why so much is pouring in and what a great job of economic stewardship this minority Labour Government has done. They forgot to mention three quite important facts: great weather down on the farm incredibly high commodity prices and an exchange rate at a level we have not seen in New Zealand since it was floated when I was just a young foreign exchange dealer in 1984—a rate of 44.10c. Those are the reasons the money has been pouring in. 
Tonight I want to talk a little bit about some of the ways in which that money has been used but I can assure the House of one thing—the money will not be going back to the hard-working taxpayers of New Zealand in a tax cut nor will it be going back to the hard-working companies of New Zealand in a tax cut. I was amused to read just the other day a comment by John Shewan the lead partner in the area of taxation at PricewaterhouseCoopers. He said that one would have to be a member of the flat earth society to believe this Government’s going to give a corporate tax cut. No one on this side of the House is a member of that society so we will not be waiting for there to be a tax cut. 
Last year the Government bailed out our national carrier Air New Zealand. It spent $885 million on the recapitalisation of that airline. I do not want to talk tonight about whether that was the right decision or whether the Government could have taken up the offer from Singapore Airlines. I want to talk about an issue that relates to the appropriations and where more money will be sent. Some time after the Government put $885 million into Air New Zealand the management of the company went to the major shareholder—at that point the 81.4 percent shareholder the Government—and said that it did not have enough money to run its business properly and would like a little bit more. Michael Cullen the Minister of Finance flush with cash said: “No problem! You can have another $150 million from us up until 30 June 2003.” 
A few weeks ago the company announced that it would have a $200 million rights issue which now that the Government is a shareholder of Air New Zealand to the tune of 78 percent after being diluted by the 5 percent stake taken by Qantas meant that if the Government took up its full rights issue it would put in $156 million. It wants to put in only $150 million. That in itself is an interesting thought except that shareholders and investors all around New Zealand have been going to their brokers and telling them that they want to invest in Air New Zealand. So why is the Government putting $150 million into Air New Zealand if it does not need to? Why is it spending $150 million of taxpayers’ money and putting it into Air New Zealand if it does not need to? Why is the Government simply not underwriting the transaction—as it could—instead of putting in $150 million? One of the answers could be that the Government wants to keep a remaining controlling stake in Air New Zealand once Qantas takes up its 22 percent stake. But even if Air New Zealand’s major shareholder the Government is diluted fully when Qantas buys 22.5 percent of Air New Zealand—as indeed it surely would because the Government is waving it on in that transaction—and does not take up its $150 million stake the Government would still own 61 percent of Air New Zealand. So why does the Government want to hold 71 percent of an airline when it could hold 61 percent? My point is very simply this: the Government went to the taxpayers and citizens of New Zealand and told them that it was bailing out the airline because no one else would. The Government told them it was investing in the airline because it was in the national interest and no one else would invest. The position has changed and there is no logical reason at all for the Government to be holding its stake at 71 percent when it could dilute it to 61 percent. That is called stock market investing and the Government should either tell the people of New Zealand that it has changed its strategy or it should not do it. It is as simple as that. I could understand if the Government were diluting itself to under 51 percent. I could understand that because if one has that big a stake it makes sense to keep oneself above 51 percent. But that is not what this Government is doing. This Government is investing in the stock market. It is nationalising Air New Zealand by stealth and it is not telling the people of New Zealand about it. That is the truth. 
Last week Jim Anderton the Minister for Economic Development that benevolent sort of Father Christmas of the corporate sector biffed $1.5 million at EDS—because it will not come and do a deal in New Zealand if we do not give it that money—and corporate welfare was the name he put on it. He said that that company—a company that earned US$22.5 billion last year—would not come to New Zealand unless we gave it $1.5 million. It is called “picking winners”. Now one might sit here and say: “Well they are going to create 360 jobs”. But not that long ago in my electorate Jim Anderton talked about the triumph for the “jobs machine” when he pumped money into Sovereign Yachts. He said that it would be producing so many boats and so many jobs that we will not know what to do with them. Lo and behold there are 60 jobs one boat and it has not actually been that great a success for the corporate “jobs machine”. 
The Government is spending taxpayers’ money. As I said when I started my speech tonight this Government loves spending money. I would like to give a bit of free consulting advice to the Labour Government. I will do it for nothing. I will not charge. I will do it out of the goodness of my heart for the people of New Zealand because I think it is worth it. Here is a little tip and it will not cost anything. The Government should cut corporate tax rates—that would be a start—and fix the Resource Management Act. And by the way while it is at it it should cut compliance tax so that “Uncle Jim Anderton” will not have to keep acting like Father Christmas giving huge multinational corporates millions of dollars instead of just giving them an environment that would make all businesses in New Zealand operate properly. 
I want to touch on one last point of appropriation spending. Whenuapai Air Base is in my electorate. 
Darren Hughes 
: Great for State houses! 
JOHN KEY 
: Yes that is right according to some people—not myself. The basing study of 2002 showed that the Government could spend $29 million upgrade that runway and keep the Air Force at Whenuapai or by taking option B it could move 45 percent of the entire Air Force 1100 of the 2400 people who work there to the middle of the North Island and station them there to protect the bulk of the population who—and I point this out in case the Government has not noticed—lives around Auckland. I would happily sign off an appropriate amount because I would be doing the right thing. I simply ask the Government to have a look at where its spending is going. Let us forget about income-related rents. Let us forget about the State houses that the Government is trying to build all over my electorate—to get rid of me. Let us stop that sort of stuff and start spending money where it makes sense. Let us spend money to keep the Air Force at Whenuapai and let us cut corporate taxes so our country can operate more efficiently. We should not be bailing out Air New Zealand—that is not what is required.