Key John: Questions for Oral Answer — Questions to Ministers Questions to Members 
Key John: Questions for Oral Answer — Questions to Ministers Questions to Members 
[Volume:626;Page:21047] 
6.  
JOHN KEY (National—Helensville) 
 to the  
Minister of Finance 
: Does he stand by his reported statement regarding Transpower’s $733 million structured finance deal that it is “difficult for Ministers to fully appreciate all the risks and benefits” without the same legal advice Transpower had received; if not why not? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Yes. 
John Key 
: Were the unknown financial institutions that took part in the Transpower structured finance deal banks or financial institutions that operate in New Zealand and is it possible that they used this transaction to lower the amount of tax they would have otherwise been required to pay in New Zealand? 
Hon Dr MICHAEL CULLEN 
: That is a matter on which the member will have to question Transpower rather than the shareholding Minister. What I do note is that Transpower said very clearly that in terms of its own arrangements it had increased the amount of tax that Transpower had to pay in New Zealand—and that was from Transpower’s spokesman Wayne Eagleson a person not unknown to the National Party. 
Rod Donald 
: As the shareholding Minister can he explain whether Transpower has assured him that it has addressed the risk to ownership of New Zealand’s transmission assets as a result of its cross-border lease arrangement; and could he please advise whether if Transpower were to attempt its cross-border lease today it would meet our Inland Revenue Department’s expectations and whether the US party to this deal would meet the rules of the US Internal Revenue Service? 
Hon Dr MICHAEL CULLEN 
: The principal question is not about the cross-border leasing deal but about a structured financing deal—a quite separate arrangement that Transpower had. But I am assured by Transpower and have been on a number of occasions that the cross-border leasing deal does not affect the ownership of the assets. 
John Key 
: In light of the answer the Minister of Finance just gave that I would have to ask Transpower has he asked Transpower whether it has engaged in a structured finance transaction that is used by banks that operate in New Zealand to lower their tax liability; if he has not asked why on earth has he not asked? 
Hon Dr MICHAEL CULLEN 
: I have received the assurances from Transpower that I consider appropriate. It is not for Ministers to enter into the details of commercial arrangements that State-owned enterprises are engaged in. 
Stephen Franks 
: Is the Minister telling us now that he cannot get the Transpower information in order to decide whether giving Aussie banks a tax break is a good idea and is that because the Minister does not want to know because in my long experience of acting for such companies on tax-driven deals if a 100 percent shareholder really wants to know something it knows it by lunchtime? 
Hon Dr MICHAEL CULLEN 
: One of the differences in the case of shareholding Ministers is that they have to be more conversant with and obey more closely the law than sometimes happens in the private sector. But in fact the only person who has suggested that the Australian banks are involved for a taxation arrangement was one Sue Newberry of Canterbury University whose views on these matters are not exactly reliable. 
John Key 
: Is it consistent with the State-owned enterprises’ requirement of “no surprises” for the Minister of Finance to have signed off a transaction by Transpower that may have reduced the tax liability of New Zealand banks and for the Minister of Finance not to have inquired who the counter-parties were on the other side of the transaction? 
Hon Dr MICHAEL CULLEN 
: Certainly if Transpower had entered into an arrangement that had the effect of reducing the tax base within New Zealand and did not give the Minister of Finance advice on that I would regard that as inconsistent with the “no surprises” policy. 
Gordon Copeland 
: Is the Government committed to Transpower remaining a profit-earning dividend-paying State-owned enterprise or has consideration been given to its conversion to a public utility with the sole objective of transporting electricity through the grid at the lowest possible cost to the consumer in line with United Future’s policy? 
Hon Dr MICHAEL CULLEN 
: On occasions consideration has been given to whether Transpower should become simply a Crown company rather than a State-owned enterprise but it would still have to meet commercial objectives in terms of return on capital etc. Experience would suggest that if it does not have that degree of discipline upon it it may quickly move into making large losses which would make all the member’s tax promises completely impossible to achieve. 
Rt Hon Winston Peters 
: Why on earth would a transaction go through the Cayman Islands if it was above board and legal and if something devious was not afoot? 
Hon Dr MICHAEL CULLEN 
: As far as I am aware the structured finance deal did not; it was the lease-out - lease-back arrangement deal that did. I repeat what I have said on a number of occasions on that particular deal: given Ministers’ concerns that it might cause some reaction within the United States specific assurances were sought from the United States Government that it was not seen as contrary either to the letter or to the spirit of United States— 
Hon Dr Nick Smith 
: Still dodgy. 
Hon Dr MICHAEL CULLEN 
: If the United States Government says it is not dodgy who on earth are we to judge otherwise as there was a net gain to New Zealand out of it? 
John Key 
: I seek leave to table a copy of the Christchurch  
Press 
 article this morning in which the ANZ National Bank and the Bank of New Zealand are reported as saying they are not denying involvement in the deal and saying they will not comment for commercial reasons. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? Yes there is.