O'Rourke Denis: Mixed Ownership Model Bill — In Committee Speaker Recalled In Committee 
Text is incorporated into the Bound Volume 
O'Rourke Denis: Mixed Ownership Model Bill — In Committee Speaker Recalled In Committee 
[Sitting date: 19 June 2012. Volume:681;Page:3111. Text is incorporated into the Bound Volume.] 
DENIS O’ROURKE (NZ First) 
: 
 The fundamental question to be asked in respect of Part 2 of this bill the Mixed Ownership Model Bill is simply whether it is better to keep these assets and borrow more or whether it is better to sell these assets and borrow less. It is a matter of assessing that balance. In making that assessment it is also necessary to simply ask: are these assets which are proposed to be sold good investments for New Zealand or are they not? The Government MPs have made it clear that they do not think that these are good assets to be held by New Zealanders but they are wrong on that. 
Government MPs do not acknowledge that the dividend stream from these assets is greater than the cost of borrowing what those assets are worth. They do not acknowledge as they should that in the long term it is better to keep 100 percent of the shares of these assets and all of the dividends that flow from them and to repay debt over time. It is no different for a private business where if it sells some of its most essential assets it will threaten the viability of the business. 
It is no different for New Zealand. These are essential assets for New Zealand’s prosperity and future and simply for that reason alone we should not even consider the sale of them. The receipts from one-off asset sales do not benefit either a business in the long term or in this case New Zealand in the long term. These proposed sales will not even result in the surplus the Government has promised us for 2014. So we are going to lose these vital energy assets and get fewer dividends and still have debt at the end of the process—perhaps a little less debt but not significant. 
I want to turn now to something that the Minister of Finance Bill English asked during his speech earlier today. We say that this bill makes so little economic sense that—in answer to that question by Mr English—yes we would buy these assets back. And we would buy these assets back for the very reasons that I have already stated. 
I refer members to the proposed amendment in the name of Winston Peters who will move that there be an amendment to clause 16 to new section 45R which will provide the power for shareholding Ministers to require that these shares be purchased back from their owners require the company concerned to register a transfer of those shares and decide the terms and conditions and the purchase price. It also says that the purchase price will not be more than the amount paid originally to the Crown for those shares by the original purchasers. So let it be put on notice that if New Zealand First in the future has influence on this matter—and I think we will—and if this part of the bill is passed we would exercise that right and we would purchase those shares back and on those terms and conditions for not more than the amount that was paid for them. We believe that that is what New Zealanders want as well and so that amendment should be passed. 
Government MPs have erroneously said that it is not correct to include capital dividends from these companies in the assessment of whether the dividend stream is worth more than the avoidance of paying for the cost of the servicing of the loans. That is not correct. Capital dividends should be included in the assessment simply because the source of those funds—capital in the companies concerned—is from accumulated profits and they are created from the companies’ operations. Therefore there is really no essential difference between capital dividends and ordinary dividends. People should not be persuaded differently from that simple truth. I do not think the Government is being very honest in the way that it has presented the information about that question. 
 The funds are the same in the hands of the shareholder whether they are from capital sources within the companies concerned or by way of ordinary dividends. Companies often restructure their balance sheets and pay capital back to their shareholders simply because it is more expensive to pay dividends than it is to service a loan. Then of course the companies are free to borrow more and to restructure their balance sheet. That is also a lesson for the Government. If it is good for companies to do that and to understand that those dividend streams are so valuable then that should be recognised in this debate as well. 
There is a good comparison here with what was a recent debate in Christchurch over whether Christchurch City should sell some of its valuable assets in order to help defray some of the capital costs of the earthquake. There has been a response published in the  
Press 
 by Mr Bruce Irvine to Gerry Brownlee and David Carter who encouraged the sale of those assets. The response by Mr Bruce Irvine the chair of Christchurch City Holdings Ltd was simply that it was not wise to sell those assets unless the shareholders so instructed. The council did not of course give any such instruction and Christchurch people are very clear in their position that they do not want those assets sold either. Mr Irvine pointed out the reason. The reason is simply that over the last 10 years— 
The CHAIRPERSON (Lindsay Tisch) 
: Part 2. 
DENIS O’ROURKE 
: —those assets—Mr Chairman this is relevant to Part 2 because it comes back to the question of control and whether indeed those assets should be sold or not. The rate of return over the last 10 years of those assets is 15.2 percent which is very similar to the approximately 16 percent that these particular assets held by the Government return to the people of New Zealand. So for the same reason as I said at the beginning it is much more valuable economically for the dividend stream to be retained from these assets than to have the process of repaying debt and saving on the debt servicing costs—a much better economic proposition altogether. 
 Another reason is simply this: why are people so against this proposal? It is simply that they feel that it is an attack on New Zealand sovereignty. The main reason for the opposition by Kiwis is simply that. Much of the figures and facts go over their heads but they know one thing: they do not want foreigners to own our assets. That must be respected. They are the people who are not able to afford to buy those shares nor are they able to afford to pay the higher prices for power that will result. They are deeply concerned about foreign control and they know that that will happen. They know it means the loss of resources they know it includes precious water rights that will be lost to us they know it means that the flow of dividends will go overseas at their expense and they know that in the future they will essentially be buying New Zealand - generated power from foreign companies. They know that that inevitably will happen and they also know that the 49 percent that the Government will sell will sooner or later turn into much more than 49 percent and will inevitably be 100 percent. We will see a total privatisation of these companies in due course. 
The will of the people of New Zealand should be respected. There is only one way to find out what that is for certain and that is for this Government to allow the current proposal for a referendum to go ahead. If that does not happen before this bill finally passes that will be a travesty for New Zealand’s democracy because the people have made it perfectly clear in the sheer number who have signed up to this petition so far that they wish to have their say on this matter. It is utterly idle for this Government to pretend that it has some kind of a mandate because of the results of the last election. There were so many issues in that election you would not know which person voted for which issue or for which party for whatever reason. 
It is completely wrong for this Government to claim that it has a mandate. That simply cannot be the case. That is simple dishonesty. The only way to find out for sure what the people of this country believe for some of the reasons I have already mentioned is to allow that referendum to go ahead before this bill goes any further and everybody knows that the Government is trying to push through this bill as fast as it can.