Cunliffe David: Questions for Oral Answer — Questions to Ministers 
Cunliffe David: Questions for Oral Answer — Questions to Ministers 
[Volume:674;Page:19943] 
3. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister of Finance 
: What is the forecast cost to the Crown of forgone dividends and sale costs as a result of his privatisation plan according to the final A3 page in the Treasury report  
Extending the Mixed Ownership Model 
? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 The basic numbers outlined on that page are as follows. According to the Budget 2011 projections combined dividends from the four State-owned enterprises in question are expected to average $380 million over the next 4 years. This represents a yield of 2.5 percent on the commercial valuations provided by the State-owned enterprise boards last year. By contrast interest rates are expected to average 5.3 percent implying a holding cost of $800 million a year or about twice the dividend returned. So the expected dividends are going to be about half of the holding cost of the value of those State-owned enterprises. 
Hon David Cunliffe 
: Can the Minister confirm whether those numbers include or exclude capital distributions and say why he has not therefore provided the public with a full costing of his asset sales policy; does he not think the public deserves to have such information in front of them before they go to the polls? 
Hon BILL ENGLISH 
: The member cannot have it both ways and say the dividends are large because of the capital distributions. Well the capital distributions come from asset sales; that is what—[ 
Interruption 
] The main capital distributions have come from the large asset sale by Meridian Energy overseen by the last Labour Government. We would rather pay dividends to Kiwis than interest to foreigners. 
Hon David Cunliffe 
: Did he read the passage in this report to him that states that “a range of issues would make the complexity of the programme substantial.” and does he consider that some policies are worth pursuing even if they are supposedly complex? 
Hon BILL ENGLISH 
: This policy is worth pursuing because it will give the opportunity for New Zealanders to invest in New Zealand assets at a time when their savings are reaching record levels. It is good news that New Zealanders understand what needs to happen in this economy and the Government is going to help by giving them the opportunity to invest their savings soundly. 
Hon David Cunliffe 
: Did he read the passage in the report that states his privatisation plan would take 3 to 5 years for the sales to be complete and would entail ongoing costs in lost dividends and does he therefore agree that Governments should undertake policies that take time to build and do not necessarily release their full revenue potential in the first year? 
Hon BILL ENGLISH 
: If the member is trying to conjure up an excuse for why his capital gains tax will not raise the revenue he is claiming and therefore he will have large deficits and more debt then the answer is no. 
Hon Rick Barker 
: I raise a point of order Mr Speaker. The Minister is not responsible for speculation about Labour’s possible policy. His answer was all about that. He should answer the question. [ 
Interruption 
] 
Mr SPEAKER 
: A point of order has been called. It is a difficult one for the Speaker to rule on because the question asked the Minister his view of policies that take time to implement and ramp up over time. The Minister in expressing his view as he was asked to do used the example of a capital gains tax as the way to respond to that question. I cannot rule that that is unreasonable or unfair given the nature of the question asked. I think the member asking the question knew the risks in framing the question in that way. 
Hon David Cunliffe 
: Is there any evidence his privatisation policy would “boost [the] domestic capital markets” as suggested in the report and would not a better policy address what he has called the distortion that leads to Kiwis favouring unproductive property speculation and starving productive enterprises of capital? 
Hon BILL ENGLISH 
: The Government of course plans to achieve both of those objectives. We have made significant changes that have increased the effective taxation of property and do not tax the gains of hard-working New Zealanders who have increased the value of their business—unlike what he is planning. 
Peseta Sam Lotu-Iiga 
: Which groups of New Zealand investors does he expect to be at the front of the queue when portions of the State-owned enterprises are offered for community ownership under the mixed-ownership model? 
Hon BILL ENGLISH 
: Of course the controlling owner will be the New Zealand Government with at least 51 percent but we expect other groups that have expressed I have to say enthusiasm for the proposal to be there: KiwiSaver funds which of course represent 1.7 million New Zealanders and their savings; mum and dad retail investors; Crown financial institutions such as the New Zealand Superannuation Fund and ACC; and iwi who appear to be the most enthusiastic group and who of course are long-term holders of New Zealand assets and would continue to be so.