Cosgrove Clayton: Questions for Oral Answer — Questions to Ministers 
Cosgrove Clayton: Questions for Oral Answer — Questions to Ministers 
[Volume:678;Page:1288] 
7. 
Hon CLAYTON COSGROVE (Labour) 
 to the  
Minister of Finance 
: What did he mean regarding public sector CEO pay increases when he said “There’s a couple of bigger pay increases I think three with the energy companies which will be probably related to the share float that’s coming”? 
Hon STEVEN JOYCE (Acting Minister of Finance) 
: 
 First of all it is important to distinguish between the core public sector such as Government ministries and departments and the wider State sector including State-owned enterprises where chief executive officer salaries are set by the boards of those companies. So the Minister’s comment in that context was speculation. The board of each State-owned enterprise will consider a range of factors in setting the remuneration for its respective chief executive. This includes company performance the competitive environment competition for chief executive talent across for example Australasia and the potential for greater accountability under the mixed-ownership model while being mindful of the need to control costs. That is what the Minister was referring to. In his full quote he went on to say: “Looking across the rest of the public sector pay chief executives are being quite restrained. You might see there is quite a lot of them where their salary has actually dropped.” 
Hon Clayton Cosgrove 
: If energy companies are paying higher executive salaries due to the Government’s privatisation agenda will Kiwi families not ultimately carry the cost through higher power prices for things like those salaries and other far larger additional costs as part of the privatisation agenda like the estimated $200 million fee for sale? 
Hon STEVEN JOYCE 
: The member raises an interesting question but it appears to me at a cursory glance at the history of this matter that actually chief executive officer remuneration has risen much more considerably over the previous 8 or 9 years before this matter was even contemplated and also in fact that at that stage the retail electricity prices jumped considerably as well. 
Hon Clayton Cosgrove 
: Why is there no guarantee at all in the Government’s asset sales legislation in respect of an increase in those power prices as the result of privatisation and why is it that the Electricity Authority has not taken the time to investigate the impact of privatisation on power prices? 
Hon STEVEN JOYCE 
: New Zealand has a very strong regulatory environment nowadays in the electricity market with the Electricity Authority which as the member points out this Government put in place. I think if he looks he will see that there has been a more competitive electricity environment in the last 2 or 3 years than in the previous 8 or 9 years under a previous Government whose brand name escapes me at this time.  
Hon Clayton Cosgrove 
: Has he seen the Ministry of Economic Development data which shows that in 84 percent of lines company areas privately owned electricity companies have the highest retail charges and nationally privately owned electricity companies charge 12 percent more on average than State-owned enterprises which may suggest that the public ownership of energy companies is currently acting to hold prices down? Has he seen those figures? Does he have a reaction to them? 
Hon STEVEN JOYCE 
: No I am not aware whether the Minister of Finance has seen those particular figures or not and on his behalf I have not seen those particular figures. But again I would comment that we have a very strong regulatory environment in New Zealand and have had very limited power price increases in the industry as a whole. We also have a situation where we encourage customers to evaluate prices between different companies and make switches and that seems to be operating very effectively 
Jami-Lee Ross 
: What recent trends has he observed in remuneration increases for chief executives of energy State-owned enterprises? 
Hon STEVEN JOYCE 
: I have observed two distinct trends in total remuneration. In the 3 financial years to 30 June 2011 the average chief executive officer remuneration increase for the four energy State-owned enterprises—Genesis Power Meridian Energy Mighty River Power and Solid Energy—totalled around 13.5 percent or an average of 4.5 percent a year. However in the 8 financial years previous to that to 30 June 2008 under a previous Labour Government the average chief executive officer remuneration increase for these four companies totalled 190.7 percent or an average of 23.8 percent per year. In the same period retail electricity prices jumped 72 percent. Fortunately these trends have not continued.  
Hon Clayton Cosgrove 
: I seek leave to table—[ 
Interruption 
]  
Mr SPEAKER 
: Order! I apologise to the member. A point of order has been called and it will be heard in silence. 
Hon Clayton Cosgrove 
: To assist the Minister I seek leave to table the Ministry of Economic Development quarterly survey of domestic electricity prices November 2011 which substantiates my point that in 84 percent of lines company areas privately owned electricity companies have the highest retail charges. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 
Document by leave laid on the Table of the House.