Copeland Gordon: Questions for Oral Answer — Questions to Ministers 
Copeland Gordon: Questions for Oral Answer — Questions to Ministers 
[Volume:619;Page:14669] 
6.  
GORDON COPELAND (United Future) 
 to the  
Minister of Finance 
: Does he believe that bailing out embattled Taitokerau Forests Ltd is a prudent use of public funds; if so why? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 On balance yes. Without providing this incremental financing the Crown faced the very real possibility that it would have little if any hope of recovering its $50 million in advances and capitalised interest to date since 1986. 
Gordon Copeland 
: Will the Minister explain to taxpayers why they should involuntarily bear the ongoing financial burden of Taitokerau Forests Ltd a company that as he has just mentioned has already racked up a debt of $50 million has been turned away by a multitude of commercial lenders and is now seeking a further $3.6 million from the public purse? 
Hon Dr MICHAEL CULLEN 
: The sum of $3.6 million has already been voted; it is not being sought. The answer to the first part of the question is that the $50 million would have been at serious risk. The Crown of course had the alternative of allowing the company to fall over but then it would have had to take on the ownership risk and the management of the forest. On balance it was thought better to take on some increased debt risk which in the end is secured for the underlying value of the forest itself. 
Gerry Brownlee 
: Does the Government have any idea of what the problem is with the particular forest management and can he assure the House that this will not be an ongoing problem that the Government regularly has to tip money into in order to bail out organisations like this? 
Hon Dr MICHAEL CULLEN 
: Dealing with the second part which I think is the more important I can say that harvesting will occur from 2009 so a cash flow will begin to be generated from that point. In retrospect I think it was probably a most unwise decision by the then Minister of Finance Roger Douglas to have entered into this initial arrangement. 
Pita Paraone 
: Can the Minister confirm firstly that in 1996 the Government re-examined this and decided that it would continue to fund as the equity in the trees was such as to advance this situation; secondly that the Crown has a first mortgage secured over the trees; and thirdly that all was signed off by the then Minister of Finance Bill Birch in 1996? 
Hon Dr MICHAEL CULLEN 
: I can confirm that in 1996 the review was undertaken on those grounds and that the then Minister of Finance Bill Birch approved the process. An attempt has been made to raise private financing. That was not possible. It does suggest obviously some difficulties but the problem for the Crown was that it already had $50 million at risk. 
Gordon Copeland 
: Can the Minister confirm that there is a first mortgage over the company’s assets; if so why did the Crown not choose to exercise its rights in that regard instead of putting some more money into the show? 
Hon Dr MICHAEL CULLEN 
: The Crown then thought it was better to leave arrangements as they were. It is confident that when we reach the point of 2009 the cash flow being generated will be sufficient for repayment to occur of the debt owed to the Crown. 
Gordon Copeland 
: Nevertheless given the track record of the management of the company is the public not left with a perception that the Government is acting as a kind of political sugar daddy to this company playing favourites with a floundering management style at the expense of the taxpayer; if not why not. 
Hon Dr MICHAEL CULLEN 
: I think I can say that on reflection and in retrospect had the then Minister of Finance—the foundation leader of the ACT party—not entered into the arrangement things might have been better. But they were entered into. This Government inherited a large amount of money at risk and it was better in fact to loan a further $3.6 million than risk the $50 million going under. 
Rt Hon Winston Peters 
: I seek leave to table the two appropriate documents that demonstrate Mr Dunne supported the initial decision in 1986 of Roger Douglas and the decision of Bill Birch and Jim Bolger in 1996 when Mr Dunne was a Minister. 
Mr SPEAKER 
: Leave is sought to table those documents. Is there any objection? There appears to be none. 
Documents not tabled.