Cunliffe David: Estimates Debate — In Committee 
Cunliffe David: Estimates Debate — In Committee 
[Volume:632;Page:4292] 
Hon DAVID CUNLIFFE (Minister of Immigration) 
: 
 I wish to recognise the contribution of the former Minister for State Owned Enterprises the Hon Paul Swain for whom it was my distinct pleasure to serve as Associate Minister in times gone by. The Hon Paul Swain was a prudent careful but visionary Minister who should take some considerable credit for the fact that under his stewardship the average rate of return amongst the State-owned enterprise portfolio was higher than the average rate of return for the NZX50. That tells us two things: not only is the governance model for the State-owned enterprise stable appropriate but also the public has nothing to fear from those who think as a matter of religious conviction that anything owned by the State must by definition perform inadequately. Under Mr Swain’s tenure quite the reverse of that was proven to be the case—and it still is the case. 
The reality is that the State-owned enterprises matter. They have over $10 billion in assets. They are responsible for something like 16 percent of Crown revenue and that amounts to billions of dollars per year. And of course they make a contribution to essential services and essential infrastructure that New Zealand needs not only today but for the longer term. 
I wish to address a couple of the points raised by the Opposition spokesperson in her remarks. The first is that notwithstanding the Government’s willingness to see State-owned enterprises play a more transformative role in the economy we will continue with the regime of prudent monitoring of tight performance expectations augmented as the Hon Paul Swain has noted by the long-term hold owners’ review process. 
The Opposition spokesperson indicated her concern that there may be a tendency for Ministers to take important commercial decisions. I think it is worth noting that it is certainly the view of the current shareholding Ministers that when they appoint a board they back them or sack them. Board members are the people who have the expertise and they are the people who must judge the commerciality of decisions in the first instance. If Ministers are deeply unhappy then they have remedies available to them under the State-Owned Enterprises Act. 
Let us consider however the policy advantages that State-owned enterprises have because the reality is that the Crown is the kind of shareholder that any company and any management team would want to have. Why? Because the Crown is not in it just for the quick buck; the Crown is in it as the custodian of the public interest for the long term. Because the Crown has an eye on long-term value creation we can make investment decisions that take a while to pay off. 
Let me conclude with I think the best example to show the difference between the two sides of the Chamber. When the present Opposition members were in Government—and I know it is a long time ago now—they issued a directive under the State-Owned Enterprises Act to prohibit State-owned enterprises from investing offshore. The National Government said: “Thou shalt not invest!”. We lifted that directive. Meridian Energy bought Southern Hydro in Australia. National opposed that. Meridian built it up and extracted portfolio synergies between wind energy and hydro generation. Meridian sold Southern Hydro for nearly a billion dollars of profit much of which has contributed to the Government’s ability to upgrade the transport infrastructure around this country. 
Let us reflect on that example. National opposed offshore investment; it used the most draconian provision of the State-Owned Enterprises Act to prevent it. Labour gave boards the right to make those decisions and Meridian Energy did us proud. Meridian Energy returned the capital to the Crown and it has been used for the good of the public of New Zealand. What we want is good tight prudent management that delivers sustainable returns for New Zealand and invests in this country’s transformation for the future. I believe that is what this policy will deliver.