Barry Maggie: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Barry Maggie: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 28 February 2013. Volume:687;Page:8321. Text is incorporated into the Bound Volume.] 
2. 
MAGGIE BARRY (National—North Shore) 
 to the  
Minister of Finance 
: What progress is the Government making in its programme to offer New Zealanders minority shareholdings in energy companies? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 The Government share offer programme is on track. The Supreme Court yesterday ruled in favour of the Crown regarding the sale of shares in Mighty River Power. This confirms that the Government can proceed to sell up to 49 percent of the shares in Mighty River in the first half of this year in line with legislation passed by Parliament and promises made by National in the last election. On Monday Cabinet will consider a timetable and other details of the share offer. This will include laying out how New Zealanders will be at the front of the queue for the shares. We would expect when the shares are sold that the company will remain 85 to 90 percent in New Zealand ownership. 
Maggie Barry 
: What are the main benefits of proceeding with the Government’s share offer programme? 
Hon BILL ENGLISH 
: In the first place it will free up $5 billion to $7 billion of cash which we can use to invest in the Government’s other priorities. Secondly it means that we will be able to avoid borrowing that $5 billion to $7 billion. Thirdly it will give New Zealanders the opportunity to invest in these companies at a time when their savings have increased and they may want to diversify their growing savings. Fourthly it will enable us to reduce the potential for the taxpayers to carry the burden of commercial risks that go wrong as they sometimes can as in the case of Solid Energy. 
Maggie Barry 
: What proportion of these energy companies does the Government expect to be held by New Zealanders after the share offers? 
Hon BILL ENGLISH 
: The Government has made it clear that New Zealanders will be at the front of the queue for shares. Including the Government’s majority stake of 51 percent Ministers expect 85 to 90 percent of the shares will be held by New Zealanders after the public offerings. I am confident that we can achieve that. As of last December Kiwis had $115 billion in bank deposits. More than 2 million New Zealanders have amassed $14 billion in their KiwiSaver funds. They may be interested in buying shares. 
Maggie Barry 
: What impact will the share offer programme have on the $240 billion of total assets that the Government holds on behalf of the taxpayers? 
Hon BILL ENGLISH 
: The Government’s ownership of assets will continue to grow consistently. The taxpayer currently owns $240 billion worth of assets. The Half Year Economic and Fiscal Update in December shows that even after the sale of this $5 billion to $7 billion of assets taxpayer wealth will be $270 billion by 2017. That is an increase of $30 billion in assets and some may argue that that is too rapid a growth in Government ownership of assets in a small economy. 
Hon David Parker 
: Does Treasury advice show whether the loss of up to 49 percent of dividends and retained earnings from the sale of State assets make a Government surplus—operating balance before gains and losses—easier or harder to achieve? 
Hon BILL ENGLISH 
: As we have discussed in this House before there is a number of measures of the impact of the sales on the Government accounts and the measure on the operating balance before gains and losses shows that we will be a bit behind on it—about $80 million in the first year in a Budget of $70 billion. But the driving reasons for this are not just the accounting. The Government believes that the mixed-ownership model is a better way to manage the substantial commercial risks faced by taxpayers a better way to build our public markets and enables us to avoid $5 billion to $7 billion of debt—of extra debt—in a world that is increasingly hostile to debt. 
Te Ururoa Flavell 
: Tena koe Mr Speaker. Tena tatou katoa. What will the Minister do to ensure that any investment statement for a mixed-ownership model company will clearly and prominently explain that the Crown’s decision regarding its 51 percent shareholding must be “consistent with the principles of the Treaty” otherwise the courts are able to review those decisions? 
Hon BILL ENGLISH 
: The offer document will have to reach the current quite high legal standard of disclosure on all material risks that Mighty River Power might face. I would expect that in the light of the attention that has been given to the Supreme Court case that issue will be covered in the offer document. 
Hon David Parker 
: Given that net debt in 2020 is now forecast to be around 26 percent of GDP an increase of around $15 billion over forecast in May last year with the difference being due to downgrades in economic and job growth does that not prove that growing the economy and jobs is the best way to pay down debt rather than flogging off State assets like power companies? 
Hon BILL ENGLISH 
: What it proves is that we need to do both—both grow the economy and use the Government’s very large balance sheet more effectively than we have done in the past. The Government’s debt target remains at 20 percent of GDP by 2020. We have fallen behind that target and we are going to have to work hard to make that target because that would give us a reasonable level of debt to enable us to deal with the next recession whenever that comes along.