Key John: Estimates Debate — In Committee 
Key John: Estimates Debate — In Committee 
[Volume:618;Page:14319] 
JOHN KEY (National—Helensville) 
: 
 Everybody knows that this is a tax spend and wasteful Government and we need no more evidence of that than to look at Vote Finance—a $57 million expenditure item in Budget 2004. Where has the wasted money gone? There has been $2.8 million for taxation advice. I have some advice for the Minister of Finance: one does not need to spend $2.8 million to know that raising the top rate of personal taxation is causing havoc amongst the business community of New Zealand and that by raising the top rate of taxation every small business in New Zealand has to pay more in compliance costs. One does not need to spend $2.8 million to know that this was simply an ”envy tax” and that it puts the wrong incentives into the economy. This is a tax waste and spend Government; everybody knows that and one does not need to read Vote Finance to know that. 
I do want to point in particular to $3.29 million of expenditure by the Government in Vote Finance in relation to purchasing advice on the ownership and performance of Crown companies and Government institutions. That $3.29 million was and is proposed to be spent by the Government on advice on the purchase and performance of Crown companies. What a waste of money that is because when I looked at the heads of agreements for TrackCo announced on the Government website or on the Treasury website just a few days ago what did I see? The first thing I saw was that despite the Government spending $3.29 million in this area no due diligence was undertaken by this Government when it bought TrackCo—no due diligence whatsoever. Why was that the case? Well Treasury was kind enough to outline its reasons why no due diligence was taken and there are some real beauties. 
The first example of those reasons wasthat TrackCo was costing only $1—the Government did not need to do due diligence on it because it was costing only $1. Well hello has anybody in the Government worked out that we are buying hundreds of millions of dollars worth of a liability? The fact that it cost $1 I am sure meant it did not come into part of the $3.29 million the Government is to spend on advice. The second little beauty contained in the heads of agreement in relation to due diligence was this one: the Government was going to buy TrackCo anyway so it would not bother having due diligence done on TrackCo. Well putting to one side what an arrogant statement that is for any Government about any purchase one of the reasons why the Government owning a multitude of businesses can very often be the wrong thing is that “we are going to do it anyway” is no reason to fail to carry out due diligence. But maybe the best reason came last and it was simply in the statementthat the best information was held within Toll Holdings and therefore that information would come to the Government when it purchased TrackCo anyway. The best information held by the existing owner Toll Holdings would come to the Government anyway. Well has anybody in the Government worked out that it could well be in the interests of Toll Holdings—the existing owner—to have that number as high as possible? After all those who have looked at the deal for just a cursory moment will have seen that anything under $200 million is picked up by the taxpayer of New Zealand so it could be well within Toll Holdings’ interest to keep the number high. 
Secondly if all this failure to do due diligence on a large liability that was being purchased by the Crown was not bad enough what did we see on Friday? We saw the reason why no due diligence was necessary despite the fact that Dr Cullen has tried to tell the public of New Zealand on nationwide television that everything spent above $200 million on the track would be recouped through the access charge. Even he the Minister of Finance who has a keen sense of humour could not keep from breaking in to a smile when he made that comment on nationwide television. But what did we see on Friday? We saw the absolute classic about the board of TrackCo the company that the Government did not do the due diligence on because it is paying only $1 for it and because it is going to buy it anyway. We saw three additions to the TrackCo board—jobs for the boys with famous sort of Labour Party people like the President of the Labour Party Mike Williams being famously appointed to TrackCo. That is why the Government did not need to do due diligence. That is why $3.29 million has been wasted if this Government is telling the people of New Zealand that it is spending that money on getting advice because the Government does not need to get advice when it does not do due diligence and when it stacks the board with its mates it can get through whatever pork-barrel politics it likes.