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Speech: Second Reading of the Mixed Ownership Model Bill

Fuseworks Media
Fuseworks Media

Hon Steven Joyce

Associate Minister of Finance

14 June 2012


Second Reading of the Mixed Ownership Model Bill

Mr Speaker, I move that the Mixed Ownership Model Bill be now read a second time.

This Bill and debate, is about controlling our nation's debt, strengthening New Zealand's capital markets, and providing funding for new high-priority infrastructure projects.

No nation can afford to let debt get out of control.

Huge debt is at the core of why the United Kingdom, Ireland, Spain, Italy, and Greece are being forced to impose tough measures - we don't want that for New Zealand.

I ask those on the other side of the chamber: why would you seek to expose New Zealand to more risks and more debt in volatile markets?

The National-led Government is committed to getting on top of debt, protecting and growing our economy and keeping it safe for New Zealanders from the debt ridden troubles plaguing other countries.

Our mixed ownership policy is part of a wider economic programme to reduce debt, increase savings, and get our country through one of the worst economic crisis the world has seen in 100 years.

It is also a key part of our post-election plan and our Business Growth Agenda.

We've guaranteed the Government will own at least 51 per cent of these companies and prevent any other shareholder from owning more than 10 per cent - ensuring widespread New Zealand investment. It is written into this Bill.

This partial share Government float programme will also help reinvigorate our capital markets and bring stronger commercial disciplines to each of the mixed ownership model companies.

The Government has been upfront with New Zealanders over our decisions. We have been talking about it for eighteen months; we took it to the country last November. We sought and obtained a mandate.

The consultation process included 10 Hui which were held around the country earlier this year, the Select Committee travelled to hear submissions, and all submitters have had their views considered.

Mr Speaker, opponents claim this will increase power prices. Under this Government there is now a more competitive electricity market than ever before. In the seven months to February, 306,000 customers switched providers, to get cheaper prices.

We have a duty to future generations to control our debt which is projected to increase to almost 30 per cent of GDP, or $72 billion, in the next few years.

This programme is expected to raise between $5-7 billion for high priority infrastructure that will help grow our economy like schools and hospitals. That is $5-7 billion dollars we would otherwise have to borrow from overseas lenders.

These share floats do trade a minority stake in some of our SOEs to enable the investment and to enable this country to go forward. This is good economic management.

The four energy SOEs dividends have averaged about 4.1 per cent over the last five years, compared with the cost of new debt, for the same period, of around 5.2 per cent. It makes strong fiscal sense.

The future profitability of these companies, which private shareholders may get through their dividends, is captured in the sales price. So we get the cash up front which makes a lot of sense in these difficult times.

This Government understands the fiscal risks the world is facing.

We are not afraid to make the right decisions, to protect New Zealand from the world's deteriorating financial crisis.

The Opposition will now posture, exaggerate, and claim that it's rushed, losing money, and not needed. They are wrong on all counts. They are politically posturing and not thinking about the long-term future of this country.

Unfortunately, it is entirely consistent with their approach where they oppose any move including this one to strengthen the New Zealand economy.

They oppose moves to strengthen the country's accounts and to invest in New Zealand's future.

They oppose the Mixed Ownership Model and they oppose our investment, not just in schools and hospitals, but have opposed our broadband investment; our transport investment; the irrigation investment; they've opposed the new convention centre; they've opposed oil and gas exploration; they've opposed foreign investment; and they opposed the Hobbit movies.

They oppose everything that would give the New Zealand economy an opportunity to get ahead.

Mr Speaker, they are playing politics with New Zealand's security; they are playing politics with New Zealand's future.

This Government has its eye on the ball. This Government is focused on jobs, on growth, on the financial security of New Zealanders and on investing in our future.

Over the next few weeks the Opposition will continue to see how challenging things are in the world financially.

The Mixed Ownership Model Bill is part of this Government's wider economic programme, to control debt, increase savings, control spending, strengthening our capital markets, and get our country through the worst financial crisis the world has seen in nearly a century.

I acknowledge the Select Committee's work and I commend this Bill to the House.

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