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PM & Michael Cullen On Air New Zealand - 3 Oct

Prime Minister and Michael Cullen in the House 3 October 2001

1. Jenny Shipley [Opposition MP] Does she regret her comments about the viability of statutory management for Air New Zealand and recommending that small shareholders “hang on to” their Air New Zealand shares, and the effect these comments may have on the New Zealand taxpayer; if not, why not?

PM – I make no apology for standing up for a national airline in the national interest and suggest that the leader of the Opposition stand up for our country – for a change.

Jenny Shipley – What explanation does she give the New Zealand taxpayer that her loose lips may have cost them up to $135 million in the value of Air New Zealand?

PM – The Dominion article to that effect was a piece of ACT fiction as the leader of the Opposition will find out in due course.

Clayton Cosgrove [government MP] Has she seen any reports of what can happen to national flag carriers when confidence is not expressed in them?

PM – I would note that Swiss Air New Zealand has been grounded in the past 24 hours as a result of the cash being run out and that leaves Switzerland without a national flag carrier – a result I assume that National and ACT want for Air New Zealand.

Richard Prebble [Opposition MP] Has she noted the comments of her Finance Minister who has been careful to distinguish between support for a national airline and for the national airline and does she not realise that her inability to distinguish the two means that, according to the ACT Dominion, the taxpayer is going to be plunging out a billion dollars mainly for the benefit of Singapore Airlines and Brie leys.

PM – In due course the Member will find out how wrong he is.

Winston Peters [NZ First MP] If the government is interested in buying into Air New Zealand why on earth would she as Prime Minister ratchet up the price – not 135 million but potentially to $350 million, which other commentators are now talking about?

PM – I repeat, I make no apology for standing up for the national airline.

Jenny Shipley [Opposition MP] Are reports correct that her loose lips led Singapore Airlines and Brieley investments to renegotiate terms of the Air New Zealand deal that are $135 million less favourable to the New Zealand taxpayer.

PM – No.

2. Hon RICHARD PREBBLE to the Minister of Finance: What justification is there for putting New Zealand taxpayer money into Air New Zealand?
[sorry missed the first question and only came in half way through the second]

… spend about a billion to take up 80% of the airline shares, is that story is correct and if so, has he considered the cheaper option that the Australian government has taken, of guaranteeing Ansett forward airline bookings for three months which has enabled that airline to resume flights?

Cullen – Ansett is operating a service only between Sydney and Melbourne. I don’t think people would regard a national airline in New Zealand as one that simply operates between Auckland and Wellington.

David Cunliffe [government MP] Why did the government not offer to take a share holding at the time of the 13 September agreement.

Cullen - at that time the main shareholders did not wish to see their shareholding diluted and preferred government support to be in the form of a standby loan facility. That changed when it became apparent to the board that more equity was needed more quickly than the 13 September agreement envisaged.

Jenny Shipley [opposition MP] Can the Minister confirm that the Prime Minister’s loose lips undermined the Crown negotiator that he appointed and as a consequence the tax payer will now lose in excess of $135 million in value in Air New Zealand?

Cullen – I can confirm that that suggestion is completely and utterly wrong and…the member does not understand what is being discussed.

Peter Dunne [United MP] Can the Minister advise that any investment in Air New Zealand on behalf of the tax payer by the New Zealand government will be a long term one or will the government be looking to quit that investment as soon as the airline’s position has stabilised?

Cullen – One of the problems that Air New Zealand has clearly faced for some time is the lack of a clear strategic direction and strong leadership. I do point out to the ACT members that it’s your own colleague Stephen Franks who has made most of his career over recent weeks criticising BIL. Therefore, any investment by the New Zealand government in Air New Zealand will ensure that there is effective control for a period in time but it will be subject to a clear message that the government does not see itself the long term shareholder in the company.

Rod Donald [Green MP] Would the Minister consider funding the purchase of Air New Zealand from the $3.4 billion superannuation fund instead of gambling 52% of that fund on international equities especially given the appalling current performance and the expected poor performance of international equity stock.

Cullen – I am pleased to see the National party joining the Greens in its attack on international capitalism so the mark moves toward an imaginary sensor, which I think they may find disappears, as they get closer to the election. I think international equity markets are doing badly unrelated to Air New Zealand or indeed anything to do with New Zealand government superannuation funds one way or another.

And again, there seems to be an extraordinary level of misunderstanding – the government is not purchasing shares off anybody.

Winston Peters [NZ First MP] If the effect of the Prime Minister standing up for Air New Zealand is to massively inflate the cost to the tax payer, particularly beneficial to BIL and Singapore Airlines would he please ask her to desist from standing up for the national airline in the future.

Cullen – I think we are close to finalising agreements, when we do and it’s announced, I think it will be very clear that Singapore and BIL are not beneficiaries out of the changed relationships.

Richard Prebble [Opposition MP] Tonight’s Evening Post, first edition under the headline “Air New Zealand Saved” that the government is expected to announce that it will take a control of the airline by a majority, taking 80% by the issuing of new shares…is that true or isn’t it?

Cullen – a final agreement has yet to be reached, but for a man who started out trying to save Rail and never did I would have thought a headline that said Air New Zealand Saved would be a source of envy.


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