Q+A interview with Don Brash & David Cunliffe
Sunday 21st August, 2011
Q+A interview with Don Brash & David Cunliffe.
The interview has been transcribed below. The
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DON BRASH & DAVID CUNLIFFE interviewed by GUYON ESPINER about ASSET SALES
PAUL The old bogey – asset sales –
the sale of our state-owned enterprises. It’s going to be
one of the big issues probably of this election. Prime
Minister John Key says if National wins in November,
they’ll put up for sale 49% of the shares in power
companies Genesis, Meridian and Mighty River Power, coal
miner Solid Energy and Air New Zealand. This is proving to
be a very difficult sell. At the start of the year, the
Prime Minister had this to say.
JOHN KEY
I think New Zealand’s ready for that grown-up debate about
whether we can afford all the things that we’re doing and
how we can best fund our future.
PAUL
Eight months on, sad to say, he’s not so keen to
have that grown-up debate, because none of his people are
coming on today. We asked State-Owned Enterprises Minister
Tony Ryall to front. He said no to an interview and no to a
debate with David Cunliffe, and he has a rule against
debating David Cunliffe, it seems. Finance Minister Bill
English says National has spelled out its policy and he
doesn’t see the need to debate the issue on asset sales,
so the government is mum. They are, however, happy to come
on if or when they figure out how to ensure Kiwi investors
get first dibs on those shares. We’ve said, well, we’ll
hold them to that. Today instead we’re delighted to have
Dr Don Brash with us, the ACT leader, and the supporter of
the asset sales. He joins us in Wellington. And Labour’s
David Cunliffe, who doesn’t think they’re a good idea at
all, with Guyon.
GUYON Thanks,
Paul, and thank you, David Cunliffe and Don Brash for
joining us on this issue. Don Brash, can I start with you?
For the average New Zealander, say on the average wage of
roughly $50,000 a year, not a lot of disposable income, the
government comes along and sells a stake in the energy
companies. What’s in it for them?
DON BRASH
– ACT Leader
Well, I think basically what’s
in it for them is that this is a more efficient way of
improving growth in the New Zealand economy. Nobody
seriously believes that governments run commercial
businesses better than private owners do. There’s no
logic at all for governments continuing to own
them.
GUYON That’s a fairly,
you know, ideological and eye-level incentive. What’s the
good bit for someone – just the average Kiwi? What’s
the good bit?
DON Look, the key
point is how do you make New Zealand a more efficient,
growing, productive economy? And this an issue which
governments have to wrestle with the whole time. The issue
is how do you make those generators more productive, more
efficient and better for the average wage earner. And
keeping them in government ownership simply doesn’t cut
it.
GUYON OK, David Cunliffe,
New Zealanders lost $8.5 billion in the finance companies.
Labour’s saying to them, ‘Don’t invest in the property
market,’ because you’ve got your capital gains tax to
try and dissuade them from doing that. What’s wrong with
giving the average New Zealander a shot at investing in a
good solid New Zealand company?
DAVID CUNLIFFE
– Labour Finance Spokesperson
Well, it
doesn’t make financial sense for New Zealanders, it
doesn’t make strategic sense for the
government—
GUYON Why
doesn’t it make—?
DAVID
It’s not going to make social sense for any of
us.
GUYON Why doesn’t it make
financial sense for an average New Zealander? I imagine
that there’ll be a big queue forming outside when these
companies, or if they are, put on the
block.
DAVID Well, it
doesn’t make sense, because we as taxpayers lose the
dividend stream that they make, and within 10 years, we’ll
be poorer as a country and as individual taxpayers because
they have been sold, no doubt on sold to foreign
multinationals, who will then control our power supply and
our airline.
GUYON Can I just
clarify with you is it the foreign ownership that you
don’t like? If it could be guaranteed that that 49% stake
stayed in New Zealand hands, would that be
OK?
DAVID Well, that’s a
really interesting point because that’s the question Bill
English was asked at the National Party conference and could
not answer. The fact is there is no way to guarantee
keeping those shares in New Zealand.
GUYON
Well, you could. You could just ban foreigners
from owning them, could you? You can issue different types
of shares.
DAVID Well, I think
you’d have to look very closely at whether that breached
World Trade Organisation obligations.
GUYON
We can get into that, but what I’m trying to
clarify—
DON Guyon.
GUYON
Just a second, Dr Brash. Is it just the foreign
ownership problem?
DAVID No,
it’s not just the foreign ownership. As I said, it
doesn’t make financial sense. We lose all the strategic
advantages of owning those assets. And let’s face it –
Labour’s fair tax plan pays down government debt and
allows us to keep our assets. Why wouldn’t we do
both?
GUYON We’re not talking
about your tax plan (laughs) this morning.
DAVID
(laughs)
GUYON Dr
Brash.
DON Guyon, it’s an argument
that David Cunliffe is using – it makes perfect financial
sense for the government to sell them. Yes, they forgo a
future stream of dividends, but what they get is an up-front
payment which is the best estimate of the current value of
that future stream of dividends. And it’s just absolutely
a no-brainer at all.
GUYON OK,
if it’s such a no-brainer—
DON
Let’s take that on. Let’s take that
on.
GUYON Dr Brash, if it’s
such a no-brainer, why is it that poll after poll when you
ask New Zealanders, overwhelmingly, it comes back, they say
they don’t like it. Are they just stupid?
DON
Basically, because the Labour Government under
Helen Clark sold New Zealand a line of nonsense, quite
frankly. Helen Clark was Deputy Prime Minister in the
Labour government that sold Telecom. Phil Goff was a
minister in the government which had most of the
privatisation of SOE assets in the ‘80s and ‘90s— in
the ‘80s, excuse me. They’ve basically sold a line to
New Zealanders which no other leftist centre government in
the world tries to do. Labor governments in Australia
routinely—
GUYON Yeah, but we
went right through the 1990s with National governments
selling SOEs too. My question to you, if you can answer it,
is why don’t Kiwis like this?
DON I
think because, as I say, we’ve been taught that this is in
some way dangerous and detrimental to our interest, and,
frankly, that is simply nonsense. I mean, if it made sense
for New Zealand to own three competing power generators, why
not also have the government buy Foodstuffs and
Countdown?
GUYON Well, let me
ask that question to David Cunliffe. I mean, if public is
always better than private, is Dr Brash right? Why don’t
you buy up the supermarkets?
DAVID
I’m not saying public is always better than
private, but we—
GUYON
That’s been your policy, though, hasn’t
it?
DAVID We make a very very
tidy return on those energy assets while maintaining a
guarantee that they behave in the national interest. Now,
we pay 6% for the cost of that debt; we make about 17% total
shareholder return on those assets.
GUYON
Do they behave in the national interests,
though?
DAVID New Zealanders
understand, Guyon, you don’t sell your ladder when
you’re in a hole. And once that family silver’s gone,
it’s gone, and we are starting again. That money that Don
Brash talks about will pay for less than six months of the
current government’s operating deficit, and then where
would we be? New Zealanders understand
that.
GUYON You’re saying that
the power companies act in the national interest.
Really?
DAVID
Yes—
GUYON They
charge a lot of money.
DAVID
SOEs are bound by the SOE Act to be good corporate
citizens and not to do anything that would be against the
national interest. And by the way, if there were minority
shareholders and they could make a case that that was
costing them money, they would have the right to sue the
government for any loss to them.
GUYON
What power company are you with at
home?
DAVID I am— Mm,
that’s a really good question. I think I’m with
Mercury.
LAUGHTER
GUYON You
don’t know what power company you’re
with?
DAVID I think I’m with
Mercury.
GUYON Well, it’s
interesting, and I don’t ask that to be facetious, but I
ask it because when you ask that question, people often
don’t even know. And then you ask, and people can do this
at home, who owns the company? And they don’t know
either. So is the emotional power in this issue that
we’ve seen on assets sales when people have to stop and
think about who even owns the company?
DAVID
Well, there certainly is the emotional power it in.
New Zealanders are very clear in what they think, and I can
tell you that polling that lines asset sales up against our
fair tax package says three to one, people prefer to keep
their assets and pay down their debt, while some of Don
Brash’s rich white old men who are enjoying their tax cuts
are made to pay a capital gains tax, like they should’ve
been as he said when he was the governor of the Reserve
Bank.
DON Guyon. Guyon, this is
populist nonsense. David Cunliffe has some responsibility
to explain to New Zealanders why the sale of assets is
sensible in the average wage earner’s interest and every
leftist centre state government in Australia has been doing
it.
DAVID Guyon, I need to
come in there on the question of
populist—
GUYON You’ve had a
fair go. Dr Brash, he talks about rich white old men, but
iwi are lining up to buy these assets too. I mean, is this
iwi or Kiwi, or can it be iwi and Kiwi in this asset
sale?
DON The reality is we should all
have a right to buy into those assets, iwi and other New
Zealanders as well. I mean, there’s just no logic at all
in government owning three competing power-generating
stations. I frankly wouldn’t myself sell Transpower.
That’s the ultimate natural monopoly.
GUYON
That’s the one you were on the board
of.
DON I’m sorry?
GUYON
That’s the one you were on the board
of.
DON I was on the board, that’s
quite right. But I wouldn’t sell it.
GUYON
Good. David Cunliffe, Wellington Airport –
let’s talk about mixed ownership. I mean, Wellington
Airport, right, 66% owned by Infratil, 34% owned by
Wellington City Council – effectively public ownership.
When you fly out of there, you might fly on Air New Zealand
– 75% owned by the government, 25% in private holding.
What’s wrong with that? What’s wrong with having a mix
of ownership?
DAVID Well, what
we’re talking about is the core of our energy assets, our
three key generators. Now, if you sell those for the kind
of money that the government’s talking about, ask yourself
are the new owners going to put up power prices faster than
they’re rising already? The answer is yes. Now, we do
not need as a short-term—
DON No
evidence for that at all, Guyon.
DAVID
Look, I really will insist on finishing this,
because Don Brash is in no place to lecture the New Zealand
public about populism. I did not give the Orewa speech;
somebody else did. Now, Mr Brash knows very very well that
New Zealanders care about long-term solutions. They know
that selling off the family silver to pay for six months’
worth of government deficit and losing on
the—
DON That’s nonsense, David.
You know it.
DAVID It’s not
rhetoric. I know that there is $300 million in dividends
from those assets. I know that the government will pay
around $350 million to the ticket-clippers who will be
involved in the sale, and I know that New Zealanders want to
see a real game plan that will feed the kids in South
Auckland and grow our economy without flogging off the
birthright that we are handing down to the next
generation.
GUYON OK, David
Cunliffe, this isn’t a Labour Party speech. Dr Brash, can
you address that question that David Cunliffe did mention,
though? Power prices – do you think that you can
guarantee or a government can guarantee that they won’t go
up if these are privatised?
DON Look,
power prices have been going up for the last decade and
more. Why? Because the Maui gas field is running out of
cheap gas. Power prices have been going up. The marginal
price of growing more electricity is increasing, and
that’s true whether the companies are privately owned or
government owned. The reality is we’ve got five major
competing power companies, three of them owned by the
government. There’s no evidence at all that having them
government owned is changing the price
increases.
GUYON David Cunliffe,
he’s got a point there, hasn’t he? I mean, I can’t
remember the exact number, but National, I think, has said a
number of times in Parliament – didn’t the power prices
go up about 63% over the years that you were in government,
and this is under state ownership?
DAVID
Well, I think Mr Key and Mr English have a history
of picking their data sets—
GUYON
Well, they did go— Of course—
DAVID
Power prices have risen to a certain extent, but
the question is if a foreign buyer is going to buy into
these energy assets, are they going to assume and pay for
the ability to rise prices— raise prices in the future
above the current trajectory? And the answer is most
probably yes—
GUYON But
isn’t it about numbers? Isn’t it about
competition?
DAVID Otherwise
the numbers which the government is suggesting, which are $6
billion to $8 billion, and that was before world financial
markets collapsed again in the last two weeks. That money
is predicated on a rate of return that implies prices are
going to rise faster.
GUYON Dr
Brash? No evidence for that?
DON I
just think there’s no evidence for that at all. Not the
slightest evidence for that.
GUYON
All right.
DAVID I
totally disagree with you, Dr Brash, and I’m happy to
debate that any time.
GUYON All
right, while we have got you there, David Cunliffe, can we
address a Labour Party issue – reports that Phil Goff
offered to resign. Is that true?
DAVID
You know me better than that. I have never
commented on a caucus issue or a shadow Cabinet issue, and
I’m not about to start now.
GUYON
So you’re not denying it?
DAVID
No, what I’m saying is there is only one
spokesperson for the caucus, and that is Phil Goff. He’s
made a very clear statement, and you should go to
him.
GUYON Did you hear him
offer to resign?
DAVID I’ve
already told you the answer to the question, which is there
is only one spokesperson, and that is our leader. He’s
been very clear about what he said, and you should go to
him.
GUYON All right, thank you.
Thank you, David Cunliffe, and thank you, Dr Brash in
Wellington. We appreciate your time.
DAVID
Thank you.