21 Mar 2012

Govt might have to borrow more once assets sold

12:58 pm on 21 March 2012

The Finance Minister has dismissed fears the Government will have to invest heavily in partially privatised energy companies, saying a few hundred million dollars here or there is not a big commitment.

Bill English was responding to questions about the Budget Policy Statement when he appeared before Parliament's finance and expenditure select committee on Wednesday morning.


The Government has argued that selling up to 49% stakes in Meridian Energy, Mighty River Power, Genesis Energy and Solid Energy, would help reduce its need to borrow.

Opposition MPs questioned Mr English about how the Government would maintain its 51% shareholding in the partially privatised companies when they raised new capital.

Mr English said it won't be a big problem.

"You're looking at over the next three or four years growth in the Crown balance sheet net value of 20 or 25 billion dollars, so a few hundred million here and there is not acutally that big a commitment.

Of course, we would look at it pretty carefully because it's risk capital."

The Labour Party's state-owned enterprises spokesperson, Clayton Cosgrove, said Mr English has now confirmed that the Government is prepared to borrow to invest in the companies at a time when it is arguing it needs to reduce its debt.

Later, National list MP Paul Goldsmith offered Mr English some help.

"Surely, one of the primary benefits of the mixed ownership model is that, rather than having to stump up 100 percent of any additional capital that's required, the Government would now be looking at 51 percent.

"So there's less requirement on investment if these companies want to grow - is that not how it works?"

Mr English replied: "That is certainly how it works."

The minister says the partially privatised companies will also go through a much more robust process before going ahead with any plan to raise new capital.