19 Jun 2012

Sale will not lead to price increases: Ryall

8:19 pm on 19 June 2012

The Government says it is a nonsense that power prices will rise as a result of the partial asset sales programme.

The legislation allowing for the partial sale of four state-owned energy companies had its committee stages debated in Parliament on Tuesday evening.

Opposition MPs have put up dozens of amendments to slow the process.

During the debate several Labour MPs claimed commercial pressures on the formerly state-owned companies will push up power prices.

However, State Owned Enterprises Minister Tony Ryall told the House the market is highly competitive.

He says this is demonstrated by the fact that in the last few months 420,000 New Zealanders have switched power companies.

Earlier, Labour leader David Shearer said the recent cold snap has made people fearful this legislation could result in an increase in power prices.

Mr Shearer says the price of power from state-owned enterprises is cheaper than private companies.

Public will warm to sale

The Prime Minister, however, says the public will warm to the idea of partial asset sales as time goes on.

John Key says that once people see the benefits of the sale, they will become more comfortable with the policy.

The legislation is expected to have its third and final reading next week.

Loyalty scheme

Earlier the Government said it was waiting on official advice before it committed to an investor loyalty scheme for the partial sale.

Prime Minister John Key says he favours some kind of shareholder loyalty programme when shares in the enterprises are floated to encourage New Zealand investors to retain them.

But he says officials are working on loyalty scheme options to present to the Government.

Labour Party leader David Shearer has criticised the proposal and says the Government has done nothing to ensure New Zealanders will be first in line to buy shares.

Labour opposes the sales and Mr Shearer says the party will put up a series of amendments to the legislation.