27 Jan 2011

Privatisation of public assets back on agenda

4:13 pm on 27 January 2011

The privatisation of public assets is back on the political agenda.

Prime Minister John Key announced on Wednesday that National is considering the partial sale of the State-owned energy companies - Mighty River Power, Meridian, Genesis and Solid Energy - as well as reducing its shareholding in Air New Zealand.

He said the mixed ownership model has worked well for Air New Zealand and the Treasury has been asked to examine extending that to the power companies.

Mr Key said if National decides to proceed with the plan, it will form part of its policy for the election later in the year.

The Prime Minister told Morning Report that unless New Zealand's debt is addressed, its international financial status could be downgraded.

He said there needs to be more depth to New Zealand's savings and investments.

Mr Key warned on Wednesday that the Government will clamp down even further on public spending as it tries to get the books back in shape.

New spending in this year's Budget will be only $800 million to $900 million, not $1.1 billion outlined in the Budget policy statement in December.

Mr Key said things have changed since then and he wants the Government accounts back in surplus faster than forecast.

Not far enough - Prebble

Former Labour Party minister Richard Prebble says the Government should go further and sell the power companies outright.

Mr Prebble says the state has made a mess of the energy sector and despite being blessed with hydro power, customers have faced power shortages and pay too much for electricity.

He says the Government should go further, and sell the power companies outright.

Mr Prebble says in New Zealand, and internationally, privately-owned companies do better than state-owned enterprises.

PM trying to flog off family silver - Labour

Labour is accusing the Prime Minister of trying to flog off the family silver.

Party leader Phil Goff says citing debt as a reason for partial sales is just an excuse.

Mr Goff says Labour left National with zero net debt when it took office in 2008 and the global financial crisis - a "temporary problem" - has now passed.

Mr Goff says National is returning to its true colours - privatisation and slashing social services.

Green Party co-leader Russel Norman says privatisation is being proposed in order to pay for National's tax cuts.

Mr Norman says selling State assets to pay for tax cuts is short-term and short-sighted.

The Maritime Union says the proposal will further strip New Zealand of its sovereignty.

Short-sighted plan - Peters

New Zealand First leader Winston Peters says the Government's proposal is short-sighted.

Mr Peters says shares will be snapped up by Chinese investors because China is one of the few countries with cash to invest.

Hs says it is nonsense to suggest that New Zealand would retain control of companies which are 49% privately owned.

Mr Peters says that with just a one-third shareholding, Fay Richwhite controlled the Bank of New Zealand before it was sold in 1992 and National is about to repeat a failed experiment.

Iwi interested

Ngai Tahu says it supports the Government's plan because it could be good for Maori investors.

Kaiwhakahaere Mark Solomon says the privatisations of government assets - such as New Zealand Rail - in the 1980s and 1990s were poorly handled. However, says this proposal is a new chapter.

Business view

Milford Asset Management executive director Brian Gaynor expects there to be huge appetite for investment in state-owned enterprises, from institutional and 'mum and dad' investors.

Mr Gaynor says the assets have always been run on a commercial basis, and a partial sale would not change that.

Air New Zealand and Solid Energy chairman John Palmer says the companies will gain from extra private investment to finance new projects.

NZX chief executive Mark Weldon says the New Zealand market lacks a blue-chip sector, and there would be tremendous appetite for investment in state-owned enterprises.