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Finance Minister Bill English - Source: ONE News -
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Bill English has challenged his critics over the controversial mixed ownership model for asset sales, after saying last week he is just guessing on how much the sales will raise for the Government's coffers.
In a speech to an Auckland Chamber of Commerce and Massey University business lunch today, the Finance Minister challenged critics of the model to come up with a better framework.
"The Government gets to free up $5 billion to $7 billion - less than 3% of its total assets - to invest in other public assets like modern schools and hospitals, without having to borrow in volatile overseas markets," he said.
"Our political opponents need to honestly explain to New Zealanders why it would be better to borrow this $5 billion to $7 billion from overseas lenders at a time when the world is awash with debt and consequent risks."
English said the Government would rather pay dividends to New Zealanders on shares they own, than interest to overseas lenders on debt.
According to English, the sales provide a way to pay for growth of assets at the same time as getting on top of debt.
"Taxpayers own $245 billion of assets, and this is forecast to grow to $267 billion over the next four years. So we are not reducing our assets," he said.
Mighty River Power is poised to be first to be sold with a sale expected in the third quarter of this year, and Genesis is likely to be the second company to be partially privatised.
English claimed the model would be best for New Zealanders and the companies themselves.
"Under the mixed ownership programme New Zealanders will get an opportunity to invest in big Kiwi companies so they can diversify their growing savings away from property and finance companies," he said.
"For companies, greater transparency and oversight from being listed on the stock exchange will improve their performance and the companies won't have to depend entirely on a cash-strapped Government for new capital to grow".
English cited Air New Zealand as an example of successful mixed ownership, which is 75% owned by the Government and 25% by private shareholders.
The speech coincided with English's announcement that the Government has finished consultations with Maori about changes to Section 9 of the State Owned Enterprises Act. The section states that the Crown must not act in a manner that is inconsistent with the Treaty of Waitangi.
Decisions on new legislation will be made in the coming weeks, English said.
"We've completed 10 hui around the country and received about 200 written submissions.
"We've been clear all along the Government won't walk away from its Treaty obligations. We entered this process with an open mind and we've listened closely to the views that have been aired."
English said the Government holds the view that partial SOE sales will not prejudice iwi rights and interests in water.
"Counting the Government's controlling shareholding, we're confident 85-90% of these companies will be owned by New Zealanders, who will be at the front of the queue for shares."
