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Treasury advice sought on state asset sale

Friday 28th January 2011

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The Treasury has been formally asked to advise on the merits and viability of extending the mixed-ownership model to four more state-owned enterprises.

In a letter to Treasury Secretary John Whitehead Finance Minister Bill English and State Owned Enterprises Minister Simon Power asked for advice on extending the model to Mighty River Power, Meridian, Genesis and Solid Energy and also on reducing the Government stake in Air New Zealand.

The Ministers said the consideration of the mixed-ownership model would be restricted to the four SOEs mentioned, and that the four companies and Air new Zealand would remain under majority government control.

"Our biggest economic challenge is lifting our national savings and reducing our vulnerability to foreign lenders," English said.

"The Government needs to play its part by prioritising and reallocating its capital."

English said the Government owed it to all New Zealanders to manage its finances efficiently and to look at areas where it could reduce borrowing.

"As the Prime Minister said this week, running a budget deficit was the right thing to do during the depths of the recession. Now, as the economy recovers, the Government borrowing $300 million a week is unaffordable and is holding back the economy."

English and Power reiterated the Government would only proceed with the mixed-model ownership if it met a number of tests, including Government maintaining a controlling stake of more than 50%, New Zealand investors having preferential access to the shares and the ability to use the capital freed up to fund new public assets and reduce Government borrowing pressure.

"The Government will carefully consider Treasury's advice on the issues we have requested and make its position clear to New Zealanders before the election later this year," English and Power said.

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