Palmer sees public support for part privatisations

Thursday 27th January 2011 5 Comments

The businessman who caused a kerfuffle last year when he advocated partial privatisation of state assets is happy the Government is now behind the idea and believes the public will be too.

John Palmer, who is chairman of both Solid Energy and Air New Zealand, last year outlined the benefits of the so-called Air NZ model, which is now being proposed by the Government for the ownership of Genesis, Mighty River Power, Meridian and Solid Energy.

At the time Energy Minister Gerry Brownlee said Mr Palmer had over-stepped the mark.

Palmer said that despite the kerfuffle he had received very positive feedback from both business people and people in the community.

"I think the wider community is no longer hung up on the bogey that this is a path to a 100% sale," he said.

There was widespread support for a policy of long-term majority state ownership, while using capital markets to source new capital.

Palmer said he personally supported the position of the Crown maintaining majority ownership of key infrastructure assets.

But the listing of these companies on the market would create opportunities for them.

"There will be opportunities to leverage the skills we have in these businesses more widely.

"My speech last year talked of the need for these companies to grow and the Crown accounts not really being the right place to source the capital from," he said.

"In Air NZ, we have the proper pressures of the market and don't have quite the same political pressure and political scrutiny that takes the focus away form running the business day to day," he said.

The mixed ownership model would also help attract talent and executives with international experience who were happy to be in a commercial spotlight rather than a political one.

The generators would be particularly attractive to investors, he said.

Solid Energy was still largely a commodity business and an export business that suffered from fluctuations in the currency and energy markets.

"The important thing for Solid Energy is we have a potentially quite big investment programme in front of us.

"We are not pushing buttons yet but have a number of projects we are developing up so the timing for us would be excellent," Palmer said.

NZPA

Comments from our readers

On 28 January 2011 at 9:33 am keith Cook said:

Didn't Contact Energy start in this way? How many NZ "Mums & Dads" own part of it now? I quick way to sell more of NZ to foreigners!

On 28 January 2011 at 10:17 am John said:

Regretfully the broader public will get raped. The "capital" from the sell down will be squandered on very low value government spending even if it does temporarily wash through debt reduction. Repatriation of dividends to foreign owners will further screw over the foreign exchange deficit. Yes another step to becoming tenants in our own country.

On 28 January 2011 at 12:51 pm Greg van Schaardenburg said:

They would make a good savings investment if they became listed Pies with the option of reinvesting dividends (tax free?) for individual NZ residents. Go for it John Palmer!

On 28 January 2011 at 4:34 pm christopher said:

It's the old saying come to life again -you can't have your cake and eat it too.There are 100's of things that would involve a government contribution to come to fruition, not the least of which is the Mayor for all of Auckland (well,south of the bridge anyway) city rail scheme. Taxing our best and brightest any more per the Labour philosophy just drives them overseas and the poor old rate payer has carried the load for too long. Perhaps the doomsayers could be appeased by a minimum holding period of say 10 years before the shares could be transferred into non resident ownership and our own kiwisaver fund be required to take up say 10% in each business (ie 61% would always remain in nz hands). And for those who think power prices will go up, i am surprised that they haven't noticed that it has been happening under the current ownership anyway.

On 9 February 2011 at 11:16 am Peter said:

I think the model of part privatisation is fine, however would advocate two precautions: No individual shareholder or related party other than NZ Govt to be allowed to acquire in excess of 5%. Govt shareholding to be maintained at 55% minimum by statute. I believe the NZ public will then find it accepatable.