Wednesday 26th January 2011
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Business leaders are optimistic that a government signal of plans to sell shares in several state-owned enterprises, while keeping a control of them, will be acceptable to voters.
Prime Minister John Key said the Government has asked Treasury for advice on extending Air New Zealand's mixed ownership model to Mighty River Power, Meridian, Genesis and Solid Energy.
Advice has also been sought on reducing the Crown's 74.69% shareholding in Air New Zealand, while still maintaining a majority stake.
Business leaders today talked about the difference between partial privatisations and the privatisation of state business in the 1980s and 1990s. Key said his Government was "interested in what works, not in following any particular ideology".
With broad public support and constructive participation by other political parties the policy had the potential to achieve widespread acceptance, Business New Zealand chief executive Phil O'Reilly said.
Business Roundtable executive director Roger Kerr said New Zealand governments were spooked by the issue of privatisation.
The roundtable has argued that there are myths about the 30 or so privatisations in the 1980s and 1990s and the country has moved in an opposite policy direction by buying back rail and Air NZ and starting Kiwibank.
He said the Government move was a step in the right direction but there were issues with partial ownership.
"All the economic research indicates that privately owned business on average outperform publicly owned ones. But partially owned state-owned enterprises can still be subject to political interference and the results are not as clear," he said.
Employment and Manufacturers Association chief executive Alasdair Thompson said it was the opposite of selling the family silver.
"This is about realising the value from part of certain state assets and using the funds released to invest in even more valuable state assets."
O'Reilly said that allowing New Zealanders to invest directly in a changed mix of state-owned assets was a policy that was both progressive and moderate.
"Broadening the pool of investment opportunities for New Zealand families is a key step towards a more vibrant economy.
"Greater involvement by more stakeholders also fosters accountability and better performance. "
Meridian Energy today noted the Prime Minister's speech in a note to the NZX under the code for listed debt instruments.
"As with any company Meridian will continue to be guided by its shareholders expectations for the company," Meridian said.
Solid Energy chairman John Palmer last year raised the issue of partial privatisation but was criticised by Energy Minister Gerry Brownlee for over-stepping the mark.
Palmer, who is also chairman of Air NZ, argued that Solid Energy's situation was vastly different to the emotional discussion surrounding Kiwibank, and he talked about the merits of Air NZ's ownership structure. The airline is listed on the sharemarket.
The National government has made it clear that it will not sell state assets in its first term and will signal any intention in election policy.
Palmer said there should be majority ownership of Solid Energy because it had some key national assets. The sale of new shares in the coal miner did not require the sale of the Government's existing stake but would dilute it.
The Crown's commercial portfolio contains almost $95 billion of assets, of which $55 billion is in commercially focused companies and $40 billion in investment funds, according to Treasury.
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