John Key MP
National Party Finance Spokesman
Katherine Rich MP
National Party SOEs Spokeswoman
2 June 2006

Labour must abandon cronyism if SOEs are to expand

Labour must abandon its policy of rewarding cronies by appointments to State Owned Enterprise boards if they are to succeed in expanding, says National Finance spokesman John Key.

Economic Development Minister Trevor Mallard today said the Government was giving SOEs wider latitude to expand to help promote growth.

“Any extension in the role of SOEs will inevitably come with more risk, particularly if they diversify offshore,” says Mr Key.

“If this is going to happen, Labour will have to abandon its current policy of using SOE board appointments as a payback for political favours.

“The role of corporate governance is crucial to the long term success of any corporation, but never more so when they venture into uncharted territory, as the Minister now seems to be giving them the green light to do.

“There are dangers in letting SOEs expand when they are stacked with Labour Party appointments. If state businesses are to expand successfully - especially offshore - they need competent and commercially-experienced boards.

“Having Ministers sign off on expansion proposals is totally irrelevant, because it’s the boards that put the proposals to the Ministers and taxpayers’ investment will be in jeopardy if a board’s not up to it.”

National’s SOEs spokeswoman, Katherine Rich, says the devil’s in the detail of the announcement.

“You have to question whether this announcement is just spin. SOEs currently have the ability to expand. One only needs to look at Meridian’s successful investment in Southern Hydro.

“I would also like to see expansion overseas rather than in New Zealand, where there is a danger that it might crowd out the private sector.”

ENDS

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