David CUNLIFFE
Finance Spokesperson
13 November 2011
MEDIA STATEMENT

John Key’s asset sales an epic fail for NZ

If John Key was to sit his own asset sales test the result would be an epic fail, says Labour’s Finance spokesperson David Cunliffe

“In his State of the Nation speech, delivered in January, John Key said he would only push ahead with asset sales if they passed five important tests. He then went on to itemise those tests (see attached).

“Yet less than a year after that speech Mr Key is not only planning to sell a number of New Zealand’s best-performing SOEs, but is doing so without having met any of his own criteria. That, in any language, is a spectacular fail,” David Cunliffe said.

“The first of National’s criteria was to ensure Kiwi investors would be at the front of the queue for shareholdings with John Key saying; ‘we would have to be confident of widespread and substantial New Zealand share ownership’.

“Unfortunately for him this contradicts Treasury’s advice that significant foreign investment would be essential to a successful sale share float. It’s no wonder National won’t prevent the on-sale of shares to foreign multinationals.

“This is the first fail mark on Key’s own score card,” David Cunliffe said.

“The second and third tests stated National would ensure the companies involved presented good investment opportunities and protected New Zealand consumers. Key failed on both counts.

“Official advice has cautioned National that the New Zealand stock exchange is “already heavy in energy stocks” and that selling the publicly-owned companies could have “negative effects. In addition, the UK’s experience of energy privatisation suggests that Kiwi consumers might be facing higher prices should asset sales go ahead.

“John Key’s fourth and widely publicised clause was that Kiwi investors would retain a majority shareholding in these precious assets. New Zealanders learned the hard way with the privatisation of Telecom not to lose control of core infrastructure without adequate regulatory protection.

“National’s protestations that the Government would retain full control of our assets simply ignores law and practice around the rights and significant influence held by minority shareholders.

“Now John Key is cosying up to Act, another indication that more Kiwi assets are on the line.

“The fifth fail mark is awarded for the complete botch-up over what the Government will do with the proceeds from our lucrative assets. John Key initially said that revenue would be used to fund new public assets, thereby reducing the government’s need to borrow

“But National’s projections haven’t accounted for the loss of dividends, which help fund Government spending once those assets are sold.

“As well, money it hopes it will make by selling the assets is already being spent, and not on new assets but on painting schools, funding hospitals and subsidising irrigation schemes that should be covered by industry or resource rentals.

“We should already have sustainable funding allocated to education and health—the one-off sale of state assets is not a solution to maintain these core services for New Zealanders. Marked on any criteria—this is a failure for John Key.

“National has failed to meet its own five tests---If re-elected, Kiwis can kiss their assets and their significant returns goodbye,” David Cunliffe said.

ENDS

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