Manufacturers' 'Reservations' over Govt SOE Plan

Canterbury Manufacturers’ Association.
Media Release.
13 June 2006.

Manufacturers’ ‘Reservations’ over Government’s SOE Plan.

The Canterbury Manufacturers’ Association has expressed reservations towards the Government’s proposal for State Owned Enterprises to explore new investment alongside private equity partners.

Economic Development Minister Trevor Mallard claims SOEs can transform New Zealand into an innovative and high-value economy; however the CMA questions why the Government is not supporting the private sector to take the lead instead.

The CMA says that questions of fairness, transparency and accountability exist as the Government has not indicated whether there will be any full privatisation of the SOEs under this scheme as raised by the New Zealand Stock Exchange. Possible duplication of product and services that compete with and displace the private sector is a major concern. The result could be devastating to small and medium sized enterprises. The Association is asking how much information will be made available to the public regarding the potential equity partners of SOE ventures, what measures will be in place to prevent unnecessary competition with the private sector and how the taxpayer will be expected to foot the bill should an SOE run into trouble.

Private enterprises, especially manufacturers, are uniquely placed to explore new investment areas through their vocational skill base, management expertise and research and development programmes. However, the CMA maintains that the Government should provide the tools and policy frameworks for these companies to explore new investment opportunities that respond to market niches as they arise.

CMA Chief Executive Officer John Walley says that “there are good reasons for the state to own some enterprises but these should be minimised and not expected to compete with private enterprise. The Government should look beyond merely hoping that some partial external investment will inject increased enterprise into existing state enterprise”.

ENDS

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