Kiwi calls for partial sale of SOE shares
The Kiwi Party
Press Release
8 March, 2009

Kiwi Party Leader Larry Baldock and Finance spokesperson Gordon Copeland today renewed their Party’s call for 20% of the shares in SOE’s to be sold to NZ residents.

Just imagine how much better off the Super Fund, KiwiSaver accounts and thousands of Mum and Dad Kiwi investors would be if they had their savings invested in such strong safe NZ companies,” said Mr Baldock and Mr Copeland.

“It is long overdue for the SOE Minister Simon Power to bring pressure to bear on the boards and management of SOEs to lift their game and produce a better return for their taxpayer shareholders” said Mr Copeland. “However the best mechanism for promoting SOE capital efficiency and performance accountability would be through a stock exchange listing. This could readily be accomplished by selling down 20% of the shares to kiwi resident shareholders. The SOEs would remain 100% kiwi owned and continue to be controlled by the government.”

“If the twentieth century has taught us anything, it is that 100% government ownership of commercial businesses is sub-optimal. It effectually shields these major companies from the reality of the capital markets and substitutes a report to the Minister and a Parliamentary Select Committee for public accountability via the stock exchange and an Annual General Meeting with shareholders.”
The story does not end there. The sale of a 20% stake could yield upwards of $5 billion that could be used for investment in hospitals, schools, roads, land transport and other infrastructural projects. It would obviate the need for much of the massive new borrowing programme that the Government is currently undertaking”.

“That reality brings to light a further aspect of the matter which is economically suboptimal. The macro-economic reality is that, at the margin, the Government is undertaking new borrowings to fund new capital expenditure that could otherwise be funded, without borrowing, by selling shares in the SOE’s. Effectively the Government is borrowing new funds to maintain, for no good reason, its 100% stake in the SOE’s. That is fundamentally flawed since it is very difficult, as the recent performance of the SOE’s shows, to earn a return over and above the cost of borrowing; a point vividly illustrated by the August 2008 report of the Commerce Select Committee into SOE’s.”

Mr Copeland believes that, right now, the New Zealand economy needs all the help it can get and that John Key & the Government is missing a huge opportunity.

Mr Baldock says that this proposal is nothing like the wholesale disposal of NZ assets to foreigners that was carried out in the 80’s and 90’s. “National should stop worrying about what the opposition would say and do what is right for all New Zealanders."

ENDS

© Scoop Media