Opponents of the Government’s mixed ownership programme need to explain to New Zealanders why it would be better to borrow an extra $5 billion to $7 billion from overseas lenders, Finance Minister Bill English says.
Speaking to an Auckland Chamber of Commerce and Massey University business lunch today, he said the challenge was how the Government pays for forecast growth in taxpayers’ assets over the next few years.
“Taxpayers own $245 billion of assets, and this is forecast to grow to $267 billion over the next four years. So we are not reducing our assets. Our challenge is how we pay for their growth, while getting on top of our debt.”
The rationale for offering New Zealanders minority stakes in four energy companies and Air New Zealand is quite simple, Mr English says.
“First, the Government gets to free up $5 billion to $7 billion – less than 3 per cent of its total assets – to invest in other public assets like modern schools and hospitals, without having to borrow in volatile overseas markets.
“Our political opponents need to honestly explain to New Zealanders why it would be better to borrow this $5 billion to $7 billion from overseas lenders at a time when the world is awash with debt and consequent risks.
“We would rather pay dividends to New Zealanders on shares they own in the energy companies than pay interest to overseas lenders on more borrowing.
“The fact is, the Government is spending and borrowing more than it can afford into the future. So it makes sense to reorganise the Government’s assets and redeploy capital to priority areas without having to borrow more.
“Most nights on television,
we see the consequences of countries in Europe and elsewhere borrowing
too much. We don’t want that for New Zealand.”
Secondly, under the mixed ownership programme New Zealanders will get an opportunity to invest in big Kiwi companies so they can diversify their growing savings away from property and finance companies.
Government’s controlling shareholding, we’re confident 85-90 per cent of
these companies will be owned by New Zealanders, who will be at the
front of the queue for shares.”
Thirdly, mixed ownership will be good for the companies themselves, Mr English says.
“Greater transparency and oversight from being listed on the stock exchange will improve their performance and the companies won’t have to depend entirely on a cash-strapped government for new capital to grow.
“We already have a living, breathing and successful example of mixed ownership in Air New Zealand, which is 75 per cent owned by the Government and 25 per cent by private shareholders.”
speech, Mr English reiterated the Government’s economic programme this
term would focus on rebuilding and strengthening the economy.
It’s main priorities are:
- Responsibly managing the Government’s finances.
- Building a more productive and competitive economy.
- Delivering better public services within tight financial constraints.
- Rebuilding Christchurch.
there will be no big surprises from this Government,” Mr English says.
“We have laid out our economic plan and Budget 2012 will focus on
implementing that plan.”