Craig Foss MP
National Party Associate Finance Spokesman

13 April 2007

Infrastructure bonds a hoax

National Party Associate Finance spokesman Craig Foss says answers to parliamentary questions reveal Labour's much-hyped infrastructure bond is an infrastructure bond in name only.

"The infrastructure bonds are a hoax - more rhetoric from a tired and decaying Government," says Mr Foss.

In answers to written questions, Michael Cullen states 'there are no infrastructure risks linked to the principal repayment at the maturity of infrastructure bonds'.

"In other words," says Mr Foss, "the funds are not effectively linked to infrastructure, because no premium is attached to the success or failure of any particular project.

"It'll take more than a glossy announcement to drive vital private investment in much-needed New Zealand infrastructure," says Mr Foss.

It has also been confirmed that 'they (the infrastructure bonds) are issued under the same terms and conditions as other government bonds'.

"If the Government was serious about improving New Zealand's infrastructure, it would invite the private sector to invest in a regime that sees them share the risks as well as the rewards.

"But at present, taxpayers are the ones carrying the risk, while the private sector is offered a return no larger than present government bonds. So where's the incentive to opt for infrastructure bonds over regular bonds?"

Mr Foss says National is keen to look at real infrastructure bonds related to projects as way of sharing risk with private sector.

ENDS

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