Hon Bill English
National finance spokesman

30 October 2011 Media Statement

New Future Fund for modern infrastructure

National will use the proceeds from the mixed-ownership model to set up a Future Investment Fund of up to $7 billion to pay for new infrastructure without extra borrowing, National Party finance spokesman Bill English says.

"A National-led Government is committed to investing in modern infrastructure that helps build a faster growing economy with more exports and more real jobs, while keeping our debt low," Mr English says.

"That’s precisely what our extension of the mixed-ownership model is all about. If re-elected, National will put the proceeds of mixed ownership – between $5 and $7 billion – into a new fund, called the Future Investment Fund.

"Through the Fund the public can be assured the proceeds of mixed ownership are not being lost. They will be used to buy new assets for New Zealanders, and to upgrade and modernise our existing assets, reducing the Government's borrowing from foreign lenders by $5-$7 billion.

"Investing the mixed-ownership proceeds in this way will result in assets that are long-lived, are here in New Zealand and are owned by the Crown on behalf of all taxpayers.

"They will be part of a growing asset pool, with taxpayers' assets forecast to expand from $245 billion now to $267 billion by 2016.

"We will set a high bar for projects to be paid for out of the Fund and the case for these projects will have to stack up. They will have to either improve public services or deliver substantial economic dividends for New Zealanders and can’t just involve the routine replacement of existing capital.

"Decisions on spending from the Fund will be made on a case-by-case basis, by ministers, as part of the normal Budget process.

"We intend the Fund to run for at least five years but this of course depends on how much the mixed ownership model raises. The higher the proceeds, the more new investment we can pay for without having to borrow.

"The Government has clearly laid out its plans to extend the mixed-ownership model, which Air New Zealand has operated successfully under for almost a decade.

"After the election, we intend to extend this model to four other State-owned companies – Meridian , Mighty River , Genesis and Solid Energy.

"The Government will retain at least 51 per cent of these businesses and Kiwis will be at the front of the queue for shares.

"This will provide an investment opportunity for savers looking to put their money in something other than housing or finance companies.

"A large and growing pool of New Zealand investment funds will ensure strong local demand for shares. As a result, we expect New Zealanders to own at least 85-90 per cent of these companies.

“The mixed ownership model is a win-win. New Zealand savers get to invest in good Kiwi companies. And the Government frees up $5 to $7 billion over three to five years to buy new assets like schools, hospitals and ultra-fast broadband, without having to borrow from overseas lenders and increase our debt."

Visit the policy at:

http://national.org.nz/PDF_General/Future_Investment_Fund_policy.pdf

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