David

Cunliffe

Finance Spokesperson

23 November 2011 MEDIA STATEMENT
Key leaves six critical questions unanswered

Three days from the election six critical questions around National’s asset sales agenda remain unanswered, says Labour’s Finance spokesperson David Cunliffe.

“John Key today attempted to appease New Zealanders worried about the sale of our assets to foreign interests, by again muddying the waters with a suggestion he could ‘consider’ legislating for a 10 per cent cap on shares. He refuses to say what he will do to stop shares going offshore -- because he knows there’s nothing he can do.

"Labour has been trying for months through Official Information Act requests and Parliamentary questions to get the straight answers that Kiwis need before they vote on Saturday,” David Cunliffe said.

“National has refused to calculate the amount Kiwis will lose in lost dividends over the next 15 years as a direct result of asset sales. Using past trends and Treasury's short-term projections, Labour estimates the cost to be $11 billion.

“Treasury also notes there is little evidence privatisation would improve the financial performance of state assets. So where is the incentive for Kiwis?

“John Key’s assertion that shares will remain in the hands of ‘ordinary New Zealanders’ is a fairy tale. National is refusing to implement any restrictions on the overseas sale of shares. Indeed, Treasury told National that "significant participation by foreigners would be essential".

“National also says it would maintain 51per cent ownership of these companies, which in itself is problematic. What if the directors at some later date decided to issue more shares to raise capital? Future governments and the taxpayer would be liable for a potentially astronomical bill.

"National has not addressed the legal risks stemming from the rights of private minority shareholders who could take the Crown to court to protect their interests. As any business person knows, effective control is lost well before 50 per cent- the sell down is a slippery slope to losing control over our energy system at a time when fossil fuel costs are set to skyrocket.

“National has been ominously silent on the scheme’s effect on power prices. This is because it understands private investors will demand higher returns, and with Treasury’s conclusion that there is little room to operate the companies more efficiently, the only way to make profits will be through higher power prices.

“Many families are already in the red, the last thing they need is higher power prices,” David Cunliffe said.

“Communities will be worse off under National. At the moment, SOEs are required by law to consider the impacts of their actions on their local communities. But with community-owned assets on the block, concessions around social responsibility will come second to corporate interests.

“Asset sales are a stop-gap measure and stalling mechanism for a party without a plan. Where Labour has bold policies to reduce debt and grow the economy National has two words: asset sales,” David Cunliffe said.

ENDS

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