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Government Needs To Get Its Story Straight

Government Needs To Get Its Story Straight

Tuesday 26th Sep 2000 Richard Prebble Media Release -- Economy

The coalition’s attempts to explain a proposed $180 million special dividend from State Owned Enterprises have added to the confusion, said ACT Leader and first Minister of State Owned Enterprises (SOEs), Hon Richard Prebble.

Documents obtained under the Official Information Act show the Government plans to take up to $180 million in “special dividends” from key SOEs to boost rapidly disappearing cash reserves. The SOEs targeted include Transpower, Meridian Energy, Genesis Power, NZ Post and TVNZ

“There is a growing concern in financial markets that this proposal both undermines SOEs commercial independence and is driven by a Government concerned its revenue targets may not be met after a recent BNZ deficit prediction.

“Helen Clark’s statement on Monday that the proposal was ‘a mystery to her’ that had ‘come out of thin air’ shows that there has been no Cabinet discussion on this radical proposal.

“Acting Finance Minster Trevor Mallard’s statement today claiming that this had been well signalled in the Budget adds to the confusion. The Budget comment contained in the Budget Economic and Fiscal Update was ‘The Government is considering reviewing the capital structure of state-owned enterprises (SOEs) to align with best commercial practice. An increase in private sector funding may result in return of capital to the Crown which will decrease Crown net debt.

“There was no suggestion that the Government was looking at a $180 million grab which would clearly change debt to equity ratios, and in the case of TVNZ appear to completely contradict other Ministers claims that the SOE will be making more New Zealand programmes.

“What Trevor Mallard needs to set out is firstly, do the SOE directors agree with this requirement being forced on them to raise more debt, and, is it fiscally prudent? The Government should also state whether the special dividend will be a capital item and used to repay Crown debt or will it be used to increase SOEs dividends thus appearing as revenue.

“If it is the latter the Government is clearly defeating the objective of the Fiscal Responsibility Act and is cooking the books. If it is the former, is the Government being a prudent investor when it can borrow money cheaper than any SOE?

“It is important for the Government to be very open about its proposals as the contradictory statements and lack of transparency are very damaging to the Government’s economic credibility,” said Hon Richard Prebble.

ENDS

For more information visit ACT online at http://www.act.org.nz or contact the ACT Parliamentary Office at act@parliament.govt.nz.

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