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Mallard To Wipe Millions Off Value Of Assets

Mallard To Wipe Millions Off Value Off Taxpayer Assets

Friday 1st Dec 2000 Richard Prebble Media Release -- Economy

The coalition could wipe millions off the value of taxpayer owned assets if Trevor Mallard gets cabinet approval to meddle with State Owned Enterprises, said ACT Leader and first Minister of State Owned Enterprises (SOEs), Hon Richard Prebble.

State Services Minister Trevor Mallard indicated in a National Business Review story today that the Government may try to use SOE balance sheets to pay back central government debt.Documents obtained under the Official Information Act in September showed that 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

“Mr Mallard’s announcement is that of a Minister whose Government is concerned revenue targets may not be met. Mr Mallard’s comments will fuel growing financial market concern that the Labour government’s stated proposals will undermine SOEs commercial independence.

“SOEs have to perform in a competitive marketplace. Ministerial interference in management decision-making jeopardises the ability of an SOE to perform, and places the value of taxpayer owned assets at great risk.

“Trevor Mallard stated in September that the SOE “cash-grab” had been well signalled in the Budget. 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.

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“While the cash extracted may appear as a balance sheet ”dividend”, the Government is basically exposing each SOE to higher levels of debt and therefore greater risk, and is the Government being a prudent investor when it can borrow money cheaper than any SOE?

“The only time an SOE should leverage debt is to meet sound strategic objectives, like commercial expansion, that the management team have approved. Capital appropriation by ministers is further proof that government’s cannot be trusted not to play politics with national commercial assets.

“The power of ministers to interfere in the running of SOEs, with no accountability to shareholders or directors, must be removed, 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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