August 31, 2011

Foreign ownership of SOEs inevitable under National

The National Government’s tinkering with ten per cent ownership caps will not stop state-owned assets ultimately falling into foreign hands, Green Party Co-leader Dr Russel Norman said today.

“The National Government are hoping New Zealanders will hold on to their investments in newly privatised state-owned assets, but they are yet to propose any feasible mechanism to achieve this,” said Dr Norman.

“In his speech today, Bill English says he expects ‘New Zealanders will own at least 85 to 90 per cent of these companies’ but provides no mechanism to achieve this level of domestic ownership.

“All National’s ten per cent ownership cap will achieve is foreign ownership across five companies rather than one or two.

“Bill English knows he can’t remove the possibility of foreign ownership without significantly undermining the market pricing of these assets.”

National plans to sell up to 49 per cent of currently state owned energy companies Solid Energy, Meridian, Mighty River Power and Genesis. Finance Minister Bill English announced further policy today on the privatisation process.

“The National Government has no clear plan for how it will limit foreign ownership of our energy companies,” said Dr Norman.

“Mr English points out in his speech that final arrangements for this policy won’t be made until after the election. The devils will be in this detail and that is why they won’t be revealed until after the election.”

Dr Norman pointed out that various ad-hoc reasons have been given for the sale of New Zealand’s best energy assets. These have included the need to fund the Government’s motorway building program.

“Rather than selling state owned assets we should be building fewer motorways and looking at alternative ways of raising revenue such as a capital gains tax,” said Dr Norman.

“The Government also needs to rethink its opposition to an earthquake levy,” said Dr Norman.

“The Government’s current ‘borrow, sell, and hope’ economic strategy is not a smart way to run an economy in the Twenty-first Century.”

ENDS

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