Mixed ownership to reduce debtJohn Key Prime Minister
Responsibly managing the Government’s finances and reducing debt are two of the Government’s four key priorities for this term.
We can see on television most nights the damage too much debt has done to economies in Europe and elsewhere – we don’t want that for New Zealand.
We’re extending the mixed ownership model to four state-owned energy companies and reducing the Government’s stake in Air New Zealand. We will keep majority control of each company of at least 51 per cent. And we’ll make sure that 85-90 per cent of each company remains New Zealand owned.
This will help pay for taxpayers’ large and growing asset base, while reducing our need to take on extra debt to provide important services that you need.
Mixed ownership is a win-win for New Zealanders
It enables the Government to free up $5 to $7 billion – less than 3 per cent of its total assets. Through the Future Investment Fund, we will invest in much-needed public assets such as schools, without having to borrow on fragile overseas markets.
Secondly, New Zealanders get an opportunity to invest in Kiwi companies at a time when they are looking for alternatives to property and finance companies.
And, it’s good for the companies themselves. They will be listed on the stock exchange which will mean greater transparency and oversight. It will improve their performance and mean the companies won't have to depend entirely on a cash-strapped government for new capital to grow.
For more information:
A mixed ownership model for state assets - Speech from Finance Minister Bill English to the Victoria University Faculty of Commerce and Administration.
Running up $5-$7b more debt not the answer – Press Release by Finance Minister Bill English.
Government assets are forecast to grow over the next four years, from $245 billion to $267 billion. We’re not reducing assets, we’re finding a solution to help pay for their growth in coming years, while getting on top of debt.
We are firmly committed to reducing Government debt and getting back to surplus by 2014/15. We’re on track to achieve this, and the Budget on May 24 will set out our next steps.
Like every household in New Zealand, we know how important it is to live within our means by budgeting carefully and deciding on our priorities.
Mixed ownership means more assets with less debt.
How mixed ownership works
The Government believes that mixed ownership is a sensible policy for New Zealand’s future.
Over the next three to five years, the Government will offer minority shareholdings in five companies:
- Mighty River Power
- Solid Energy
- Genesis Energy
- Air New Zealand, which is already successfully operating under mixed ownership. We plan to reduce the Government’s share from 75 per cent while retaining a majority shareholding.
We’ll keep at least 51 per cent majority control of each company.
We have promised that New Zealand investors will be at the front of the queue for shares and we’re confident that 85-90 per cent of shares will be owned by New Zealanders.
Mixed ownership will give you the chance to invest in Kiwi companies. We know that investors are keen to diversify savings away from property and finance companies. We would rather pay dividends to Kiwi shareholders than pay interest to overseas lenders on more borrowing.
We’ll also make sure that no investor, other than the Government which will maintain a controlling stake in each company, can own more than 10 per cent of each company.
The Government has introduced Legislation to the House supporting its mixed ownership programme. This has passed its first reading, and is now before the select committee.
The Government has also completed extensive consultation with Iwi throughout New Zealand. We will include a provision in the legislation ensuring the Crown acts consistently with the principles of the Treaty of Waitangi.
Subject to market conditions, Mighty River Power will be offered to market later this year.