Asset sales the hot topic at pre-election debate

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The contentious issue of selling state assets intensified what was an otherwise light debate amongst distinguished politicians in Queenstown.

Deputy Prime Minister and local MP Bill English, Labour’s finance spokesman David Cunliffe, Green co-leader Russel Norman, Maori Party co-leader Pita Sharples and ACT newcomer Stephen Whittington spoke to a packed Memorial Hall at the pre-election Great Debate tonight (Thursday).

The usual party manifestos centred on fiscal responsibility and economic stimulation were trotted out – with plenty of wisecracks peppering the speeches – but it took a question from Wakatipu High Year 13 student Caleb Dawson-Swale to get the politicians wading deeper into their views on state asset sales.

English, whose National Government wants to partially sell off key assets including state-owned power companies and a stake in Air New Zealand in order to pay off debt, says the consequences are “all good”.

Assets with up to 49 per cent private ownership will make companies subject to the market and “they’ll have to get more competitive and less lazy”.

“Between 2000-2008, power prices went up 70 per cent. The Government is not an efficient owner, it sticks your power prices up and you have to put up with it.”

He added: “We’re talking about three per cent of the Government’s total assets. You own $230 billion worth of assets, we are looking at selling $5bn.”

Labour’s Cunliffe says “selling the family silver” won’t solve problems in the long-term.

“These will no longer be state-owned enterprises, they will essentially be publicly-listed companies where the minority shareholders could sue the Government when their profits are not maximised.

“Within nine years the country will be poorer because the dividends add up to more than the sale price over that time, based on a historical average of total shareholder return.”

Green’s Norman says the immediate effect of selling state assets is that taxpayers lose an annual return of 15-22 per cent. Not only will companies fall into overseas ownership and become “profit centres for another country”, New Zealand will lose crucial research and development sectors and company headquarters to overseas.

ACT’s Whittington argued that assets with private shareholders are run more efficiently.

“When you sell an asset, what you receive is the present value of the future income streams from that business,” he says.

“We don’t actually lose out because yes we may give up $4bn in the future, but we receive $3bn now, and sometimes that’s more valuable than that future dividend stream.”

Maori Party’s Sharples – and debate funnyman alongside MC Jim Hopkins – says Maori want to invest in SOEs. “If you sell to Maori, we promise we won’t sue you.”