Lobbyists take aim at SOEs

When the new government settles in, one of the first business lobbyists on the blower will be former fund manager Craig Stobo.

His primary mission - sorting out our huge state-owned enterprises, including the likes of Meridian, TVNZ, Landcorp and Kiwibank.

Now a professional director, investment banker and financial consultant, Stobo published a report in September on creating wealth for New Zealanders.

Based on the ideas of a cluster of financial sector businesses which gathered in Taupo in May, the document was a prescription for a step change in New Zealand's economic prospects.

Stobo's first political target to discuss the ideas was National finance spokesman Bill English on September 24. Labour cabinet ministers were consulted the following Monday and since then Stobo has been in touch with officials from Treasury and the Crown Company Monitoring Advisory Unit.

What reception his ideas received, Stobo won't say, except to note that English was "listening".

The radical nature of the proposals will have escaped neither English nor his Labour rivals.

While the report's obscure language delicately advocated a New Zealand Asset Liability Management Office "at arm's length to parliament", its aim was to drive a blunt instrument through the whole concept of SOEs.

"Let's not be PC about this," Stobo told the Sunday Star-Times. "Those things are there to create revenues for the government's expenditure programmes. Well, are they the best businesses to create the best revenue?

"SOEs carry with them lots of business risks including the requirement for more capital, and should the government be putting more capital into those businesses which might be better used in the health system or education . . . What are the priorities of government, is it to increase the education of our kids or is it to put more capital into a power company?"

Stobo's idea is for the new office to decide how to manage all the SOEs to best meet the government's expenditure objectives, including whether to sell any of the existing businesses. The question of holding on to Kiwibank, for example, would then be a purely financial one.

"I think it's acknowledged that governments inherit a portfolio of these assets that aren't necessarily highly desirable. I think you could argue we're overweight on energy businesses and underweight growth businesses, so the debate has to move to a higher level which is not so much 'do we want to sell part of or all of an asset like Kiwibank?', but 'what are the best assets to meet our needs?' - around education, health and old age pension basically."

Stobo acknowledged there were originally other reasons for owning power companies, but questioned their ongoing relevance.

"I don't think ownership is a prerequisite for controlling market excesses - after all, we've owned these things and we've still had power crises. We still have the same issues we had in the 90s even though the government has owned these things, so that issue hasn't been solved."

THE TAUPO GROUP

ABN Amro Securities, ABN Amro Craigs, ANZ National Bank, ASB Securities, Chapman Tripp, Citigroup, Deloitte, Direct Broking, Fisher Funds Management, First NZ Capital, Forsyth Barr, Endace, HRL Morrison & Co, Infratil, McDouall Stuart, Macquarie Equities, Macquarie Securities, NZX, Russell McVeagh, Tyndall Investment Management, UBS New Zealand, Xero.

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