Foreign corporates could end up with big stakes in state-owned power companies within a decade of them being partially-sold, according to a Treasury assessment.
A ''think piece'' prepared at the end of last year says partial sales of power companies Meridian, Mighty River Power and Genesis and state-owned coal miner Solid Energy could see ''possible cornerstone stakes by energy multinationals'' within ten years.
The prediction could prove embarrassing for National as it tries to garner support for plans to sell up to 49 per cent of the companies.
The Government is also looking to reduce its 75 per cent stake in Air New Zealand, but retain a majority shareholding.
Prime Minister John Key has promised that Kiwis would be first in line to buy up the sold off portions, but has acknowledged it would be difficult to prevent their stakes being onsold to foreign interests.
The purchase of state assets by foreign companies was one of the most controversial aspects of the sales programmes in the 1980s and 1990s.
Labour has already made clear it will raise the spectre of foreign interests gaining big shares in vital infrastructure companies a main part of its campaign against the proposals outlined by Key.
The Treasury has been asked to provide specific advice on the proposals ahead of National finalising any policy on partial sales heading into the election, but the think piece makes clear it is highly unlikely to recommend against the move.
It effectively urges the Government to sell out of all its commercial interests, saying there is no compelling reason for it to stay involved.
''We think full private ownership for all companies over the medium term would be likely to result in moderate economic benefits compared with alternative institutional arrangements ... We do not find any of the arguments for continued Crown ownership particularly convincing ...''
It says partial sales of the three power companies would do the most to meet the Government's need to pay down debt and develop New Zealand's capital markets, given their size.
The paper lays out several options for an asset sales programme, including selling full stakes in everything with no restrictions, sales with restrictions on foreign ownership and shareholdings and partial sales.
It makes clear it was prepared on Treasury's own initiative and not solicited by the Government.
It was released today by Finance Minister Bill English and State Owned Enterprises Minister Simon Power.
They also released a letter requesting Treasury to explore the Government's partial sales proposals, which makes it clear other asset sales options are off the table.
''... the Government is not interested in pursuing all of the options discussed in that paper.
''Only the four companies we have mentioned will be considered for the mixed ownership model already applying to Air New Zealand'.''
- © Fairfax NZ News
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