Sell off stakes in SOEs, Govt urged

Related Links

The elephant in the debt room

Relevant offers

Politics

Buzz about Crafar ruling snuffed out Email hacking managed well, says Key Today In Politics: Thursday, February 16 Reconsider Crafar farms deal, Government told Mojo Mathers gives maiden speech Turia misses Whanau Ora meeting TPK boss pays back wife's travel money Get on with it, Mr Speaker Greens: Faster Mojo money decision wanted Activists hacked McCully's emails

The Government is being urged to sell off minority stakes in State-owned enterprises by a high powered task force set up to look at how to strengthen the sharemarket.

The Capital Market Development Taskforce says retail investors have suffered big losses, both in dollars and confidence, and higher quality listings, such as SOEs, are key to restoring trust in the sharemarket.

In its report to Commerce Minister Simon Power, the taskforce says New Zealand's capital markets have not served retail investors well and a number of major failures - most recently of finance companies - have resulted in large investor losses.

These had "justifiably dented trust and confidence in financial assets."

It found that some issuers and financial advisors had behaved poorly, useful information was lacking and some capital markets products had performed poorly.

This was undermining the crucial need for New Zealanders to save more.

Recommendations included:

* Simplifying and standardising product disclosure so investors have better knowledge of what they are investing in.

* Improving the governance and ongoing disclosure of managed funds.

* Continuing to improve the quality of financial advisory services.

* Broadening the range of high-quality equity offerings for retail investors by encouraging partial listings of central and local government-owned companies, agricultural businesses like Fonterra and local subsidiaries of financial services firms.

* Broadening the range of high quality debt offerings on the market.

But it was also crucial for businesses to be able to access the capability and capial they needed at each stage of their development, so the task force was also recommending the commercialisation of government-funded research, further developing the venture capital market and insuring that government assistance was delivered on commercial lines.

Other major recommendations including a beefed-up Securities Commission and tax changes designed to even the playing field in the treatment of other investments over property.

Commerce Minister Simon Power said the Government would consider the recommendations as a matter of priority but would not be giving its response today.

It intended to release discussion documents on the review in the new year.

"These recommendations are a key part of the Government's wider work programme for the financial sector and to demonstrate ust how important we regard it, the prime minister will lead the response by announcing it early in 2010."

The most controversial recommendation will be the call for partial SOE floats - the Government has ruled out asset sales in its first term though has left the door open to asset sales if it wins a second term.

The taskforce, led by investment banker Rob Cameron, says $25 billion in taxpayer funds is tied up in government-owned businesses and that posed a risk to both taxpayers and the Government.

It said a partial listing of companies would allow the government to retain a controlling interest in assets.