English admits asset sales won't meet top target
Bill English insists the asset sales programme remains a success, despite reducing the amount it is expected to raise as shares hit record lows.
Under pressure from the Opposition, the finance minister revealed to a select committee yesterday that the partial sales were expected to raise between $4.6 billion and $5b.
Until yesterday the Government had refused to move from its target that the sales would raise $5b-$7b.
The figures were expected to be released as part of a half-year budget update on December 17, but Labour and the Greens demanded it be known before a citizens initiated referendum on the asset sales process closes next week.
English said the drop was mainly due to the withdrawal from sale of debt-troubled Solid Energy, as well as Meridian's renegotiation of its contract with Rio Tinto for the Tiwai Point aluminium smelter and uncertainty created by the Opposition's plans for energy sector reform. But he maintained that the sales had been "a success" and rejected claims the companies should have fetched higher prices.
"In terms of the wider objectives, these have also been achieved, as well as [being] good value for taxpayers' money [and achieving] widespread New Zealand ownership," he said.
"We've got nearly $4 billion in the bank, and at a time when we're trying to limit the increase in our debt when we have an expensive programme of investment in our infrastructure, and other public assets."
Proceeds from the sales have been earmarked for investment in infrastructure, including roads, schools and hospitals, through the future investment fund.
English said although the Government would raise less than expected from the sales, it did not mean its investment plans would be cut.
Confirmation of the lower proceeds came as shares in Mighty River Power and Meridian Energy, both listed on the stock exchange this year, reached record lows. Shares in Mighty River dropped 3.4 per cent to $1.99, meaning the more than 100,000 investors who took part in the sale are sitting on a loss of more than 20 per cent.
Meridian's instalment receipts, sold in October to investors for $1, dropped 2.6 per cent to 92.5c.
English said some investors would no doubt be concerned, but they should not have been expecting "windfall gains" and those with long-term intentions had not lost money.
In Parliament, he dismissed claims from Labour that the tumbling share price was another sign the sales were a failure.
"They can't have it both ways, that we ripped off the investors and that we gave away the taxpayers' assets," he said.
Labour state-owned enterprise spokesman Clayton Cosgrove said the Government had ample warning that Solid Energy was "a basket case" but continued to use it as an alibi for the failings of the asset sales programme.