SOEs told 'think like a business'

State-owned enterprises should act as if they face part-privatisation in two to five years, Stock Exchange boss Mark Weldon says, prompting suggestions he is acting as a stalking horse for the Government.

Mr Weldon is known to have the ear of Prime Minister John Key and chaired his flagship Jobs Summit. The Government's policy is for no asset sales in its first term in office, ending in 2011.

Speaking to SOE heads at a meeting at the Treasury, Mr Weldon said that as part of sharpening their performance they should "form a strategy based on the prospect of a partial listing in two to five years".

"Whether or not such an event comes to pass is immaterial. It is the right question because, were such an event to occur, you would want to ensure the maximum return to your current shareholder from the sale of any stock."

A clear plan to increase shareholder value in a defined period, and a clear mechanism for measuring that, such as a stock exchange listing "or analog" would be a catalyst for a good strategy from the board and its crisp execution by management. That would include identifying now "the story you would want to be able to tell, were you to be inviting direct investment by New Zealanders in two to five years".

Finance Minister Bill English told Parliament that whatever statements Mr Weldon made were in his capacity as the chairman of the stock exchange.

"It is not surprising that he would like to see partial privatisation."

But Labour MP Trevor Mallard called on Mr Key to make it clear whether Mr Weldon was wrong, and there would be no asset sales during that period, or whether he was right and SOE boards "should follow his mate's advice".

"The formation of a strategy around a privatisation over a two-to-five-year period would involve a considerable expenditure of resource and a reversion to the "prepare for sale" short-term strategic approach that SOEs had in the late 1980s and throughout the 1990s."

  SOEs TOLD TO STOP C1

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