SOE shares to stay in NZ, MP says
Government will keep its promisesLYN HUMPHREYS
The Government will keep its promise to retain power company asset sale shares within New Zealand, says New Plymouth MP Jonathan Young.
Mr Young, who chaired the commerce select committee that did financial reviews of the four energy company State-Owned Enterprises, yesterday moved to assure people that the Government would not rush through the legislation.
If passed, the bill, which is now before the Finance and Expenditure Committee, will allow the sale of 49 per cent of Genesis Power, Meridian Energy, Mighty River Power and Solid Energy, with the Government retaining 51 per cent.
Labour MP Andrew Little said last week that the legislation as drafted allowed more than 49 per cent to be sold and there were no protections in place to prevent the shares from going to overseas investors.
Mr Young said Mr Little got it wrong. Promises made by Prime Minister John Key that between 85 and 90 per cent would be retained within New Zealand would not be broken, Mr Young said.
"There's a lot of work taking place right now on how to put all that together but final decisions haven't yet taken place.
"The Government is not selling its silver. It's not something that can never be touched. But it just has to be done very carefully and very wisely and to get people on board is very important as well.
The Government will always own a minimum of 51 per cent of voting shares.
"Even if what Andrew was saying actually happened [that a different class of shares would be sold] the Government would still have 51 per cent of the shares," Mr Young said.
"As far as I can understand or see there isn't a suggestion of a different class of shares."
The reason for the sale – which represents only 3 per cent of the Government's portfolio – was to reduce overseas borrowing.
The overseas debt was already too high, he said.
The intention was to "sell some commercial assets in order to convert them into social assets", such as schools and hospitals.
"What this is about is borrowing less."
The Government intends to spend $25 billion in the next five years to build on those assets.
And the sales would also give New Zealanders, burnt by the collapse of finance companies, solid and robust companies to invest in.
Mr Young said a major concern for people was that electricity prices would rise as a result of the sale of the power companies.
The reality was that prices would always increase because of the need to re-invest in infrastructure, Mr Young said.
"If we fail to invest it will bring us to a grinding halt."
The Electricity Authority, which implemented the What's My Number campaign in May last year, had changed the dynamics of the retail electricity market, he said.
As a result, the consumers price index price for electricity was reduced for the first time in 12 years.
Contact Energy's discount went from 12 to 22 per cent.
"It keeps them efficient," Mr Young said.
"They know if they have to increase consumer prices, consumers will jump to another supplier. What these companies are learning is how to operate in a more competitive environment.
"I think what we're seeing here, we would say these SOEs have not been as efficient as they can be and because of that prices have been higher than they could have been."
The bill before the select committee now could be expected to return to Parliament in about July or August.
When asked if the Government had the numbers to pass the bill, Mr Young said: "I'm pretty sure it has."
- © Fairfax NZ News
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