By Alex Tarrant
State Owned Enterprises were not ‘the family silver’, rather a spoon in the cutlery set, Finance Minister Bill English said.
English was asked about the government’s plans on asset sales after speaking to a Cullen Law breakfast last week.
English reiterated the government specifically ruled out selling any public assets in the last election campaign.
“That has meant instead of spending a lot of time on an issue that some people get a bit worked up about, we’ve spent a lot of time on understanding the whole Crown balance sheet,” he said.
The assets people focused on – State Owned Enterprises – were less than 10% of Crown assets, English said. “So the idea that they represent the family silver, it’s more like a teaspoon in the cutlery set, or maybe a dessert spoon."
“So it’s not the family silver.”
“If we were going to sell anything significant, then we would put a plan in front of the public and campaign on it in the next election,” he said.
English then went on to say big gains for the government would be from the efficient use of current capital.
“We have this odd system where, of that NZ$230 billion [of government assets], [cabinet] gets to make a few choices about the next NZ$1.5 billion [in spending], and that’s it,” he said.
“Actually in these constrained times, that’s less than 1% of the [government’s] balance sheet and most sensible organisations would be finding that from their own balance sheet. They wouldn’t be going out and borrowing overseas to finance another half a percent."
“So we’ve had a good look at what’s there, and now we need to start thinking much harder about how we deploy the capital,” he said.
Not sure on broadband investment
Two big demands on government over the next four or five years were going to be KiwiRail, “which is a pretty low returning investment”, and ultra-fast broadband, “which is a bit speculative,” English said.
“[Ultra-fast broadband] is future-proofing the country but we don’t quite know how they’re going to take it up and therefore whether it’s financially viable,” he said.
“Along with calls on capital from disasters, you can see how going out and borrowing money for that stuff is a bit tricky.”
Investment statement
The government therefore needed to form investment strategy of its own, which had never been done before, English said.
In December’s Half Year Economic and Fiscal Update, the government would issue an investment statement which would “clearly set out the Crown’s assets and liabilities, identify emerging issues and state how the Government’s plans to manage its large and growing investment in taxpayers’ assets,” he said.
“We believe this level of transparent information – in a regular publication – will allow the public to demand a much greater level of accountability from the Government and lead to significantly better decision-making across the public sector.”
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