By Alex Tarrant
Kiwibank could be the recipient of some of the cash raised from the government's proposed sell-down of shares in four state-owned energy companies and Air New Zealand, according to Prime Minister John Key.
Key yesterday announced the expected NZ$5-7 billion raised from National's mixed-ownership model over the next three to five years would be earmarked in the government's accounts for spending on "things like major hospital redevelopments, new schools, and transport projects". Those projects would have to deliver substantial social or economic dividends for New Zealanders, Key said.
The fund would not be set up like the government ACC and Superannuation investment funds, but rather the proceeds from the share sales would be spent soon after they were received over at least the next five Budgets, and the cash could be gone within a decade.
See more in Alex Tarrant's article here.
Kiwibank could get some money
Despite the lean toward investing in social assets like schools and hospitals, asked yesterday whether the government would consider putting the money into assets which made money, Key said Kiwibank could be in the running.
“It could invest in another SOE for instance. You could put money into Kiwibank if you wanted to, as an example, if you wanted to strengthen its capability to go into the SME [small and medium enterprise] sector," Key said.
"So it could go in those places. We’d need to consider everything on a case-by-case basis,” he said.
Asked later in the press conference whether he was just using Kiwibank as a general example, or whether the government was actually looking to boost the bank's capital with the SOE cash, Key replied:
“You’ll just have to wait and see over time. What we know is that that’s an institution that wants to grow, and needs capital. If it does, well that’s a possibility of where it could come from.”
The government last year committed NZ$300 million worth of taxpayers' money to a facility that can be drawn in response to a "significant unforeseen event" by Kiwibank's parent New Zealand Post to help maintain NZ Post's AA- credit rating (from Standard & Poor's with a stable outlook) and Kiwibank's growth.
Based on data compiled by interest.co.nz from the trading banks General Disclosure Statements, at 22.8% Kiwibank has the highest leverage, or the least amount of capital supporting its deposits.
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6 Comments
ZZzzzzz How about retained earnings from the keeping of the SOE's being used to fund the maintainence of our baisic community requirements. Why do you need to sell something to build something. Ask a PI, you never sell, use the asset as equity against a new loan. There is NO reason to sell these profitable assets. They are owned by all New Zealanders, keep it that way.
Fonterra farmers had the brains to realise what a privatisation of fonterra would do to them, same scenario right here. Keep it 100% Kiwi owned, use the profits to reinvest, don't sell the profits for a one time sugar rush.
What else would it be but a taxpayer bailout...yes I know you will say the loot comes from asset buyers...but the asset sale is actually the dividends that would have gone to govt...QED the taxpayer will have to make up the loss....it's a bailout....now the question has to be...why would Kiwibank need this bailout....why are they not able to grow 'organically'....~!
If any SOE should be partially sold off it's this one. Raise the capital it needs and put discipline in it's management. Right now it's heading to bailout. Does make profit, competes on price only, and instead of competing against the larger Aussie banks, is intent on destroying the smaller nz ones. It's a parasite that has outgrown any usefulness it may have once had
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