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.
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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