John Armstrong on politics

John Armstrong is the Herald's chief political commentator

John Armstrong: Asset sell-off 'guesswork' keeps the buyers guessing

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Finance Minister Bill English. File photo / Ross Setford
Finance Minister Bill English. File photo / Ross Setford

It seemed an astonishingly naive admission by the Finance Minister. Just months out from the partial float of Mighty River Power, Bill English is saying it is guesswork as to how much the Government expects to raise from such sell-offs over the next four years.

It is a pretty safe bet that the Treasury is heaving with costly consultants' reports estimating fairly precisely how much will be raised.

The last thing the Government wants to do is reveal those estimates to the financial markets. However, it is required under the Public Finance Act to produce some forecasts of sale proceeds in the Budget policy statement issued yesterday.

So the total cited from all the projected sell-downs was $6 billion - the mid-point between the $5 billion to $7 billion the Government has quoted as its expectation from the sale of up to 49 per cent of state electricity generators and a downsizing of the taxpayer holding in Air New Zealand.

Cash proceeds from the share sales were cited at $1.5 billion for each of the four next financial years - a nice round figure which takes no account of changing market conditions. True, the Finance Minister produced more exact estimates of foregone dividends and savings in borrowing costs. But he said those were guesses, too. But if this was guesswork then it was really all about keeping potential buyers guessing.

English's assertion these figures were not refined judgments could more aptly apply to economic growth and fiscal forecasts elsewhere in yesterday's document, which outlines the Government's overarching policy goals ahead of the Budget.

The Treasury comes close to saying as much itself. "Economic forecasts could be subject to large changes within short periods of time," the document warns in almost the final line of its final page, referring to volatile financial markets, the Euro debt crisis and the possibility of further seismic activity in Christchurch causing further delays to the rebuilding of that city.

The latest forecasts still project a return to Budget surplus by the end of the 2014-15 financial year.

- NZ Herald

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