Asset sales plan 'rehashing failed policies' - Goff

Prime Minister John Key before his state-of-the-nation speech in Auckland today. Photo / Greg Bowker

A Government proposal to partially sell off state-owned assets will result in higher power prices and cuts to services, the Labour Party says.

Delivering his "state of the nation" speech at Trusts Stadium in west Auckland this morning, Prime Minister John Key said Mighty River Power, Meridian, Genesis and Solid Energy were all being looked at for partial sale, and advice was also being sought on reducing Crown shares in Air New Zealand.

The proposal was part of a Government plan to reduce debt and increase savings.

"We need to look at where we can change the mix of assets we own - identifying where new assets are most needed and where we have more money invested than we absolutely need to," Mr Key said.

The Government was considering extending the mixed-ownership model for Air New Zealand, which is owned predominantly by the Government but with a minority of outside equity, to other companies.

"Under this model, the Government has a controlling stake in what is a crucial piece of transport infrastructure and guarantees that it will be majority New Zealand owned. But by not owning 100 per cent of the airline, the Government also has capital free to invest in other assets."

The Government had asked Treasury for advice on the viability of introducing mixed-ownership to the power companies, as well as on reducing Government shares in Air New Zealand.

Mr Key said the Government would also be looking to cut spending by lowering the spending allowance from $1.1 billion to about $800 million or $900 million.

Labour Leader Phil Goff said the plans were a recipe for disaster.

"Hocking off our assets to foreign buyers and slashing spending is vintage National. It doesn't have an economic plan so it's simply rehashing the failed policies of the past."

Mr Goff said low and middle income earners were ignored in Mr Key's tax plan and were going to suffer more if assets were sold off.

"Now they'll face cuts to health and education. And they'll pay through the nose to heat their homes once National sells off our power companies to foreign investors," he said.

"It is socially, ethically and morally wrong to impose the sorts of cuts he's proposing on society after having given away billions to the country's most wealthy."

Green Party Co-leader Russel Norman was also quick to condemn the Government's proposal, saying the gloves had come off and National's true plan for the country was being unveiled.

"John Key's speech today shows a swing to the right, and signals National's plan to privatise state assets in the next term," Mr Norman said.

"Selling state assets to foreign corporations, which will inevitably happen under this plan, will drive up the current account deficit, send profits overseas and drive up costs for Kiwis."

Council of Trade Unions economist Bill Rosenberg said the plan would cause more problems than it would solve - inevitably sparking price rises from power companies.

However, Business NZ chief executive Phil O'Reilly welcomed the plan, saying it would broaden the investment opportunities for New Zealanders.

"The timeframe and tests for advancing the policy are measured and give a good amount of time for public discussion around the options advanced," Mr O'Reilly said.

"With broad public support and constructive participation by other political parties this policy has the potential to achieve widespread acceptance."

- NZPA