'Picking a number' for budget report no way to run NZ's books, say Greens
Finance Minister Bill English is attracting political flak over suggestions that some figures in yesterday's budget policy statement for the proceeds of share floats of state-owned enterprises were "a guess".
The Government has long estimated that the sale of up to 49 per cent of five SOEs would collect between $5 billion and $7 billion.
The amount was factored into last year's Budget and the pre-election fiscal update in as much as the Cabinet decided it would be able to cut its borrowing by that amount.
The forecast yesterday was the first time the Treasury has had to provide more precise forecasts in the books because the sales have now been confirmed by a Cabinet decision.
The Treasury has settled on the figure of $6 billion as being the midway point between the $5 billion and $7 billion estimates.
Mr English was being questioned by reporters yesterday about what was driving the view that the sale would get $6 billion, which was $800 million more than the book value of $5.2 billion.
Mr English said the Treasury "had to pick a number" so they picked the mid-point of the range.
"If we did get $6 billion, that would be a gain of sale [of $800 million] which is just a product of the accounting.
"I just want to emphasise that it is not our best guess; it's just a guess. It's just to put some numbers in that look like they might be roughly right for forecasting purposes.
"That's an honest answer."
Labour finance spokesman David Parker said Mr English's comment about a "guess" was laughable.
"They're trying to soften the public up."
"The Government had several valuations of the SOEs up for part sale yet they are suggesting they are going to get a higher figure than any of them."
Greens co-leader Russel Norman said he was "pretty shocked that the Finance Minister went into the election telling us that these were reasonably accurate figures and now he is telling us they are just a guess.
"That isn't how we should be running the finances of New Zealand."
United Future leader and Revenue Minister Peter Dunne said some of the predictions about proceeds had been more specific than they should have been "but that's not my problem - I didn't make them".
The books forecast that the profits the Government will lose as a result of partially selling the SOEs will exceed the savings from the resulting reduction in debt.
But Mr English said the fiscal impact of the programme "will be roughly neutral and we will have significantly less debt" which was one of the key reasons for doing it.
The proceeds would help the Government to keep net debt to under 30 per cent of GDP. Net debt is forecast to peak at 29.6 per cent of GDP in 2015-16 and is projected to be 20 per cent of GDP by 2020-21.
The Government's operating balance is still on track to get into surplus in the 2014-15 year by just $370 million.
49 per cent of five SOEs would collect between $5 billion and $7 billion, the Government estimated
$6 billion - the figure Treasury has settled on as being the midway point between the original estimates
$800 million more than the book value of $5.2 billion