Labour - SOE sale a funder for tax cuts

By Paula Oliver

National is pressing on with its open talk about the merits of partially selling some of the country's state-owned assets, and power generators such as Meridian Energy are being viewed as heading the list of likely sales.

Although the controversial policy is yet to be officially adopted by National for next year's election, it has quickly been savaged by Labour - which firmly says it will not sell or partially sell any SOE.

National's deputy leader, Bill English - who triggered a strong political reaction after he talked about partial sales in a television interview - yesterday did not back away from his comments.

He said there was "certainly room for a debate" about the issue and he brushed off a stream of negative reaction left by readers on the Herald's website yesterday.

"I think some people are strongly motivated about it," Mr English said.

"And the way it's being presented to them, as a massive sell-off of assets, well I can see why they might be upset about that."

Mr English said National was considering selling 20 to 25 per cent of some SOEs, and would give local investors the chance to invest in them. The Government would retain control.

He said there was no plan to sell Kiwibank, but he added that National did not have a list drawn up of what it would partially sell yet.

"There's no list and we haven't ruled anything out."

Mr English said the proceeds could be used to help pay for road, water and telecommunications infrastructure.

He argued that the money pouring into savings needed somewhere to go, and if there were not enough local companies to invest in, it would go overseas.

But Prime Minister Helen Clark made it clear yesterday that Labour would not be prepared to give up the dividends from SOEs, and she accused National of using the sales to fund tax cuts.

"I simply cannot see that it is any step forward for the people of New Zealand to see our public assets put on a rolling fire sale in order to enable the National Party to creatively account for its tax cuts," she said.

"Why would we want to go from having very successful state-owned companies returning a dividend to every Kiwi, to some Kiwis getting the chance to get a lot more from them than others?"

But the financial sector yesterday strongly endorsed Mr English's suggestion.

Tyndall Investment domestic equities manager Rickey Ward said he thought state-owned utility companies would be the most likely candidates to start with. Electricity companies would be in strong demand from investors if they were partially floated - particularly ones that focused on renewable energy.

Therefore Meridian, which is heavy on the renewable generation rewarded under the Kyoto Protocol, would be more popular than fossil-fuel heavy Genesis.

New Zealand Exchange chief executive Mark Weldon said he was pleased National had opened up the debate, and he warned that fear was not a good basis for making a decision on the matter.

"I think what you see around this issue is the worst of scare-mongering," he said.

"Whether or not this ends up being a policy that is implemented, I think it's appalling that we live in an environment where you can't have the debate."

Mr Weldon argued that a partial sale offered many positives and was completely different to events surrounding Tranz Rail several years ago.

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