The Labour Party's finance spokesman, David Cunliffe, raised some eyebrows last Thursday when he spoke favourably of allowing state-owned enterprises to form subsidiaries in partnership with private shareholders.

Could it be that Labour is relenting on the stern anti-privatisation stance it adopted under Helen Clark?

Alas, no. Mr Cunliffe was talking strictly of subsidiaries. It would be an enlargement of the state's role in the economy, not a diminution of it.

Even the Clark Government was open to this idea. Trevor Mallard, urged it upon the SOEs when he was minister of state-owned enterprises, though nothing happened.

Mr Cunliffe, in his speech at Victoria University, cited Kiwibank as an example of a subsidiary that had added value to its state-owned parent, NZ Post. The next day he made it clear Kiwibank would be excluded from the envisaged private partnerships.

He was not talking about diluting the taxpayers' equity or wholly or partially privatising an SOE, he said. "But we have no ideological problem with a new project attracting a new subsidiary with both public participation and private brains."

New is the operative word. This policy will not answer the Stock Exchange's prayers for blue chip listings of public utilities. But unless the National Party leadership has more gumption on that subject in a second term, there is not much prospect of SOE share floats from either of the main parties.

Even when a state property such as Kiwibank needs capital for expansion, the taxpayer will have to provide it. The day after delivering this year's Budget, Finance Minister Bill English speculated on ways Kiwibank's capital request might be met.

John Key quickly ruled out a trade sale, saying any float would be for small investors. Within the week he retreated further, promising there would be no sale or part sale of the bank while he was Prime Minister.

That makes Kiwibank more sacrosanct than any other SOE, as Mr Key has left open their status if he wins a second term. His prospects look even better after the Mana byelection, which might explain Mr Cunliffe's welcome to private capital in SOE subsidiaries.

Labour probably wants to sound more moderate and reasonable on a subject such as privatisation, even if its real motive is to increase state participation in the economy.

The party probably also realises that the dearth of good stocks on the New Zealand market is becoming a more urgent problem now property is no longer the investment.

It is telling that two of the three largest remaining stocks, Fletcher Building, Telecom and Contact, are privatised public utilities. As households reduce debt and savings grow, there will be more capital looking for worthwhile ventures.

If we want to keep this capital at home and develop new dimensions to the economy, SOE floats would be helpful. They might not produce new products, but they would provide ballast for the portfolios that found room for new ventures.

At least the policy Mr Cunliffe has revived, and the Government can readily endorse, opens the way for private enterprise to propose projects to SOEs and tap their resources. That sort of investment could be better for the country in the long run than passive private holdings in the parent utility.

No company should need additional capital unless it has something new to do. In that event, it is sensible to set up a subsidiary to do it.

With the benefit of private investors' assessments of value, and the discipline of sharemarket accountability, the foal would outshine the horse. The state should open its stable and let all its enterprises reach their potential.