John Key is still tip-toeing around the sale of state assets.

This week, he was advising journalists not to get ahead of themselves in assuming the National Party's moratorium would be lifted. Clearly, he is still concerned about the public reaction to such a change.

Nonetheless, the ground has been prepared by a post-Budget statement from the Finance Minister, and work will begin soon on assessing which assets will be on National's for-sale list going into the next election. At the top of the list and for reasons as much to do with pragmatism as philosophy will be Kiwibank.

The Prime Minister has indicated that any part-sale of the bank would be a public float aimed chiefly at mum-and-dad investors, not a trade sale, and that the Government would want to retain a majority shareholding.

As such, he is extolling the idea of a shareholding democracy, a concept that has flourished in Britain and Australia but which enjoyed a regrettably brief currency here.

Floats of the likes of Vector, Contact Energy and Auckland International Airport proved, however, to be hugely popular with Mr Key's target shareholders, who recognised the opportunity for steady incomes and long-term returns from such utilities.

The concept was resuscitated this year by the Capital Market Development Taskforce. It saw the sale of minority stakes in state-owned enterprises as an answer to a shortage of high-quality investment opportunities, which had prompted an unhealthy and non-productive emphasis on the housing market.

The Budget's move to quell that enthusiasm provides yet another reason for an alternative investment avenue. Its presence would surely tweak the interest of the New Zealand Superannuation Fund, as well as mum-and-dad investors. Among the winners would be the stock exchange, which has suffered from a swag of delistings over the past few years.

While Kiwibank heads the list, there are many candidates for the shareholding democracy treatment among the 18 state-owned enterprises on the Government's books. It is an oddity that Contact has already been placed in that camp but not the other three electricity generating companies, Meridian, Genesis and Mighty River.

State coal-miner Solid Energy is another obvious candidate, as are Landcorp's farms, although even a float of these would be a matter of great sensitivity.

Therein lies a problem for Mr Key. It is difficult to explain the philosophy underpinning the float or sale of state assets: that it delivers an efficiency, discipline, transparency and customer focus which is absent when an enterprise is supported by taxpayer funding.

Many people seem reluctant to concede that this path gives businesses the best chance to reach their full potential, while also boosting the national economy. The Prime Minister seems set to choose, therefore, to sell the policy on the basis of its benefit to small-scale investors.

Either way, the float of Kiwibank would be the most logical of outcomes. The bank's success means it needs substantial amounts of capital to grow further.

A cash-strapped Government would be an unwilling source. Nor would it be likely to be able to orchestrate a trade sale because potential buyers have their eyes fixed on the burgeoning Asian market.

Indeed, the Government might even see a rationale for keeping Kiwibank in New Zealand hands, if only to provide consumers with choice in a market dominated by Australian-owned competitors.

Everything, therefore, points to a float. The Government should not hesitate to confirm as much in the most unambiguous of terms. And to state that, finally, the country will have the chance to fully embrace the benefits of a shareholding democracy.