Goldsmithmade the remarks in response to Treasury documents released under the Official Information Act (OIA) that showed the Government forging ahead with drawing up “purpose statements” for each of the State Owned Enterprises (SOEs) it owns. A purpose statement is designed to force the Government into thinking about why it owns a state asset: is it to generate income for the Crown, to fulfil a policy objective, or is there another reason?
The purpose statement for KiwiRail, for example, could be to facilitate an integrated multi-modal transport system in New Zealand.
Separate briefings, released to the Herald, show the Government has looked at reviving a 28-year-old idea, beloved by some at Treasury, to roll SOEs into a large holding company like Singapore’s Temasek. This company would actively manage the SOE portfolio, driving performance from the existing SOEs. It comes with one big caveat: the company would be allowed to sell down the Government’s stake in the companies and acquire new ones. That would mean the Government being open to part-privatisations.
Goldsmith conceded it was possible that an outcome of the purpose statement exercise could be that it no longer wanted to own an asset, although he said there was no current plan for privatisations.
“That’s always a possibility and then we’d work our way through that,” he said.
“You’ve got a kaleidoscope of options going forwards, but we’ve always been clear that if we were to sell them, we would take that to an election as a commitment.”
Labour’s state owned enterprises spokeswoman Arena Williams said the documents showed the Government was “laying the groundwork for asset sales, and have been asking for a framework to justify doing so”.
Williams said “generations” of taxpayers had contributed to the companies “over decades for the long-term good of the country”.
She said the Government should focus on getting one SOE, KiwiRail, to deliver a resilient Cook Strait connection. KiwiRail-owned Interislander’s connection was imperilled by the Government’s decision to deny it hundreds of millions of dollars in funding at the end of last year. The Government is currently looking for alternative solutions.
She called on the Government to be upfront about any assets it wanted to sell.
Labour's state owned enterprises spokeswoman Arena Williams Photo / Mark Mitchell
Goldsmith added that there were not plans to sell the assets and that any election policy was years away.
“That’s something we’ve got to work through over the next couple of years, but there’s no particular plans at the moment,” he said.
“My main focus in the SOEs is that we get good results from them, and that they are profitable.”
The last National-led Government swore off asset sales in its first term, but took a proposal for part-privatising assets to the polls ahead of its second term. National won that election, but the asset sales proposal was unpopular enough to trigger a citizens-initiated referendum where 67.3% of voters said “no” to the asset sales policy. A Treasury blog post from 2016 which represented the view of the author, rather than Treasury itself, used the example of Air New Zealand to question whether the Crown was getting a good return on its investment. The author was not sure it was, given the Crown’s return was only slightly above the compound return an investor would have made on a term deposit.
Rather unhelpfully for the current Government, Luxon was chief executive of the company at the time, having assumed the role four years prior.
The OIA documents further fuel speculation the Government is keen to create a profit-driven holding company.
One sub-heading asks: “Is Crown ownership the most efficient and effective intervention?”
“When considering creating or purchasing a profit-oriented company, the Government should evaluate whether Crown ownership is necessary to achieve the public policy objectives (and if so, at what level of ownership), and whether it is the most efficient and effective means of achieving those objectives,” the briefing said.
However, it added that officials “are not recommending the development of ownership policy and purpose statements to provide a rationale for selling entities”.
The paper said the Government could consider the “opportunity cost of Crown ownership, and the impact on economic performance from Crown ownership of commercial companies”. It noted that New Zealand was rare among OECD countries for not having an “ownership policy” that asked the Government to explain why it owned certain assets”.
The officials pointed to the Netherlands as an example of good practice. There, the government tries to ensure ownership should contribute to specific policy objectives rather than simply extracting returns from SOEs.
Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.
