Opponents of the partial sale of a few state assets are still peddling their emotive arguments against the policy and in doing so are telling only half the story.
They’re saying we’ve lost Mighty River Power but we haven’t.
The state still owns 51% of the company; those shares are worth more now than they were before the partial float and all dividends will be taxed.
Opponents to the policy would have us believe the 49% of shares floated have gone with nothing in return.
That’s not the case. The government now has $1.7 billion to put to more productive use.
As Finance Minister Bill English said in parliament on Thursday:
There has been, I think, a misunderstanding that somehow in selling shares the Government and the taxpayer are losing an asset. In fact, we are swapping shares for cash, and by tomorrow night, the Government will have $1.7 billion in its bank account ready to invest in those projects that will be outlined in the Budget through the Future Investment Fund. Future proceeds of asset sales will also go into that fund. Parties that want to buy back the assets, or not sell them, will have to borrow the same amount of money from foreign bankers if they want to invest in the same way this Government plans to invest in infrastructure, in hospitals, in schools, and in better public services.
Jacqui Dean: What are the benefits of the Government’s share offer programme?
Hon BILL ENGLISH: There are many benefits. In the first place, the Government achieved its objective of widespread New Zealand ownership, so 86.5 percent of this company remains owned by New Zealanders. Secondly, it has provided an opportunity for New Zealand savers to invest their money in the share market, many of them for the first time. Thirdly, we have collected $1.7 billion in cash proceeds, which are available to the Government for reinvestment in public assets. And, finally, it is a significant move in reinforcing our public capital markets, where Mighty River Power will list as the fifth-biggest company on the stock exchange. A strong public capital market is one of the ingredients for higher incomes and more jobs.
That’s the other and more important half of the Mixed Ownership Model story.
It makes far better reading than more debt and less investment in other areas where there’s greater need for public money than energy companies.