National’s partial sale of a few state assets has been vindicated by a report released by TDB Advisory:
An independent report released today by TDB Advisory shows that the Mixed Ownership Model introduced under the previous National Government has been an overwhelming success, National’s Finance spokesperson Amy Adams says.
“The Mixed Ownership process successfully generated $4.7 billion for public infrastructure such as schools, hospitals and broadband and TDB’s findings highlight the wider issue with the Government’s ideological opposition to private sector involvement in funding new assets.
“The partial sell-down of Genesis, Meridian and Mercury began in 2013 and had three simple objectives: to lower Government debt; to increase investment opportunities for ‘mum and dad’ investors; and to improve the financial performance of each company.
“TDB’s study shows all of these objectives have been achieved.
“The most striking finding is that despite electricity prices being flat-to-falling over the period of the Mixed Ownership Model, shareholder returns have increased by 69 percent and the Government has received higher dividends despite owning a lower share of each company.
“The report also shows that opposition to the Mixed Ownership Model was misplaced. It didn’t lead to higher electricity prices. And it didn’t result in a drop-off in renewable energy generation, which has increased over the period.
“The current Government has an irrational opposition to the private sector. Labour’s ideological resistance to Private-Public Partnerships to build public assets means a number of important projects are failing to get off the ground.
“The Government shouldn’t shut itself off from ideas such as Private-Public Partnerships or Mixed Ownership purely on ideological grounds. Evidence, not ideology, should drive good policy.
So the fear of prices soaring was misplaced; the government is earning a similar amount in dividends from a small shareholding; and pausing less interest; and the people who invested in the shares are getting dividends too.
. . .Taxpayers’ Union Economist Joe Ascroft says, “This report demonstrates what most analysts already knew: private-sector discipline can transform bloated, inefficient Government-owned companies into efficient market-disciplined businesses. It’s a win-win-win for taxpayers, investors, and consumers.”
“With the Government struggling to meet its self-imposed budgetary restrictions, it’s actually the perfect time for an expansion of the Mixed Ownership Model. Raising capital and increasing dividend payments would give Grant Robertson the room to invest in infrastructure without seriously damaging the country’s books.”
The three parties now in government were vehemently opposed to the MOM.
The report proves them wrong and shows their opposition wasn’t based on fact.
The state still owns too many businesses which could easily be sold, partially or fully, to the benefit of the public finances, taxpayers and the businesses.
If the government would let evidence not ideology guide its decisions, it would sell at least some of them but it is very, very unlikely to do so.
The report is here.