Much has been written over the last month since the National Party announced its policy to partially sell State Electricity assets should they win the November 26 election and most of it the typical rantings of those commentators from the left and those politicians from the same place that are scaremongering for political gain.
If we look at the facts before us though, in terms of the economic fortunes of New Zealand we are in a dire situation.
These are the main points of the National Party Policy:
- The Government would have to maintain a majority controlling stake by owning more than 50 per cent of the company.
- New Zealand investors would have to be at the front of the queue for shareholdings, and we would have to be confident of widespread and substantial New Zealand share ownership.
- The companies involved would have to present good opportunities for investors.
- The capital freed up would have to be used on behalf of taxpayers to fund new public assets and thereby reduce the pressure on the Government to borrow.
- The Government would have to be satisfied that industry-specific regulations adequately protected New Zealand consumers.
Very specific guidelines for a sale process that do not mention full sales.
We have very high debt levels, both personally and publicly and this debt is a heavy weight on out present and future economic stability.
We owe almost as much as we own and borrowing and interest costs are currently having a big impact on us, with the State borrowing NZ$300 million a week and individuals still borrowing and servicing their own debt.
This impact will have long term effects if we do not do anything to either pay down more debt, cut spending or drastically cut both. Nobody would attempt to do the latter, apart from the most rabid right wingers so we have to do something right?
Absolutely is the unequivocal answer.
While I would be happy to sell non-essential assets to the State like schools, hospitals, airlines, banks and many other under-performing state monopolies, the National Party are only considering selling partial minority stakes in 4 electricity companies to Mum and Dad investors -hardly a sell-down of the family silver!
The control of those assets remains in the hands of the State on behalf of all of us, so it shouldn't be a problem to the left who have championed the same sort of sell-down of Air New Zealand Ltd [AIR.NZX] that happened under Labour nearly 10 years ago, so the current opposition seems at the very least sour grapes that the left are not in power and at the most hypocritical to the extreme.
The proceeds from a sell down of 49% stakes in the 4 remaining state power companies should go to paying down debt, there are indications that Government want to use the cash freed up to buy other assets for the State but that would clearly be a mistake given the poor quality of management of State assets under any political party.
The sell-down will also encourage prospective small Mum and Dad investors to invest in good companies based in New Zealand rather than putting money into dead end stuff like term investments, private real estate or investing money overseas.
The vast proportion of Kiwisaver money and money invested in various New Zealand superannuation schemes is currently invested offshore and that clearly needs to change.
We need to invest in ourselves, promote a savings culture based on our own assets and the National Party proposal ticks all those positive boxes.
To scaremonger by saying this policy is one based on failed models of the 1980s and 1990s is simply that and is not based on fact at all but a political agenda and lack of economic education, business skills and a determination and political ethos that will have us stuck with the debt we have now for generations to come.
We need to take politics out of this and take a good hard look at the merits based on fact.
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