Coalcorp sale double profit return—Prebble

Press, 20 July 1988, Page 3

Coalcorp sale double profit return —Prebble

By

YVONNE MULDER

The Government would get twice as much money over the next 20 years by selling Coalcorp as it would by keeping it, said the Minister for StateOwned Enterprises, Mr Prebble, yesterday. If the corporation was retained it would pay no more than $46 million in dividends to the taxpayer over the next two decades.

However, if Coalcorp were sold for $lOO million and that money used to pay off some of the national debt, the taxpayers would save $95 million in interest payments over the same period. “The Treasury estimates that the sale of Coalcorp will produce at least twice as much money for the Government ... as retaining the corporation,” Mr Prebble told delegates to the Australasian Transport Research

Forum in Christchurch yesterday. Mr Prebble was using Coalcorp as an example of an S.O.E. which met all three of the Government’s criteria for selling. These are

® The Government must receive more from the sale of the business that it would from the business’s future earnings.

® The sale of the enterprise must not impede, and must make a positive contribution to, the Government’s economic objectives. @ The sale of the business must not impede and must advance the Government’s social objectives. Coalcorp’s sale would advance the Government’s social objectives, said Mr Prebble. “Under private ownership there is an increased likelihood of further development leading to permanent, more secure jobs which is a social policy

objective of this Labour Government,” he said after his formal address. If the Government retained ownership it would have to provide significant capital injection for Coalcorp, and this money would have to be taken

from other areas of Government spending.

Television One and TV2 would not be sold because the sale would not contribute to the Government’s social objectives, said Mr Prebble.

“The ownership of those networks brings with it the power to control their programming in ways which have tangible social effects,” he said. Other S.O.E.s, such as Electricorp, New Zealand Post, Airways and Telecom would not be sold while they were still monopolies, as this would not contribute to the Government’s economic objectives.

Mr Prebble said the three-point test did not cover the full range of matters the Government took into account when assessing whether to sell a business, but it did represent the most important elements.