Staunch defence of asset sales

Press, 15 September 1988, Page 2

Staunch defence of asset sales

By

BRENDON BURNS,

political reporter

Asset sales to anyone, including foreigners, were staunchly defended yesterday by the Ministers of Finance and State-Owned Enterprises.

But Mr Douglas and Mr Prebble also held out a sweetener, saying preChristmaS public floats of shares in State enterprises were possible.

The two Ministers, who were speaking at a seminar in Wellington on privatisation, did not suggest that consultation with the Labour Party would impede any asset sale. Mr Douglas rejected an argument often repeated by critics of privatisation, that selling public assets meant the loss of future dividends to help repay debt. He said that well established State businesses such as Petrocorp, D.F.C., the Railways, Shipping Corporation, Bank of New Zealand, Air New Zealand and the Tourist Hotel Corporation had cost taxpayers a net $155 million in the last five years. Even with the accountability required under the State-Owned Enterprises Act, State enterprises tended to be slow and cumbersome compared with private businesses, said Mr Douglas. Opportunities for expansion and growth could be missed, the taxpayers

being required to meet this cost. Mr Prebble said that to restrict share sales to New Zealand bidders was at the expense of tax-

payers. If the sale of Petrocorp had been restricted to New Zealanders, the Government would have received $2OO million less than it did. The British Government had decided on privatisation to spread wealth through the community via share sales, said Mr Prebble. ‘‘The Conservatives set out to create a population that would support capitalist principles and would therefore support Conservative Governments.” This led to the accusation that taxpayers’ assets were being used in Britain to buy support. The Lange Government was well aware it could enhance the political acceptability of asset sales by making shares available to the public at a discount price, he said. This would allow those who could afford to buy shares to gain the property of those New Zealanders who did not

have the money to purchase shares.

Mr Prebble said the National Party had realised the popularity of such a “scam.”

“We are not prepared to do it. Such a policy is theft,” he said. However, where appropriate, the Government would make somer more share floats. Mr Prebble made only one passing reference to the newly instituted process of consulting the Labour Party about asset sales. The order in which the 12 candidates for privatisation in July’s Budget would be sold “will depend on the speed at which the Government’s machinery can work.”

Once a decision to sell was taken, it was the Government’s intention to complete the sale as soon as possible. Under questioning, Mr Prebble said the issue of foreign purchase of New Zealand assets was emotional. He said the Government was looking at retaining a “Kiwi” share in the Bank of New Zealand. This would allow it a controlling vote in the

affairs of the bank. A similar move had already been taken with Air New Zealand, said Mr Prebble. This ensured the airline’s bilateral air rights were not affected by any foreign share purchase. Foreign investment had helped develop New Zealand and was still needed, he said.

Mr Douglas said those advocating the retention of BNZ should also, for consistency, be suggesting the nationalisation of the ANZ Bank and other foreign companies. If the Government disposed of all its businesses, it still had the power to introduce regulations to control any foreign investor, he said. The president of the Council of Trade Unions, Mr Ken Douglas, challenged this claim, saying that if the Government reduced its role in the economy, this also lessened its ability to regulate commercial affairs. BNZ had not acted as a socially responsible institition but there was no reason why this could not be done, he said.