SOE changes 'a good move' - Deloitte
Fri, 20 May 2011 8:20a.m.
By Ally Mullord
The Government is going into the November election promising to sell shares in State Owned Enterprises (SOEs), which Finance Minister Bill English expects to free up between $5 billion and $7 billion in capital.
Paul Callow, the energy and infrastructure leader of accounting and financial services company Deloitte, joined Firstline this morning to talk about how the SOE changes will affect New Zealand.
Mr Callow said the privatisation of SOEs was "a good move at three levels".
He says it’s good for Government, allowing them “raise money to pay down some of the debt that's been raised over the past few years”, and good for the companies, as “governments tend to not be terribly good owners of large companies… and listing drives better performance from those companies”.
The third party to benefit is the savings and investment market, says Mr Callow.
"By listing these companies you actually provide a destination for KiwiSaver savings and for individual mum and dad savings.”
Increased offshore ownership of our assets has in the past been a concern for New Zealanders, but Mr Callow says this also benefits the country by creating jobs, “which obviously you can’t take offshore”.
He doesn’t think a restriction on foreign ownership is necessary, saying New Zealanders valued owning their own companies.
"Once [New Zealanders] get a hold of these assets and have a financial interest in them they do tend to hang onto them… we shouldn't underestimate people's fondness for owning New Zealand assets."
Mr Callow says that although the current "tight financial times" mean people don't have a lot of money to invest, "it's not just about the mum and dads”.
"There is a lot of KiwiSaver funds looking for good, safe, long-term investments, and by floating these companies the institutions that are running those schemes will have a destination for those funds...so mum and dads will be investing indirectly through their KiwiSaver as well as having the opportunity to take a direct investment themselves."
Mr Callow says publicly listing the SOEs will help to counter the “low birth rate” of New Zealand companies, which has an adverse effect on the sharemarket.
"By listing four very large SOEs... we're actually going to be correcting that birth rate. It's actually going to be very good for the stockmarkets."
Watch the video for the full interview
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20/05/2011 4:16:53 p.m.
I doubt the ability of the private sector to lift company performance and I question why kiwisaver providers would sink money in to NZ. They should diversify so that we not just tied to the fortunes of NZ and NZ companies - thats all your eggs in one basket and frankly a bit of a gamble. The Kiwisaver funds who invest will lose if the NZ economy underperforms, which is precisely when we will those funds the most.
20/05/2011 1:15:45 p.m.
Paul Callow is probably saying this because his firm will benefit from the changes by getting consultancy work around the proposed changes. The argument that Government's cannot run a business well has proven to be false. It's a right wing mantra from those that want to take over assets paid for by taxpayers. In the case of the energy sector, every key power generating facility was built with taxpayer money. None of it was built by with private sector money but now they want to own it and pay as little as possible for it.
20/05/2011 12:50:16 p.m.
nick a wrote:
yusss, i have been waiting for the national party to cut their own throats....although you could tell the blade was being sharpened in keys bbc interview about being clean and green. The knife has now well and truly been plunged and i believe when the public wakes up that the govt is going to sell up the country, they(national)will not be able to stem the flow from this wound...goodbye national and good ridance.
20/05/2011 9:05:16 a.m.
who's going to buy? Kiwis?? Of course not, not that sort of money in NZ.
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