SOE changes 'a good move' - Deloitte
Friday 20 May 2011 8:12 a.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