Government admits to guessing asset sale profits
Thursday 16 Feb 2012 6:19 p.m.
By Political Editor Duncan Garner
The Government has today opened the books in advance of this year's budget and admitted it is simply guessing as to how much it will reap from the controversial sale of state owned assets.
Finance Minister Bill English says it is the only honest answer but Opposition parties say it is no way to run an economy.
In order to balance the Government’s books Mr English is partially selling state owned assets like Mighty River Power, but he has no idea how much cash the Government will get - so he is guessing.
Last year, it was $5-7 billion – and today Mr English settled on $6 billion.
“It’s not our best guess, it’s just a guess. It’s just some numbers, and that might mean they look roughly right for forecasting purposes. That’s an honest answer,” says Mr English.
But Opposition parties say it is a poor way to run an economy.
“He’s telling us they are just a guess, that’s not how to run the finances of New Zealand,” says Green Co-leader Russel Norman.
The Government's books also show selling the assets will cost the Government $360 million in lost profits over four years - which is $100 million more than the savings it makes by reducing overall debt.
“For the first time today they have had to admit that the privatisation of these assets will cost the Government huge money because the loss in profit is greater than the cost of the reduction in debt,” says Mr Norman.
All this is important because the Government is trying to get back into surplus by 2015 - a surplus it now estimates will be just $370 million, due to poorer economic conditions. A small surplus that it still may not reach.
The Government is also promising to spend $800 million in this year’s budget, but that too could be slashed.
“Of course if there is an economic meltdown in Europe, then we would need to rethink it,” says Mr English.
So while there are pockets of hope in the economy - there is also bucket loads of uncertainty too.
But the Government is determined to get back into surplus – and it is become a political target as much as an economic one - which means it will likely tighten the screws further, with less spending and widespread job cuts in the public service.