19 Aug 2015

Govt agencies should 'recycle capital' - English

6:14 pm on 19 August 2015

The Finance Minister has told Parliament any government agency or state-owned-enterprise with assets surplus to requirements should sell them off.

But Bill English said he stood by the National Party's election promise that it would not conduct any full or partial asset sales of SOEs in this term of government.

Bill English talking on Solid Energy.

Photo: RNZ / Chris Bramwell

There has been political debate this week about the financial stability of state-owned enterprise Landcorp, and the prospect of it having to sell more land to pay down debt.

Labour finance spokesperson Grant Robertson produced Treasury documents from last November in Parliament that discussed plans to "recycle capital", or for SOEs to sell surplus assets to boost their balance sheets.

Mr English told the House the Government was open about its plans.

"The Government has a clear policy of no further government share offer type sales, or indeed no outright sales of SOEs; we will maintain our current ownership of SOEs."

But he said the Government also had expectations about how companies operated.

"All businesses owned by the Government need to actively manage their balance sheet - that is, where they have assets that are no longer useful, they should sell those assets and recycle the capital.

"So individual SOEs will be buying and selling assets all the time, as part of their usual business."

Mr Robertson asked Mr English if he still accepted the Treasury assessment, in the paper, of at least $2 billion of savings "through so-called capital recycling" from SOEs and Crown entities.

Mr English said that over a period of five to seven years that may be possible.

"I have to say that realising those kinds of savings would be a considerable challenge.

"The savings would come from a combination of dispensing with assets that are no longer needed, for instance land held in Auckland by the Ministry of Education that it no longer thinks is right for the new schools that it wants to build.

"As well as demanding extensive discipline over government agencies' capital planning and intentions, so they don't just dream up projects that invest more money than is needed."

Mr Robertson went on to ask Mr English why, as of last November, none of the company boards had been advised of the proposal.

Mr English said the Government often discussed policy about assets or businesses it owned without consulting directly with the boards.

"At the appropriate time, we discuss it with the board, but in the end the Government makes the decisions that it makes, and the boards are there to carry them out, because they are 100-percent-owned subsidiaries."

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