24 Oct 2013

Greens accused of unsavoury tactics over share sales

5:25 pm on 24 October 2013

The Minister of Economic Development has accused the Green Party of adopting unsavoury tactics in opposing the Government's policy of partial privatisation.

Steven Joyce was answering questions on behalf of Finance Minister Bill English in Parliament on Thursday about the sale of 49% of shares in state-owned Meridian Energy.

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Photo: PHOTO NZ

The Government has sold shares in Meridian for $1.88 billion, but it won't get the full amount until investors pay their second instalment 18 months from now. Shareholders will pay $1.50 per share for a slice of the power company.

Green Party co-leader Russel Norman asked Mr Joyce whether he considered the sale was a failure, given that only 62,000 investors bought shares.

Mr Joyce said he found it unsavoury that Dr Norman was complaining about the number of investors when the MP had done his best to sabotage the sale.

Earlier on Thursday, Bill English challenged Opposition parties to commit to buying back shares in Meridian Energy if they think the sale is such a bad idea. He dismissed criticism of the sale of 49% of the shares in Meridian, saying it was a success despite lower-than-expected interest from investors.

The Labour and Green parties say the Government got far fewer investors than the 250,000 it originally believed would buy shares. However, Mr English blames the Opposition parties, saying they set out to sabotage the sale by promoting a policy of nationalising the electricity industry.

Mr English says if Labour, which as described the sale as a disaster, thinks it is such a bad deal it should be promising to by the shares back. He says neither Labour, the Greens nor New Zealand First have done so.

"It's all crocodile tears, hand-wringing and whinging and we're proceeding with the programme. I don't think they've got any credibility criticising it because they won't commit to buying the assets back."

Green Party co-leader Russel Norman says the commitment Bill English is asking for is not something the Greens can promise because the Government's books are in such bad shape.

Dr Norman says the current Government has borrowed so much money, there is no way the Greens can be sure what the fiscal position of an incoming government may be.

Figures please minister

Bill English told Radio New Zealand's Morning Report programme he is happy with the final share price, even though it is at the very bottom of its indicative range of $1.50 to $1.80 each.

He says the Government will immediately get $1.3 billion and another $628 million when investors pay their second instalment in 18 months.

Mr English says that money can then be invested in other public assets, which he describes as a "pretty good outcome." He says the Meridian float is the biggest ever retail float on New Zealand's public market.

Milford Asset Management portfolio manager William Curtayne says the price may have been higher if the political risk was lower.

Mr Curtayne told Morning Report the low response from investors is also a result of the increasing favour for growth companies over utilities. He says there may be more interest in Air New Zealand, as it is a growth asset.

Meridian is the second state-owned company to be put up for partial sale by the Government, following Mighty River Power.

Before Air New Zealand or Genesis Power shares go up for sale, people will get to vote in a referendum on whether they support the sales.

Postal voting starts on 22 November and finishes on 13 December, but the Government has made it clear the sales will proceed, even if a majority vote against its policy.