19 Nov 2013

English accused of misleading public over shares

5:17 am on 19 November 2013

The Labour Party is accusing Finance Minister Bill English of misleading the public about the sale of shares in Air New Zealand.

Air NZ planes

Photo: RNZ

Mr English says the Government's sale of 20% of its stake in the airline is no different to what Labour did when it was last in government and denies that the timing of the partial sale was influenced by an upcoming referendum on asset sales.

The Government is reducing its shareholding in Air New Zealand from 73% to 53% in the same week that ballots for the referendum are being posted. The sale is expected to be completed by Tuesday.

A Labour government privatised Air New Zealand in 1989.

Labour's State-owned Enterprises spokesperson Clayton Cosgrove said on Monday that Mr English is making it up when he suggests the previous Labour government sold shares in the national carrier.

Mr Cosgrove said when Labour rescued Air New Zealand in 2001, not all its shareholders agreed to sell their shares and some remained on the sharemarket. He said Mr English needs to stop making things up and stop being so arrogant.

Green Party co-leader Russel Norman said the Government is rushing the sale before the result of the referendum is known. Dr Norman said with a higher proportion of private ownership, Air New Zealand will not be as committed to serving the national interest and services to provinces are likely to be cut further.

But Mr English told Radio New Zealand's Morning Report programme on Monday the referendum is irrelevant to the Government's decision to sell. He said Air New Zealand's recent performance is an example of good results from the mixed-ownership model the Government is adopting with some state-owned companies.

Prime Minister John Key said the selldown of the Government's stake would make little difference to the operations of the company and the change in ownership would not affect the airline's service.

New Zealand First leader Winston Peters said the Government will lose control of the airline.

Voting in the asset sales referendum opens on 22 November and closes on 13 December.

Good time to sell - broker

A stockbroker believes it is a good time for the Government to sell down its stake in Air New Zealand.

Salt Funds Management managing director Paul Harrison told Radio New Zealand's Nine to Noon programme on Monday selling now makes sense because Air New Zealand's share price has gone up about 30% in the last year and potential investors have been expecting the sale for some time.

Mr Harrison said it is also a good move to only sell share purchases available through stockbrokers, as airlines can have volatile profits and people need to know what they are investing in.

However, business commentator Rod Oram said the restoration of profitability at Air New Zealand means now is the time for the Government to keep its share - not sell some of it off.

"Air New Zealand has done very well, in it rebuild from bankruptcy in 2001, and a very important part of that has been the stability of share ownership, with the Government owning 73 percent."

Mr Oram told Morning Report on Monday the Government can retain ownership of 53%, but this will not give it the control it thinks it has, because minority shareholders cannot always be overridden by a simple numerical majority.

"If you start to get a number of 10 percent shareholders working together, they can start pushing their ideas on strategy, which may not be in (the company's) best long-term interest."