Colin Craig says Air NZ selldown makes sense - but iffy on wider privatisation
"Selling an asset returning 13.2% in order to repay debt costing 4%, this National government must have rocks in their heads."Featured comment
Conservative Party leader Colin Craig says he supports the government's selldown of its Air New Zealand stake. But National's potential coalition partner remains dubious of its wider asset sales programme.
"The government bought a share holding as a temporary 'bail out' when airline stability was an issue," Mr Craig says.
The 2001 bailout saw the government pay $885 million ($1.25 billion in today's dollars) for 80% of the airline as it struggled in the wake of its failed Ansett venture across the Tasman.
Today, "Returns are modest and the stability issue is resolved so liquidating the holding makes sense," Mr Craig says.
But support for the Air NZ selldown does not translate into wider support for National's partial asset sales programme.
"Apart from the question of mandate - less than 50% party vote for asset sales last election- there is an issue of best use of money," Mr Craig says.
Beyond the basic right wing principle that private ownership is better than state ownership, Prime Minister John Key has argued that while power companies pay dividends, using partial asset sale proceeds to pay down government debt delivers the best fiscal outcome.
Mr Craig disagrees with the PM on the best use of money argument, and the timing of the sales He also worries that loss of dividend income to the Crown from the partially privatised power companies - a line that could come straight from a Labour, Greens or NZ First manifesto.
"Setting aside AirNZ for a moment the other assets returned to us the taxpayer on average just over 13.2% return on equity, 2007-2011. Our rate of borrowing is around 4%. I am not supportive of selling 'cash cows' in a difficult market," he says.
"My own business practice has always been to retain cash cows and divest myself of assets that have small returns. It works very well long term - surely the government should be thinking long term
"I for one am also not excited about the additional future taxation that will be required to cover the loss of income from these assets."
Another wrinkle, as voting papers are mailed for the Citizens-Initiated Referendum on assets sales: the Conservative Party leader want referenda results to be binding if 66% of those who vote are in favour of a proposition. Prime Minister John Key says the private asset sales programme was on the table at the last general election.
Mr Craig made his comments in a new round of responses to NBR readers' questions. Monday night, he added replies to questions he ran out of time for Friday.
See the whole session - which also covers his controversial land banking comments, teaching creationism in schools and possible coalition with NZ First - at ASK ME ANYTHING: Colin Craig.