Prime Minister John Key has promised this year’s sell-off of two energy companies will provide a “shot in the arm” for capital markets.
He has delivered his opening statement to parliament today.
In it, Mr Key reflects on National’s achievements last year but focuses largely on what is planned over 2013 and beyond.
He has repeated the government’s priorities this term:
- To responsibly manage the government’s finances.
- To build a more competitive and productive economy.
- To deliver better public services to New Zealanders, within the tight budgets the government is operating under.
- To support the rebuilding of Christchurch.
Mr Key says the government is still on track to return a modest $66 million surplus in 2014-15, having set an operating spend of $800 million in this May’s Budget and a zero allowance for capital spending.
“Instead, new capital spending will be funded from reprioritising existing capital and, in particular, the proceeds from the government’s share offer programme, which is expected to raise between $5 and $7 billion in total. That is $5 to $7 billion the government would otherwise have to borrow.”
He says the government is still planning to sell up to 49% of Mighty River Power, subject to the Supreme Court hearing into the Maori Council’s water rights’ claim, which is being heard on Thursday.
It also plans to proceed with another IPO later this year.
“The government’s share offer programme is designed to give New Zealand savers an opportunity to invest in big New Zealand companies, and to bring those companies the benefits of private sector disciplines and increased monitoring.
“The share offer programme as a whole will be a shot in the arm for New Zealand’s capital markets.”
Mr Key says New Zealanders will be at the front of the queue for shares.
“But in general we continue to welcome foreign investment in New Zealand. That’s because overseas investment adds to what New Zealanders can invest on their own.”
He says overseas capital can make things happen which would not otherwise happen – grow business, create jobs and pay wages.
The government plans to secure more “high-quality” trade agreements with other countries as he believes that will encourage more investment.
“Investment is crucial to building a stronger economy. In contrast, and through poor policy decisions, the New Zealand economy lost competitiveness in the mid-2000s, when growth was built on debt, consumption and large increases in government spending.”
Mr Key says the government is currently negotiating free trade agreements with 11 countries in the Trans-Pacific Partnership, including the US, and separately with a number of other countries including India, Russia and Korea.
“TPP negotiations are well advanced and negotiators have been asked to try to conclude the broad outline of an agreement by October this year.
"This year we will also begin negotiations for a new 16 nation regional free trade agreement – the Regional Comprehensive Economic Partnership – that involves the 10 Asean countries including China, Australia, India, Japan, Korea and New Zealand.”
On the hot issue of affordable housing, Mr Key says National is planning to build more than 2000 houses over the next two financial years and wants to work with local councils on “underlying issues” which are driving up land and building costs.
Alluding to housing plans from the Greens and Labour, he says other proposals which do not do anything to fix the actual cost of building will either “fail miserably, deliver dwellings that people don’t want to live in, or require massive taxpayer subsidies”.
He says 2013 will be a challenging year but assures parliament the country is on the right track.
“The government’s economic programme is laying the foundations for a stronger economy, sustainable jobs and higher incomes. It will leave New Zealand well-placed to take advantage of the main opportunities available.”
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