BUDGET 2012: How the Govt will spend SOE sale cash

A new fund to spend money made from the partial float of four state-owned enterprises and Air New Zealand has been revealed.

The government expects to raise $5 billion-$7 billion from the partial sale of shares, which will be put into the future investment fund.

Finance Minister Bill English says the fund will allocate $558.8 million to schools, health, science and innovation, and transport this year.

That includes $76.1m for the creation of the new Advanced Technology Institute and $88.1 for health, most of which will go towards hospital redevelopments.

It also includes the first $33.8m of $1b earmarked for a “modernisation” programme for schools so they can take advantage of ultra-fast broadband, and $250m towards the KiwiRail turnaround plan.

Mr English says the fund is notional, like the Canterbury Earthquake Recovery Fund.

“Investing the share sale proceeds in this way will result in valuable assets that are owned by the crown,” says Mr English.

The first of four SOEs, Mighty River Power, is likely to be partially floated in the third quarter of this year.

The other companies involved in the share offer programme are SOEs Genesis, Meridian and Solid Energy, and Air New Zealand, in which the government has a majority stake.

Science a winner

New Zealand’s science sector will receive a $326m boost from the Budget.

Science and Innovation Minister Steven Joyce says $250m of new operating funding, and $76.1m in capital funding will be put into science, innovation and research.

That includes the establishment of a new Advanced Technology Institute, which will receive $166m (in operational and capital funding) over four years.

“The creation of the ATI will better link business and science, and help create new high-tech products and services,” says Mr Joyce.

Another $60m will be put towards the so-called national science challenges to “find innovative solutions to some of the most fundamental issues New Zealand faces”.

Mr Joyce says this will “focus multi-disciplinary teams of researchers on addressing challenges that are fundamental to New Zealand’s prosperity and wellbeing.”

The Performance-Based Research Fund will also receive $100m in additional research funding, increasing the size of the fund to $300m by 2016.