Key continues firefighting Kiwibank sale comments

Prime Minister John Key was today still dampening down concerns that his Government would sell off Kiwibank.

Finance Minister Bill English, who sparked the debate answering questions in a post-budget speech last week, was this afternoon very careful not to add fuel to the story when asked about the issue by a business audience in Lower Hutt.

Back in 2008 Mr English was covertly recorded saying that National will sell Kiwibank "eventually, but not now".

Last week answering questions from the audience at a post-budget function in Christchurch, Mr English said Kiwibank had reached a size where it needed either a government guarantee or "an awful lot of capital".

He suggested there would be strong demand for shares in it.

This morning Mr English said his comments last week were speculation. "There is an opportunity with Kiwibank about how we grow it -- because it has been quite successful. So the Government has to deal with those issues on their own merits in the next couple of months."

At the Lower Hutt event Mr English was sticking to the government line when answering questions from the floor and later from media: "The Government's position is pretty clear, no asset sales in this term of office and we've said if that position changes then we would make that clear to the public and campaign on it."

Mr English said he was just outlining the Government's position.

"What we've focussed on is lifting the performance of the existing $200 billion worth of assets because the effects of that would be much greater than any benefits from some kind of sale."

In Parliament Labour leader Phil Goff asked why the Government would want to sell something supported by so many New Zealanders.

"Why even consider selling Kiwibank when 700,000 Kiwis bank with it precisely because it is community and New Zealand owned, retaining its profits in and for New Zealand when the commercial banks, the private banks take $2.6m in private profits and send it overseas."

Mr Key said the Government had given no consideration to selling Kiwibank.

"What I can say the Government giving is consideration into putting more capital into Kiwibank because certainly the board of Kiwibank want more capital."

Mr Key reminded Mr Goff of the many assets previously sold by Labour governments but the Labour leader said he didn't need a history lesson.

He told reporters: "I've learnt and National hasn't. I've learnt that the sale of Air New Zealand and of KiwiRail was to the detriment of New Zealand, it hurt New Zealanders, KiwiRail run into the ground, Air New Zealand run into bankruptcy, so much for the private sector being for the good of New Zealand owning those strategic assets."

Mr Key yesterday said the Government was yet to start work on a policy about state assets and said any policy would be very clear. He indicated a preference for a float rather than trade sales.

Mr Goff questioned how the Government could stop shares being sold overseas.

"Why would he risk Kiwibank shares falling into the hands of overseas investors and its profits going offshore when Kiwi mums and dads already own it and benefit from its profits working for them and working for New Zealand."

Mr Key said the issue hadn't been looked at yet.

Earlier in the day Mr Goff told reporters the Government planned to "soften up" New Zealanders for sales of assets like TVNZ and Kiwirail.

Green Party co-leader Russel Norman said in a statement that no matter how the sale was framed it would inevitably end up in foreign ownership.

"These owners will also demand a similar stream of profits from their investment. In the last five years alone, $9.5 billion in bank dividends have gone off-shore, fuelling our current account deficit and starving New Zealand businesses from much needed capital to fund their growth."

Dr Norman said the bank offered better deposit rates and lower lending rates than the big four overseas-owned banks.