SOE sell-down on PM's agenda

The government has confirmed it is looking at allowing partial privatisation of the country's large government-owned energy firms.

A "mixed ownership" model along the lines of Air New Zealand is under consideration, Prime Minister John Key said in a scene-setting speech in Auckland today.

Under the Air New Zealand approach, "the government has a controlling stake in what is a crucial piece of transport infrastructure and guarantees that it will be majority New Zealand owned. But by not owning 100 percent of the airline, the government also has capital free to invest in other assets."

The government plans to use the same approach with Meridian Energy, Mighty River Power, Genesis Power and Solid Energy."

Speaking to National Party supporters at Trusts Stadium in Auckland, Mr Key said this year's budget would focus on savings and investment.

"In the worst of the recession, running a budget deficit was the right thing to do, as it gave much-needed support to the economy," Mr Key said.

"Now, as the economy recovers, borrowing $300 million a week is unaffordable and is holding the economy back.

"The economic plan would involve running a tighter budget, with the Government to consider borrowing less for its capital investment programme over the next few years.The Government would also reconsider the ownership of a number of state-owned assets.

"We need to look at where we can change the mix of assets we own -- identifying where new assets are most needed and where we have more money invested than we absolutely need to.

"Mr Key said the mixed-ownership model for Air New Zealand, which is owned predominantly by the Government but with a minority of outside equity, could be extended to other companies.The Government had asked Treasury for advice on the viability of introducing mixed-ownership to power companies Mighty River Power, Meridian, Genesis and Solid Energy. Advice was also being sought on reducing the Crown's shares in Air New Zealand.

"No other SOEs are being considered and no decisions have been made," Mr Key said."We will carefully consider the advice we get from Treasury and will clearly spell out our intentions well before the election later this year."

Read John Key’s speech here