State Owned Enterprise Sell Off – Flogging the Family Silver?

26 June 2012

There has been much debate recently about the sell-off of State Owned Enterprises – both in the media and across boardroom tables.  However in the public arena, debate has not focused much on the fact that privately owned companies are already growing at the expense of public power companies and have been doing so for quite some time.

This is mainly due to the fact that private power companies like TrustPower and Contact Energy are able to make decisions on a purely commercial basis unhampered by political restraint.   This makes them more responsive to the changing market and consumer needs.

When seen in this context, much of the emotion is taken out of the debate around the SOE sell off.  Most Kiwis, myself included, feel strongly about keeping our national assets, but the cold hard reality of life is that the SOE sell off is going ahead.  We could miss a trick if we get too wrapped up in debating whether or not the assets should be sold – and fail to look closely at the parameters that are set to govern the sale process.

I would have no problem with selling 25%-30% of these SOE’s but would like to see us keeping at least 70% locally owned.  In Australia, politicians have limited the sale of strategic state assets to any one foreign owner to 25%.  This pragmatic arrangement works well with Qantas and could surely do the same for our SOE’s.