We need real clarity in New Zealand about what characteristics make a government asset a ‘strategic asset’. Much of the public debate concerning asset sales has centred on the term ‘strategic asset’, yet this term is not defined within the Treasury glossary, in the Mixed Ownership Model Bill or even in legislation governing public finance, overseas investment and state-owned enterprises. We hope the current debate will start a national conversation on this important issue.

In our submission on the Mixed Ownership Model Bill, we explore in depth the history of the Manapouri Power Station presenting a time line of its ownership and development. This history is used to explore the implications of the proposed Bill on one of the Crown’s more technically challenging, controversial and costly investments over the last one hundred years. It shows that other options exist that may be worth exploring, with a view to ensuring current and future New Zealanders get the best possible deal from our strategic assets.

Some possible strategic options we highlight in our submission for government include:
(i) reassessing the strategic mix of the four companies in question by considering whether the value gained from selling 1 or 2 companies outright and retaining 2 or 3 as state owned enterprises is better value, and/or
(ii) government purchasing the smelter and floating a new company (comprising the smelter and the power station) on NZX, giving New Zealanders the opportunity of purchasing a share in a commodity.

In reality due to the current pricing policy and our 99 year agreement, the government has been, and will continue to be until at least 2063, in the business of aluminium smelting. We will be presenting our submission to the Finance and Expenditure Committee tomorrow.

Posted by: Niki Lomax