Mixed ownership will deliver better investment opportunities
I think that if we are going to cultivate a culture of saving we must give people something worthwhile to invest in. As a community we are still shy of investment, scared off by the pain of countless finance companies tipping over and losing many millions of dollars of other people’s money.
Mixed ownership is a term we are hearing more often, and I believe it is the way of the future because it offers tangible, reliable investment opportunities. As the government works hard to lift national savings it stands to reason there is a very real need to provide more investment opportunities, especially ones that grow our assets.
The government owns about $220 billion of assets and is expecting to invest another $34 billion into assets over the next five years. Rather than borrow the money to pay for this, National is proposing to extend the mixed-ownership model, where the government owns most of a company but offers a minority stake to shareholders.
The benefits of mixed ownership are compelling. There will be more capital and less debt. The freeing up of $5-7 billion to invest in high priority assets such as schools, hospitals and broadband will reduce our need for extra debt.
There will be greater investment opportunities giving Kiwi investors, including “mums and dads”, the chance to invest in large and proven companies.
We will also see the emergence of better performing companies. Mixed ownership allows companies to access capital and grow without depending entirely on the government. At the same time there will be sharper discipline and more transparency on their performance through external oversight.
The move towards tangible, reliable investment opportunities is a matter of good sense. We simply cannot keep rolling up to big overseas banks asking for billions of dollars when we can give New Zealanders good investment opportunities, reduce our dependency on borrowing and free up capital as it arises to build the assets we need for our future prosperity. New Zealand needs to be more resilient and mixed ownership will help us achieve this resilience.
Right now the government is looking at extending the mixed-ownership model to four state-owned energy companies. It is also looking at reducing the government’s majority shareholding in Air New Zealand which is already under a mixed-ownership model.
There will be guarantees:
• Government maintains a majority shareholding stake by owning more than 51 per cent of each company
• New Zealanders will get priority as investors in shareholdings
• The companies involved will provide good opportunities for investors
• The capital freed up will be used to fund new assets such as hospitals without borrowing more
• Industry specific regulations will protect consumers
Mixed ownership is an intelligent way of creating sound investment opportunities for New Zealanders that also allow them to actively participate in building our assets and I think that sounds like a very attractive prospect.
