Better Managing Taxpayers' Assets
Mr Speaker,
The Budget also includes a range of new capital spending, mostly focused on improving New Zealand's infrastructure.
The Government believes that efficient infrastructure will underpin improved productivity in a growing economy.
Budget 2011 allocates a further $942 million of capital funding to ultra-fast broadband, as Crown Fibre Holdings completes negotiations for the roll-out. This brings the total invested over the past three years to $1.4 billion.
A further $28 million has been allocated for ultra-fast broadband in schools.
The Budget includes the second $250 million tranche of the Government's intended $750 million investment over three years as its contribution toward KiwiRail's $4.6 billion turnaround plan.
And there is an additional $88 million over eight years to complete the upgrade and renewal of the Wellington Metro rail network.
Other key parts of the Government's infrastructure programme are continuing.
We continue to invest over $1 billion a year in state highway improvements, including the seven Roads of National Significance and a number of other significant regional projects.
And the investments in the new prison at Wiri, and a number of new schools, remain on target to deliver worthwhile savings to taxpayers via Public-Private Partnerships.
Mr Speaker,
These capital commitments are part of a larger programme of investment in public assets. The net value of government-owned assets is expected to increase by $34.3 billion between 2010 and 2015.
This includes a range of high-priority areas, including social infrastructure such as schools, hospitals, housing and student loans, as well as the investment in roads, rail, broadband, electricity transmission and increased investment in financial assets.
Some of this extra investment will occur within the State-owned enterprises and Crown entities. But about $21 billion will be invested in core social infrastructure and student loans.
The Government's objective is to maintain investment in core public assets without increasing debt. This highlights the need for the Government to prioritise where its capital is used.
Mr Speaker,
At present, our commercial assets present the greatest scope to change the Government's asset mix.
Earlier this year the Government announced it would explore extending the Mixed Ownership Model for some of its commercial assets.
This model frees up Crown capital, provides the companies involved with wider access to capital and imposes greater transparency and commercial discipline and reduces the need for extra government borrowing.
It also provides Kiwi investors with opportunities to put their money in solid, New Zealand-controlled companies.
It provides the opportunity for KiwiSaver funds, and large government investors like the New Zealand Superannuation Fund and ACC, to increase the proportion of their funds invested in New Zealand.
The Government therefore intends to apply the Mixed Ownership Model to Mighty River Power, Genesis Energy, Solid Energy and Meridian Energy, along with reducing its shareholding in Air New Zealand, starting in 2012.
In all cases the Crown will retain majority ownership.
The expected revenue from offering minority stakes in these five companies is between $5 billion and $7 billion.
This will therefore fund about one-third of the core Crown's increased investment in social assets in the period to 2015.
The alternative would have been to borrow more. The Government believes it is much better to reprioritise existing capital, in this case from commercial to social assets, rather than always accumulate debt.
The Government will seek a mandate in the 2011 general election before proceeding with the Mixed Ownership Model.
