Too many initiatives are squandered

Andrew Harmos. Photo / Mark Mitchell

ANDREW HARMOS
NZX

NZX chairman Andrew Harmos wants the Government to involve itself more in the debate on how state-owned enterprises should be opened to equity participation by private investors.

Like many respondents to the Mood of the Boardroom survey, Harmos is clearly irked that too many policy development initiatives and policy leadership opportunities have been squandered.

Citing the proposal to mine on the Conservation estate, and, the botched attempt to create a debate on Kiwibank ownership, he says some policies have been poorly thought-out, and, importantly, their positioning and explanation to the public has been poorly thought-out.

"So they are announced into a vacuum which allows the naysayers to dominate and this poll-driven Government then either withdraws or modifies them."

Harmos' comments reflect a widely held view in the finance world that the Government is ducking some parts of it leadership role in reviving NZ's capital markets.

"Solving the ownership issues could add so much value to the economy through allowing the entities to access capital to grow, unconstrained by Government fiscal limits, thereby giving them a shot at growth in business and profitability.

Harmos points to many more advantages: SOEs would pay more tax and be exposed to public scrutiny and accountability. They would also be under capital markets disciplines, and able to properly remunerate staff free of political constraints.

The capital markets would be stimulated. There would be more savings and investment options for New Zealand savers and more scale into the financial services industry.

"Solid Energy could be our Nokia - but we will never know if it remains constrained in its growth options."

Revenue should also be increased if the Government moved ahead by approving initiatives like financial hubbing and building out the capital markets, he says. He cites the Australian financial services sector which employs 400,000 Australians and contributes about 11 per cent to the Australian growth rate.

Harmos suggests that instead of sand-bagging the private sector, Labour should capture the capital markets and economic growth space.

"If Labour campaigned on an Australian-style compulsory savings mandate and forgot its ideological objection to capital markets participation in SOE ownership and public-private partnership opportunities, it would do very well.

He says no-one wants to sell SOEs and lose head offices and jobs. But the Vector and Air NZ ownership models with share caps and foreign ownership limits would be highly appropriate.

"They should also realise that we need to build an asset-ownership society, Harmos adds. "It is asset ownership that builds wealth and generates income and savings: labour for salary or wages provides a living, not wealth."