English uses debt fear to advocate for asset sales

Finance Minister Bill English. File photo / NZPA

Finance Minister Bill English today further pushed the case for some of the Government's controversial moves ahead - part sales of state assets, welfare reform, and tightening spending in the public sector.

And he used an argument about fear of debt to advocate for the unpopular SOE sales.

In a speech to an Auckland Chamber of Commerce and Massey University lunch he challenged opponents of the SOE floats that will begin this year to say how they would fund their capital programmes.

The sale of up to 49 per cent of four energy companies and Air New Zealand is estimated to raise between $5 billion and $7 billion which will be used for the capital works programme.

"Our political opponents need to honestly explain to New Zealanders why it would be better to borrow this $5 to $ 7 billion from overseas lenders at a time when the world is awash with debt and consequent risks."

The Government was spending and borrowing more than it could afford into the future. So it made sense to reorganise the Government's assets and redeploy capital to priority areas without having to borrow more.

"Most nights on television, we see the consequences of countries in Europe and elsewhere borrowing too much. We don't want that for New Zealand."

Prime Minister John Key will spell out the Government's thinking on public sector reform in a speech next month but more job cuts and mergers of agencies are a given.

Restructuring of the once untouchable Ministry of Foreign Affairs and Trade will be outlined today.

Mr English said that the Government's commitment to absorb the shock of the global financial crisis on its own balance sheet could not continue.

"We told public sector chief executives to look at their own operations and tell us how they could be improved to deliver better services with little or no new money.

"We gave them time to do that. We're now at that point."

The changes ahead would help general productivity in the economy.

The public sector made up about a quarter of the real economy ''and it has been a drag on overall productivity."

Referring to social welfare reform which will apply tougher work tests on sole parents and address youth employment, Mr English said the Government would move quickly to get reforms underway.

He said it was staggering that around one in eight New Zealanders aged 18 to 64 was on a benefit and about half of them had spent at five of the past 10 years on a benefit.

"That's not only bad for the beneficiaries and their children, it's a waste for society and taxpayers."