Debate urged over partial sale of SOEs

Rob Cameron. Photo / Mark Mitchell

The Government's decision to put on hold a recommendation to list or partially sell state-owned assets is the biggest concern for the development of New Zealand's capital markets, says Rob Cameron.

Speaking to an investment industry conference yesterday Cameron, who chaired the Capital Markets Development Taskforce, said the group had been buoyed by the Government's decision to adopt the framework it had put together for the role of capital markets, and the amounts of resources put into undertaking many of the taskforce's 60 recommendations.

But its biggest disappointment was the shelving of a debate around listing SOEs.

"The reason we came up with the recommendation was because when we looked at the public capital markets there were huge gaps compared to what markets overseas had."

A lack of low-risk investment options, such as SOEs, had a huge impact on the choices for retail investors. "Low-risk infrastructure investments don't exist," he said.

The biggest reason is because they are owned by either local or central government.

"Those things have a huge impact on the size and depth of the market. We found New Zealand is an absolute outlier in the OECD on this."

Cameron said partial listing need not compromise Government ownership.

"One of the best examples is Air New Zealand, which people have acknowledged has been a very successful model."

He said New Zealand had fallen a long way since the end of the 1980s when it had led the way in the management of its SOEs. The taskforce had found a positive response from the public when it suggested the partial listing of SOEs.

"If we want to improve our capital markets, central and local Governments must list SOEs," Cameron said.

The National-led Government has said it will address the issue in its second term but Cameron said it needed to be debated now.

"The one issue we thought was important and needs active debate now was partial listing of SOEs."

The two-day Workplace Savings conference finishes today.