Finance Minister Bill English is pinning his hopes for majority New Zealand ownership of state-owned asset shares on the amount of money New Zealand investors and funds have in their accounts.
However, he appeared to concede yesterday that overseas investors will eventually get their hands on the shares.
Plans for a 10% maximum shareholding cap could provide a safety valve for the Government as plans proceed.
The Government plans to introduce a mixed ownership model for state power companies Meridian, Mighty River Power and Genesis, along with coal producer Solid Energy. A sell-down of the Government's share of Air New Zealand is also planned, if National wins the November 26 election.
Concern has been expressed that although New Zealanders will be first in the queue for the first tranche of shares, there was nothing to stop those shares being sold to overseas investors in the future.
Mr English reiterated yesterday that New Zealanders would be at the front of the queue for shares.
The Government would rather pay dividends to New Zealanders than interest on rising debt to foreigners, he said in a speech yesterday delivered by State Owned Enterprises Minister Tony Ryall.
"Overseas investors will play a role in helping to get a good price for taxpayers. They will also help deliver a robust and liquid market for New Zealanders.
"But it's important to remember that these companies will remain firmly, and overwhelmingly, in New Zealand control."
There were strong reasons for expecting a high New Zealand shareholding, Mr English said.
The reasons included:
• New Zealand investors had more than $300 billion of investments excluding their own homes, ranging from money sitting in term deposits to financial assets and investment housing.
• The 34 registered KiwiSaver providers had about $9 billion invested and would double in size over the next four years.
• New Zealand institutions - excluding KiwiSaver - had about $59 billion under management.
• Crown financial institutions, including the New Zealand Superannuation Fund, ACC and the GSF, had almost $40 billion under management. Iwi were estimated to have more than $10 billion of assets.
"In total, we expect New Zealanders will own at least 85% to 90% of these companies, including the Government's cornerstone shareholding," Mr English said.
"So any suggestion the Government is selling the family silver is rubbish."
The Government managed $220 billion of assets owned by taxpayers, from hospitals, state houses, roads and schools to the NZ super fund, electricity companies and shares in Air New Zealand.
Those assets were growing rapidly and over the next five years, the Government would increase taxpayers' assets by about $78 billion before depreciation.
That was a large commitment to public investment, he said.
"It's more than the entire value of the NZX and about as much as all of the managed funds owned by New Zealanders."
The $78 billion of new assets would be funded from a wide range of sources. Some, like roads, came from dedicated taxes, and some came from returns on commercial investments.
But more than a quarter, about $21 billion, would be funded through extra Crown borrowing, Mr English said.
