$6bn 'best estimate' of asset sale revenue

Prime Minister John Key yesterday modified Bill English's description of the proceeds of state-owned assets to "our best estimates''.

He also hinted that any sale of Air New Zealand shares could be delayed until the aviation market picked up.

Mr English, the Finance Minister, said during his presentation of the Budget policy statement last week that Treasury's estimate of $6 billion in sale proceeds from the minority sale of five state-owned assets "is not our best guess _ it's just a guess''.

The comments caused uproar.

The Government's capital spending programme is directly linked to the proceeds; borrowing for capital expenditure will be offset by whatever it gets for the four energy companies and Air New Zealand.

Asked about the description yesterday Mr Key said "I think they are our best estimates''.

"There are lots of variables in there ... what we do know is the Crown will absolutely have a minimum of 51 per cent shareholding but could have more. We don't know what price the market will pay at the time; we don't know the exact timing of all these particular floats.''

The initial estimates had been between $5 billion and $7 billion.

The advice he had was that it would be about $6 billion.

"I'm confident of those numbers as best you can be but his basic point is that there is a degree of subjectivity there because of the variables and moving parts, just as there is when we put together any set of budget predictions.

"In the end they rely on a certain amount of best analysis that you can get.''

Mighty River Power is the first of the five state-owned companies being readied for sale and Mr Key said the Government could sell 49 per cent of it in one tranche "but we could also have a couple of tranches''.

"We could ultimately decide that we don't want to rush on Air New Zealand, for instance, if we think that the international airline market's weak. There are a number of factors there.''

Meanwhile, Mr English said yesterday that the latest set of monthly Crown accounts, for the first six months of the financial year (to December 2011), reinforced the need for the Government to be disciplined in its spending.

Tax revenue was $400 million lower than the Pre-election Fiscal Update in October and $743 million less overall.

But that was offset by expenditure being $887 million lower than forecast.

The operating balance before gains and losses was a deficit of $4.085 billion, very close to the $4.082 billion deficit forecast. Treasury warned, however, that corporate profits for the full year may be down.