Key upbeat about Genesis incentives

Prime Minister John Key answers questions during his  Dunedin visit yesterday. Photo by Gerard O...
Prime Minister John Key answers questions during his Dunedin visit yesterday. Photo by Gerard O'Brien.
Prime Minister John Key expects prospective investors in Genesis will react well to incentives likely to be announced today by Finance Minister Bill English.

However, Milford Asset Management adviser Mark Warminger said the deal should be a straight ''vanilla'' equity-raising with no incentives included.

Genesis is the last of the Government's energy assets to be partially sold down and responding to questions in Dunedin yesterday, Mr Key said there would be an incentive for investors as there had been with Meridian Energy and Mighty River Power.

Mr English would release further details in a speech today.

Mr Warminger said Meridian had an instalment component to the float which confused some retail investors and Mighty River Power had bonus shares.

''Genesis should be sold on price and with a yield higher than the others in the sector. It is a small float and with a good price and high yield it will attract 'sticky' professional investors. That's how the first two should have been done,'' he said.

Mr Key defended the asset sales programme, which will fall well short of the up to $7 billion the Government expected to raise. Solid Energy, which the Treasury had estimated to be worth $3 billion, had little oversight and was now a company of no value.

The partial sale of other energy companies meant the Government had more oversight, still retained 51% control of the companies and the partial sales had raised about $4 billion so far.

Asked why he had decided to end the sales programme if it was so successful, Mr Key said a company had to have the ''right characteristics'' to be part of the mixed ownership model.

A company like Kordia did not fit as it was too small in value, and a monopoly, like Transpower, did not fit the model.

The only other two which could be sold were Television New Zealand and New Zealand Post and neither was fit for sale.

Labour Party education spokesman Chris Hipkins said Mr Key's claims Genesis was the last asset sale rang hollow as the Government was busy privatising facilities across the entire government sector.

''In education alone there are five charter schools opening this year and the Government is now taking applications for a second round of new privately run schools.''

The Government was also using the reconstruction of Christchurch schools as an excuse to privatise school facilities through the use of public-private-partnerships, Mr Hipkins said.

At the same time, other state sectors were being privatised, he said.

National had created a private prison at Mt Eden and a new private prison at Wiri was set to open next year.

Both would be run by ''controversial'' multinational corporation Serco, Mr Hipkins said.

In the health sector, private hospitals and clinics were being used for elective surgery because the public health sector lacked the capacity to cater for the growing health service needs.

''These are core duties of the State that National has been shifting responsibility for to the private sector. Few Kiwis believe the sale of Genesis spells the end of the privatisation of vital infrastructure,'' he said.

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