"Our assessment finds that a programme of asset sales to finance the construction of new assets leaves the Government accounts permanently worse off - compared to the baseline - in terms of Government debt, debt ratio, net worth and total assets," Dr Nana said.
Business and Economic Research Ltd (Berl) was commissioned by the Green Party to investigate the long-term impacts of the Government's "signature" asset sales programme.
Electricity generators Mighty River Power, Genesis, Meridian Energy and coal producer Solid Energy are earmarked for a partial sell-down. The Government is to retain at least 51% of the companies.
Proceeds of the sales, estimated between $5 billion and $7 billion, will be used for new infrastructure assets and paying down debt.
Mighty River is due for a partial listing on the NZX, probably in the third quarter of this year.
Dr Nana said the Berl assessment of the asset sales to finance the construction of new assets left the Government accounts permanently worse off in terms of debt, debt ratio, net worth and total assets.
At best, the annual deficit remained unchanged on the baseline.
"This is because the interim loss of earnings resulting from reduced dividends and the period of time before the new assets reap benefits is never recouped."
Subsequently, the option of asset sales could significantly improve the Government accounts only if a set of assumptions were adopted that were at the extreme ends of plausibility, he said.
Any long-term improvement in the Government's borrowing position, or debt ratio, could only be achieved through permanently lowering the level of the Government's deficit, not a programme of partial asset sales, Dr Nana said.
Finance Minister Bill English and Prime Minister John Key are unlikely to be moved by the latest criticism of the asset sales programme, which was a major policy plank of National going into the last election.
However, the Greens continue to steal a march on other parties over the anti-asset sales campaigns.
Green co-leader Russel Norman said the asset sales analysis by Berl was not only bad news for the Government books, but the effect of asset sales on the wider economy was even worse.
"Even Bill English accepts that our high levels of indebtedness to overseas lenders is our number one economic vulnerability. His programme of asset sales would make that worse."
Dr Nana said while the Government had stated that New Zealanders would be at the front of the queue to buy the assets being sold, some might be sold to overseas investors. Consequently, the portion of company earnings - dividends and profits - that related to overseas investors would be a payment on the external accounts.
"Further, while the initial offering may be directed towards domestic purchases, future private share transactions could increase the portion of shares, and earnings, in overseas investors' hands. Such an outcome would lead to a further deterioration in the external deficit and external debt position."
The Government had suggested measures to ensure widespread and substantial New Zealand participation in the asset sales programme, including a priority allocation, pre-registration and instalment receipts; financial incentives, such as price discounts and loyalty shares; hard ownership restrictions, such as individual or total ownership caps, or separate domestic shares.
However, Dr Nana said until decisions were made as to how those were to be implemented, Berl could make no conclusion as to the magnitude or significance of the negative impact of those sales on the external deficit or external debt.
"At the very least, though, we advise that it would be unwise, from an economic perspective, to embark on a policy that risked increasing external payment obligations without at first verifying and confirming a counter-balancing positive impact on external revenues, such as from exports."
