Government's lead on asset sales 'foolish'

A leading economist says the Government's plans to partially sell off the four state owned energy companies will leave the country's books permanently worse off.

Ganesh Nana from BERL economics has released a report commissioned by the Greens looking into the financial implications of the asset sales.

Dr Nana says it'll make New Zealand's external debt and external deficit even worse.

He's reminding the country the government isn't using the asset sales to pay off debt but is instead planning to buy more assets such as school buildings.

"That is not the choice that they have put in front of us, they have as far as I'm aware not put that up as an option or as a justification. So we need to through that out with the water."

He says it's a risky option and there's a better option for mum and dad investors.

"Why not just sell them a debt instrument? Term deposits, there's a hundred billion dollars of term deposits that our Mum and Pop investors have in trading banks in New Zealand, why not get some of them to lend directly to Government, at a competitive interest rate."

Meanwhile a Wellington City Councillor thinks the Government's lead on asset sales is a foolish one to be following.

The Government's signalled councils should be looking at selling shares in publicly owned assets to keep costs down.

But councillor Iona Pannett says it's important the council holds onto assets, because they deliver much to the community.

"The other problem is the sale of our share of the airport probably wouldn't find much of a buyer except for Infratil, and I certainly don't agree with selling at a lower price than we really should be getting."

Iona Pannett says they're also not likely to get much bang for their buck selling a lot of their asset portfolio, which is mainly made up of roads and parks.

Auckland's Mayor is echoing Ms Pannett's calls, by reiterating Auckland's port and airport shares are not for sale.

Len Brown admits one of Auckland's biggest pressures is costs arising from the super city amalgamation, but he says core assets that generations of Aucklanders have invested in will not be sold, especially as they bring in tens of millions of dollars a year.

However he says the Council is considering selling non-strategic assets such as property, which could bring in as much as $400 million dollars.

Photo: Auckland's waterfront (Edward Swift)