An Uncomfortable Question For Key
July 29th, 2009
Speculation in Christchurch media Meridian Energy is about to be privatised was well over the top and drew a denial from John Key, which was interesting if only for its swiftness and strength. He says “there is no privatisation agenda for Meridian, nor is there for any other SOE.” The company is undergoing a huge internal process to strip out costs, pet projects and prove it is a viable commercial proposition, with reports one in seven of its 700 employees’ jobs are at risk.
However, the question of privatisation is definitely back on the agenda. SOE’s are under the cold scrutiny of a business-friendly Govt which sees them making relatively poor returns on their very large capital assets. The only commitment given so far by National on privatisation is that there will be no asset sales in its first term of Govt. The first year of the term is approaching and thoughts will be turning already to positioning for the 2011 election.
The specificity of Key’s wording on the privatisation promise, let alone the recent rash of commentary from key politicians and Treasury Secretary John Whitehead on the desirability of private sector disciplines in the public sector, are a sure sign that the door is well and truly open to ways of injecting private equity into currently state-owned enterprises, if a National-led Govt is re-elected. In the meantime the Govt expects a big improvement in commercial performance and may be willing to consider quasi-equity and SOE bonds.
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