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Finance minister defends NZ partial privatization plans

(Xinhua)

14:28, February 23, 2012

WELLINGTON, Feb. 23 (Xinhua) -- New Zealand Finance Minister Bill English Thursday defended the government's plan for partial privatizations of state-owned assets, saying it is better than borrowing more from overseas lenders.

The government is being increasingly challenged on its proposals to sell up to 49 percent of four state-owned energy companies and to sell down its majority stake in Air New Zealand to just 51 percent.

In a published speech to a business meeting in Auckland, English said opponents needed to explain to New Zealanders why it would be better to borrow an extra 5 billion to 7 billion NZ dollars (4.14 billion to 5.79 billion U.S. dollars) from abroad.

"Taxpayers own 245 billion NZ dollars of assets, and this is forecast to grow to 267 billion NZ dollars over the next four years. So we are not reducing our assets. Our challenge is how we pay for their growth, while getting on top of our debt," said English.

He gave three reasons for the government's commitment to its " mixed ownership" model of partial privatizations.

"First, the government gets to free up 5 billion to 7 billion NZ dollars -- less than 3 percent of its total assets -- to invest in other public assets like modern schools and hospitals, without having to borrow in volatile overseas markets," he said.

"We would rather pay dividends to New Zealanders on shares they own in the energy companies than pay interest to overseas lenders on more borrowing.

"The fact is, the government is spending and borrowing more than it can afford into the future. So it makes sense to reorganize the government's assets and redeploy capital to priority areas without having to borrow more.

The second reason was that New Zealanders would be able to invest in big New Zealand companies and diversify their savings away from property and finance companies.

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