Chapter 1: How is New Zealand's economy impacted by rising debt?
Every day that passes our debt is getting bigger and it's hurting. A second international credit rating agency has downgraded its outlook for the New Zealand economy. Moody's is reaffirming New Zealand's AAA credit rating but is changing its outlook from stable to negative.
Moody's says persistent inflation pressures, weaker growth and higher debt servicing costs are adding pressure to the fiscal outlook.
Ratings downgrades mean the country has to pay more to borrow money. But our roads and water pipes are crying out to be fixed.
Chapter 2: What are the implications of credit rating downgrades for New Zealand?
New schools and hospitals need to be built. If we don't borrow more, where does the money come from?
We've got Panu or Landcorp, there's over 100 farms.
I don't know why the government doesn't have a golden share for Air New Zealand and we don't flog it off to Singapore. Quotable value, parts of the MET service.
Does the government put hundreds of millions of dollars into a bank, or does it put that money elsewhere?
Yep, asset sales are shaping up to be an election battle. But hang on, haven't we been burnt before? Former Labour Minister Phil Goff remembers that.
We sold New Zealand Rail. They ran it down, they asset stripped it, and then they abandoned it. And we had to buy it back, and we're still recovering from that experience.
I'm Sharon Brett-Kelly.
Today on The Detail... Doing nothing, like, you know, seems to be where we're at at the moment. It means higher debt and fewer choices.
Investment specialist Greg Smith tells us why we have to stop kicking the can down the road on asset sales. We look at the no-goes and what's top of his list. First, though, Janae Tibtrani is New Zealand Herald's Wellington business editor.
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Chapter 3: Why are asset sales becoming a focal point in the election?
And that's where it gets political. But, you know, as I said before, an asset can be a liability. If it's costing you too much, you do need to think about moving that on. So I think the Treasury is acutely aware of this and has asked different parts of government to write sort of statements saying, well, what is the point of the state owning this asset?
Just making the case for does the state need to own that asset or is it actually better selling it and perhaps redeploying that capital elsewhere.
Chapter 4: What historical asset sales have shaped public opinion in New Zealand?
I think it's a very prudent question to ask. The question is, which assets? I'll talk about my car again. Having a car might actually be a liability. By the time you look at all the expenses, how much do you actually use the car might not be financially worth it. But for your own security sake, you might want the car.
You know, I like to have the freedom to get in my car and go somewhere over a weekend. It's probably not a good financial decision, but that's what I like for my security or my lifestyle. The state might ask the same question. Do we want to own TVNZ or RNZ?
Do we think it's important to have some state-owned media that provides content that might not always be commercial, but that is good for our democracy, good for the public interest? It's a financial question, but also what's the outcome? What is the point of the state owning that? And Air New Zealand's probably another one as well. We're an island, and I think we really value owning an airline.
I don't think Kiwis would want to get rid of that. There are some that are no-go, and the electricity ones as well. A bunch of the smaller ones, Cordia or New Zealand Post, but that's an interesting one too. Not financially good, but people want postal services. And Kiwibank, I think that's the other hot one that has been discussed.
Having New Zealand's bank owned by New Zealand and working for New Zealand is critical to the offering, but why do you need 100%?
Kiwibank, why? Why isn't it good for us all to say Kiwibank is ours?
I think New Zealanders love to say that, but in recent times Kiwibank has needed more capital to grow. So we've got the big four, Australian banks, Australian-owned banks. Kiwibank's quite small in comparison, and for it to grow it needs more capital. Now, the government had decided that it would try to get some private sector capital to put into it to allow it to grow about $500 million.
So that would effectively dilute the government's ownership of KiwiBank. But it walked away from that arrangement, I think, because there was some trouble getting enough interest there. And because the Reserve Bank changed bank capital rules, which meant Kiwi Bank effectively has enough capital now to grow sustainably for now. But further down the track, the question will come up again.
Does the government put hundreds of millions of dollars into a bank? Or does it put that money elsewhere? And could Kiwibank still fulfil its purpose of being a disruptor bank, of being New Zealand owned, if the government owns, let's say, 50% of Kiwibank, not 100%? There's a fair question as to whether private sector capital would help it grow.
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Chapter 5: How does the government determine which assets to sell?
What that then could mean in terms of the management of the bank is that Is it much different? I'm not too sure. But you could say that arguably if you have to satisfy shareholders rather than just satisfy voters, that requires more scrutiny and that sort of holds you to a high standard. Because if you're not delivering for your shareholders, they're going to walk away.
So that does compel you to be razor sharp and arguably perform better.
Well, here's how Phil Goff argues it. The former Auckland mayor, Labour minister and ambassador puts his points on the podcast Cross Party Lines.
In London, I was in the Thames water area, where after privatisation, they paid really big dividends, but they never reinvested in ensuring that there was an adequate quality and supply of water. Air New Zealand was privatised and it went bust.
I'm not for ownership for the sake of ownership, but I think that you should own the things that are your strategic assets that occupy monopoly positions in the economy, like your power companies.
The pro-asset salespeople say we've moved on since the disastrous past sell-offs of the so-called family silver, and another phrase has emerged. It's touted as the fix for our infrastructure deficit.
Asset recycling. Asset recycling. Asset recycling. Asset recycling.
Is this just a rebranding just, you know, because it's a bit more palatable or is there actually any difference between asset recycling and asset sales?
Yes, I think those on the left or those opposed to asset sales might be concerned that a right-wing government would sell the assets and not buy anything new with that money. But what National is saying is that, yes, actually, we need to look at the assets we own. We might need to sell some. They haven't committed to anything.
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