Close

Budget 2012: SOE sale takings earmarked for new infrastructure fund

The government plans to establish a new Future Investment Fund with the proceeds from SOE asset sales, which is expected to amount to $5-7 billion.

The government plans to establish a new Future Investment Fund with the proceeds from SOE asset sales, which is expected to amount to $5-7 billion.

The proceeds from partial floats of electricity companies Mighty River Power, Meridian and Genesis, coal miners Solid Energy, and the government’s stake in Air New Zealand will be directed toward this fund.

The fund's first $558.8 million is earmarked as follows:

  •  $76.1 million for the creation of the Advanced Technology Institute
  • $88.1 million for the health sector, most of which will go towards hospital redevelopments.
  • The first $33.8 million of $1 billion ring-fenced for modernising schools as part of the 21st Century Schools programme
  • A further $250 million towards the KiwiRail Turnaround Plan

Deloitte energy and infrastructure leader Paul Callow said while the government’s case for the mixed ownership model has been handled poorly, the "proof of the pudding" would depend very much on what it did with the proceeds. 

The lack of detail given to date was a shame, as the fund had great potential, he said.

“Tagging the proceeds in this way doesn’t really fool anyone: money is money and the fact that the Government has just sold a stake in an SOE simply means it has more to spend or needs to borrow less,” he said.

“The important thing about the fund is the opportunity it presents to do something different and send a strong message about the government’s economic priorities and what it plans to do to achieve them.”