Mixed ownership builds investment
The collapse of many finance companies around 2008 was a tough period for many local investors, some of whom lost a lot of money.
A high proportion of people in Kapiti and Horowhenua are of retirement age, or getting close to it. It’s important that people have a solid range of options to invest their savings in and set themselves up to enjoy retirement.
This is one of the reasons why the Government is extending the mixed-ownership model for Air New Zealand and four power companies. We want New Zealanders to be able to buy a direct stake in these companies, earning dividends and saving for the future.
We’ve seen in the past that too many people have relied purely on housing or dodgy finance companies, which hasn’t ended well.
Previously, Labour created (in effect) the mixed-ownership model with Air New Zealand, where the Government owns 75% of the company and private shareholders owning the remaining 25%.
This model has worked well - the company has been very innovative and has twice won Airline of the Year awards, and has expanded into new markets like Paraparaumu.
Now we want to extend this model to four power companies: Mighty River Power, Meridian, Genesis, and Solid Energy.
The Government will still own the majority of these companies (at least 51%) and we expect that New Zealanders will end up owning at least 85 to 90 per cent of these companies.
We expect it will be very popular with investors. New Zealanders already have about $100 billion sitting in term deposits, and there are tens of billions of dollars invested by KiwiSaver providers, the NZ Super Fund, ACC, the Government Superannuation Fund, and iwi.
The biggest advantage is that it frees up between $5 billion and $7 billion to invest in new assets, like schools and hospitals. Otherwise this is money we would have to borrow from overseas, and we’ve seen in Europe that debt levels have created great anxiety.
The mixed-ownership model gives people a chance to invest in the future of this country, and means less debt and borrowing in the long term.