The Government ignored Frontier’s recommendation to divest, even though between 2012 and 2014 the partial sale of state-owned electricity companies under the mixed ownership model was a huge success. Efficiency, governance and financial discipline all improved. Management focused on core operations, earnings grew annually, and returns on assets rose. Politically motivated, high-risk projects were avoided.
New Zealand is drowning in government debt, currently more than $140,000 per household with interest costs alone costing just shy of the total budgets for Corrections, primary schools, and secondary schools combined. Without decisive action, deficits will spiral and debt will top 100% of GDP by the 2040s. Throw in another natural disaster or economic shock, and the country is in serious trouble.
Selling $16b of electricity shares wouldn’t just cut debt. It could fund hospitals, schools and infrastructure, choices the public want far more than saying they own a slice of some electricity companies.
Meanwhile, the energy sector itself faces problems that Crown ownership cannot fix: there simply isn’t enough gas to meet demand, and uncertainty over peaking generation remains. Holding shares does nothing to solve supply constraints.
Ownership for the sake of ownership is costly. The Crown sits on $570b in assets, yet taxpayers are worse off for it. Interest bills are higher than the dividends we earn. That’s not investment, that’s mismanagement.
Asking why and acting decisively is the essence of leadership. Nicola Willis had that moment to lead. She didn’t take it. When will our leaders finally grow the courage of a four-year-old and ask why?