John Key said this week that the government will sell some state assets after the next elections. He listed four energy companies: Solid Energy which is a coal company, and three electricity companies – Meridian Energy, Genesis and Mighty River Power. These are state assets because they belong to the government. The government may also sell some shares in Air New Zealand. At the moment, the government has 74% shares in this company.
John Key said that the government would keep a 51% share in all these companies. Other shares would be offered to New Zealanders.
The government has to borrow $300m a week from overseas. Selling some state assets would help reduce the government debt. The Labour Party said this would be a bad idea. People may have to pay more for electricity.
Selling state assets is not a popular idea in New Zealand. In the 1980s and 90s, the government sold many state assets which made a few people very rich but a lot of people lost their jobs. The government sold New Zealand rail in 1993 but bought it back again three years ago.Listen to May 10th 2008 for more about this.
However, if the government keeps control of the company, more people will be happy about selling 49% of the shares.
Questions
Do you think that electricity companies should be private companies or public companies?
What other public companies could become private?
Vocabulary
An asset is something valuable you own like your house or car. A state asset is something valuable the government (state) owns.
An asset can also be a good quality you have that helps you to be successful. For example, for a basketball player, height (being tall) is an asset.
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