Key backs down on funds denial
The Government has been forced to back down from denials it had earmarked $100 million from the proceeds of asset sales to help failed State-owned coalminer Solid Energy.
Early yesterday Prime Minister John Key said Labour spokesman for stateowned enterprises Clayton Cosgrove was ‘‘making it up’’ when he had pointed to Treasury papers showing the Government was planning to use $100m from the sale of Mighty River Power shares for ‘‘Solid Energy recovery facilities’’.
The Budget said it could be used for a secured or unsecured loan to Solid Energy or to buy its assets.
But Mr Key said: ‘‘If the Crown has to make a capital injection if that’s what it decides to do with Solid Energy to try and resuscitate it, then, yeah, it can go and do that. But it’s not going to come out of the mixed-ownership money’’ However, Finance Minister Bill English confirmed the Government had set aside a ‘‘facility’’ made up of $50m of appropri- ‘‘If the Crown has to make a capital injection . . . with Solid Energy to try and resuscitate it, then, yeah, it can go and do that. But it’s not going to come out of the mixed ownership money.’’ ated cash and another $50m contingency to help Solid Energy through its cashflow problems, though it was never used.
Mr Key later backed down, saying the allocation appeared to be ‘‘buried pretty deep’’ in the Budget documents.
‘‘I haven’t actually seen those myself, well I can’t recall them.’’
Mr Cosgrove said Mr Key had revealed ‘‘his true incompetence . . . with his bizarre denial that asset sale proceeds have been set aside to bail out Solid Energy, despite signing it off in Cabinet’’.
Mr English said Treasury, by booking the $100m against the cash from Mighty River Power, had taken ‘‘a conservative view’’ of the Cabinet decision that the money could be used to buy Solid Energy assets.
‘‘There was, and is, the possibility that the Government would put cash in other than as a secured loan.’’ Because the Government had decided it would not borrow to raise money for capital spending, the proceeds of the mixed ownership were the only source available, Mr English said.
Mr Key agreed the Cabinet decision ‘‘technically’’ allowed the cash to be used to help Solid Energy, but he insisted the Government had only ever contemplated a secured loan.