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Keating wrong about privatisation



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Peter Reith

DEPUTY LEADER of the OPPOSITION PRESS RELEASE SHADOW TREASURER

- FTGHTBAOG SETTING THE RECORD STRAIGHT —

KEATING WRONG ABOUT PRIVATISATION

Prime Minister Keating's claims today about the Coalition's privatisation program are based on politics rather than market facts and figures.

Mr Keating asserted that the domestic equity market cannot cope with the Coalition's privatisation program for the 1993/94 and 1994/95 years. This is nonsense.

For example, according to official Australian Stock Exchange statistics, equity raisings on the Australian Stock Exchange actually reached as high as $20,678 million (in 1991 dollar terms) in 1987.

Further, Mr Keating’s own Treasury department has a contrary view to the Prime Minister. Mr Ewen Waterman, Deputy Secretary of the Commonwealth Treasury, said on 10 December 1992:

*... Experience suggests that in a good year the equity markets might absorb new public issues of between 5-7 per cent of market capitalisation or $10-14 billion.1 '

Further, ANZ McCaughan have indicated publicly that Australian equity markets should absorb equity raisings up to $15 billion annually:

'The capacity of the Australian equity markets should comfortably cope with cumulative equity raisings of around $12-15 billion per annum for investment proposals which are:

. attractively priced in the sound market conditions;

. fundamentally well structured; and following an effective communications, pre-float marketing and distribution strategy.'

(‘Future Ownership of Qantas1, ANZ McCaughan, January 1992)

Importantly, none of the figures take any account of the possibility of foreign participation in asset sales.

Conveniently, Mr Keating has overlooked the fact that the Government itself is selling a major share of Qantas to British Airways.

Mr Keating is simply talking through his hat.

Fightback! is fully funded even before taking into account the proceeds of asset sales and the only funding benefit achieved by bringing forward the sale of Telecom is some public debt interest savings from the retirement of public debt.

18 December 1992 Canberra COMMONWEALTH

PARLIAMENTARY LIBRARY MICAH

Contact: David Turnbull (06) 2774277 D219/92