Wellington, Aug 6 NZPA - Some big ideas are being tossed around by a taskforce to develop New Zealand's capital markets, including ways of getting government assets to market while retaining local ownership.

Capital Market Development Taskforce chairman Rob Cameron is not giving away details and it is clear that many of the ideas are in the early stages and the subject of work by advisers.

Mr Cameron's firm Cameron Partners is involved in one stream of research to look at developing a local authority debt market, with an institutional conduit, or bank, behind it to effectively securitise or create financial products.

There are several models around the world being looked at and issues include whether a government guarantee is needed and whether the institution should be a co-operative or profit-making.

"This could be a huge," Mr Cameron said.

Effectively the conduit, or bank, would make loans to a local authority of one maturity and package them into different financial products investors could invest in.

A lot of thinking is also going into how the Government's increasing borrowing requirement can be harnessed to build the debt market, particularly with retail products.

This involves a close look at the role of government and the issue of whether it should be an innovator in capital markets.

The taskforce's progress report, released earlier this week, said New Zealand's capital markets are not functioning as well as they could.

The debt market has short maturities and is dominated by banks.

The equity market has stagnated compared to Australia not because it lost companies but because it had comparatively few "births". The private equity market is undeveloped.

Mr Cameron sees movement on the issue of co-operatives coming to capital markets in New Zealand, but said investors did not have access to many good quality investments in utilities, infrastructure and agriculture.

"The issue is can we think of models where the government can have options to list the equity of their commercial businesses.

"We think there are models that might enhance the idea of New Zealand control and ownership but still let them list and offer investors the opportunity to participate," he said.

Research is also going into a major overhaul of the clearing and settlement system for capital markets in New Zealand and something on this could be available in the next two to three months.

Another area of research should surface in a month on how New Zealand can develop as a financial services centre.

The thinking is that businesses in other countries could outsource or offshore financial services tasks, like fund administration, to New Zealand.

"We are relatively low cost. We have a very high integrity environment, which is particularly important," he said.

The taskforce's progress report notes that of the companies listed in New Zealand Management Magazine's top 200, 116 are majority foreign-controlled and of those only 14 are listed.

In contrast, the top 200 includes 50 New Zealand owned companies and of these 40 are listed on the NZX.

Mr Cameron, who worked at Treasury during the period of privatisation of state assets, said New Zealand had to be prepared to buy back companies.

"In crises big multi-nationals begin to think about what they need to own. What we need to do is be ready for when these people spin them off to find homes for them in New Zealand," he said.

NZPA