Hard News: Unwarranted risk
255 Responses
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It's not even a one-off gain. Selling something, as I think has been pointed out here, leaves your net accounts in the same position as they were before. Unless, of course, the price you get is depressed for some reason...
(See also Gordon Campbell today)
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Russell Brown, in reply to
It’s not even a one-off gain. Selling something, as I think has been pointed out here, leaves your net accounts in the same position as they were before.
Point. Can we call it a one-off cash gain?
Unless, of course, the price you get is depressed for some reason…
Oh look. Another risk.
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When you're a one trick pony government that has managed to get the economy into a death spiral, you have to take the money anywhere you can.
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Wow. Big Surprise. National urgently making decisions and passing policy with little to no long term plan. Not like them at all?
And a budget blowout to boot. What happened to all those carefully crafted spreadsheets people were all yuk yuk yuking over? All the trust the people put into his history as a money man?
Oh that's right. More cuts than an A&E on Friday night with the majority of the profits going to the wealthy tax dodgers equaled a much lower tax take.Right...
Please tell me at some point the people will stop grazing and look up long enough to get it???
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I guess it's a problem with having to be re-elected every three years. You have to make all of your financial decisions based on looking good in election year. So keep the cash flowing and ignore the long term consequences. I agree, though, that a so-called clever bastard in finance, like our John, should be able to see the drawbacks here. He has fallen in love with being PM.
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merc,
I think they have no mandate based on the fact they never really showed us the money. And like Joyce with TVNZ, the Treasury figures inflated, the projections guesswork (English).
Also, Fukushima http://en.wikipedia.org/wiki/Fukushima_Daiichi_nuclear_disaster
The Prime Minister wanted to be open, the company http://en.wikipedia.org/wiki/Tokyo_Electric_Power_Company didn't.
The PM was forced to resign.
If there is an incident, who will be liable, and to whom? -
If you want an example of how the electricity generators are being run against the public interest, look at this. Obviously, if we want to get to 100% renewables, we have to close Huntly units and then gas generators, replacing them by wind, water and geothermal.
Instead, designed and consented wind farms are being put on ice, Huntly is being kept going and they're even looking at new (cheap in the very short term) gas generation.
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And as for the "Mum and Dad" investors crap . . . most of the population is struggling to keep food on the table and the mortgage paid, and will not be chucking a few spare thousands at SOE shares. Those shares will go straight to the wealthy and overseas interests, i.e. National Party voters and supporters. Buying shares in SOEs must have been what John wanted me to save up for when I got my incredibly generous tax cuts over the last two years = $15/week (minus extra GST, increased ACC, higher rates, etc. etc.). Sorry, sounding too lefty and whiney.
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The reason for selling a profitable business is if you believe you can make more profit by investing the cash in some new venture. That's what the richest of the rich do, buy businesses that are undervalued, fix them up (lay off unproductive staff) and sell them. Then buy a new business that will earn them more money.
It's not complicated except in the details which are very complex, hence so few are successful.
But the Nats aren't investing in anything more profitable. In fact everyone that looks at the math says it's a bad idea for New Zealand from the dollars perspective. So what other perspective is there.
The answer is ideology. It is a tenet of faith that the government is less efficient that the private sector. Hence if the government can make a profit from Mighty River then if Mighty River were privately owned the profit would be bigger. However, that profit would no longer go to the government.
They might even be right that Mighty River could be more efficient and profitable in private hands. But that doesn't help New Zealand because instead of getting all the profit we now only get the tax on the profit.
It is possible to argue that making Mighty River more efficient would lower power costs to New Zealand which would improve the economy and hence benefit New Zealand. Sadly this experiment has been done elsewhere (notably in the USA) and demonstrated that rather than reducing energy costs private ownership increases energy costs. This however is not evidence based policy.
So as far as I can tell the sale of publicly owned assets is being done as an act of ideological faith. That it harms New Zealand is beside the point, the point is that it supports the ideology that private is always more efficient (and hence better) that public ownership.
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Tony Ryall claimed that “all successful companies” make commitments to social responsibility. So we'll see these oligarchic power companies holding prices down for kiwi Mum & Dad non-investors at the expense of their private owners. Yeah, right.
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"Trust us"???? I wouldn't even trust that shower of bozos to look after a goldfish.
And to think they intend to go through with this charade after admitting that the fiscal gain will be less than the value of the dividends if they were to stay as SOEs just beggars belief.
The opposition should be flaying them in the House over this, raising the issue to levels where everyone in NZ can see what a shower of wankers* are currenly running the show.
* My opinion & not necessarily the view of the blog host...
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As in the UK where the big power companies have massively increased profits over the last 10 years to the point where The Independent newspaper is running a campaign to try and overcome "energy poverty" for the increasing number of people in the UK who can't afford to heat their homes properly in winter.
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A thing I would like to see discussed more widely is how a partial sale makes it enormously harder for a more interventionist government to use assets as instruments of policy.
Right now, we have citizens who are too cold and can't afford to be warm, and we own both generation and delivery of power. Using our ownership to solve the problem would require structural change, but since we do own the whole thing, the obstacles are purely political. Once we have even a partial sale, then the corporate structure is embedded and issues of compensation for private owners make it vastly more difficult.
Sales are about limiting the power of the Left and cementing the corporate governance model as the only legitimate model to operate any enterprise.
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Sacha, in reply to
That it harms New Zealand is beside the point, the point is that it supports the ideology that private is always more efficient (and hence better) that public ownership.
Great summary
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Thirty years of watching politics in New Zealand has taught me many things…and near the top of the list is don’t trust National when they are getting what they want…and promising…somehow, probably, later…..to ’sort something out"….for you.
RED FLAG!
That’s how every scam works. They get theirs now…and later…it’s too late.
You’d think the Maori Party would be onto this after 160 years of it from every government….but apparently not.
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Sacha, in reply to
how a partial sale makes it enormously harder for a more interventionist government to use assets as instruments of policy
I've seen the Greens talking about the negative implications for greener energy policy.
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Sacha, in reply to
I think they have no mandate based on the fact they never really showed us the money.
It's the job of others to point out the lies. They failed to do so well enough last year and now we're reaping the rewards of their incompetence. Demand better.
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We may this aaaand we may say that...This is a simple simple exercise...
These utilities will be sold to interests that support this government that simply will be used to farm US
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Lucy Stewart, in reply to
Tony Ryall claimed that “all successful companies” make commitments to social responsibility. So we'll see these oligarchic power companies holding prices down for kiwi Mum & Dad non-investors at the expense of their private owners. Yeah, right.
Better question: what and who forces them to meet all these lovely socially responsible commitments? (I say "forces" because while individuals may have strong senses of social responsibility, history demonstrates that corporate bodies are all but incapable of it.)
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Rob Stowell, in reply to
I wouldn't even trust that shower of bozos to look after a goldfish.
It's gold, innit? what's that worth on the open market?
The opposition should be flaying them in the House
Mr Shearer is too polite. He's not a flayer, a slayer or a nay-sayer. He's not a frother or a ranter or a raver. He's not a rabble-rouser, a rubble-raker or a rhetoritician. So far, he's more-or-less a vacuum.
DPF must be soooo disappointed Labour avoided that polarising Cunliffe and opted for the affable Fleecer-of-sheep. </still disappointed with Labour, when will I learn :)> -
merc,
Key; You have a bridge and I feel compelled to sell it to you.
Is this what class warfare really looks like?
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pile of increments
Surely, the reverse? It’s not “cutesy” or “blithe”, it’s bullshitting, and deserves to be bluntly labelled as such.
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Sacha, in reply to
the opposition is broader than Labour. thankfully.
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@ stephen judd
'We' don't own generation and delivery of power; we own large bits of it but not all. We the taxpayer don't own any local lines.
But govt retains sovereignty. Not owning Telecom hasn't stopped it aggressively intervening in that market. We currently have high levels of intervention in electricity yet claims about people going cold. Maybe that ongoing intervention is creating more of a problem than it;s solving by distracting powercos from the basics?
Ownership might be a disincentive in effective social intervention because govt will always be counting the dollar impact on its businesses around rule changes.
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I'm curious about the use of the word "mandate." In the church I belong to after a number of closely contested decisions it was recognised 51% did not constitute a workable mandate because it meant that the "losers" then spent the next period of time lobbying to get their view uppermost. Now any matter voted on if it doesn't get more than 2/3 of the votes is left on the table as it were until a workable majority is achieved. It seems to me that a 48.5% total vote tally, even though the policy was well signalled, does not reach the threshold for a working majority on the issue and that the opposition parties will spend the next period of time working out how to undo the sell-out and change the legislation. Irrespective of my own perspective, that seems to be a waste of resources and will result in a messy legislative fight later on.
Building consensus is where the mandate will come from and I do not believe National is committed to that at all.
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