Why should taxpayers face the risk?

February 21, 2013

Solid Energy’s shareholding ministers, Finance Minister Bill English and Minister for State Owned Enterprises Tony Ryall confirm the Government has been advised that Solid Energy is in discussions with its banks.

“The Solid Energy board is working with Treasury, advisors and the banks with respect to further restructuring options, with the aim of returning the company to a sustainable financial position,” Mr English says.

“World coal prices have dropped significantly which has contributed to the deteriorating financial position that Solid Energy is in now.

“These discussions are required because the position of the state-owned enterprise has continued to deteriorate despite the restructuring that has already taken place,” Mr English says.

State-owned Enterprises Minister Tony Ryall says a number of factors have weighed against the company, in particular world coal prices dropping by 40%.

 “It is facing very serious financial challenges,” Mr Ryall says. Solid Energy’s debt stands at $389 million and its interim result, which is due shortly, will show additional losses.

“The new chair and board are focusing on a return to a core coal business which is viable at current world prices. The public is aware that there had already been restructuring at the company, but more may be required,” says Mr Ryall.  

“The Government appreciates this is a very unsettling time for employees and suppliers and the company’s wider stakeholders but it is a process which must be worked through carefully and properly,” the ministers say.

Opponents of government plans to sell  a minority shareholding in a few state assets talk about what will be lost.

They don’t talk about what will be gained nor do they talk about the risk that comes with running a business which includes loss of capital.

Why should taxpayers face this risk for something that isn’t core government business?


Word of the day

February 21, 2013

Confabulate – to chat, discuss, talk casually; fill in gaps in one’s memory with fabrications that one believes to be facts.


Rural round-up

February 21, 2013

Fish war on canals :

”Greedy” salmon anglers threatening to turn a salmon bonanza in the Waitaki hydro canals into a free-for-all are being accused of ignoring catch limits and using illegal methods to catch easy prey.

Following the release of 36,000 salmon smolt from the Mt Cook Alpine Salmon hatchery at Ohau 18 months ago, anglers have reported being able to hook a fish on every cast at some spots on the Tekapo and Ohau canals.

However, Central South Island Fish and Game field officer Graeme Hughes said the easy fishing had resulted in more people fishing illegally and ignoring the two-salmon quota. .  .

Tarras scheme reprieve - Rebecca Fox:

Potential irrigator Tarras Water Ltd has had a reprieve, but it has come with a stern warning from the Otago Regional Council.

The council voted 7-3 to overturn its own hearing panel’s recommendation not to amend the long-term plan to allow for investment in the irrigation scheme at a meeting in Dunedin yesterday. Instead, the ORC is proposing the amendment go ahead.

As the decision gives the council the option to invest in the scheme, a meeting will be held, possibly as early as next month, when councillors will make the decision whether to invest – with conditions attached – or not. . .

Cautious steps in goat milk expansion:

An Australasian goat milk company, CapriLac, is looking to expand “in a cautious way” in the Waikato.

Co-owner Rupert Soar said the family-owned company was advertising for goat farmers who were interested in selling their goat milk or leasing their operations to the company.

The company had received “quite a bit of interest”, and was following up leads, Soar said.

Farmers did not need to buy shares to get involved, as the company was not a co-operative. . .

Mining rights unlikely to affect farm sales – Terri Russell:

Solid Energy’s decision to sell farmland and keep mineral rights for mining would not turn away potential buyers, a Southland rural agent says.

About 1000 hectares of farmland near Mataura have been put on the market, and the mining giant plans to retain rights to lignite resources under the surface for about 30 years.

Last year, the company reviewed its land holdings after a drop in coal prices and a $40m loss for the year ending June 2012.

Southern Wide Real Estate director Philip Ryan said potential buyers would not be put-off if it were reserved for mining because about half of Southland had mineral rights. . .

A finalist but best still home – Gerald Piddock:

Doug and Jeannie Brown have made the final of the 2013 Glammies.

The North Otago farmers made the cut in the best of breed – traditional for one of his romney lambs grown on his farm at Maheno.

It was the third time they had entered the Golden Lamb Awards and the first time they have made the finals. This year four sheep were entered into the competition.

Their entry was one of 20 finalists which made the cut out of 180 entries from around the country. . . .

 

 

 

 

 


Thursday’s quiz

February 21, 2013

It’s your turn to set the questions again.

Anyone who poses one which stumps us all will an electronic bunch of gladioli.


Govt is doing something

February 21, 2013

The opposition keeps calling on the government to do something.

The announcement of a small improvement in the operating deficit before gains and losses in the last half of last year shows it is doing something and it’s doing it right.

It’s being very careful with public finances which is what it’s supposed to do.

. . . both Core Crown tax revenue and Core Crown revenue were slightly lower (0.1%) than forecast, but Core Crown expenses came in $273 million lower (0.8%) than expected, helping reduce the OBEGAL deficit by $158 million to $3.2 billion.

“These figures confirm that the Government’s determination to control its spending and get better value from taxpayers’ money is paying off,” Mr English says.

Careful and responsible stewardship doesn’t get headlines, but it does get results:

Todd McClay: What steps has the Government taken to manage its finances and get back to surplus?

Hon STEVEN JOYCE: The Government has put spending and revenue initiatives in place to balance the books. On the spending side, we have delivered two consecutive Budgets showing zero net new expenditure, while maintaining increases in health and education spending. We have launched the Better Public Services programme and reprioritised $4.4 billion over 4 years to ensure New Zealanders will see better results without new resources. On the revenue side, the Government has increased income while improving the fairness of the tax system by shutting down loopholes. These things include tightening the tax treatment of property, increasing GST, making it harder for people to avoid paying tax through trusts, and making resources available for the Inland Revenue Department to target tax avoidance.

All of which is far better than any alternatives being proposed.

Todd McClay: What alternative proposals has he seen for managing the Government’s finances?

Hon STEVEN JOYCE: I have seen any number of alternative proposals. These measures include putting a capital gains tax on every productive business and farm, encouraging tax avoidance by increasing the gap between the top personal income and company tax rates, discouraging all sorts of private investment in the New Zealand economy, printing money, and so on. That is the Greens-Labour prescription for the New Zealand economy.

And that is a prescription for economic woe not economic growth.


Many factors in manufacuring malaise

February 21, 2013

Reserve Bank Governor Graeme Wheeler says the decline in manufacturing is much more than an exchange rate story.

In a speech to the New Zealand Manufacturers and Exporters Association in Auckland, Graeme Wheeler said factors such as globalisation, outsourcing and international supply chains, along with competition of low cost producers and rising global demand for services meant that the relative importance of manufacturing had been declining in all but the poorest countries for the past 40 years. New Zealand was no exception.

Mr Wheeler acknowledged the New Zealand dollar was significantly overvalued in terms of economic fundamentals, and this was a headwind for some in the manufacturing sector. But he said there are no simple solutions available to the Reserve Bank.

“Some of the strength in our real exchange rate is due to global financial imbalances and the weakness of the US dollar in particular.”

Near-zero interest rates and quantitative easing by other central banks have pushed up currencies like the New Zealand dollar, and domestically, New Zealand’s poor savings record is also to blame. . .

There’s little we can do about globalisation, outsourcing and international supply chains, competition from low cost producers and rising global demand for services.

But improving our savings record is entirely in our own hands.

That probably won’t have much impact on manufacturing because it won’t counter all the other factors which are making it difficult, but it would be much better for us as individuals and for the economy.


Deciding

February 21, 2013

“How did you know you and Grandpa know you loved each other enough to get married?” she asked.

“It wasn’t so much knowing as deciding and once we decided it was up to both of us to make it work,” she said.


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