Good people

July 31, 2014

Yesterday I was in parliament’s public gallery for six valedictory speeches.

National MPs Shane Ardern, Phil Heatley, Paul Hutchison, Eric Roy and Tony Ryall, and Labour’s Ross Robertson delivered their reflections on their time in parliament.

All were very different but there was one similarity – all had come to parliament, motivated by their desire to serve their constituents and improve their country.

Politicians in general are often derided. Sometimes individuals deserve that derision.

But listening to all the speeches yesterday reminded me that most are good people and most do good work, some in smaller ways, others are able to achieve something bigger.

It also reminded me that there is a lot of common ground on ultimate goals. The divisions are often much less about where we’re going and far more about how to get there.


Tied up for Tony

July 30, 2014

Parliament will be especially colourful today.

The best Health Minister in recent times, Tony Ryall, is delivering his valedictory speech this afternoon and his National Party colleagues are getting all tied up in tribute to his sartorial splendour:

Photo: On the day of his Valedictory Speech, National MPs are emulating Tony Ryall's infamous shirt-and-tie combos in tribute to an exceptional career.


Rural round-up

July 20, 2014

Back agriculture back our Roads:

Federated Farmers welcomes the Government’s announcement to increase investment in our deteriorating rural roads, but has concerns at whether it will be enough.

“A proposed increase of 4.3 percent per annum for local road improvements, and a 2.4 percent increase for local road maintenance, is long overdue but it remains to be seen whether it is enough.” says Katie Milne, Federated Farmers Local Government Spokesperson.

“To date, the investment in our rural roads has not kept up with inflation and it is evident in each pot hole and/or goat track that farmers, families, school buses and contractors navigate everyday.

“We are pleased this is now being addressed but is it a sufficient recognition of the importance of roading to an economy reliant on primary production, and in turn it’s long rural roads? . . .

More places earmarked for rural medical students:

Health Minister Tony Ryall has today announced there will be an additional 34 medical places for students next year at our two medical schools, including more positions earmarked for rural students.

Mr Ryall made the announcement at Taumarunui Hospital, a busy rural health facility in the King Country with around 100 staff. 

“Research shows that students who grew up in rural areas, such as Taumarunui, are more likely to go back and work in those areas. These extra places will help encourage more doctors to work in our rural communities,” says Mr Ryall.

“Since 2009 this government has now funded 170 extra medical school places. . . .

New Zealand Seafood Industry Assures Australian Consumers that its Seafood is Sustainable:

The Australian Marine Conservation Society (AMCS) list of imported fish that it’s telling consumers to stay away from, sounds like an ‘underarm delivery’ to the New Zealand industry.

Seafood New Zealand’s Chairman George Clement says it seems that the AMCS is has just gone through a list of imported seafood to arbitrarily warn people against most of it.

“Species by species, as we go through them, we can see how misinformed the AMCS report is. They’ve provided no transparent criteria nor openness in their assessments. There’s no indication that they have actually challenged themselves to examine the facts when they’ve drawn up their list.” . . .

Seafood New Zealand welcomes community funding for seabird conservation work:

Seafood New Zealand today welcomed Conservation Minister Dr Nick Smith’s announcement that the Government will provide $300,000 of funding to two community groups to support their work in protecting some of New Zealand’s special seabirds.

The seafood industry is one of the founding partners in the Southern Seabird Solutions Trust which has received $100,000 towards a seabird smart recreational fishing initiative that aims to reduce the number of birds accidentally caught by recreational fishers in the upper North Island. . . .

From the last will and testament of a farmer c1986 – Gravedodger:

To my Wife,  my bank overdraft. Maybe she has an explanation for it.

To my Banker, I bequeath my soul, he has the mortgage on it anyway.

To my nearest and dearest neighbor, my clown suit, he claims he is going to carry on farming.

To The Rural Bank, my grain silo and my Fertilizer Bin, he has them as chattel security anyway.

To the local scrap metal dealer, every item of crap machinery I have gone to extraordinary lengths to keep from his possession. . . .

Otago woman named NZ’s top young amenity horticulturist:

New Zealand’s top young amenity horticulturist has been found after an intense day of competition at the Young Amenity Horticulturist of the Year event in Hamilton yesterday.

The annual competition is run by the New Zealand Recreation Association (NZRA) and serves as the qualifier for the prestigious Horticulturist of the Year competition, which will be hosted in Auckland in November.

Otago woman Sarah Fenwick emerged as the judge’s choice after planning, planting and potting her way to victory. The 30-year-old former vet nurse narrowly beat second place getter Josh van der Hulst, from Kamo, to take out the prize. . . .

Tax officials to work with bloodstock breeding industry:

Racing Minister Nathan Guy and Revenue Minister Todd McClay have confirmed that Inland Revenue officials will work with the New Zealand Thoroughbred Breeders’ Association on a number of tax issues raised by the industry.

The issues cover questions the NZTBA has over the application of tax rules for the industry and are expected to be dealt with as part of the normal consultative process between the private sector and tax officials.

“We are confident that the majority of the issues can be worked through, providing a positive result and greater certainty for what is an important industry to New Zealand,” Mr McClay says. . . .

Entries open for New Zealand’s largest A&P Show:

Show organisers for the 2014 Canterbury A&P Show are calling upon showing enthusiasts from throughout New Zealand to send in their entries and compete in the country’s largest Agricultural and Pastoral Show. For over 150 years, The Show has been attracting and showcasing New Zealand’s best animals and talented competitors. In addition to showing success, exhibitors will be competing for over $100,000 in prize money.

More than 3000 animals and close to 1000 competitors are expected to compete in 1700 classes including sections for horse and pony, beef and dairy cattle, sheep, alpaca, llama, wool, goat, dog trials, poultry, shearing and woolhandling, woodchopping and vintage machinery. Entries are also open for two of the feature competitions of The Show – the Mint Lamb Competition where New Zealand’s top lambs are put to a taste test, and the Young Auctioneers Competition where up-and-coming stock agents get to show off their skills. . . .


Valedictory roster

June 19, 2014

Parliament’s Business Committee has released the roster for valedictory speeches from retiring MPs:

Wednesday, 23 July 2014

(At the conclusion of the General Debate)

4.00pm – 4.15pm Dr Cam Calder

4.15pm – 4.30pm John Hayes

4.30pm – 4.45pm Chris Auchinvole

4.45pm – 5.00pm Colin King

5.00pm – 5.15pm Hon Chris Tremain

5.15pm – 5.30pm Hon Kate Wilkinson

Thursday, 24 July 2014

4.45pm – 5.00pm Dr Rajen Prasad

5.00pm – 5.15pm Darien Fenton

5.15pm – 5.30pm Hon Dr Pita Sharples

5.30pm – 5.45pm Hon Tariana Turia

Wednesday, 30 July 2014

(At the conclusion of the General Debate)

4.00pm – 4.15pm Dr Paul Hutchison

4.15pm – 4.30pm Hon Phil Heatley

4.30pm – 4.45pm Eric Roy

4.45pm – 5.00pm Shane Ardern

5.00pm – 5.15pm Hon Tau Henare

5.15pm – 5.30pm H V Ross Robertson

5.30pm – 5.45pm Hon Tony Ryall

The Herald opined that valedictories should be the preserve of “deserving” MPs:

No fewer than 14 National MPs are retiring at the coming election, plus a couple from other parties. While the turnover is refreshing for public life, it carries a cost if every departee gives a valedictory address. . . .

Few voters could name many of those retiring this year. Many are leaving because they have not been able to make much impact and accept that they should give others a chance. More credit to them, but valedictory time should be reserved for those who have made their mark and will be missed.

That is very ungracious and also shows a depressing level of ignorance about the role of MPs.

Most of the good work MPs do never makes the headlines, much of it can’t because it’s helping people over matters which must remain private.

Maiden speeches and valedictories are among the best speeches given.

All MPs deserve the opportunity to do one and in doing so show their work and parliament in a far better light than it’s normally portrayed.


Politics Daily

June 12, 2014

This is an attempt to replace Dr Bryce Edwards’ daily political round-up while he’s taking a break. I’m not pretending to be balanced. While I link to a range of news stories, the blogs I link to are usually from the centre to the bluer end of the political spectrum or the more reasonable or witty bits of the pink to red end. You’re welcome to leave links to other news and blogs in comments.

Election

Claire Trevatt @ NZ Herald – NZ Game of Thrones – does Cunliffe dare to play?

David Farrar @ Kiwiblog - Caucus can safely roll Cunliffe from next week

John Armstrong, Adam Bennett & Isaac Davison @ NZ Herald – Election 2014: Parties ready but are you?

CameronSlater @ Whale Oil – The magic “Seven reasons” that will drive this election

Pattrick Smellie @ Stuff – Early date a savvy move from PM

Vernon Small @ Stuff - Curious case of deal with Craig

David Farrar # Kiwiblog – National’s potential election deals

Cameron Slater @ Whale Oil – Paranoid Winston Peters dumps candidate?

Nookin @ Keeping Stock – A guest post on a new Labour policy

Pete George  @ YourNZ – Civilian Party and United Future announce campaign deal

Beehive

Chris Finlayson - Agreement in Principle signed with the iwi and hapū of Te Wairoa

Chris Finlayson – Screen NZ formed to boost NZ’s profile on world stage

Todd McLay – Intergovernmental FATCA agreement signed

Tony Ryall – Health Minister opens $67m Whakatane Hospital

Steven Joyce – International education numbers set to grow

Gerry Brownlee - Performing arts precinct off to an exciting start

Hekia Parata – Pegasus School opens

OCR

Brian Fellow @ NZ Herald – Wheeler yanks the leash

Tony Field @ TV3 – OCR rise good for savers

David Farrar @ Kiwiblog – OCR goes to 3.25%

Crime

Rachel Smalley – Labour politicising a terrible tragedy

Inventory 2 @ Keeping Stock – Smalley tears into Labour

David Farrar @ Kiwiblog – Violent crime

Education

Inventory 2 @ Why don’t they mention the PPTA?

David Farrar @ Kiwiblog – Labour against paying the top teachers more

Other

David Farrar @ Kiwiblog – Misrepresenting the current abortion law

Cameron SLater @ Whale Oil – David Cunliffe upsets Chief District Court Judge

David Farrar @ Kiwiblog –

Cameron Slater @ Whale Oil – Fine tuning immigration to drop Auckland House prices? Reserve Bank says yeah… Nah

Pete George @ YourNZ – Labour vs Reserve Bank on immigration

Cameron Slater @ Whale Oil – Trevor Mallard continues to show that for Labour, facts are optional

Matthew Beveridge – Compare and Contrast: Chris Tremain and Todd Barclay


Politics Daily

June 9, 2014

This is an attempt to replace Dr Bryce Edwards’ daily political round-up while he’s taking a break.

I’m not pretending to be balanced.

While I link to a range of news stories, the blogs I link to are usually from the centre to the bluer end of the political spectrum or the more reasonable or witty bits of the pink to red end.

You’re welcome to leave links to other news and blogs in comments.

Electoral Act breaches

Inventory 2 @ Keeping Stock – Some thoughts on Electoral Act breaches

Cameron Slater @ Whale Oil – Why won’t the Police act with complaints from the Electoral Commission?

Cameron Slater @ Whale Oil – Andrew Little just drew a great big target on the backs of his Labour pals

Beehive

Steven Joyce, Tony Ryall – $78m in health research funding announced

Murray McCully – NZ support for new Pacific eye care centre

Tim Groser – Address to business chambers event – Philippines

Act

Dan Satherley @ TV3 – ACT ‘determined to play straight’ – Whyte

Pete George @ Your NZ – Different impressions of Jamie Whyte

John Banks

TV3 – Sympathy for Banks despite differences

Rob Hosking @ NBR Banks’ departure will clear the air

Michael Fox and Hamish Rutherford @ Stuff –  John Banks’ votes would’ve been rejected

Audrey Young – Conviction delay blindsided Act MP

Tracy Watkins @ Stuff – Banks departure a less messy solution

Danyl Mclauchlan @ Dim Post – Silly Laws

TV3 – IPCA considers John Banks inquiry

Labour

Gerry Brownlee – A lawyer’s field day at the taxpayers’ expense

Insurance Council of NZ – Earthquake Court approach misguided

David Farrar @ Kiwiblog – Labour’s insurance court

Pete George @ Your NZ - Labour soul searching

No right Turn - A paucity of vision

Cameron Slater @ Whale Oil – Labour has lost their lost their raison d’etre

Inventory 2 @ Keeping Stock - Comment of the Day – 9 June 2014

IMP

Pete George @ Your NZ – Dotcom and citizenship

Russel Brown @ Public Address - Meanwhile back at the polls

Green Party

David Farrar @ Kiwiblog – The Greens want 3D printing for NZ

Cameron Slater @ Whale Oil – Green Taliban’s “3D blueprint” for the future nothing but hype

Other

Education

Hekia Parata – Teachers take role in leadership plan

Inventory 2 @ Keeping Stock – Parata on the IES programme

David Farrar @ Kiwiblog - The “Tea Party” left

Matthew Beveridge - Leaving on a jet plane 2

Matthew Beveridge - A blast from the past

Stacey Kirk @ Stuff –  Civilian Party ‘a joke on taxpayers’

Eric Crampton @ Offsetting Behaviour – Value for Money election broadcasting edition

David Farrar @ Kiwiblog - Joyce rated more valuable than Cunliffe

Cameron Slater @ Whale Oil – Why readers are turned off by main stream media and voting with their dollars


Growing for good

May 5, 2014

The message from the opposition’s policies and their attacks on the government is that at best economic growth isn’t important and at worst there’s something wrong with it.

New Zealand National Party's photo.

They don’t seem to be able to join the dots between economic growth and the provision of services which depend on it.

Economic growth is growing for good health like this, for example:

The Government has today announced free drop-in sore-throat clinics will be expanded to target a further 90,000 children and young people who are at risk of getting rheumatic fever.

“Budget 2014 will invest an extra $20 million over the next four years to combat New Zealand’s high rate of rheumatic fever – bringing the Government’s total investment to more than $65.3 million over six years,” Health Minister Tony Ryall says.

“Excellent work is already going on across the country. Expanding a number of these initiatives will help reach more families whose children are at risk of developing this serious illness.

“The free drop-in sore-throat clinics will be rolled out in the Northland, Waikato, Lakes, Bay of Plenty, Tairawhiti, Hawke’s Bay and Hutt Valley District Health Boards (DHBs).

“When the free clinics open later this year, over 200,000 children and young people in high-risk areas will have access to prompt care and treatment for sore throats.”

Mrs Turia says the Government will also expand healthy homes initiatives in the Northland, Waikato, Lakes, Bay of Plenty, Tairawhiti, Hawke’s Bay, Capital & Coast and Hutt Valley DHBs. 

“These initiatives help families to address housing conditions, particularly for those families living in crowded homes, a contributing factor for rheumatic fever,” she says.

“And an extra $5 million is being invested to raise awareness of the disease, including TV and radio campaigns and information resources. The increasing profile of rheumatic fever is raising awareness with families and health professionals, and as a result more cases of rheumatic fever are being identified and treated.

“As part of the Better Public Services focus, the Government has a target to reduce the incidence of rheumatic fever by two-thirds by June 2017. This additional funding will help us achieve this goal,” Mrs Turia says.

Addressing rheumatic fever is a recommendation from the Ministerial Committee on Poverty which was negotiated in the relationship accord between the Maori Party and the Government.

Budget 2014: National's commitment to combating rheumatic fever will give another 90,000 kids access to free sore-throat clinics - http://bit.ly/1rI1oCt


Seeking interest in social bond pilots

April 14, 2014

The Ministry of Health is seeking groups interested in social bond pilots:

A new and innovative alternative to the way social services are delivered has come a step closer, Minister of Finance Bill English and Health Minister Tony Ryall say.

The Government last year agreed to a social bonds pilot and people are now able to register their interest in becoming an intermediary in the pilot programme.

An intermediary is a person or group who brings investors and service providers together. The intermediary uses their skills in project management and finance to raise funds and drive performance to achieve agreed outcomes. 

“The Government does not have all the answers to our communities’ problems and social bonds are one new way to involve investors and private or not-for-profit organisations in improving social outcomes, while achieving value for taxpayers,” Mr English says. 

Mr Ryall says social bonds give service providers greater freedom and flexibility to use private capital and expertise to deliver services to their communities – with the Government paying a return depending on achievement of agreed outcomes.

“This shifts risk from the taxpayer and provides an incentive for our investment community to use its expertise for generating results in the social sector,” Mr Ryall says.

Social bonds trials are underway in the United Kingdom, United States, and Australia where examples of their use include targets of reducing reoffending, increasing employment, improving outcomes for children in care, and improving management of chronic health conditions.

In New Zealand, service providers have submitted their ideas and a shortlist is being compiled by the Ministry of Health, which is leading cross-agency work on the pilot.

“We’re still in the early stages here but progress from the overseas pilots is encouraging,” says Mr Ryall.

“We see potential for social bonds to deliver better results and attract investment to preventative services and we think the time is right to pilot this model here.”

Mr English says there is a strong alignment between the social bonds model and many of the other initiatives being put in place across government like Better Public Services where the focus is on achieving results for the investment New Zealanders make in public services through their taxes.

“If successful, the social bonds pilot might attract investment and offer lessons that could be used for contracting in future, including further social bonds,” Mr English says.

How refreshing, and encouraging, to have a government which admits it doesn’t have all the answers and is willing to try a different approach to solve problems.

Rewarding achievement puts the risk with the provider while giving them a strong incentive to succeed.

This isn’t just throwing money at problems, it’s aimed at getting solutions.

More information of Social Bond Pilots is here.


Meanwhile what matters

March 5, 2014

While the sideshows are going on, the government is focussed on what matters – and getting results:

Under National, New Zealanders are getting faster emergency treatment when they need it: www.national.org.nz/Article.aspx?articleId=43177

 

Under National, New Zealanders are getting faster emergency treatment when they need it: 

Public hospitals are delivering emergency department treatment faster than ever before, according to the latest quarterly health target results released today.

“In the last quarter, 94 per cent of patients across New Zealand were either admitted, discharged, or transferred from an emergency department within six hours of arriving. This is up almost 2 per cent on the previous quarter and close to the national target of 95 per cent,” says Heath Minister Tony Ryall.

“This is the highest result since targets began, meaning that public health services are providing New Zealanders with emergency healthcare faster than ever before.

“Among the DHBs, Waikato and Capital and Coast stood out as the biggest improvers – up 6.9 per cent and 6.2 per cent on the last quarter, respectively. MidCentral also made significant progress – up 4.9 per cent on the last quarter,” says Mr Ryall.

The update also shows that four health targets have been met with:

  • DHBs delivering 79,785 elective surgery discharges in the year to date – 3554 more than planned;
  • 91 per cent of eight-month-olds fully immunised;
  • all cancer patients who were ready-for-treatment waiting less than four weeks for radiotherapy or chemotherapy;
  • and 95 per cent of patients who smoke offered support to quit when seen by a health practitioner in a public hospital.

“There will always be room for improvement across some targets, but overall, Kiwis can have confidence in continued progress across a range of key health targets from their public health services,” says Mr Ryall.

The government had the courage and belief in itself to set these targets and was willing to be measured against them.

 


Tony Ryall not seeking re-election

February 27, 2014

Health and States Services Minister  Tony Ryall has announced he won’t be seeking re-election.

“I am looking forward to being part of New Zealand’s dynamic future in the private sector,” Mr Ryall says.

Mr Ryall has been in Parliament for 24 years, as a young back bencher, an opposition spokesman and a Minister of six portfolios.

“This is the right year for me to leave politics, and I’m up for the next challenge. The Government is doing very well and the National Party is in great heart.

“It has been a huge privilege representing the Bay of Plenty since 1990 and having a senior role in John Key’s high-achieving government. I’ve greatly enjoyed being in Parliament.”

As Minister of Health since the National Government took office in 2008, Mr Ryall has overseen significant change and improvement in services.

“Our health services have been transformed with a great effort by clinicians and motivated teams across the sector.

“In 2008, the health system was on track to financial ruin but we’ve turned that around. My more business-like approach has provided more services and better care for patients within a tight budgetary environment.

“I am particularly proud of achieving record elective surgery, faster cancer treatment, and more effective preventive healthcare for New Zealanders.

“Many people underestimate the importance of the health sector in New Zealand which amounts to one-tenth of the economy. There are some 70,000 people employed directly in the public health service alone.

“And we have a very vibrant private sector too, with innovative and successful New Zealand companies like Fisher & Paykel Healthcare. There’s a wide group of NZ Health IT and medical device manufacturers whose innovation and expertise is developing technologies for here and abroad.

“As State Owned Enterprises Minister, it’s been a pleasure working with Bill English to oversee the government share offer programme.

“This has deepened New Zealand’s capital markets and to date has generated almost $4 billion to help control debt.

“Externally, the mixed ownership model has forced increased scrutiny and debate on the performance of these companies, the service they provide their customers, and of their value to New Zealand.

“Across the wider SOE portfolio I’ve introduced an on-going series of strategic reviews. These enable the Crown and the board of an entity to consider the longer term strategy and future direction of each business. This has already led to significant improvements and will generate further benefits over time.

“As State Services Minister I was pleased to introduce the performance improvement framework for departments and the cap on public service staff numbers.

“I have discussed my decision with Mr Key and Deputy Prime Minister Bill English, who were both disappointed but supportive.

“There is still a lot of work to do in both my portfolios and I appreciate the Prime Minister allowing me to continue my work in Cabinet until the next election.

“I also want to thank all the good people who have voted for me over the years, and in particular the great team who have worked so hard for me in my National Party organisation.”

Reporter’s notes:
Tony Ryall entered Parliament as MP for East Cape in 1990 at age 26.
Between 1997 and 1999 Mr Ryall was at times Minister for State-Owned Enterprises, Minister of Local Government, Minister of Youth Affairs, and Minister of Justice.
During the National Party’s time in Opposition, he was Law and Order Spokesman (1999–2005), Commerce Spokesman (2002 – 2003) and Health Spokesman (2005–2008).

Since 2008 Mr Ryall has served as Minister of Health and again as Minister for State Owned Enterprises (2011 – ). He was Minister of State Services 2008 – 2011.
His majority in the Bay of Plenty electorate is 17,760.

Health is one of the most important and demanding portfolios and the Minister has accomplished a lot of work in improving services and getting better value for money.

His will be big shoes to fill in Cabinet, caucus and his electorate.

He is the 14th National MP to stand down which is enabling refreshment in caucus in stark contrast to Labour.


Govt selling down Air NZ shares

November 18, 2013

Speculation that the government was going to sell down some of its shareholding in Air New Zealand soon was confirmed yesterday.

The Government has today started the process to sell 20 per cent of Air New Zealand shares, Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall say.

“A sale of shares to New Zealand brokers and to New Zealand and some offshore institutions will commence tomorrow, Monday 18 November, via a bookbuild process,” Mr English says. “We expect the transaction to be completed by Tuesday evening.

“New Zealanders will be at the front of the queue for shares and we are confident we will achieve the Government’s objective of at least 85 per cent New Zealand ownership.

“Air New Zealand is different from the other companies in the Government share offers programme in that it is already listed on the New Zealand and Australian sharemarkets. This means a different process will be used to reduce the Government’s shareholding.

“The Treasury sought proposals from its panel of financial advisers to carry out an off-market sell down via a bookbuild.  Craigs Investment Partners, together with Deutsche Bank and Goldman Sachs, have been appointed to undertake the transaction and work with New Zealand sharebrokers in particular to target widespread New Zealand ownership.

“Shares will be sold via a competitive bookbuild process to New Zealand sharebrokers for on-sale to New Zealanders, and to New Zealand and some overseas institutional investors.

“Shareholding sell downs of this type are typically conducted off-market when the company’s shares are not trading on a stock exchange, to ensure the company’s share price is not affected by speculative trading,” Mr English says.

“An off-market sell down is fast and efficient, which is important when working with a company that is already listed.

“Usually these types of sales are completed in less than one day. However, to target widespread New Zealand ownership, we are conducting the bookbuild over Monday and Tuesday to give New Zealand sharebrokers time to discuss the offer with retail investors.

“That is why the sell down process is being started today and we anticipate there will be a trading halt of Air New Zealand shares on the NZX and ASX when the markets open tomorrow.

“We expect Air New Zealand’s shares to resume trading on the NZX and ASX on Wednesday,” Mr English says.

Mr Ryall says Air New Zealand is currently trading at five-year highs, making it an opportune time to conduct the sell down.

“Air New Zealand is one of our most iconic global brands and has regularly been recognised on the world stage as a leading international airline. Its share price has been performing strongly.

“New Zealanders interested in purchasing Air New Zealand shares should talk to a sharebroker or authorised financial adviser.

“The Crown currently owns 73 per cent of Air New Zealand. Therefore, the sale of 20 per cent of Air New Zealand shares will leave the Government with a shareholding of around 53 per cent of the airline.

“There have been several successful similar off-market sell downs in recent times, involving other existing NZX listed companies such as Auckland Airport, Trade Me, Summerset and Sky TV.

“This sale approach will keep down transaction costs for taxpayers, maximising the proceeds that we can invest in other public assets like hospitals and schools.

“The Government’s share offer programme has raised $3.6 billion from the first two share offers.

“The proceeds of the programme have been allocated to the Future Investment Fund so the money can be reinvested in new assets and new infrastructure without the need to borrow money from overseas lenders,” Mr Ryall says.

Air New Zealand was listed with other SOEs National said it would partially float if it won the last election.

The sale of a few shares is simple because the company is already listed on the share market.

Ministers have been asked about the possible sale recently. They couldn’t confirm it before the announcement without breaching stock exchange rules.

The decision is already being criticised because the sell-down will take place before the upcoming referendum on the partial sale of a few state assets.

That criticism is just political posturing.

National was explicit about its intention to partially float some SOEs and the Opposition said the election would be a referendum on the issue.

They lost and the referendum is nothing but an expensive publicity exercise for them.

There’s no need to wait for the results. They’re non-binding and the government has made it quite clear it will ignore them, as it has the right to do.


Closing immunisation gap

November 15, 2013

Good news on the immunisation front:

There has been an unprecedented increase in the Maori immunisation rates over the past four years.

Immunisation rates for Maori children have improved so much in the past four years that the Maori rates are now equal to or better than the New Zealand European rate in more than half of the country’s district health boards (DHBs).

Two-year-old Maori children have higher immunisation rates than New Zealand European children in Bay of Plenty, Hawkes Bay, Lakes, Northland, Tairawhiti, Wairarapa, Waitemata and West Coast DHBs. And equal rates in Canterbury, Hutt Valley, Southern and Taranaki DHBs.

Health Minister Tony Ryall says results for Pacific communities are even better.

“Immunisation rates for Pacific children are equal to or better than the New Zealand European children in 17 DHBs. Even more impressive, in eight of these DHBs every single Pacific child was fully immunised at two years of age,” says Mr Ryall.

End of financial year data from the Ministry of Health shows 90 per cent of Maori children and 95 per cent of Pacific children were fully immunised by their second birthday.

In 2007, only 59 per cent of Maori children and 63 per cent of Pacific children were fully immunised – this equates to a 50 per cent improvement.

“This is a tremendous result and a tribute to the hard work of general practice teams, Well Child providers, community outreach teams, midwives, district health board staff and the national immunisation programme team.

“For the past four years these immunisation teams have taken our country from having one of the lowest immunisation rates in the world to having one of the highest. They have also removed the significant difference in rates between different groups that we had in the past,” says Mr Ryall.

Over at Sic Sci Blogs Helen Petousis Harris writes:

. . . This is bloody amazing and we should feel really proud. Most health care services have equity gaps and we have shown in immunisation that these are not inevitable but can be overcome. . . .

In the mid-90s the NZ government decided to solve the problem and over the next decade or so lots of talking and reports and strategies happened. Coverage slowly started to improve thanks to increased awareness of the problem, a united belief that we can and will fix it, champions of the cause at the national, regional and local levels, and improved reporting so that providers had a better idea of their performance. But the real game changers came when firstly, immunisation coverage was placed on a list of health priorities and then targets were set.  Alongside this the institution of the National Immunisation Register in 2005 was the essential tool required to monitor progress and find the children missing out.  Immunisation coverage rates have tracked rapidly upward ever since for a whole range of reasons: overall a priority focus at all levels, working together, improving organisational performance, feedback loops and teamwork. Amazing how that motivates people!!  In particular real credit must go to general practice where the bulk of the service delivery occurs, and to the unsung heroes – the practice nurses – for all the commitment and hard work!

This needs repeating: But the real game changers came when firstly, immunisation coverage was placed on a list of health priorities and then targets were set.

That’s not rocket science but it’s made a significant improvement.

This is  is good not just for those immunised but those who can’t be.

Herd immunity requires most people to be immunised and the higher immunisation rates are the smaller the risk of disease outbreaks.

On a related note, the count-down was on for the eradication of polio internationally but now there’s been an outbreak in Syria:

At least 22 people – most of them babies and toddlers – are now believed to have contracted polio in Syria, the World Health Organization has reported.

If confirmed, it would be the first outbreak of the disease there in 14 years. Syria’s Health Ministry began an immunisation drive on Thursday.

Before Syria’s civil war began in 2011, some 95% of children were vaccinated against the disease.

Now, Unicef estimates 500,000 children have not been immunised. . .

Polio has been largely eradicated in developed countries but remains endemic in Nigeria, Pakistan and Afghanistan.

Worldwide, polio cases have fallen from an estimated 350,000 at the start of a WHO-led immunisation campaign in 1988 to just 223 reported cases last year.

There is no known cure, though a series of vaccinations can confer immunity. Young children are particularly susceptible to paralytic polio, the most serious form of the disease.

Rotary International is working to eradicate polio.


Banks will be more cautious with SOEs after Solid Energy bail out

October 2, 2013

The government and banks have agreed to a proposal to financially restructure Solid Energy Finance Minister Bill English and Minister for State Owned Enterprises Tony Ryall announced.

“As we have said previously, ministers were not prepared to expose taxpayers to on-going losses if Solid Energy’s core business was not considered viable,” Mr English says.

“However, we also said that we were prepared to provide support for the company if there was a reasonable chance it could be made viable, and we expected the lenders to also contribute to that recovery,” he says.

Mr Ryall says that although the company still has a lot of work to do, and market conditions remain challenging, the point has now been reached where a financial restructuring proposal can be formalised with Solid Energy’s key lenders.

“The proposed restructuring will give the company more time to work through the issues it faces, as it continues to focus on its core coal business,” Mr Ryall says.

The proposal includes:

  • A restructuring of the bulk of the company’s bank facilities.
  • The company issuing $100 million in non-voting redeemable preference shares – $75 million to key lenders in exchange for part of the debt owed to them, and $25 million to the Crown in exchange for cash.
  • A secured working capital loan of $50 million provided by the Crown, repayable within three years.
  • A secured land mortgage of $50 million provided by the Crown, repayable within three years.

Ministers have also agreed to a secured standby facility of up to $30 million, provided by the Crown, if required.

“Holders of the company’s medium term notes are being asked to agree to waive some of their rights to enable the company to put the financial restructuring proposal forward to lenders,” Mr Ryall says.

“The process to formally adopt the proposal is now underway and is expected to be complete by the end of the month.”

Mr English says the Government’s financial statements for the year to June 30 2013, to be issued next Monday, will include the financial impact of the proposed agreement, including the $25 million cash injection and $100 million of loan facilities and the $30 million standby facility.

“After many months of complex discussions between the Crown, the company and its key lenders we welcome this next step to move the company forward,” Mr English says.

The Green Party shows its idealogical blindness by calling this privatisation by stealth.

Four foreign-owned banks – ANZ, BNZ, ASB and Westpac – will take a $75 million ownership stake in Solid Energy in return for writing off debt. . .

Banks are in fact are taking an expensive haircut.

Banks that lent unsustainable amounts of debt to state-owned coal miner Solid Energy are taking a $75 million “hair-cut”, dressed up as an issue of redeemable preference shares that may never be repaid. . .

English signalled in February, when the problems were announced, that the government expected the banks to take a share of the burden of adjustment created by Solid Energy investing too heavily in experimental new energy forms.

Had the company not been an SOE banks would have been a lot more wary about lending so much to it.

Now they know the government isn’t going to be prepared to carry the full costs of an SOE’s losses they will be more cautious about lending to them in future.

Rather than complaining that this is privatisation by stealth we should be grateful banks are sharing the loss and questioning why the government owned a company like this in the first place.

It’s evidence in the case for privatisation not against it.


All of govt savings

September 26, 2013

An all-of-government procurement programme will enable hospitals to save $18 million on power bills over the next three years.

The new contracts are part of a public sector-wide Government Procurement Reform Programme aimed at making government buying as efficient as possible and reducing costs. It includes all public sector agencies, councils and up to 2500 schools.

An electricity tender on behalf of 17 District Health Boards (DHBs) has been awarded to Contact Energy and Genesis Energy following a market process.

Economic Development Minister Steven Joyce says the majority of the new contracts have commenced and the estimated savings of $18 million over the next three years is based on a comparison of the new tender rates against the previous year’s contract rates.

“The lower contracted rate shows the benefits to the taxpayer of government organisations like DHBs working together to align their service needs,” Mr Joyce says.

Health Minister Tony Ryall says these significant savings are part of a programme of procurement and administrative savings being carried out by the 20 district health boards.

“This includes moving to one bank nationally for DHBs, resulting in saving more than $4 million a year from lower fees and higher interest payments,” Mr Ryall says. “All savings made by the DHBs go back into frontline health services for patients.”

In addition, the Ministry of Business, Innovation and Employment has been working on an All-of Government reticulated gas supply for agencies. This contract has recently been agreed with Genesis Energy and is forecast to realise an additional $4.1 million in savings over the next three years.

All-of-Government contracts let to date are tracking to deliver $330 million in savings over the contract lifetimes. The All-of-Government contract for reticulated gas is the 12th All-of-Government contract signed since 2009 which includes external legal services, computers, mobile voice and data, air travel, and advertising.

Those are significant savings and one of the reasons the government has been able to reduce costs while maintaining services.

Bigger buyers can usually negotiate better prices and the government is one of the biggest buyers in the country.

Using that buying power to get better prices is such a good idea, why has no-one thought of it before?


Referendum even more redundant

September 17, 2013

Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall have announced the timetable for the partial float of Meridian Energy and Genesis Energy and further selling down of Air New Zealand shares.

The Government has confirmed New Zealanders will have the opportunity to invest in a minority shareholding in Meridian Energy from later this month, before an expected sharemarket listing on 29 October.

Full details will be set out when the offer document is lodged this Friday 20 September, Finance Minister Bill English and State-owned Enterprises Minister Tony Ryall say.

Pre-offer marketing will start this evening, ensuring New Zealanders are aware of the Meridian offer through television, newspaper and online advertising. This will explain how people can get more information, including ordering an offer document.

As with the Mighty River Power share offer earlier this year, New Zealanders will again be at the front of the queue for shares in Meridian, Mr English says.

“The Government was very clear about the opportunity for New Zealanders when we put our share offers programme to New Zealanders during the 2011 election campaign. The compelling reasons for proceeding with the share offers are as valid today.

“The Government share offer will enable New Zealanders to invest in big Kiwi companies at a time when they are telling us they want to diversify their growing savings away from property, bank deposits and finance companies.

“And we can invest the proceeds in other public assets like modern schools and hospitals, without having to borrow that money in volatile overseas markets, and increase debt.”

As Ministers have previously indicated, investors will buy Meridian shares in two instalments over 18 months. This means investors will need to pay only around 60 per cent of the price up front – but they will receive in full any dividends.

In addition, there will be a price cap for New Zealand retail applicants to provide more certainty about how much the shares will cost.

Mr English says further decisions have now been confirmed, including:

  • The Meridian offer document will be lodged this Friday 20 September, setting out all the information investors need to make an informed decision about whether to invest. This will include the price range, the price of the first instalment, the capped price of the second instalment and the expected yield.
  • After the offer document is lodged, the Financial Markets Authority has around five business days to review the document. This ‘consideration period’ is expected to conclude on 27 September.
  • New Zealanders will then have three weeks from 30 September to consider the offer document and apply for shares before the general offer closes on 18 October. This will be followed by a book-build process where institutions bid for shares.
  • It is expected that Meridian will list on the New Zealand and Australian sharemarkets on 29 October.

Mr Ryall says the offer process puts New Zealanders at the front of the queue for shares and will ensure they have easy access to information.

“To help achieve this, a retail syndicate will be marketing the offer to New Zealanders, and they will offer information and advice to their clients.

“In addition, we have included what is called a ‘broker firm’ aspect to the Meridian offer. Under this arrangement, brokers assess demand from their clients and submit bids, and the Government then chooses how much to allocate them.

“Just like the retail offer, this process is open only to New Zealanders and is consistent with our commitment to ensuring 85-90 per cent New Zealand ownership of the shares,” Mr Ryall says.

Ministers have also confirmed they are considering options for Genesis Energy and Air New Zealand – two of the other companies in the Government’s share offer programme.

“As the Prime Minister said last month, we anticipate that the Genesis Energy share offer will occur in the first half of 2014, subject to market conditions,” Mr Ryall says. “Preliminary work is underway and will continue over the next few months.”

The Air New Zealand share offer will be different to the others, as it is already a sharemarket-listed company.

“What that means is that New Zealanders can buy shares in the company now, if they wish,” Mr Ryall says.

“We are currently working through the best way the sell down can occur and we remain keen to ensure that New Zealanders have the opportunity to participate in it.  At this stage, no final decisions have been made, including on timing. However, when it occurs we expect it will be a shorter process than that used for Meridian and Mighty River Power.”

This makes the politicians’ referendum on the partial sale of a few state owned assets now even more redundant.

It was always only political posturing.

It was never going to have any impact on government policy which was clearly signalled before the 2011 election, made the issue by the opposition and had already begun with the partial float of Mighty River Power before enough signatures had been gathered.

That Grey Power which fronted the referendum petition has now negotiated a deal for its members with a private power company makes it not just redundant but hypocritical.

Referendums are very blunt instruments and none of the four Citizens Initiated Referendums we’ve had since they were introduced in 1993 have achieved anything.

There are better, and cheaper, ways to make a point and influence policy.

All the latest one does is reinforce the growing body of opinion that Citizens Initiated Referendums have had their day.


Partial float of Meridian to go ahead

August 20, 2013

The partial float of Meridian Energy is going ahead with the float expected to take place in early November.

Prime Minister John Key today confirmed the Meridian Energy share offer would be concluded and the company listed on the New Zealand sharemarket by early November, subject to market conditions.

“The Meridian share offer – the second in the Government’s Share Offer programme – comes after we successfully floated 49 per cent of Mighty River Power in the first half of this year, hitting our target of an 85 to 90 per cent New Zealand shareholding, and retaining majority Government control,” Mr Key says.

“And the Government remains committed to 85 to 90 per cent New Zealand ownership on the Meridian share offer.”

He expects Mighty River Power, and now Meridian Energy, will benefit from a broader shareholder base, and end up being better, stronger companies for the rigour and transparency that being listed on the sharemarket brings.

“Both companies will also be better off because they will be able to access capital to grow in more ways than companies that are 100 per cent government owned – which is basically from the taxpayer.”

He says the share offer programme is aimed at freeing up between $5 billion and
$7 billion to invest in other public assets for New Zealand and New Zealanders.

“The partial sale of Mighty River Power put $1.7 billion into the Future Investment Fund – and that is money we have been using to buy public assets without having to borrow on overseas markets.”

Mr Key says it should be remembered the whole Government Share Offer programme covers less than 3 per cent of the Government’s total assets.

“It’s smart reinvestment. With so many demands on government funding, these companies can get investment from sources other than just hard-working taxpayers, and taxpayers can get money freed up for spending on other priority projects that they will benefit from.”

Mr Key says he is confident New Zealanders will understand the instalment receipts model being used for the Meridian share offer, which will involve them paying for their shares in two instalments.

“It is not an uncommon model with large share offers.  I think New Zealanders will view the ability to pay around 60 per cent of the share price at the time of the IPO and receive full benefits for the first 18 months as a positive feature of this offer.”

He says listing up to 49 per cent of Meridian Energy will also give New Zealanders the chance to invest in another big Kiwi company at a time when many people recognise the value of diversifying their growing savings away from property and bank deposits.

As at June this year, New Zealanders held around $118 billion in bank deposits – around 20 times the expected size of the entire Government Share Offer programme. 

The Government will use instalment receipts in the share offer which will allow investors to pay for their shares in two instalments.

Subject to market conditions, the sale of up to 49 per cent of Meridian is expected to be completed, and the company listed on the sharemarket, by early November, Finance Minister Bill English and State-Owned Enterprises Minister Tony Ryall say.

“Listing up to 49 per cent of Meridian on the sharemarket will give New Zealanders an opportunity to invest in another big Kiwi company at a time when many people recognise the value of diversifying their growing savings away from property and bank deposits,” Mr English says.

The instalment receipts, which are fairly common for major initial public offerings in other countries, will mean New Zealand retail investors will need to pay less cash up front when they apply to buy shares. Instalment receipts were used by the Government in the float of Capital Properties in 1998.

“They will allow New Zealanders to pay for their shares in two instalments,” Mr English says. “The first instalment, for around 60 per cent of the share price, will be paid when investors apply for shares.

“The remaining amount, which will be fixed at the end of the share offer, will not need to be paid for a further 18 months.”

Between the first and second instalments, investors will receive the full dividends paid out in that period, which will make the dividend yield – or return on their investment – higher in those first 18 months.

Ministers have decided to use the instalment receipts as an incentive for New Zealand investors in Meridian, instead of the loyalty bonus shares that were used in the previous Mighty River Power share offer.

Mr Ryall says ministers have also confirmed the following decisions for the Meridian share offer:

  • A minimum application of $1,000 will apply for the first instalment of shares.
  • Given there is sufficient public familiarity with the Government’s share offer programme, there will not be a formal pre-registration process, as happened with the Mighty River Power offer.
  • Retail banks ASB and ANZ and sharebroker Forsyth Barr have been appointed to the retail syndicate for the Meridian offer. The syndicate will work closely with joint lead managers Craigs Investment Partners / Deutsche Bank, Goldman Sachs /JB Were and Macquarie to market the offer to New Zealanders.

“Another difference with the Meridian offer is that we have decided to set a share price cap for New Zealand retail investors who take part in the offer,” Mr Ryall says.

“We understand that people like to know the maximum price they’ll be paying at the time they apply to buy their shares. 

“Therefore, the cap will be set at the same time that we set the price range, and it will be announced when we lodge the offer document. This will give retail investors more certainty when they apply for shares.

“It also means that if demand is such that institutions are bidding at higher prices than our price cap, then retail investors will get their shares at a lower price than that paid by the institutions.”

More information on the offer and how instalment receipts work is here.


Touch screen tech helping district nurses

June 9, 2013

Touch screen technology is increasing the time district nurses spend caring for their patients Health Minister Tony Ryall says.

“District nurses at Gore Health are piloting the new Agility TRx technology, from a touch-screen tablet, which allows them to get up-to-date information about their patients instantly and securely while out in the community,” says Mr Ryall.

“Since introducing Agility TRx last year, the eight district nurses at Gore Health have reduced the time they spend on unnecessary paperwork and travel by at least an hour per nurse, per day.

“This means hundreds of extra hours of nursing care are being provided to people in the Gore community. Care provided by district nurses includes home-based chemotherapy services, dressing wounds and intravenous therapy.

“In the past these district nurses made multiple trips to and from the general practice and hospital each day to collect hard copies of up-to-date patient information – this new technology means they have all the information they need at the touch of their fingers.

“I congratulate the district nurses and staff at Gore Health for piloting the new technology and improving health services for people in their community.

“Southern District Health Board began piloting the new technology with 16 of their district nurses last month. The success of the pilot will be evaluated at the end of the year and a decision will be made about rolling the technology out across the country,” says Mr Ryall.

Health Workforce New Zealand has contributed $360,000 towards the pilot.

District nurses who service rural areas travel long distances to visit patients.

Reducing the need to return to base for patient information saves time, fuel and wear and tear on vehicles.

City nurses won’t travel as far but will take longer to go shorter distances in traffic. If the initial success of the pilot continues it would be better for nurses, patients and health budgets to roll the technology out nationwide.


Green hypocrisy

May 25, 2013

State Owned Minister Tony Ryall has correctly applied the H word to the Green Party:

The Government says it’s hypocritical of the Green Party to criticise the number of ‘mum and dad’ Mighty River Power investors, when they were responsible for “frightening them off”.

State-Owned Enterprises Minister Tony Ryall is defending using ‘mum and dad investors’ in the Government’s sales pitch of the shares, despite Greens co-leader Russel Norman calling it a “con”. . .

. . . Mr Ryall responded to those claims this afternoon, saying there was a huge turnout of first time investors, or ‘mum and dads’, despite a plan by the Greens and Labour to “sabotage” it.

He says there were 77,000 first-time investors and more than 101,000 people invested less than $15,000 in the company.

“The Green Party are being hypocritical, saying not enough everyday New Zealanders bought shares, while at the same time they are doing their level best to frighten them off.” . . .

“Over 76,000 people invested less than $5,000 on Mighty River shares and they got everything they asked for,” says Mr Ryall.

“That is a huge achievement despite the economic sabotage of the Green Party and Labour during the float.”

Mr Ryall says investors who were not ‘mum and dads’ had their shares reduced due to demand.

I know several people who were planning to dip their toes into the share market by buying Mighty river Power shares who got cold feet after the LabourGreen power play.
It is indeed hypocritical for Norman to complain that not enough everyday New Zealanders bought shares when their quest for publicity and economic ignorance caused some of those who would have bought to change their minds.

MRP shares to list at $2.50

May 9, 2013

The government has announced the listing price for Mighty River Power shares:

113,000 New Zealanders will become shareholders in Mighty River Power following a successful share offer, Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall say.

The final price will be $2.50 per share.

Of the shares issued, 86.5 per cent will be New Zealand owned: 26.9 per cent by New Zealand retail investors, 8.6 per cent by New Zealand institutions and with the Crown retaining a majority 51 per cent shareholding. That leaves 13.5 per cent for overseas institutions.

“This is an outstanding result and fulfils our commitment to ensuring at least 85-90 per cent New Zealand ownership of the company,” Mr English says.

“The share offer will raise $1.7 billion, which is a very good return for New Zealand taxpayers. Those proceeds will go into the Future Investment Fund, allowing the Government to control debt while continuing to invest in public assets. More details will be announced in next week’s Budget.

“The Government has achieved all of its objectives for the Mighty River Power share offer, so the company will list on Friday.

“Given the strong response to the share offer, and the price we have set, Mighty River Power will have a market capitalisation of $3.5 billion.

“And with over 110,000 New Zealand shareholders, it will have the largest share register – by some margin – of any New Zealand company on the exchange.”

Mr Ryall says that due to the strong level of demand, some scaling has been necessary.

“We have decided to apply progressive scaling, which means that larger applications are scaled more than smaller ones,” Mr Ryall says.

“That means that more than 80 per cent New Zealanders will get what they applied for.”

More details of the allocation and scaling decisions are attached.

“While most New Zealand investors will be able to work out from this announcement what their share allocation is, they will also be able to get confirmation of their individual allocation from Friday – by checking the website or calling 0800 90 30 90. We will also be emailing or writing to all applicants to confirm their allocation,” Mr Ryall says.

“The demand from institutional investors was strong, and bids from both New Zealand and offshore institutions were scaled considerably. Institutions will be advised of their allocations shortly, after which a settlement process commences.

“Mighty River Power will list on the NZX at 12.30pm this Friday.

“We are delighted to get to this stage, and look forward to a healthy aftermarket and a positive experience for New Zealand investors, particularly those who are investing in shares for the first time,” Mr Ryall says.

The price might well have been higher had it not been for the LabourGreen sabotage.

If they can cost the country millions in opposition they’ll do even more damage in government.

The NBR has the numbers:

Mighty River Power share offer – at a glance

Share Price:  $2.50
Proceeds of share offer: $1.7 billion
Total NZ ownership (incl 51% Crown):  86.5%

New Zealand retail investors
Individual New Zealand shareholders: 113,857 (provisional)
Retail investors: $943m
Proportion of shares: 26.9%
Average shareholding for New Zealand retail: $8,220
Applicants who pre-registered:  91%
Applicants without CSNs:  68%
Withdrawal after Labour/Green policy:  1,783 applicants ($25m)

New Zealand institutional investors

NZ institutions:  $300m
Proportion of shares: 8.6%

International institutions                                                                                                               
Offshore institutions: $472m
Proportion of shares: 13.5%

The 68% of applicants without a CSN are almost certainly first-time buyers. That indicates the partial float has succeeded in encouraging new investors.


Meridian unlikely to reach agreement with smelter

March 28, 2013

Meridian has announced it’s unlikely to reach an agreement with Pacific Aluminium over supply of electricity to its Bluff smelter.

. . . Chief Executive of Meridian Energy, Mark Binns, says that Meridian has advised Pacific Aluminium of its ‘bottom line’ position.

“Despite significant effort by both parties there remains a major gap between us on a number of issues, such that we believe that it is unlikely a new agreement can be reached with Pacific Aluminium,” says Mr Binns.

In the event no agreement can be reached, Meridian will seek to engage with Rio Tinto and Sumitomo Chemical Company Ltd, the shareholders of NZAS, who will ultimately decide on the future of the smelter. . . 

The smelter is a big employer in Southland but falling global prices for aluminium have put pressure on its operation.

This announcement also has implications for power prices. Without the smelter supply could well be greater than demand.

. . . news that there may be no new electricity price agreement with New Zealand Aluminium Smelters carries huge implications for the electricity sector, which has struggled to grow in the last five years and would face a massive supply over-hang which could last years, were the smelter to close.

However, that outcome is not yet certain.

The smelter’s majority owners, Anglo-Australian minerals giant Rio Tinto, are locked into the first three years of an new 18 year contract, which took effect from Jan 1, took three years to negotiate, and had been agreed in 2007.

While the New Zealand smelter makes internationally recognised high grade metal, which sells at a premium, Rio has been hit hard by its exposure to the aluminium sector, where world prices have been hit hard since the global financial crisis.

Rio Tinto is seeking to sell the smelter, along with a clutch of other, older smelters in Australasia, which it has packaged as a new subsidiary, Pacific Aluminium. . . .

If my recollection is correct the smelter was wooed to New Zealand by the price of cheap electricity.

This is an example of the dangers of such policy. It was designed with the good intentions of job creation but has skewed the electricity market.

State Services Minister Tony Ryall says all relevant information – including about the smelter electricity contract – will be reflected in the Mighty River Power offer document which is currently being finalised.


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