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.


More than 400,000 pre-register for MRP shares

March 24, 2013

Around 440,000 people have pre-registered for Mighty River Power shares.

Minister of State-Owned Enterprises Tony Ryall said that the number of New Zealanders who pre-registered was extremely pleasing.

“Pre-registration is not a commitment to buy shares, and someone pre-registering their interest may decide to not apply for shares in Mighty River Power. However, it was a goal of the Government to achieve widespread awareness of the opportunity, and I believe we have achieved this.” . . .

This doesn’t mean 440,000 individuals have pre-registered.

People could register more than once by using their own names and also those of their companies; others might pre-register in the names of their children.

Not all of those who have pre-registered will support the partial sale of state assets. Some might be doing so in order to do their bit to keep the shares in New Zealand ownership.

But even so, this shows a very healthy interest in buying the shares that augurs well for the float.


Schadenfreude

March 21, 2013

Prime Minister John Key resisted the temptation to attack David Shearer for  his memory lapse:

It is “unfortunate” Labour leader David Shearer forgot to declare an offshore bank account with at least $50,000 in it since he became an MP, Prime Minister John Key says. . .

Key said the oversight was “unfortunate”, but mistakes could be made.

However, National had not had much support from Labour when that was the case in the past, he said.

“In the end he’s [Shearer] got to make peace with the New Zealand public,” Key said.

He had “tried not to” forget about investments worth $50,000, and he said Shearer’s bank account could hold quite a bit more than that.

Key had been criticised for failing to declare Tranz Rail shares. . .

Act leader John Banks was unable to resist the temptation.

Hon John Banks: Could the Minister for State Owned Enterprises tell me whether funds could be used from a secret bank account in New York to purchase shares in this initial public offering? [Interruption]

Mr SPEAKER: A legitimate question.

Hon TONY RYALL: That is a very good question, because if a New Zealander was one of the pre-registered 400,000 and they were able to get the benefits of that pre-registration in terms of their shares, they would have to pay for them. We would be unclear of whether the bank account was secret or not, but we would presume people would actually know they had a bank account.

Given the delight Labour took in criticising Banks for his memory lapse he could be excused this schadenfreude.


Leading by example

March 13, 2013

This is definitely leading by example:

It might also be called taking one for the team because protecting yourself from flu also helps reduce the spread of the illness to other people.

Health Minister Tony Ryall rolled up his sleeves at Karori Medical Centre in Wellington today to receive his annual influenza vaccination and launch the 2013 influenza immunisation campaign.

“We want more New Zealanders to be protected against this serious disease – this year the goal is to vaccinate 1.2 million people,” says Mr Ryall.

“Around 400 New Zealanders die, directly or indirectly, each year from influenza. Last year the disease put more than a thousand people in hospital and nearly 50,000 people visited their GP with influenza-like-illness.”

Mr Mark McIlroy was also at the launch today to encourage more people to be immunised. His wife, Catherine (49), had been a previously fit and healthy woman when she was struck down by the A(H3N2) influenza virus in July 2012. She died of the disease within five days of showing symptoms.

The influenza vaccine for 2013 Southern Hemisphere season includes two new strains based upon recommendations from the World Health Organization. The vaccine this year includes:

  • A/California/7/2009(H1N1) pdm09-like virus
  • A/Victoria/361/2011(H3N2)-like virus (new strain for 2013)
  • B/Wisconsin/1/2010-like virus (new strain for 2013).

“Last year over one million New Zealanders had a flu vaccination – around 23 per cent of the population. However we want more people to be protected and I encourage you to get your flu vaccination, especially if you are in one of the at risk groups,” says Mr Ryall.

The flu vaccination is free to those at greatest risk of serious influenza complications, including New Zealanders over the age of 65, pregnant women and people with on-going health conditions such as asthma or heart problems.

People who are not eligible for the programme can purchase the vaccine from their general practitioner or selected pharmacies.

For further information go to www.fightflu.co.nz or call 0800 IMMUNE 0800 466 863.

Photo: I received my annual influenza vaccination today at the launch of the 2013 influenza immunisation campaign. Robyn Taylor, a nurse at Karori Medical Centre, did a great job and I barely felt a thing. I encourage you to visit your GP or selected pharmacies and get vaccinated against the flu.
I didn’t get round to having a vaccination last year and paid for it with a very nasty does of flu which lingered.
I’ve learned from that and have already had this year’s jab.

Selling at last

March 5, 2013

National’s policy to sell, or partially sell, a few state owned assets was forecast before the 2008 election when John Key made it clear no assets would be sold in the first term and any proposal to sell anything in the second term would be part of the election campaign.

It became a big part of the 2011 campaign, not just because national campaigned on the policy of selling minority shares in a few energy companies but even more because opposition parties campaigned so hard against the policy.

National won, the opposition lost but continued to campaign against the policy.

Like their election campaign that will get them nowhere.

The court ruling against the Maori Council’s bid to stop the sales cleared the way for the sales process and the government has lost no time in getting it under way.

Prime Minister John Key today confirmed the Government will offer the public up to 49 per cent of Mighty River Power in the second quarter of this year – subject to market conditions.

“This will begin tomorrow, with the opening of the process for investors to pre-register their interest in finding out more about the Mighty River Power share offer,” says Mr Key.

The Supreme Court last week dismissed challenges by the Māori Council and others to the Government’s sale of a minority shareholding in Mighty River Power. This follows the High Court reaching the same decision late last year.

“It means we can now proceed with offering a minority share in Mighty River Power.

“The Government’s share offer programme is an important policy. It is expected to free up $5-7 billion that we can then invest in other assets such as modern schools and hospitals, without having to borrow in volatile overseas markets,” says Mr Key.

“Under the share offer programme, New Zealanders will be at the front of the queue. They will have an opportunity to invest in big Kiwi companies at a time when they are telling us they want to diversify their savings away from property, bank deposits and finance companies.”

Cabinet today made a number of decisions about the timing and details of the Mighty River IPO.

These include:

  • The Order-in-Council decision was taken to remove Mighty River Power from the SOE Act.
  • A pre-registration process for New Zealand retail investors interested in finding out more about Mighty River Power shares will open tomorrow (5 March 2013) and run though until 22 March, around three weeks.
  • The offer period is expected to open in mid-April and run for three weeks. The share offer document will be available at that time.
  • Details of a loyalty bonus for New Zealand retail investors will be announced before the offer period starts.
  • When the offer period closes, the institutional book-build takes place. Ministers then make share pricing and allocation decisions.
  • We then expect that Mighty River Power will list on the sharemarket.

“My expectation is that, subject to market conditions, this process will be completed in mid-May, most likely before the Budget,” says Mr Key.

“The Mighty River Power share offer has been designed to achieve widespread New Zealand ownership. We envisage that, with the Government’s majority shareholding, total New Zealand ownership will be 85-90 per cent of the company after the share offer.

“From the Government’s perspective it makes sense to use this opportunity to reorganise the Government’s assets and redeploy capital to priority areas without having to borrow more.

“We intend to make it as easy as possible for New Zealanders to get access to information, register their interest and apply for Mighty River Power shares.”

Today Finance Minister Bill English and State Owned enterprises Minister Tony Ryall will officially launch the pre-registration period for New Zealanders who are interested in finding out more about the Mighty River Power share offer.

 . . . Mr English says the initial public offering of up to 49 per cent of the Government-owned power company is an opportunity for New Zealanders, including those who have not owned shares before, to invest in the stockmarket.

. . . Pre-registration will allow New Zealand retail investors who are interested in finding out more about Mighty River Power shares to register their interest.

“Tomorrow will also see the start of a substantial advertising and communications campaign covering television, print and online media which will raise awareness of the IPO, and tell people how to pre-register,” Mr English says.

“That campaign will include a strong investor education element for those unfamiliar with the sharemarket. We strongly recommend investors obtain their own independent financial advice”

Ministers also announced today that they expect that the share offer document will be lodged shortly after the pre-registration period ends and that there will be a three-week offer period.

At the end of that, the book-building process will take place before ministers decide on the share price and the allocation of shares. Those decisions will include how the shares will be allocated between New Zealanders and overseas shareholders.

The Government expects this process to be completed in mid-May.

The share offer had been designed to put New Zealanders first, Mr Ryall says.

“Mighty River Power will apply to be listed on the NZX main board. We expect that its primary stock exchange listing will be in New Zealand.

“We also expect it to have a secondary listing on the Australian Stock Exchange. There is nothing at all unusual about this – eight of the 10 largest New Zealand listed companies are already dual listed in Australia.

“There is a balance to be struck here. On the one hand, we have given New Zealanders an absolute commitment that Kiwis will be at the front of the queue for shares.

“On the other hand, we want to ensure there is enough tension in the share price for investors. A secondary listing in Australia will help to achieve that.

“Another point worth noting is that some Australian institutions, under their own investment mandates, would not be able to invest in Mighty River Power unless it was also listed in Australia.”

Mr Ryall says the website for pre-registration and for the share offer itself has been designed to restrict people from outside New Zealand from participating.

However, the IPO will be open to certain institutional offshore investors because that will help ensure New Zealand taxpayers get the best price for the shares being sold. Ministers expect around 85-90 per cent of shares to be held by New Zealanders after the share offer.

Other decisions confirmed today include:

  • The minimum application for shares will be $1000, increasing in $100 increments.
  • New Zealanders applying for up to $2000 worth of shares will not be scaled back if the IPO is over-subscribed.
  • A loyalty bonus will apply for New Zealand retail investors who keep their shares for a minimum period. The terms of that bonus will be announced before the share offer opens.

I’m not purporting to be a financial advisor but I’ll be putting my money where my mouth is on this.

I think the partial sale will be good for the company, good for the country and good for all shareholders – the private ones who buy up to 49% of the shares which will be for sale and the government which will retain at least 51% of the shares.


Real referendum

February 28, 2013

Quote of the day from Tony Ryall:

“Let’s be clear about this referendum – it’s not a citizens-initiated referendum, it’s a Parliamentary-initiated referendum,” says Mr Ryall.

“It has citizens, it has overseas visitors, it has children. This was a Green Party-funded, taxpayer-funded signature collection process. The Green Party paid staff members to go out there and collect signatures.

“They’ve got to prove they’ve got the right number of signatures, there’s up to a year before the referendum happens. The real referendum on this was the 2011 general election. We campaigned on it, we made it clear and we’ve got a mandate.”

The partial sale of a few state assets was the Bogey Man with which opposition parties tried to frighten voters during the election campaign.

National was explicit about the policy, the opposition parties were explicit about their opposition.

National won, they lost. That doesn’t mean everyone who voted for National supports the policy but it does mean they weren’t so opposed to it to vote for the parties which would not have done it.

 

 


Let the sales proceed

February 27, 2013

The Supreme Court has ruled in favour of the government over the sales of Mighty River Power.

“This confirms the Government can proceed to sell up to 49 per cent of shares in Mighty River Power in the second quarter of this year, in line with legislation passed by Parliament last year,” Mr English says.

“Cabinet will next Monday consider a timetable and other details of the Mighty River offer – including how New Zealanders will be at the front of the queue for shares. We expect to be in a position to confirm those details soon afterwards.

“We are pleased to be getting on with what we were elected to do.”

Mr Ryall says the Government’s share offer programme remains on track, following the Supreme Court decision.

“The Government has always been firmly of the view that the partial sale of shares does not in any way affect the Crown’s ability to recognise rights and interests in water, or to provide redress for genuine Treaty claims.

“The Government’s partial sale of shares in state-owned enterprises is good for taxpayers because we expect to generate between $5 billion and $7 billion in proceeds which we will use to control debt.

“It is also good for New Zealand’s capital markets and it will improve the performance of the companies in the share offer programme.

“The Government will invest these proceeds in new public assets like modern schools and hospitals – and that’s money we don’t have to borrow from overseas lenders.”

Excellent.

Let the sales proceed.


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?


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