The opposition harps on about selling the family silver when criticising the partial sale of a few state assets.
They’re wrong these energy companies are not national treasures.
They are however, investments for the state and individuals and Matthew Hooton points out that Labour and the Green Party are damaging them:
. . . No doubt as intended by Green/Labour, there has been vast destruction of value in these four companies and it is likely only to get worse if the polls continue to trend towards Green/Labour. Ironically for parties who tell us they want to save the family silver, the main loser from the destruction of wealth has been the state. All the wealth destruction so far in Meridian and Genesis has been suffered by the Crown and at least half of it in the case of MRP. Even with Contact, both ACC and the Cullen Fund are among the top 20. . . .
Labour and Greens regard SOEs as family silver but they’re not only trashing them they’re devaluing public and private savings.
It would also damage other companies:
If Labour and the Greens imposed their proposed power policy Contact Energy would be forced into a complete restructure, chief executive Dennis Barnes says.
Earlier this year, the parties announced plans to set up a single buyer, NZ Power, to buy all electricity generation at a fair price, promising to cut the average New Zealander’s power bill by up to $330 a year.
Speaking to The Press after the company’s annual meeting in Christchurch today, Barnes said the policy would require a structural change for Contact’s business and the electricity industry.
It would “change the face of Contact from a risk manager and a retailer to a business which has got the Government as its customer”, he said.
“It’s likely that a lot of the people we have working in the risk aspects of our business wouldn’t be needed anymore. I believe that innovation would stop and the Government would have to fund that.
“The biggest change is that the Government then becomes responsible for security of supply development of the industry rather than the market; that’s a whole different dynamic.”
Barnes indicated that power price increases in the last couple of years did not come from generators and retailers such as Contact Energy.
“A lot of the prices increases that you experience as a whole are transmission and distribution and charges that the generators and the retailers are not responsible for.” . . .
The threat of the policy is already doing damage, it would do even more damage should they try to implement it.