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.


Inaccurate and out of date

September 2, 2013

Enough signatures have been gathered to force a politicians’ initiated referendum on asset sales.

The question we’ll be asked is:

“Do you support the Government selling up to 49% of Meridian Energy, Mighty River Power, Genesis Power, Solid Energy and Air New Zealand?”

That is inaccurate and out of date.

MRP has already been partially floated, Meridian Energy is about to be, Solid Energy has been taken off the list and there is no plan to reduce the government’s share in Air New Zealand.

The law states:

The Governor-General sets a date for the referendum within one month from the date of presentation. The referendum must be held within a year of the date of presentation unless 75% of all members of the House vote to defer it.

The left made the partial sale of assets the main policy of the last election.

They could do so again next year without wasting public money on this referendum which will have no impact on the policy.


The other side of the sale story

May 13, 2013

Opponents of the partial sale of a few state assets are still peddling their emotive arguments against the policy and in doing so are telling only half the story.

They’re saying we’ve lost Mighty River Power but we haven’t.

The state still owns 51% of the company; those shares are worth more now than they were before the partial float and all dividends will be taxed.

Opponents to the policy would have us believe the 49% of shares floated have gone with nothing in return.

That’s not the case. The government now has $1.7 billion to put to more productive use.

As Finance Minister Bill English said in parliament on Thursday:

There has been, I think, a misunderstanding that somehow in selling shares the Government and the taxpayer are losing an asset. In fact, we are swapping shares for cash, and by tomorrow night, the Government will have $1.7 billion in its bank account ready to invest in those projects that will be outlined in the Budget through the Future Investment Fund. Future proceeds of asset sales will also go into that fund. Parties that want to buy back the assets, or not sell them, will have to borrow the same amount of money from foreign bankers if they want to invest in the same way this Government plans to invest in infrastructure, in hospitals, in schools, and in better public services.

Jacqui Dean: What are the benefits of the Government’s share offer programme?

Hon BILL ENGLISH: There are many benefits. In the first place, the Government achieved its objective of widespread New Zealand ownership, so 86.5 percent of this company remains owned by New Zealanders. Secondly, it has provided an opportunity for New Zealand savers to invest their money in the share market, many of them for the first time. Thirdly, we have collected $1.7 billion in cash proceeds, which are available to the Government for reinvestment in public assets. And, finally, it is a significant move in reinforcing our public capital markets, where Mighty River Power will list as the fifth-biggest company on the stock exchange. A strong public capital market is one of the ingredients for higher incomes and more jobs.

That’s the other and more important half of the Mixed Ownership Model story.

It makes far better reading than more debt and less investment in other areas where there’s greater need for public money than energy companies.


Asset sales petition hasn’t got numbers

May 7, 2013

The petition seeking a referendum on the partial sale of a few state assets hasn’t got the numbers.

. . . Parliament’s Clerk of the House Mary Harris this afternoon said she had certified that the petition had lapsed because she could not be sure minimum number of signatures required by law had been met.

The petition needed the signatures of 10 per cent of voters to succeed which the Electoral Commission said worked out to 308,753.

But Ms Harris said that following a counting and sampling and checking process she found the petition was short by about 16,500 valid signatures.

The organisers of the petition presented it to Parliament in March claiming they had 393,000 signatures. . .

The petition was started by Grey Power but promoted by LabourGreen with the assistance of taxpayer funds.

They’ve got another couple of months to get the additional signatures needed but they should stop wasting their time and our money.

Might River Power shares will start trading on Friday.

Even if the people and parties behind the petition get enough signatures it will be far too late. The government will have received the money from the sale and will have invested some or all of it in other assets.

LabourGreen made this an election issue and lost.

Whether or not most people support the partial sale of a few assets, enough didn’t feel sufficiently strongly about the issue to vote to stop them.

They missed that opportunity; they’re short on signatures and attempting to get more will show they’ve got nothing better to do than pursue a lost cause.


Risk good reason for sale

April 10, 2013

Opponents of the government’s programme for the partial sale of a few state owned assets are seizing on the risks to investors.

They purport to be worried that people who buy shares in Mighty River Power might lose money.

Their concern is no more than crocodile tears because they also complain that only the wealthy will be able to afford the shares.

But in raising fears of potential losses, they appear not to understand that if no shares are sold the government carries all that risk.

The risk of investment in non-core assets is not a reason for continued state ownership. It’s a very good reason the state should divest itself of them.

The government ought to ensure every cent of public money is put to best use.

There is potential gain in any business but there is also a potential for loss and that’s not a risk the state should be taking when there are far better uses for its very scarce resources.

While we’re on the subject of risk, Landcorp has told Shanghai Pengxin, which took over the former Crafar farms from receivers, that its investment will make a loss this year.

Chief executive Chris Kelly said the drought has had significant affect on revenue. Extra capital expenditure by Shanghai Pengxin has also been required.

People opposing land sales to foreigners are concerned about profits going overseas. At least this year, the owners will be losing money.

The risk the state takes in owning non-core assets is also illustrated by Landcorp’s half-year report:

At the time this report went to the printer, an operating result of around$6 million to $8 million for the full year 2012/13 was expected. Since then,Landcorp has experienced the worst widespread drought in many years. As a result, it is unlikely that the Company will report an operating profit for the year and consequently it is not likely to pay a full year dividend.
Around $1.6 billion in assets and no dividend. There are far better, and less risky, uses for public money than that.

 


SOEs put govt blanace sheet at risk

March 1, 2013

Opponents to the partial sale of state assets complain about the loss of dividends, they forget about the costs.

Trans Tasman points out the risks of state ownership:

. . .there is a harsh reality to be faced, not only with Solid Energy (what’s a Govt trying to do in owning coal mines?) but with other state-owned entities whose profitability has shrunk: think of TVNZ, NZ Post, Kordia. Not surprisingly, Solid Energy’s troubles have thrown into relief how the Govt’s balance sheet, already structurally weak, can be pushed into dangerous territory by businesses where all the risks have to be shouldered by the taxpayer.

Opponents to the sales complain that the government will lose dividend income when up to 49% of shares in an SOE are sold.

They forget the risks and costs of ownership which ultimately fall on the taxpayer.

I’d rather have my taxes pay for core government responsibilities like defence, police, infrastructure, health and welfare than investment in areas best left to the private sector.


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.

 

 


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