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.

 

 


How many signatures

February 16, 2013

In January the people organising a petition opposing the partial sale of a few state assets said they had enough signatures.

Grey Power national president Roy Reid said the group had collected more than 340,000 signatures, allowing for a percentage of signatures that did not meet the requirements under the Citizen Initiated Referendum Act.

But this was on Facebook yesterday:

Sign on for the Sign-a-thon

                  signathon.org.nz

Just 22,000 more signatures are needed for a referendum on asset sales. Help collect signatures on 16-17 February!
Did Grey Power miscount or did a check find too many of the signatures didn’t meet the legal requirements to be counted?

Green policies could kill?

May 3, 2012

The Green Party has taken another step towards the absurd with the claim that assets sales could kill people:

Let’s correct his second mistake, first. No assets are being sold, it’s a minority shareholding – up to 49% – which will be sold under the government’s Mixed Ownership Model.

Now his first mistake:

The Greens claim people could die as a direct result of asset sales. . .

Russel Norman says higher power prices will hit the elderly.

“It’s certainly true… that power prices would go up under  privatisation, which is what you’d expect, and if prices go up then some people  will struggle to heat their homes – and that could result in some older people  dying.”

The only death I can recall in recent years in any way related to a power company was Folole Muliaga, who depended on used an oxygen machine and died after the power was cut off by Mercury Energy after a bill wasn’t paid.

The rights and wrongs of this case have been well debated and to what extent the power company was at fault, if at all,  is still under question. What isn’t under question is that the company is an SOE.

But back to power prices, Kiwiblog compared prices between companies  in Auckland, Wellington, Christchurch and Dunedin:

In Christchurch and Dunedin Contact, the only private company, had the cheapest prices, was second out of four in Auckland and third in Wellington.

If the fully private company doesn’t charge the highest prices why would one under the MOM?

If Norman makes absurd claims like assets ales directly killing people, it would be very easy to make equally extreme claims that some Green policies would kill people because we would no longer have a first world economy able to afford first world medical services.

(For the sake of people who are likely to take offence at that last sentence let me be quite clear – I am not saying that is what would happen, I am merely using it to illustrate that absurd claims from one side can be countered by equally absurd ones from the other).


Answer depends on question

April 3, 2012

The latest One News Colmar Brunton poll shows a drop in the number of people opposed to the partial sale of state assets although the majority still oppose the idea:

The latest ONE News Colmar Brunton poll shows the policy continues to fly in the face of public opinion, with only 30% of people saying they support the mixed-ownership model.

Double that number say they do not support it (61%), and the rest (9%) do not know.

But it appears voter support for asset sales has picked up slightly since ONE News last asked the question in a November poll.

Back then, just 26% of people supported the plan, while almost 70% opposed it.

What answer is given depends on the question asked.

If, for example people, were asked: do you want the government to borrow more from foreigners? or do you want the government to stop investing in new infrastructure? or would Air New Zealand be better if it was wholly owned by the government? it’s likely that many of those who think they’re opposed to partial sales might answer no to all those questions.


Never’s a long time

October 11, 2011

United Future leader Peter Dunne wants to rule out Kiwibank, Radio New Zealand and the water supply from any future asset sales programmes.

“New Zealanders, I believe, are not definitively pro-asset sales, but under certain conditions, it is no longer the bogeyman issue that Labour would have you believe.” . . .

“New Zealanders, I believe, are not definitively pro-asset sales, but under certain conditions, it is no longer the bogeyman issue that Labour would have you believe.” . . .

“Let no one claim for any price what is ours as of right. There needs to be a blanket and clear undertaking that this will never be on the agenda,” Mr Dunne said. . .

The prospect of asset sales isn’t the bogeyman Labour is trying to scare voters with and there will be some assets that people feel more strongly about keeping in state hands than others.

The sale of Kiwibank, RadioNZ and water aren’t on any party’s agenda and I can’t see them being so.

But never is a very long time and it’s not wise to hobble future governments with policy prompted more by the hope of winning votes than fact-based analysis.

 


Turn silver into gold

September 9, 2011

Opponents of even the partial sale of a few state assets wail about selling the family silver but as Owen Glenn says:

If selling the “family silver” produces gold, and a continuing return on investment, then it makes sound economic sense.

Quite why Labour thinks borrowing from foreign banks is better than paying 49% of the dividends to shareholders, most of whom will be New Zealanders and all of whom will pay tax on their earnings, defies logic.

For a sobering look at what happens when you continue borrowing to live beyond your means, check out this video of the real national debt .


Partial asset sales ideal

August 10, 2011

Quote of the week:

“The market is flush with cash and there is a thirst out there for new equity issues. Funds like KiwiSaver have to find a home for their money and the Government’s partial asset sales would have been ideal.”

It comes from Deloitte Dunedin managing partner Steve Thompson in response to Prime Minister John Key saying that partial sales of state assets might be delayed by a few months if market conditions were unsuitable.

This is one major difference between what National is proposing and the sale of assets in the late 80s and early 90s.

Then assets were sold in total in fire sales. The new plan is for a mixed ownership model. The government will retain a majority share and sell the minority stake in an orderly manner, holding back if the time isn’t right.

Mr Thompson’s comments show that New Zealand super funds and other institutions like ACC will be lining up to buy.


Why didn’t Labour nationalise Air NZ?

August 8, 2011

Labour is trying its best to put people off National’s mixed-ownership model for state assets.

They’d rather borrow or tax more than allow New Zealand individuals and institutions like superanuation funds to invest in local companies through the partial sale of some state-owned companies.

Their argument is high on emotion and low on logic and it’s very much do as we say not as we do – or at least did when in power.

If the mixed-ownership model was really such a bad idea, they’d have nationalised Air New Zealand.

Instead, they purchased a share, leaving the rest of the company in public hands and subject to the discipline, rigor and scrutiny of  a publicly listed company.

The airline and its shareholders, including the government on our behalf,  are much better off this way than if the company was 100% state owned.


Does state really need to own rat bait company?

June 29, 2011

This week’s Listener makes a very good point about opposition to National’s plans to sell minority shares in some SOEs  and Labour’s bill to require 75% of parliament to support the sale of any asset:

. . . the premise behind the bill is essentially that the commercial enterprises the Crown owns are a perfect use of public funds. There is, Labour implies, no single better use that can be found for the public’s money invested in the businesses listed in Schedule 1 and 2 of the State-Owned Enterprises Act. The money tied up in 100% ownership of SOE shares could never be better used, for example, to buy other commercial or public assets, or to pay off some of the Crown’s debt to foreign lenders.

Put like that no reasonable person would want to hog-tie a future government, especially when you consider some of the assets still owned by the state:

Apart from the best-known ones, such as Meridian, Genesis, Solid Energy and Television New Zealand, they also include Animal Control Products, which is, according to its website, one of the world’s leading manufacturers of rodent baits. And what’s not to like about that? Rats, unless pets, are not generally life-enhancing.

But is it the best use of government money to own 100% of a rodent-bait company? Might it be better if, say, 24% or 49% or 100% of the company was sold and the proceeds were applied to rebuilding schools in Christchurch, funding more public hospital operating theatres, repaying government debt or buying shares in other New Zealand companies?

I can’t think of any reason to justify state ownership of a rodent bait company now. Even if there was a good reason to hang on to it for a while longer, who could argue that there might not be a time in the future when there’d by better use for the capital than animal control?

It is quite legitimate to argue the Crown’s portfolio of commercial assets is optimal for New Zealand at the current time. People can agree or disagree with this argument and the debate should be had. But it is a hard argument to sustain that the current portfolio will always be the best use of those billions of dollars and that nothing could change that.

Labour senses a public reluctance about asset sales and is campaigning against National’s plan to sell minority shares in a few SOEs. That’s what opposition parties do.

But attempting, even half heartedly, to keep all state assets in state ownership for ever is the triumph of politics over logic.


Remember when

June 27, 2011

Do you remember when we used to own the Health Computing Service, DFC, Communicate New Zealand, the National Film Unit and the Tourist Hotel Corporation?

I have vague memories of some of them being state owned but had completely forgotten the others.

They are among the 17 assets sold by previous Labour governments which Keeping Stock lists.

There are valid questions about the way some of the assets were sold. But would we be any better off as a nation if we still owned them, especially those which were in direct competition with private enterprise?


Mixed ownership provides opportunities for local investors

June 23, 2011

State Services Minister Tony Ryall is correct when he says there can be no guarantee that shares in state assets will remain in the hands of New Zealanders.

It might be possible to control who makes the initial purchase  and to ensure a certain percentage of shares remain in local hands – although that will have to be done very carefully if it’s not to lower their value. 

But in a free market with an open economy, onerous restrictions on who people could sell their shares to would be at best problematic.

That won’t stop opponents to even a partial sale of some state ownership playing politics over the prospect of foreign investment.

What those people will gloss over or ignore is that National’s policy is for a mixed-ownership model where no more than 49% is sold. The state would retain at least 51% of any SOE offered for partial sale so even if all the shares sold went overseas, the majority share of the company would still be New Zealand owned.

Even then it is most unlikely that all or even most of the minority shareholding sold would end up in foreign hands. Even if individual shareholders didn’t hold on to their shares for long, institutions like the New Zealand Superannuation Fund, ACC, community trusts, Iwi and the various companies with KiwiSaver accounts would.

Instead of complaining about the potential for foreign money to come into New Zealand, we should be celebrating the opportunity for these big local institutions to keep more of their funds at home.


Privatisation works

April 10, 2011

Professor William Megginson in the print edition of the NBR:

“. . .  privatisation ‘works’ in the sense that divested firms almost always become more efficient, more profitable, financially healthier and increase their capital spending.” . . .

. . . “You certainly have variation – in that it doesn’t always happen – but on average, across countries, across time, the financial and operation performance of privatised firms is significantly improved.”

Opponents of privatisation highlight past failures and use them to argue against any more asset sales.

Prof Megginson shows they are wrong.

That not every asset sale in the past went well is not a valid argument against any in the future.

We should learn from past failures to avoid repeating mistakes but we shouldn’t let them be used to justify opposition to any and all privatisation.


Learning from history

January 27, 2011

Edmund Burke said,  “Those who don’t know history are doomed to repeat it.”

The National Party does know its history and has no intention of repeating the mistakes made by the then-Labour government (in which were current Labour leader Phil Goff and Act MP Roger Douglas) when it sold state assets in the 1980s.

The proposal to sell minority stakes in a few State owned Enterprises, announced by John Key yesterday,  is a very moderate response to the very real danger posed by New Zealand’s high level of debt.

The left are scaremongering that this will mean overseas ownership but it won’t.

The government will retain a majority share and New Zealanders will be first in the queue for shares.  Among them could be Kiwi Saver providers, the Superannuation Fund and Iwi with Treaty Settlements none of which were possible buyers a couple of decades ago.

Even if they then on-sold to foreigners, and it is most unlikely all of them would, the government would still have a majority holding.

Funny how the people who oppose overseas ownership of land, (which can’t be taken away and use of which is subject to domestic laws) and minority shares in businesses, don’t seem to mind being highly indebted to foreign banks.

You don’t have to know much about history to realise that poses a far greater danger to our economy and sovereignty than selling a minority share in a few assets.


Nothing to fear in careful sale of some assets

December 15, 2010

The government’s first investment statement is a welcome addition to open government.

“Effective management of the Crown’s assets and liabilities and making the best investment decisions is important if we are to realise our economic goals and deliver better public services,” Mr English says.

“The first annual Investment Statement clearly shows the Government’s assets, liabilities and future investment intentions and brings this important aspect of financial management into line with other regular fiscal reporting.

“It forecasts Crown assets to grow by $33 billion over the next five years to $256 billion – about five times the size of the sharemarket. That growth comes from a combination of investment in new infrastructure and social assets, alongside forecast accumulation of financial investments.

“At a time when we are borrowing for all new capital investment, we need to get the most out of our existing asset base and ensure new investment goes into areas where it can provide the largest improvements in public services.

When so much money is invested in these assets it is vital they are operating efficiently and giving the best possible return.

“We believe this level of transparent information allows the public to demand a much greater level of accountability from the Government and will lead to sharpened incentives and significantly better public sector decision-making.

“One of the big challenges is to get our capital moving to where we think it will have a positive impact – for example, newer better schools, modern well-organised hospitals, upgrades of our national electricity grid and the roll-out of ultra-fast broadband. To do this we need to look at ways of reprioritising poorly performing capital.”

Some of the areas identified in the Investment Statement, where capital is not being used efficiently, include:

  • Social housing: About 27,000 state houses are the wrong size, location or quality to meet the needs of high-priority Housing New Zealand clients. There are also 5,000 tenants currently paying market rent who could afford to rent in the private sector. 
  • Defence: Opportunities exist for base consolidation and divestment of housing stock, which would reap significant gains. 
  • Education: The Ministry of Education holds 244 surplus schools, teacher houses, vacant sites or other assets worth $96 million. 

The primary school our daughter, her father and grandmother attended closed several years ago. It was sold last year and I haven’t heard a single complaint or question over the sale. There ought to be loud complaints and continuous questions over why so much other capital isn’t being used efficiently.

“Disposing of these surplus assets faster would provide additional capital for new schools, more appropriate social housing and modern defence equipment,” Mr English says. “We are asking other agencies to investigate a similar approach.

“The Government is committed to new capital investment where it can be shown to improve public services. But over the coming years, most state agencies will be expected to first show their existing capital base is being fully and effectively used before being granted additional capital.

“The Government is focused on getting better performance across our entire asset base. With regard to major asset sales, our position is clear – there will be no sales this term and if that position changes we will say so and campaign on it at next year’s election,” Mr English says.

In a recent speech, Don Brash said:

As a Party, we need to be at the forefront of challenging why the state should be:

  • The biggest owner of dairy farms in New Zealand;
  • The biggest fund managers in New Zealand;
  • The 50% owner of a large chain of petrol stations;
  • By far the biggest owner of rental properties;
  • The dominant generator of electricity;
  • The dominant owner of our trains and planes;
  • The owner of our most aggressively growing bank.

And the list goes on. Nothing in history or experience suggests that ministers and officials and their appointees have the incentives to get the decisions right in managing those assets to their best potential.

Asking the question doesn’t mean the answer is to sell all of these assets at once or even ever. Nor does it mean all of those which are sold should be sold in their entirety.

Partial floats may be better for some of them, getting an injection of capital and providing new investment opportunities for individuals.

But I wouldn’t include Landcorp among them. Most investors would want a much better return on capital than it gives.

However, I am not advocating selling the company as a whole or all its farms at once while the rural real estate market is sluggish. A gradual sale of individual farms over time would be the best way for the state to divest itself of these low performing assets.

Any mention of possible sales will inevitably engender howls of rage from the left but it is the least painful way to help return the government books to surplus.

The half-year fiscal and economic update made gloomy reading.

The state either has to spend less or earn more. A careful sale of surplus assets will be an important ingredient in the recipe for recovery.


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