Other questions

November 19, 2013

One of the tricks in politics is to ask a question to which you’ll get the answer that suits your bias.

That’s why the question the opposition parties keep asking about the governments’ mixed ownership model for a few state owned enterprises is, do you support asset sales?

The referendum question is far more specific but the left still keeps asking the same inaccurate question.

There are other questions which could be posed on the issue.

One of these is, would you rather pay interest to foreign banks or dividends to mostly New Zealand shareholders.

If the answer to that is neither, the next question would be, how else are we going to fund other assets?

The opposition have made it quite clear they oppose any change at all in the government’ shareholding in SOEs.

They have yet to come up with any credible alternatives for reducing debt and funding other assets.

What’s the case for state ownerhsip of Solid Energy

May 21, 2013

The Opposition are not just opposed to the Mixed Ownership Model for state assets under which a minority share in a few companies are sold.

They want to retain all the companies the crown currently owns.

A case can be made for the state to own some companies but what is the case for owning Solid Energy which is in such a dire state?

. . . The state-owned coal miner is grappling with debts of nearly $390 million and earlier in May announced a further 105 job losses. . .

What justification is there for the state to be risking public money in this enterprise?

It’s not a monopoly, it’s not an essential or strategic industry.

It is possible that had it not been state owned, banks would have been a lot more careful about lending it money and it might not be so deeply in debt.

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.

What a waste

March 12, 2013

There is never a good time to waste public money but if ever there was a worse time, it’s now.

Our economy is growing, but  slowly, and many or our trading partners are still struggling with the impact of the Global Financial Crisis.

We’ve got the added cost of the Christchurch rebuild,  the need to cut back because of the extravagances and mismanagement of the previous Labour-led government and almost all of the country is facing drought.

There is no fat in the system.

National has been focussed on getting more for less from public services which requires very careful management and fiscal rigour.

The opposition has shown it hasn’t got the seriousness of the problem by opposing every move the government has made to reduce costs and improve efficiency.

Now the petition calling for a referendum on the policy to sell minority stake in a few state owned energy companies is to be presented to parliament.

It’s supposed to be a Citizen’s Initiated Referendum but this is a politician’s initiated one.

It was never anything more than a political stunt and carrying on with it now that the sales process for the sale of up to 49% of shares in Mighty River Power has begun reinforces that.

If there are enough valid signatures to force a referendum it will be too late. MRP will be under mixed ownership and at least one of the other companies could be too before it’s held.

Regardless of the timing of the referendum and the partial sales this is an expensive exercise in futility.

National campaigned on its Mixed Ownership Model and won.  The Labour and Green Parties and their potential coalition partners New Zealand First and Mana campaigned against it and lost.

The partial sales are a fundamental part of National’s financial plan and the referendum will do nothing but provide an opportunity for grandstanding by the opposition.

It’s time for them to realise they’ve lost and accept the importance of not wasting public money.


Keeping Stock shows it’s not just money being wasted.

Expensive political stunt

January 4, 2013

The organisers of a petition to force a referendum on the partial sale of a few state assets say they have more than the 310,000 signatures required.

The signatures will have to be checked but with around 340,000 there will probably still be enough to force the referendum when invalid ones are removed.

It is nothing but a very expensive political stunt which, regardless of the result,  the government will ignore as it has a right to do.

National campaigned on the mixed ownership model and won.

Opposition parties, Labour in particular, campaigned against the issue and lost.

That doesn’t mean everyone who voted for National supports the partial sales policy nor that everyone who voted for other parties opposes it.

But voters aren’t voting for or against individual policies they’re voting for or against a package.

Enough people voted for National to enable it to lead a government and whether that was because of or in spite of the partial sales policy is irrelevant.

National won and the policy is a fundamental part of its economic programme.

The referendum will merely provide very costly publicity for the parties promoting it at our expense.

Clothes maketh not the millionaire

July 8, 2012

Some people who thought they were dressed as millionaires protested  outside the Prime Minister’s home yesterday against the proposal to sell a minority share of a few state owned companies .

They dressed that way to make a point and one point they made was about their ignorance.

You don’t have to be a millionaire to buy shares. A lot of people who are of far more modest means will have the good sense to invest some money when the partial floats are done.

They also showed their ideas about how millionaires dress are rooted in fantasy.

Those in the photo in the link above were dressed as any man, regardless of his financial status, might be for a formal occasion.

These clothes aren’t normal day wear for anyone, except perhaps a doorman, and you can’t necessarily judge people’s worth by what they wear.

Few if any at a seminar a couple of months ago would have owned businesses worth at less than a few million dollars. Had they been urban business people they might have been dressed for the office. But these were farmers. The only ones in suits were staff of the bank hosting the seminar, the rest of the people were tidily but  casually dressed.

If only the protesters understood that clothes maketh not a millionaire.

But the reality of ordinary people who through dint of their own ability and hard work have managed to make money from successful businesses  wouldn’t suit their narrative.

Nor would the idea that ordinary people who work for wages and salaries save and will be keen to invest in shares which ought to bring a far better return than leaving it in the bank and far safer than many finance companies.

Case for MOM

July 5, 2012

Joanne Black has a good case for the Mixed ownership Model for state assets (on-line here next week):

. . .  I need think only of Solid Energy’s plans to build a lignite-to-briquette plant to remind myself why ownership of these companies is better left to people who can afford to risk (that is, possibly lose) their money, than to have such investments funded by taxpayers.

I imagine most of us could think of several hundred things on which the government could more urgently and usefully spend our taxes than on finding out whether converting lignite to briquettes actually works. It might not.

that is not a reason for Solid energy to not pursue the project, but it is quite a good reason why someone other than taxpayers alone should pay for it.

Opponents of the MOM have focussed on the income that will be lost when a minority of shares are sold.

They conveniently overlook the costs, and the risks, that will be reduced when they’re shared by other investors.

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