Tag Archive for ‘assets’ at The Standard 2.02

Tag Archive for 'assets'

For whom the Toll bells

Published

on May 5, 2008

in assets, economy, election 2008 and environment

. 62 Comments

The Government has bought back the rail stock and ferries from Toll for $655 million.

The privatisation of these vital assets, which are also natural monopolies, by National was a disaster from Day 1. National flogged the railways and the ferries off dirt cheap to their mates who asset-stripped them by slashing maintenance and taking huge profits. As every asset-stripper knows, at some point the Government has to stop economically vital assets being degraded – and that’s what happened when Labour bought back the railways and the rail stock and ferries went into the ownership of Australian-based Toll.

The situation stopped getting worse but hasn’t improved: Toll wanted to make big profits too, it didn’t want to pay for the use of the tracks, and it was tempting to direct freight away from rail to its trucking line. While the Government has poured money into improving the tracks, Toll hasn’t done its part. More and more freight is moving by road when it should be going by rail.

20 years of under-investment and greedy owners have left us with a dilapidated rail and ferry system. Now the Government owns the whole system again it doesn’t need to waste time and effort trying to get private wonders to invest; it can start to make the upgrades that are needed itself. Rail should be an integral part of our national infrastructure, especially as peak oil approaches and more energy efficient means of transport are needed (rail is at least three times more energy efficient than road).

National has said it will sell the railways now the Government owns them again (well English said that, then Key said no asset sales in a first term, so who knows where they stand). Labour will undoubtedly be planning a major investment programme. The ownership of rail and the broader issue of public assets is shaping up to be a central election issue.

Buy it back

Published

IrishBill

on April 28, 2008

in assets and privatisation

. 21 Comments

I see that the Wellington lines network has been sold. Given the network has been in in the hands of foreign investors before I can’t see a sustainable argument for blocking the sale as the Auckland Airport bid was blocked. I do think the government should have bought it back. Electricity is too important to be left to a competitive model and in my opinion the government should be taking every opportunity to return the electricity sector to public ownership and then move to re-regulate it to work cooperatively. Buy it back.

Flip-flopping at warp speed

Published

Steve Pierson

on April 17, 2008

in assets, flip-flop, john key and slippery

. 31 Comments

On Monday, I wrote “Stay tuned for National’s next assets policy, due out sometime next week.” It seems I miscalculated. Here’s what Key had to say on asset sales today on newstalkzb:

“I’m going to go into an election with a group of policies and those policies we will implement or not implement as the case may be if it’s in the point of view if we’re saying we’re not going to sell something. We’re not going to sell assets and the reason for that is that there actually isn’t a strong argument for selling state assets. Forget about your ideological view. I’m actually not ideologically opposed to selling assets I’ve made that quite clear. So i could spend a bit of time selling off a quarter of Solid Energy as was our policy in 2005 and that was my policy so, as the finance guy [sic], or a few Landcorp farms but is that really going to drive higher after tax wages? If we ever change our minds and we ultimately decide that we do want to sell an asset then what we’re going to do is be transparent about that” (I didn’t transcribe the ums and ahs for comprehensibility).

So, National “will implement or not implement as the case may be” the ‘no-sale’ policy and Key leaves open the chance of asset sales in the first term in the final sentence.

Let’s add that to our list of Key’s asset policies:

November 2002: advocates privatisation in health and education
November 2005: Sell Solid Enegery and other SOEs
September 2007: Partial Privatisation, lease new school properties off private owners
March 2008: Pro sale of Auckland Airport (eventually)
12 April 2008: No asset sales in first term
17 April 2008: Maybe asset sales in the first term, if National implements no sale policy at all.

As you will have noticed, the flip-flops are getting closer together. Let’s graph the rate of flip-flops, on a ‘flip-flop per year’ scale since the last policy.

That’s right, it’s exponential. The flip-flops are coming faster and faster. Based on the formula, the next flip-flop should be in two days, to be followed by another 10 hours later. The tenth flip-flop from now will occur 0.6 seconds after the ninth. At the 16th flip-flop from now (around 63 hours away) the trend line goes vertical, John Key becomes a singularity, and a new Big Bang occurs. What that will do for Kiwis’ after-tax incomes, I’m not sure.

Running scared

Published

Steve Pierson

on April 16, 2008

in assets and national

. 32 Comments

Why did National block Parliament from debating the Auckland Airport sale?

Only last Friday, Key was “fuming” over the Government’s decision to prevent the sale, claiming it would be the end of foreign investment in New Zealand and cause a plague of boils to descend on our land.

Yesterday, when New Zealand First offered them a chance to debate the issue in Parliament, they said ‘no’. Scared to debate substantively, rather than in sound-bites, it seems.

Weak.

From slippery to send up

Published

Dancer

on April 15, 2008

in assets

. 23 Comments

Mike Moreu provides insight into the art of turning news events into images - using as one example his latest piece on asset sales:

“National continues to play it safe as John Key announces that his party has ruled out state asset sales … at least for the first term. This may appear to be a u-turn on another traditional National position, but it’s more like a cynical ploy to assuage voters’ concerns over a return to Rogernomics and stay ahead in the polls.”

An election year provides lots of fodder for the political cartoonist. We shall watch their work with interest.

National’s ‘whack-a-mole’ game

Published

Steve Pierson

on April 14, 2008

in assets, national and slippery

. 21 Comments

Trying to follow National policy is like playing that ‘whack-a-mole’ game. Up pops John Key or Bill English or a spokesperson, and they make a clear statement of policy but just as you turn your attention to it, that position disappears and they pop up somewhere else with a contradictory statement on the same policy. You don’t know where National will be on an issue from one moment to the next.

Take assets. When Key was National’s Finance spokesman he was all for selling off state assets and allowing more foreign control of strategic assets. Then the issue disappeared. Then English said National had ‘for some time’ been pro-partial privatisation and would use the proceeds to pay for tax cuts, and National talked about future state assets (new schools, for example) being built and owned by the private sector. Then National’s David Carter said Landcorp would be sold. Then Key ummed and ahhed about Auckland Airport saying he was against it falling under foreign control but opposing the Government’s decision to block foreign control. English told us that if the Government buys back the railways, National will sell them again. Now, Key tells us that assets sales are off the table completely “in the first term” of a National government, not because he doesn’t want to sell them but because kiwis oppose flogging off our assets.

But even that isn’t the end of the story. National still plans to sell part of TVNZ. It also seems that National might be planning to have SOEs issue ‘infrastructure bonds’ and pay the capital raised to the Government. In typical slippery style, that wouldn’t technically be selling the SOEs. The Government would get cash from private investors and future profits from the SOEs would go to those investors but as returns on bonds, rather than dividends.

Stay tuned for National’s next assets policy, due out sometime next week.

National to sell TVNZ

Published

all_your_base

on April 14, 2008

in assets and same old national

. 33 Comments

Despite Key’s best efforts to inoculate against the “hidden agenda on asset sales” perception - he’s now peddling the story that National won’t start selling assets until 2011 - the truth seems to have slipped out.

A reliable source close to the party has leaked National’s broadcasting policy for the upcoming election. According to the source National would sell off TV2 to private investors and turn TV ONE into a non-commercial channel, thus making it completely dependent on government funding.

Sound strangely familiar? Selling off New Zealand’s strongest assets has always been an integral part of National’s psyche. It was Don Brash who, in 2004, couldn’t rule out selling TV2. Back in the 1990s it was part of the slash and burn agenda when Jenny Shipley used to joke that she had to check on a daily basis which of the assets has been sold off over night. Maurice Williamson still regrets that he never got around to selling it at the beginnings of the 1990s when he was in charge of broadcasting. And as late as 1998 Tony Ryall stated that in some stage in the future government would seriously have to look at the sale of TVNZ.

Even more interesting is that the Tories seem to have copied their ideas word for word from a suggestion made by investment bank Goldman Sachs JBWere in January 2007. Back then Goldman analyst Rodney Deacon suggested that, with TV2 sold, TV ONE could be transformed into a BBC-style, commercial-free, public channel fulfilling TVNZ charter obligations. He valued TV2 at $392 million but said that, based on recent media deals, it could fetch $436 million. Too bad that the Nats don’t like the charter much either.

John Key might be trying hard to kill off the sneaking suspicion that National, if given half a chance, would return to the old ways of cutting benefits and privatising state assets, but slowly the whole picture is starting to emerge. A quick reminder: In October last year, for example, he couldn’t remember being lobbied by Macquarie Bank over introducing private public partnerships into education - then later admitted to it. Then Bill English slipped up saying that he would like to sell state assets - only “partial floats”, of course. And in health John Key and Tony Ryall want to allow doctors to charge patients whatever they want and channel more money into the private sector. Go figure.

To sell or not to sell

Published

Dancer

on April 12, 2008

in assets and john key

. 11 Comments

At the Labour Party congress today, Helen Clark predicted that asset sales would be a key election issue and says the Government was right to veto the Auckland Airport share bid.

“The National Party and ACT have made it plain where they stand - ’sell it off’, they cry.

This is a defining issue. In Labour we support special scrutiny being applied to bids for foreign ownership of strategic infrastructure on sensitive land.”

Yesterday John Key, with the luxury of time to prepare after being put on the spot back in March, came out strongly saying the Government’s action shows it always intended to veto the offer and overseas investors won’t like it.

However, I suspect many people would agree with Michael Cullen when he pointed out that New Zealand has had bad experiences selling assets offshore - such as Telecom, the rail network and Air New Zealand. He says it was up to the Canadian company to prove the offer was in the national interests of New Zealand.

Given the Colmar Brunton poll last month found that 48% of people said assets should be kept and 45% backed a partial sale it will be interesting to see how the final decision is received over the next few weeks.

NB - for those interested in the full ins and outs of the arguments the associated papers are up on the web here.

Poor Poor John

Published

Jasper

on April 2, 2008

in assets and john key

. 43 Comments

Tracy Watkins tells us in today’s Dom-Post that John Key may have taken a beating in the stock market lately.

He wouldn’t say how much he lost, but did admit, “I’m worth less than I was.”

And, I’ll bet some in his Caucus would agree.

Anyway, Tracy tells us that Poor John came to New Zealand with a fortune worth $50 million and now he has lost a bit. He said the amount wasn’t significant. So, what, maybe, he lost maybe a million or two?

I have to say, it brings a tear to my eye thinking of the poor guy sitting in his cabana at his $6.8 million Parnell mansion counting his remaining $48 million.

And, John Key wants us to think he is an average Kiwi Bloke – yeah, right!

Nationalise Air New Zealand

Published

Tane

on March 18, 2008

in assets and workers' rights

. 64 Comments

160 The recent scandal over Air New Zealand underpaying its Chinese workers to the tune of four times less than their New Zealand counterparts comes as no surprise given the sick management culture at our national carrier, and highlights some serious contradictions in the airline’s ownership structure.

Here we have a company that’s 80% owned by us, the New Zealand public, and yet because it is structured as a private company it’s allowed to act unethically and even undermine our national interests in the pursuit of short-term profit.

You will recall how Air New Zealand secretly ferried troops to Iraq in defiance of the New Zealand public, half-succeeded in gutting our high-skill, high-wage aircraft engineering industry, and has tried to cut the wages of thousands of Kiwi workers by contracting their jobs to third parties at lower rates and outsourcing anything that can’t be nailed down to low-wage economies.

It’s time we got some democratic control over our national carrier by bringing it into full public ownership and strengthened our labour laws to stop the airline undermining its workers’ pay and conditions.

Helen Clark shouldn’t be excusing Air New Zealand’s behaviour - she should be nationalising it.

National confirms Landcorp would be sold (?)

Published

Dancer

on March 12, 2008

in assets, election 2008 and john key

. 18 Comments

We have an interesting mixed message (once again) from National on asset sales. David Carter is quoted in the NZ Farmers Weekly as saying:

David Carter: “As Minister of Agriculture I would sell Landcorp. I don’t see taxpayer money best invested in farms” (10 March, 2008).

However after the example was raised in Parliament today Mr Carter tried to defend himself, saying not only did never say it but that he had rung the paper to tell them so (sound familiar?). I’ll post the Hansard when it goes up later today. (see below for quote)

He need not be defensive. Mr Key is already on record saying Landcorp farms would be sold. Indeed National leader John Key told Rural News last year that he has concerns that Landcorp is not performing.

Key: “We think the economic returns are relatively low. We are not sure the State makes a terribly great farmer and don’t feel we need to own farms to do the research.” (Rural News, 25 June 2007)

Mr English confirmed last year that National will have a programme of the partial sell off of assets.

So was Mr Carter really misquoted? Or has he adopted his leader’s habit of saying what people wanted to hear?

Some may say “but Labour has sold farms too”. But there’s a difference between the odd sale (and purchase) in the pursuit of operational efficiency when you’re committed to overall ownership of the asset and a wholesale sell off.

Just to re-inforce the point, the Government took steps last year to place strict criteria around future sales.

(Hat-tip: ferg)

Update: Here’s what Mr Carter said:

Hon David Carter: I raise a point of order, Madam Speaker. For the sake of clarity, I just point out that I rang Mr Alan Emerson, the author of that article. That is not a direct quote of mine, at all. (Hansard, 12 Mar 2008)

Canadian Pension Fund’s asset-strip plan

Published

Steve Pierson

on March 12, 2008

in assets

. 35 Comments

The Canadian Pension Fund is planning to asset-strip Auckland Airport.

Once they have control they would demand “hyper-dividends” three times the size of the Airports’ normal dividends. Where would the money have come from? From funds the airport would otherwise have spent on maintaining and upgrading its assets. The Fund would walk away with a pile of money from our economy; the airport would be left with crumbling, outdated assets.

Fortunately, the Fund’s bid is not being accepted by shareholders. The Fund needs 39.2% of shares for its bid to succeed. As of Tuesday, only 26.22% have accepted the offer. The bid closes tomorrow.

Predictions that shareholders would accept the offer to spite the Government after it intervened to tighten the law protecting strategic assets from foreign control last week have been proven wrong. Ordinary kiwi shareholders along with the Manukau and Auckland city councils (the two biggest shareholders) do not want our prime assets falling under foreign control and are happy with the good dividends the Airport has returned.

The revelation that even the supposedly benign Canadian Pension Fund was looking to asset-strip completely justifies strengthening the Government’ power to block foreign control of strategic assets. Fortunately, the Government won’t be required to step in this time because New Zealand shareholders are saying ‘no’ themselves.

Key backs the underdog

Published

IrishBill

on March 4, 2008

in assets, john key and national

. 24 Comments

The latest Newsroom story [subscription only] about the Government’s move to protect Auckland International Airport from sale to the Canadian Pension Fund reports Labour is taking National to task on the issue of their support.

Prime Minister Helen Clark is challenging National to state its position on strategic assets sales after the Government stepped in to effectively place Auckland International Airport beyond the reach of foreign control.

Interestingly John Key’s first response is to speak out on behalf of his former master - the market.

The Government should have made its intentions clear much sooner and the move did not inspire much confidence in the capital markets

A little bird told me that in a recent meeting with business leaders National’s deputy leader Bill English was challenged on what made National different to Labour. His answer was simple:

Industrial relations and privatisation.

I’d say Labour has just made it a little harder for them to move on the second part of that agenda. Poor old capital markets.

Update: National has responded by calling the decision “political opportunism” and then trying really hard to sit on the fence. It seems John Key is willing to tell us whatever we want to hear. Well, most of the time. Just don’t ask him to speak against the market.

Protecting New Zealand’s assets

Published

Steve Pierson

on March 4, 2008

in assets, economy, labour and tax

. 89 Comments

nz150 The government has made a series of moves to prevent strategic New Zealand assets being exploited by foreign companies. Last week tax law was changed to prevent the Canadian Pension Fund avoiding tax in its bid for Auckland Airport. Yesterday, the government changed the Overseas Investment Act to give Ministers veto power when strategic land is up for sale. The government will also change tax law to stop oil drilling companies offsetting costs from their foreign operations against their tax in New Zealand; previously foreign companies were able to extract our oil and sell it without New Zealand getting our share in tax.

It is good to see the government taking this stance to protect our assets. Already, foreign owners take $15.4 billion (8% of our GDP) in profits from the work of New Zealanders every year, most of it dividends from former public assets that were sold off too cheaply in the 1980s and ’90s. Foreign owners also have a bad record of asset-stripping the New Zealand companies they own; extracting maximum profits while running important pieces of infrastructure (like our rail network) into the ground. We do not need more prime New Zealand assets falling into foreign hands.

Other parties have warmly received the government’s moves, except for National, which has been conspicuously silent. The public deserves to know: would Key have acted as the government did or would he have stood by while foreign companies bled this country?

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