Editorials 26 May 2010
May 26th, 2010 at 12:00 pm by David FarrarThe Herald supports a float of Kiwibank:
The Prime Minister has indicated that any part-sale of the bank would be a public float aimed chiefly at mum-and-dad investors, not a trade sale, and that the Government would want to retain a majority shareholding.
As such, he is extolling the idea of a shareholding democracy, a concept that has flourished in Britain and Australia but which enjoyed a regrettably brief currency here.
Floats of the likes of Vector, Contact Energy and Auckland International Airport proved, however, to be hugely popular with Mr Key’s target shareholders, who recognised the opportunity for steady incomes and long-term returns from such utilities. …
The bank’s success means it needs substantial amounts of capital to grow further.
A cash-strapped Government would be an unwilling source. Nor would it be likely to be able to orchestrate a trade sale because potential buyers have their eyes fixed on the burgeoning Asian market.
Indeed, the Government might even see a rationale for keeping Kiwibank in New Zealand hands, if only to provide consumers with choice in a market dominated by Australian-owned competitors.
Everything, therefore, points to a float. The Government should not hesitate to confirm as much in the most unambiguous of terms. And to state that, finally, the country will have the chance to fully embrace the benefits of a shareholding democracy.
Hear hear.
The Press tuts tuts Fergie:
A British tabloid newspaper reporter, Mazher Mahmood, had revealed a sting operation against the duchess, in which she was filmed demanding, anything but selflessly, NZ$1.074 million from an undercover reporter in return for access to the Duke of York, Prince Andrew, who is her former husband.
The cash-strapped but big-spending duchess has subsequently apologised for what she called her serious lapse in judgment. But no apology can undo the damage this affair has done to her own reputation and possibly to that of the prince.
The duchess has long been renowned for her gaffes but this scandal is far more serious. She was trying to exploit her position as the prince’s former wife and use him to gain financially.
Very tacky.
The Dom Post talks Auckland super city:
The Government’s efforts to assuage concerns about the Auckland super-city by strengthening the transparency and accountability of the organisations that will run much of the city deserve support.
Change was needed in Auckland. Local government there was a fractured mess. Planning on Auckland-wide matters such as transport continually foundered on the egos of local body politicians.
One council, and the move to council-controlled organisations, should help break the jam and start solving Auckland’s massive infrastructure problems. …
Allowing Auckland Council to require them to hold meetings in public will go some way towards that, though those who follow local body politics know that it is all too easy for even elected councils to dodge transparency by going into committee and shutting the doors on the public.
Making the CCOs subject to strategic plans set by the council means setting overall goals is the job of those who must answer directly to voters. That is what is needed in a democracy.
In a few years Aucklanders will wonder what all the fuss was about, and why id they wait so long to rationalise their local government structure.
The ODT looks at the oil spill:
The news from the Gulf of Mexico is not good, and there are lessons to be learnt in New Zealand – and, more specifically, Otago – from the oil disaster and its subsequent handling.
Foremost among these are the very real economic and environmental dangers associated with deep-sea drilling such as that which has been mooted for the Carrack/Caravel site off the coast of Dunedin. …
You have to feel sorry for Louisiana especially.
May 26th, 2010 at 12:16 pm
Can someone explain how a state owned asset can be sold to the existing shareholders of the state – ie taxpayers. Genuine question.
Also I do wonder if mum & dad investors will benefit from the same creative cost-alloaction currently enjoyed by Kiwibank on account of it’s join-at-the-hip relationship with NZ Post.
Vote:May 26th, 2010 at 12:28 pm
So the Duchess of York (estranged) remains public property, and how dare she be on the make for herself?
If some people think paying her off is a worthwhile means of getting the Duke’s ear, more power to her. Surely there is a proper channel (available to everyone else) that they could have chosen to go through.
And Hear hear to Key. If it’s really the people’s bank, let the people invest.
Vote:May 26th, 2010 at 12:39 pm
I don’t often agree with John Bland-but you know what he is suggesting around Kiwibank makes sense. The Reds and Red-Greens will be all too eager to mouth off about rapacious overseas interests running off with the family silver. However, private equity involvement from Mom & Pop investors in New Zealand means eveyone wins.
Vote:The bank gets the growth equity it needs and ordinary New Zealanders get a chance to enahance their personal wealth by participating. Every one wins! The challenge in these cases is not whether privitisation is good or bad it is how to prevent the loss of voting control to foreign interest groups. That is another matter.
The government’s suggestions means instead of Kiwis paying taxes that go to supporting a monolithic State-subsidised dinosaur (Kiwirail anyone?) on a total loss basis, at least we will get a choice of whether we want to invest our hard-earned dosh in Kiwi Bank or not.
May 26th, 2010 at 12:39 pm
A partial public float of state owned assets makes sense, but will it stop there the TSB Bank unlike Kiwibank is owned by the people of Taranaki, not the government. Yet the government still dictates that it has its own govt appointed members on the TSB Bank board of directors. If the bank is not owned by the govt, then why does the govt have its own govt appiontees on the board. Other than wanting to have a say in controlling its assets.
Vote:May 26th, 2010 at 12:55 pm
Surely the practical route is to issue more shares – say 50% thus providing Kiwibank with the additional capital to expand whilst reducing the government share to 66%. If sucessful could be the platform for other SOE’s.
Vote:May 26th, 2010 at 1:10 pm
Government TSB board appointees are necessary because (as has become clear from recent experience) banks need close supervision. We are fortunate to have the benefit of the use of closely controlled well capitalized Australian banks; if the only banking in NZ had been NZ owned I suspect we would be looking at an Iceland type scenario. Icelandic Banks could not expand on the resources of a limited local population so they went chasing overseas business. I well recall the BNZ fiasco and the Govt. bailout.
Vote:May 26th, 2010 at 1:37 pm
I can’t figure out why Hurricane Katrina was all Bush’s fault, but Obama for some reason gets a free pass for dicking around and doing nothing about the oil spill. Can anybody enlighten me?
Vote:May 26th, 2010 at 1:38 pm
Re ; the oil spill. One of my good mates now travels around S E Asia, Aussie, NZ testing oil and gas flows. Talk in the industry is that BP had put three concrete plugs in the well to cap it off, till a new rig arrived to set up production facilities. It is thought these plugs did not fully seal the well head and gas escaped. As the wells were very deep the gas was under tremendous pressure and as it rose the gas expanded a thousand fold. When this gas hit the rig it took out the accommodation unit instantaneously igniting and the rest is history. According to my mate BP weren’t running the right equipment but the general feeling is that this would probably have made little difference. Their mistake was a belief the plugs had contended the pressure.
Vote:May 26th, 2010 at 1:43 pm
I can’t figure out why Hurricane Katrina was all Bush’s fault, but Obama for some reason gets a free pass for dicking around and doing nothing about the oil spill. Can anybody enlighten me?
Its easier to make a scapegoat of a physical entity, than a natural event that has caused a disaster.
Vote:May 26th, 2010 at 1:44 pm
When the journalist dumped $40K in the coffee table the Dreadful Duchess salivated, gushed and threw all caution to the wind. At that point she would have done anything, just anything – the mind boggles. Oh well she dusts herself off and just stiffens the upper lip and carries on. Mother to two of the Queen’s grandchildren. As one of the Queen’s former staff said she is “vulgar vulgar vulgar”,she always has been always will be. The Duchess just cannot help it – 50 and climbing.
Vote:May 26th, 2010 at 3:53 pm
Who will never be tempted to sell to a foreign multinational who, once it has swallowed all the small shareholding parcels will wield enormous influence even if the government does retain a majority.
Not at all like, say, the electricity companies which were sold to “mums and dads”, most of them who had no idea of how the sharemarket works and saw no value in the shares. So the multinationals set up shop front share-buying operations where people queued to receive a cheque for around $1,000, which barely compensated them for the price rises they were then forced to endure in the first three years and certainly aren’t helping them now.
If you think it’s a good idea to flog it to your mates, John, at least have the guts to say so and attempt a justification, rather than taking us all for f#cking mugs.
Vote:May 26th, 2010 at 4:38 pm
I support privatisation but I doubt I would buy shares in Kiwibank..It evolved because the Aussie Banks were closing down un-economic branches in smaller communities. Anderton’s deal with Labour established Kiwibank without regard to economics. A commercial operation following privatisation wouldnot want to continue with uneconomic branches. Its current overheads are probably illusory with hidden costs carried by NZ Post….. Privatisation of the existing combined entity NZ POST/Kiwibank now that would be attractive as an investment.
Vote:May 26th, 2010 at 5:43 pm
NZ Post profit before the sale of Postbank to a rapacious Australian bank: ~$72 million.
NZ Post profit after the sale of Postbank to a rapacious Australian bank: ~$31 million.
Suggesting Postbank, with a branch in most (all?) Post Offices, no matter how small, was profitable to the tune of around $40 million and not subsidised by NZ Post at all.
Also suggesting that, since a rapacious Australian bank bought it, either they’re into buying duds or it was providing them some real (and unwanted) competition.
The reduced costs of co-location would no doubt play a significant role in Postbank’s ability to be profitable, which is why Kiwibank was established in much the same way.
Postbank was sold and quickly swallowed, disappearing from the market – it wasn’t a “merger”, as it was spun at the time, but anti-competitive behaviour designed to take a competitor out of the market and strengthen the oligrachy of foreign-owned banks. And it worked, because we were stupid enough to let it.
Incidentally, assuming profits were flat, and since Postbank was sold in 1989, we’ve foregone $840,000,000 in returns to the taxpayer.
Vote:May 26th, 2010 at 6:43 pm
Creating Kiwibank was a mistake. Not selling it already was a mistake as well. Both of those are arguable though.
But the idea that it can be sold to NZers but not foreigners is just idiocy. Nobody would suggest that unless they were economically illiterate or grossly unprincipled. We should be seeking more foreign investment not less.
Vote:May 26th, 2010 at 7:39 pm
Interesting… Nigel Kearney approaches the issue from a position diametrically opposed to mine yet we both conclude Key’s line on “mum and dad” investors shows he’s either stupid or a grossly unprincipled snake oil salesman.
Considering a wildly successful former trader is unlikely to be ignorant of the reality of such matters, things ain’t looking good for the integrity of Honest John.
Vote:May 26th, 2010 at 7:56 pm
trout @ 1:10 pm
I hear what your saying.. but that is not true and does not apply in case of the TSB.
Vote:Although the govt uses your reasoning to put in its own govt board appointees.
It is and continues to be a red hearing… as there are already safeguards in place to prevent this from happening.. without the need for govt appointees to be on the board.
May 26th, 2010 at 9:33 pm
Those awful rapacious Australians banks! What’s worse is that you can’t buy shares in any of them and bring some of those stolen profits back home through dividends!
Vote:May 26th, 2010 at 9:52 pm
Gosh, can you ISeeRed?!
Wow!! And I bet you can stop them paying their CEOs in excess of $10 million a year and their senior executives tens of millions more, and instead demand they pay reasonable salaries while returning those tens of millions to shareholders! Because you’re sure to have the backing of the institutional investors who’ve gobbled up the majority of shares. That’s why so many remuneration recommendations are overturned at AGMs.
And you can demand they slow down foreclosing on homeowners and small business people too, causing personal insolvencies to increase by 300% since 1990 (caused in the main by the banks having sold those people unaffordable debt at bargain basement interest rates before jacking them up).
And make them into good corporate citizens overnight, just by waving your few lousy impotent shares around…
Gosh, if only I’d realised how much power the average shareholder wields!! Thanks for opening my eyes.
And anyway, everyone knows that the fewer the players in the market, the fairer and more principled are the remaining players.
Vote: