Editorials 3 June 2010

June 3rd, 2010 at 11:15 am by David Farrar

The Herald wants an FTA with given priority:

Last year, New Zealand exports to Russia were worth $187 million, a modest sum even if well up on the $51 million of a decade earlier. As Russia has a population of 142 million, those figures hint at the potential of a free-trade pact.

But more telling still is the fact that not so long ago, New Zealand enjoyed thriving commercial arrangements with the former Soviet Union despite an often strained diplomatic relationship, not least over the invasion of Afghanistan.

But Keith Locke supported that invasion, so maybe we should make Keith the free trade negotiator for Russia :-)

The Press supports the creation of a new bank:

The proposal to merge three finance organisations to create a new locally owned bank is a timely one.

For the finance institutions themselves, it is an opportunity, driven by necessity, to turn themselves into stronger, more robust entities, particularly after the turmoil of the last three years or so.

For investors, looking to diversify their investments away from the great Kiwi stand-by, domestic real estate, it could provide a worthwhile and productive place to put their money.

And for borrowers, particularly small-business owners who have complained of being cold-shouldered by unsympathetic banks during the financial crisis, it could provide a friendlier, more knowledgeable lender to local business. …

The three entities involved – Pyne Gould Corporation’s finance arm Marac Finance, the Canterbury Building Society and the Southern Cross Building Society – are established names in finance.

They have not been unscathed by the upheavals of the financial crisis, but they have survived it with credit ratings still at very respectable levels for non-bank institutions.

Two have BB+ ratings and the other a BB rating, which is at the high end for entities that are not banks.

But still not great. The acceptable grades are:

  • AAA : the best quality borrowers, reliable and stable (many of them governments)
  • AA : quality borrowers, a bit higher risk than AAA
  • A : economic situation can affect finance
  • BBB : medium class borrowers, which are satisfactory at the moment
  • BB : more prone to changes in the economy
  • B : financial situation varies noticeably

Once you start to get into CCC and below, institutions are officially vulnerable.

The Dom Post talks :

But for recent events in the Gulf of Mexico, the Government would be making more of a fuss of Brazilian oil giant Petrobras’ decision to explore for oil and gas off the East Coast of the North Island.

The world’s fourth-biggest energy company, a world leader in offshore drilling, this week won the right to explore about half of the Raukumara Basin, which extends north and east of East Cape. The company will spend up to US$118 million (NZ$174m) over the next five years gathering seismic data and drilling an exploratory well.

The project will create jobs and draw international attention to New Zealand as a potential source of petroleum.

But the big gains will come if Petrobras makes a commercial find. Already the petroleum sector generates about $3 billion a year in export revenue. Energy Minister Gerry Brownlee has estimated that figure could rise to $30b by 2025 if preliminary estimates of New Zealand’s petroleum resources prove to be correct.

Which would make a huge difference to our standard of living, and ability to fund health and education services.

However, celebrations this week have been muted by the ongoing disaster in the Gulf of Mexico. Six weeks after an explosion on BP’s Deepwater Horizon rig killed 11 workers, the well 1.6 kilometres beneath the sea is continuing to spew between 1.9b and 3b litres of oil a day into the gulf, polluting the fragile Louisiana coastline, threatening fisheries and destroying the livelihoods of fishermen and tourist operators.

For that reason it is essential that the promised overhaul of New Zealand’s health, safety and environmental arrangements for offshore petroleum operations is completed well before any deepwater drilling begins.

Agreed.

The ODT looks at and :

Facebook, once a small, “free” social networking site for university undergraduates to share personal information, has become a vast subdivision on the information super highway.

It is expected soon to reach a landmark figure of 500 million registered users.

This would make it the third largest country on Earth, bigger than all but India and China.

On Monday this week – “Quit Facebook Day” – Canadian campaigners urged people worldwide to remove themselves from the site.

They, and many others, were riled about the way in which they felt their privacy was being purloined for profit.

Quite why they should have been so surprised is another matter: you do not pay upfront to belong to Facebook, but the company must make ends meet – and a tidy profit – somehow.

That “somehow” is no great secret.

The site sells advertising to companies tailored to the defined demographics of its users.

The “footprint” they create in their Facebook activities is like gold to advertisers and marketers who will pay accordingly.

I was talking last night to someone about Facebook, with the idea being that if a user is aged under 18 then their privacy settings are set by default to not share data with anyone but friends.

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13 Responses to “Editorials 3 June 2010”

  1. ephemera (556 comments) says:

    There is an alternative against Facebook being hyped right now, called Diaspora.

    Supposedly this will be an open-source, decentralized and privacy-assured social network. I am really excited to see what the people behind it come up with, but don’t enjoy the prospect of changing platform for the 3rd-odd time.

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  2. RRM (9,917 comments) says:

    People get far too uptight about Facebook privacy issues IMHO. It’s provided free, use it or don’t but stop whinging.

    And FB has always been about attention-seeking on the internet not top-secret secure communication. Forget that at your OWN peril.

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  3. campit (467 comments) says:

    Already the petroleum sector generates about $3 billion a year in export revenue.

    Details please! What is the definition of “export revenue”? Are we including revenue earned by overseas shareholders? For instance the Tui oil field is only 12.5% owned by NZOG through a JV. The rest is owned by Australian Worldwide Exploration and other overseas interests.

    Ad Valorem (reveneue based) royalties from oil can be surprisingly high (20%), though not sure what has been put in place for the Petrobras arrangement.

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  4. voice of reason (490 comments) says:

    ” was talking last night to someone about Facebook, with the idea being that if a user is aged under 18 then their privacy settings are set by default to not share data with anyone but friends.”

    – Facebook “security & privacy” settings are a chinese puzzle of check boxes, 5 different menus, differing settings for tagged photos, photo albums, applications et all. A new setting called Instant personalistion is the one which by default shared your info with “partner websites” is the one which was behind the recent campaign I believe
    Find & turning off all these settings is beyond the average facebook user.

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  5. Bevan (3,924 comments) says:

    RRM: And FB has always been about attention-seeking on the internet not top-secret secure communication.

    I thought that was Bebo and My Space? And FB was for the more sophisticated slob.

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  6. Bevan (3,924 comments) says:

    campit: Details please! What is the definition of “export revenue”?

    I dunno, maybe the same for every other type of export business maybe….

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  7. campit (467 comments) says:

    So Bevan, if a New Zealand dairy company is 100% owned by China do its earnings count as NZ export revenue by your definition?

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  8. Bevan (3,924 comments) says:

    campit: So Bevan, if a New Zealand dairy company is 100% owned by China do its earnings count as NZ export revenue by your definition?

    If it is owned by China, then it is not a New Zealand Diary company is it. It is a Chinese diary company operating in New Zealand. If you object to a Chinese diary company repartiating the profits back to China, then do you also object to Fonterra repatriating their profits back to NZ?

    Would you also bitch about the profit Microsoft makes going back to Redmond?

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  9. Mr Elbow (30 comments) says:

    Hmmm if I was a smart man I would have mentioned David Garrett’s blogpost on offshore drilling here instead – and hey, when an ACT MP talks of the importance of environmental protection then you KNOW things are serious! http://www.davidgarrett.org.nz/?p=996

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  10. Jeremy Harris (319 comments) says:

    I’m excited by the possible new kiwi owned, listed bank…

    I’ll be asking for some IPO info, hopefully with info about how they plan to raise their BB rating..!

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  11. campit (467 comments) says:

    If it is owned by China, then it is not a New Zealand Diary company is it.

    Bevan, that’s my point. Any “export revenue” from our hypothetical example would still count as export revenue flowing into New Zealand. The way it is measured is exports leaving New Zealand’s geographic boundaries, but in the age of global corporates this is becoming an increasingly irrelevant figure.

    The claim was made that “already the petroleum sector generates about $3 billion a year in export revenue” and therefore this “would make a huge difference to our standard of living, and ability to fund health and education services”. But a $3bn a year export revenue figure is presumably just the value of the oil that leaves New Zealand’s geographic boundaries. It does not mean $3bn a year actually flows into New Zealand. Now do you get it?

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  12. side show bob (3,660 comments) says:

    ETA with Russia, cool more Lada’s, those things are indestructible, drive them off a 100 meter hill, roll them on the road, just tip them back on their wheels and drive away.

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  13. wikiriwhis business (3,996 comments) says:

    Talking about petrol

    Is it so obvious the pterol companies are dropping prices in anticipation of the envirnment tax in July.

    I hate thinking how fast those prices are going to sky rocket mid winter.

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