Labour’s challenge
January 27th, 2011 at 11:45 am by David FarrarLabour have a challenge in whipping up opposition to National’s likely policy to allow people to invest in four power company SOEs, while retaining majority crown ownership and control.
When Phil Goff attacks John Key for a policy of minority stakes being allowed, John Key will no doubt point out that Phil Goff enthusiastically sold off 100% of NZ Steel, Petrocorp, DFC, Postbank, Rural Bank, State Insurance, THC, Maui Gas and oh yeah Telecom.
And worse Phil Goff sold them with no mandate, while John Key is doing the opposite – going to the voters saying this is what we will do (and only do) if re-elected.
I have no doubt National will lose some popularity if it confirms a policy of allowing minority private investment in those SOEs. But I beleive it will be relatively modest compared to what it might be if Labour wasn’t led by someone who was an enthusiatic champion of asset sales in the past.
Also of note, the Herald editorial welcomes the policy, and the fact the PM is risking taking on a sacred cow:
Courage in politics is seldom recognised when it is successful. It takes courage to challenge a sacred cow, but a well-aimed challenge can render the cow sacred no longer. John Key’s announcement of public asset sales yesterday should be recognised as a decision both courageous and well directed.
Importantly, Key has built up trust by keeping to the no SOE sales in the first term policy, so that voters can be reassured that any policy for the second term will also be adhered to and not exceeded.
The Prime Minister has made a very good case for the decision to partly privatise the state’s three power companies and its coal company and reduce its stake in Air New Zealand. He says the sales are primarily to finance the construction of other public assets that will be needed over the next five years.
Yes, the state is not reducing its total number of assets – in fact it is growing them.
The partial floats of Meridian, Genesis, Mighty River Power and Solid Energy, will bring some much-needed new life to the stockmarket and begin to provide an alternative to property investment for superannuation funds and personal savers.
This privatisation programme will favour local share buyers over foreigners, much like the sale of power companies in the 1990s. Unlike then, the Government plans to retain a majority holding. Mr Key believes this makes for the “best of both worlds”. The company is subjected to the discipline, reporting requirements and oversight of the sharemarket and the bulk of its dividends go to the public purse.
It is a bold plan and a sensible one. Public asset sales alone will not sustain the sharemarket or breed a new investment culture in the population. But they are a start.
If we want people to borrow less, and save more, we need to have companies they can invest in.
Tags: editorials, NZ Herald, Phil Goff, privatisation
January 27th, 2011 at 11:57 am
“I have no doubt National will lose some popularity if it confirms a policy of allowing minority private investment in those SOEs. ”
And the truth of that statement makes one despair for New Zealand. Even Key’s rhetoric (dont worry about us selling assets as we plan to buy even more) is discouraging. It’s as if the USSR, China, North Korea, East Germany or Cuba, let alone pre 1980s New Zealand have taught us nothing.
Vote:January 27th, 2011 at 12:01 pm
Seems very sensible to me. Goff, as usual, should just be ignored.
nevertheless, they who designate a full privatisation of TVNZ first, get’s my vote. If the public is to own businesses, then those businesses should at the very least provide some public good. TVNZ patently doesn’t.
Vote:January 27th, 2011 at 12:03 pm
This is all a smokescreen DPF! National must address the serious issue of the moment as Trevor Mallard has raised the matter of hair dye!!!!
Seriously if Key loses this election he’d have to be the biggest muppet to ever walk the earth.
Vote:January 27th, 2011 at 12:07 pm
Labour’s (Goff’s) challenge – to sound like he knows something about the economy and not to sound like someone who regurgitates tired old slogans (otherwise he will sound like a tired old politician)
National’s (Key’s) challenge – to talk sense to enough voters to convince them to give him a vote of confidence in November
There’s probably no better person than Key to guide the country towards a more sensible balanced economic path, and no better time to do it. Key has experience in financial fields, he sounds like he is knowledgeable when he talks about economic matters, and he has an ability to talk to people, not down to them and not treat them like sound bite idiots.
Ultimately for him to succeed he has to get enough of the electorate behind him – that’s how democracy should work, despite the frantic calls for a major lurch NOW from some people. So he’s started the election year the best way he could to set his vision in motion.
If Key doesn’t succeed at least he should have given it as good a shot as anyone could. And it would probably consign the country to a few terms at least of populist pandering and wallowing.
Vote:January 27th, 2011 at 12:07 pm
If the partial floats of these enterprises occur then among those participating in the purchase of shares will be the Cullen Fund as well as the ordinary retail investors like me.
Vote:As far as I am concerned I don’t see any real economic problems in what is proposed and in fact see benefits.
January 27th, 2011 at 12:11 pm
Despair, indeed.
The population’s mindset is on passing the buck and avoiding personal responsibility since someone else will always end up paying for the consequences of your own mistakes.
A mindset worsened by the most negative aspects of the pervasive welfare state.
Without any attempt to reform the corrupt welfare edifice and bring down the number of bludgers, loafers, “breed-for-money” people that abound in today’s NZ, our country is destined to continue on the downward path.
People hooked on benefits (the whole gamut, from the DPB to WFF) are easy target and our corrupt politicians know it.
Vote:January 27th, 2011 at 12:13 pm
I expect Labour will start sounding like a stuck record over this: stuck in the past. They have said nothing about building a better future except for the claim that throwing lollies around will benefit those with a sweet tooth. They always seem to justify things by saying ïf National hadn’t done XYZ then our policies would be sensible. Hah!
My line on the share sell down would be this: NZ has $10 billion. What is the best thing we can do with that money to enhance New Zealand’s future? Use it to own all the electricity generators? Or invest it in hospitals, schools, roads, broadband, and 1000 other things. No brainer really.
Vote:January 27th, 2011 at 12:16 pm
Theres no downside to this.
Let these companies be publicly traded. We always bang on about how great we are as a nation.. we lead the world blah blah. well let these companies get some capital and expand overseas.
wouldnt it be nice to have aussies whinging “a billion of our dollars goes to kiwi power companies” etc etc
Vote:January 27th, 2011 at 12:20 pm
Good policy but msm challenges already abound. Headlines of Asset sales and opinion pieces of “selling the family silver” already seem to the norm not the exception – regardless of the facts. Having said that no point being in politics unless you’re prepared to push change for the better and this is one of those things worth pushing on. Good.
Vote:January 27th, 2011 at 12:26 pm
more foreign ownership…
which will mean even more profits just flowing offshore than now..
how can that be a win for us…?
and my understanding is that goff has mea culpaed over his asset-sale history…
..and i mean..it all went so well the last times…eh..?
…mug-punter nz’ers were screwed every which way..
..corporates/individuals stuffing their pockets with the proceeds of state assets..
built over generations from taxpayers money..
..all just virtually given away…
…and that is what is on the menu now/again…
..you are trying to throw lipstick and a tutu on a pig…and call it a palin..
..but we’ve seen it/her before..eh..?
phil(whoar.co.nz)
Vote:January 27th, 2011 at 12:27 pm
Goff is a hypocrite.
Vote:This is a brave and bold move by the government I for one applaud it, and will be in boots and all with my cash.
Very Good.
January 27th, 2011 at 12:31 pm
fool us once…your fault..
fool us twice…our fault..
phil(whoar.co.nz)
Vote:January 27th, 2011 at 12:33 pm
I’m not sure how many people have seen it, but I was at Te Papa a couple of weeks back and they have on the NZ Culture Exhibition a montage around the 1980′s reform and sale of state owned assets, one of the clips in it, (which I almost feel over laughing watching) was a clip of Phil Goof saying almost word for word 20 years ago exactly what Bill English is saying now about the importance of creating REAL jobs not artificial ones through government spending etc…. It would be great if someone could track it down and post it somewhere must be in TVNZ archives
Vote:January 27th, 2011 at 12:39 pm
It amazes me that no-one has mentioned Michael Cullen’s selling 100% of Vector Wellington Electricity to the Chinese with no chance of Kiwis being able to invest. Shouldn’t Labour be reminded of this at every opportunity?
http://www.beehive.govt.nz/release/approval-granted-vector-wellington-network-sale
Vote:January 27th, 2011 at 12:42 pm
The quotes usually suggest that people evolve from young socialists to older conservatives.
Second childhood?
Vote:January 27th, 2011 at 12:45 pm
I look forward to Winston supporting this, he was treasurer when Contact was floated, as his constituents need somewhere to get a decent return and therefore a more comfortable retirement, they can be patriotic at the same time.
Vote:January 27th, 2011 at 12:56 pm
Herald’s Fallow criticises Key and Goff’s questionable policies:
Ideology and tribalism behind questionable policy
http://msn.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10702279
Vote:January 27th, 2011 at 1:10 pm
Can’t they do the same with KiwiRail? – thats a dead bird around the taxpayers neck.
Vote:January 27th, 2011 at 1:13 pm
I guess Brian Fallow got his byline on the front page but his opinion piece was superficial and confused. The assets that the Government is intending to partially sell are chicken feed compared with the enormous investment in infrastructure in this country; this is where the money is going and should be going. Per head of population NZ would be one of the most asset rich countries in the world. But these fixed assets – roads. bridges, schools, hospitals etc, etc. seem to be taken for granted as if they are not ‘family silver’.
Vote:January 27th, 2011 at 1:17 pm
Can someone explain to me the difference between what John Key announced yesterday and what David Cunliffe talked about just before xmas???!!!! I am pretty sure they said roughly the same thing…..
Perhaps more importantly, can someone outline the chasm between what Cunliffe talked about prior to xmas and what the Red Machine is pumping out now.
Doesn’t seem like there is a lot of policy coordiantion between Goff and Cunliffe!!
Vote:January 27th, 2011 at 1:29 pm
Labour would rather people invest in failed finance companies which all went belly-up in their term. Is that what the Labour Party wants people to invest in.
Vote:January 27th, 2011 at 1:29 pm
@ neebone Cullen didnt own the Wellington network so he didn’t sell it. There are plenty of infrastructure companies if you wish to invest in one.
Vote:January 27th, 2011 at 1:31 pm
“Can’t they do the same with KiwiRail? – thats a dead bird around the taxpayers neck.”
First of all, who would want to invest in KiwiRail. Would you? The Energy Companies have a proven track record for generating cash. KiwiRail is nothing more than a big black hole for throwing your money into. You would have to pay someone to take it away from you.
Secondly, and probably the greatest reason of all why the government will never sell KiwiRail is that it would be political suicide. Most people with their heads screwed on know that it is worth more as a cycleway than for carting goods, let alone a handful of passengers. But as most people are stupid a sale of this eyesore is hugely unpopular.
Vote:January 27th, 2011 at 1:33 pm
Good point reversespin. I recall Cunliffe championing public-private partnerships as if he invented the idea.
Vote:January 27th, 2011 at 2:07 pm
Labour’s Challenge: Finding just the right colour hair dye to make Goff popular.
Vote:January 27th, 2011 at 2:11 pm
Trevor Mallard had his own partial privatisation plans too.
Vote:Think back to 2006 when he was SOE minister and was saying all kinds of things.
January 27th, 2011 at 2:11 pm
Liarbour also sold stuff it defined as ‘none core.’
Vote:January 27th, 2011 at 2:15 pm
It was noticable that on the 0600 news this morning a certain, Phillip Goff was rabbitting-on about Mr Key’s actions being similar to selling-off the ‘family silver’ This from the hypocritcal socialist that did exactly that when he was in power – and without apology or legal authority to do so.
Should we be surprised? Typical Labour hypocricy and ‘forgetfulness’ (when it suits them!)
And FWIW, I notice with some interest that Richard Prebble (he who also sold things off – when another Labour governmetn was in control) supports the ‘Key’ action – and this from a socialist! Perhaps he has finally seen the (Capitalist) light – or is he just envious?
Vote:January 27th, 2011 at 2:40 pm
WHy are we relying on the govt to create great private sector companies? I’m so confused by you guys at the moment!
Vote:January 27th, 2011 at 2:44 pm
Perhaps this sell down will go better than the one overseen by Douglas/Prebble. I have heard all the arguments against state ownership but in a small country like NZ where much of our infrastructure is in effect a monopoly 100% private ownership means we get screwed as customers.
Privatisation of NZR was a classic example. The arseholes who bought it & asset stripped it would in a less benign nation have been deservedly tarred & feathered alongside the fools who sold it cheap. Just maybe our leaders can learn from history.
Vote:January 27th, 2011 at 3:08 pm
Labour had it’s chance to embark on a privatisation programme but couldn’t because essentially they stuffed it up last time.
Vote:This news is exactly what the capital markets have been howling for and will generate huge interest in the marketplace. This time round the valuations will be more precise, consequently in 18 months the Government will be in line for a considerable windfall.
This is good news and the timing is right.
January 27th, 2011 at 4:15 pm
Until Key announced asset sales I thought Labour had no show of winning in November (I did expect major loss of votes in Canterbury but not in the rest of the country).
More interestingly is how this was promoted by National. Usually some Key has some minister no one cares about (like Brownlee) say they will do something (like mine GBI) and back down when there is a whiff of protest. The back down is usually Key coming to the rescue and smiling a lot.
Well he can’t really do this time. He’s the minister with the unpopular idea. Either National has some master plan (ie there really our a million people who can afford to own these assets) or National has got arrogant. Listening to the people I spoke with today the earlier does not seem likely. Maybe that just because they (and I) live in Christchurch and they are increasingly getting pissed off of the lack of progress in rebuilding homes and other buildings. I think we will have an interesting year.
People do change their minds. In the UK this time last year the UK Labour Party was on par with the Lib Dems. Now they have a healthy lead over Conservatives (even before it was announced GDP fell 0.5% ion the last quarter, in part to government spending cuts and the flow on to businesses who sell to government)
Vote:January 27th, 2011 at 4:23 pm
NASSKA………You forget 51 % will still be state owned. The State Owned Power Companies have generally been price setters and beset with problems while Trustpower and Contact follow along doing very nicely thankyou.
MANOLO is also right, unless at the same time welfare wastage such as DPB for mealticket kids and free money for students is reigned in then this courageous initiative will merely slightly delay our inevitable ruin.
I endorse the KEY initiative and despair of the GOFF nonsense.
Vote:January 27th, 2011 at 4:41 pm
Backster,
What planet are you on. Contact Energy and TrustPower have both complained that the SOEs have conspired to keep electricity prices low. The electricity market in NZ is not competitive it is an oligoply with huge barriers to entry.
The Bradford changes in 1998/9 (kept by Labour) are the main reason power prices increased.
Fact in 1999 ECNZ had $3.2 billion in fixed assets (ECNZ annual report 1999). In their 2010 June annual Meridian Energy valued their fixed assets at $7 billion (their ECNZ share was $1.6billion).
Meridian have not spent $5.4 billion on new fixed assets. They have revalued their assets meaning they need to get a higher return so they put up prices.
Meridian are not unique, the SOE, Contact and TrustPower have all done the same. We are ripped off by their owners. At least while the government rips us off we get something back. That is not the case with the majority foreign owned Contact Energy and TrustPower.
Vote:January 27th, 2011 at 4:58 pm
1. So a few billion to pay down debt – good. But I would like to see $700 million come off the govt expenditure to cover the lost dividends.
Vote:2. No problem with private ownership. Given that Govt entities (and local bodies) are just as vicious (maybe more) to us customers as private owners are.
3. There remains a problem though with monopolies. These do exist in infrastructure. Airports plainly. And power companies somehow manage to do it – despite apparent competition.
4. There is a vicious cycle that harms New Zealanders within these monopolies. eg. The dividend must go up because the shareholders must get a return on the capital. Then the assets get revalued because the dividend is so good. And so it goes. Nasty and fake.
5. Perhaps a solution is to set the capital value at the start and it can not be revalued up. And define an adequate rate of return on assets that is a maximum for monopolies.
6. Finally – can they cease the fiction that this will be for New Zealanders to own. There will be no rules about that. Can we have some honesty please and ditch the PR
January 27th, 2011 at 5:10 pm
backster @ 4.23pm
I hadn’t overlooked National’s intention to retain majority ownership. Basically I have a total distrust of politicians born from listening to the lying bastards over the years & I have a gut feeling that if this sell down flies with the electorate it is only a taste of what is to come.
My doubts over the possibility of full private ownership sometime in the future are not based on political ideology……. just an observation that what is good for big business is bad for the consumer.
Vote:January 27th, 2011 at 5:12 pm
can they cease the fiction that this will be for New Zealanders to own. There will be no rules about that.
There can be rules about who can buy shares initially. And New Zealanders will be free to buy them if the wish on the market.
I don’t know why people are so horrified the “the Chinese” could buy shares. They could buy all shares for sale on all private companies – and get control of some. They may have already done that. If New Zealanders sell shares to any foreigner then they benefit.
Vote:January 27th, 2011 at 5:28 pm
KH 2 @ 4.58pm
Interesting points especially No 1. The local offshoot of the MSM in their in depth analysis must have overlooked the small matter of the loss of dividends, both normal & special. Probably the subject wasn’t included in the spin doctors’ press releases.
Vote:January 27th, 2011 at 5:43 pm
brian fallow is ‘unimpressed’…
http://whoar.co.nz/2011/brian-fallow-ideology-and-tribalism-behind-questionable-policy/
“…Here are some reasons to be unimpressed by the Government’s plan to partially privatise state-owned enterprises:
* There isn’t all that much family silver left in the cabinet.
It does little or nothing to deal with the genuine problem of woeful national savings and a perilously high reliance on foreign capital and credit.
* And it only partially addresses popular concerns based on the experience of previous privatisations -
- when a stock exchange listing proved to be a kind of low-rent motel on the road from state ownership to foreign ownership….” (cont..)
phil(whoar.co.nz)
Vote:January 27th, 2011 at 6:05 pm
Keith Ng has done some thinking before typing
Vote:http://publicaddress.net/onpoint/election-2011-go-/
January 27th, 2011 at 7:40 pm
There is only one down side of the Nat’s plan to partially sell off state assets, by announcing this policy they have effectively guaranteed that Winston will return to the house.
Yes folks, there are enough fucking morons out there who will be whipped into a frenzy by that lying cheating prick Peters, sadly the crook will pass the 5% threshold, he is going to be sucking from the public tit for another three years come November.
Vote:January 27th, 2011 at 10:20 pm
So to summerise, it looks like this is bad news for Phil Goff?
I also guess the fact the more recent government he was in was against asset sales does’t override him being a more junior politician voting in favour, not that parties back in the “good old days” of FPP never voted on party lines.
Personally in favour of the policy, but your statements of hyprocracy on this one would make a spin master blush
Vote:January 27th, 2011 at 10:47 pm
Interestingly, there was a post on the NZ Labour website announcing Cunliffe’s support for public-private ownership and it appears to have been deleted in the last couple of days. It was here: http://www.labour.org.nz/news/labour%E2%80%99s-pathway-future-more-progressive-and-more-prudent and is linked to from several places including The Standard http://thestandard.org.nz/cunliffes-bad-politics/ and here on Kiwiblog http://www.kiwiblog.co.nz/2010/11/some_common_sense_emerging_from_labour.html
Vote:January 27th, 2011 at 10:49 pm
Oh but look, they haven’t removed it from his own website yet: http://cunliffe.co.nz/?p=582
Vote:January 27th, 2011 at 11:46 pm
Will this lose National votes?
I doubt it will be too many
The NZ Herald had a fair question for its poll today ‘Is a partial sell-off of Government assets to raise funds a good idea?’
It is a fair question unlike Stuff’s biased question yesterday
Anyway 48% in favour
Vote:Lets assume nobody voting left supports this, I know this may not be technically correct but if someone currently National is likely to switch to Labour then it is just as likely that someone supporting Labour is jsut as likely to switch to National.
So 48% is say 46.7% National 1.3% Act
Let take Curia’s poll of polls figures
So 3.7% (50.4% – 48% – 1.3%) of the country are National voters are opposed
And say only 10% care enough to switch voting sides
That a neglible .4%
It wouldn’t even come close to registering in the polls
January 28th, 2011 at 6:44 am
So, John Key said there would be no asset sales in the first term of a National Led Government, and that’s what happened.
Now, he is clearly stating the policy direction before an election, and going to the people to get a mandate to carry out this very reasonable policy. This is very, very pleasing. And a complete turnaround from the treatment we received from the last government, as I recall. (Anyone remember the mandate for the removal of the nations Air Strike Capablity?)
Vote:January 28th, 2011 at 6:45 am
Interesting links ch123. A couple of key comparisons…
Labour’s economic pathway more progressive, more prudent
Cunliffe: November – 25 – 2010
We can unleash State Owned Enterprises to create and grow new subsidiaries with private partners and shareholders, without diluting the taxpayer’s equity, or wholly or partially privatizing the SOE.
New lyrics, same song: Flog the silver
Cunliffe 26 Jan 2011
“Arguably ‘mixed ownership’ is the worst of both worlds, and certainly not the best,” David Cunliffe said.
Incidentally, the “selling the silver” line has become very monotonous very quickly, again. I guess it’s aimed at the WP demographic, who else knows or cares about “family silver”?
Vote:January 28th, 2011 at 6:54 am
Another challenge for Labour:
Who were they expecting to cobble together a minority coalition with?
Vote: