Fran on Asset Sales

May 28th, 2011 at 10:00 am by David Farrar

Fran O’Sullivan writes in the NZ Herald:

In his bones, Key will know that in the longer term the partial privatisation policy will prove very popular indeed, particularly if the sales are sweetened with a sprinkling of “popular capitalism”.

Australia’s Queensland Government – run by Labor’s Anna Bligh – did just this by offering incentives to mum and dad investors in a highly successful string of assets sales.

There were no brokers’ fees, a specified maximum price per share and a loyalty bonus to incentivise small shareholders to hold on to their shares, as well as a free parcel of shares for relevant workers; particularly with the float of Queensland Rail (now QR National) – the second largest IPO in Australia’s history.

 People did not like Telecom and NZ Rail being sold off entirely to large foreign corporates. But the floats of Auckland Airport and Contact Energy to local investors were actually relatively uncontroversial at the time.

But on this side of the Tasman, Labour leader Phil Goff – who was an integral member of the David Lange Cabinet that privatised many state assets – is hell bent on re-erecting Fortress NZ.

What I dislike about Goff is that he reneges on policies he previously promoted when he believes he can score a naked political advantage.

Hence at the 2005 election he blithely stood by while a fellow Cabinet minister made untrue allegations that the United States was writing New Zealand’s policy even though he knew full well that an American slagged off as a National “bagman” had partially under-written a New Zealand lobbying programme in the US capital.

The same bagman who has been our most generous donor to the arts. What shameful treatment.

So when Goff gets all pumped up and red-faced and hyperbolic, Key only has to dip into the recent history books to underscore the Labour leader’s hypocrisy.

In fact, the partial will provide an investment home for KiwiSaver providers, the NZ Superannuation Fund, iwi and retail investors. They will also release capital for the Government to reinvest in much needed new infrastructure and to help get the budget back into the black.

Labour is going into an election campaign which they say they want to fight on asset sales, yet their leader was once the most enthusiastic advocate for. Do they really think they will get much resonance?

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37 Responses to “Fran on Asset Sales”

  1. tvb (4,501 comments) says:

    People wanting to invest especially the elderly will appreciate the opportunity to invest in blue chip companies. Under Labour they had dodgy finance companies many of which failed with huge losses to investors. Much of this happened under Labour and they simply shrugged their shoulders. They sneeringly thought they were just rich pricks. Labour plays politics with everything. But their pitch is to poor people who have a chip on their shoulder. The Government has cleverly “Banked” the proceeds of privitisation into future CAPX presumably Labour will have to find that money from somewhere – more borrowing perhaps, or not do it at all. Good politics.

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  2. questlove (242 comments) says:

    Labour is going into an election campaign which they say they want to fight on asset sales, yet their leader was once the most enthusiastic advocate for. Do they really think they will get much resonance?

    Maybe. It goes to show that Labour has learnt the lesson from that 80’s neo-liberal free market roll of the dice. National has not.

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  3. tvb (4,501 comments) says:

    The only lesson learned is sales to overseas companies are very unpopular and were a major strategic blunder. It ruined the constituency for these sales for 20 years. Labour has cleverly expoited this. But “peoples capitalism” is different and will be very popular or not as unpopular as Labour thinks.

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  4. Inky_the_Red (761 comments) says:

    People are still mad at the Telecom sales. The Tranzrail sale was a dismal failure. In both cases the NZ taxpayer invested significantly in new productive assets. The buyers did nothing and their infrastructure decayed.

    The main reason I oppose the electricity generators being sold is not the fact they earn 4 times what they cost. The reason I oppose it is cements in a very broken electricity market. We will keep having electricity prices raising at 3 times the rate of inflation and we will keep having power shortages. While the government owns all the 3 SOEs electricity generator they can still create a Nation generator with responsibility of ensuring supply and having NZ business and household pay a fair price. High electricity prices are bad for NZ industry and reduce the standard of living ordinary kiwi families.

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  5. Mike Readman (365 comments) says:

    Those QR workers have it good! $100k AU for being a train driver and free shares!

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

    One of the greatest problems is where to put ones money, usually property in the case of Kiwi’s. Why not let New Zealanders invest in our infrastructure, has to be better then all the ponzi schemes dressed up as finance companies and a bloody site safer.

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  7. s.russell (1,646 comments) says:

    I have observed that the less Labour has to say on a subject the louder they say it, and the weaker their arguments, the more extreme their rhetoric. (eg, “the worst Budget in 27 years”)

    Thus, I expect Labour to rant endlessly about assett sales in such an over-the-top fashion that they will actually hurt their cause – making them look obsessed and blind to realities.

    While a substantial majority do not like the idea of state asset sales I suspect that many also accept that it is necessary – like a visit to the dentist, or don’t actually feel very strongly about it – especially in the mild form National proposes. A Labour campaign that we should just let those teeth rot may not be as popular as they think.

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  8. thedavincimode (6,871 comments) says:

    “They will also release capital for the Government to reinvest in much needed new infrastructure and to help get the budget back into the black.”

    In fact, Key has indicated that it will be the former.

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  9. Adolf Fiinkensein (2,917 comments) says:

    If Labour had a rose garden, all the dead wood and old buds would still be on the thirty year old rose bushes, there would be no fertiliser applied and insufficient growth would occur to support any new flowers.

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  10. questlove (242 comments) says:

    While a substantial majority do not like the idea of state asset sales I suspect that many also accept that it is necessary – like a visit to the dentist, or don’t actually feel very strongly about it – especially in the mild form National proposes.

    You suspect wrong. The actual question in the latest Herald poll was:

    Do you approve of the partial sale of state-owned assets to raise $7 billion?

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  11. Maggie (672 comments) says:

    Fran’s rosy picture of the Queensland rail sale sale is based on very poor research. Consistently opinion polls showed the privatisation was hugely unpopular and will be a major issue in the coming state election, which Labor looks certain to lose. Some 3000 jobs were lost at QR.

    Fran apparently thinks Kiwis can be bought off with few shares – we’ll see.

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  12. tvb (4,501 comments) says:

    When Goff said this was the worst budget in 27 years. I assume this being worse than the budgets where major asset sales were announced by Douglas – which Goff supported. This is what happens when you have been in politics far too long and your old words and deeds boomerang against you.

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  13. s.russell (1,646 comments) says:

    questlove,
    I am aware of the Herald poll. The issue is
    a) the degree of feeling (though many really hate the idea I suspect some people say they oppose it, but are simply not very passionate about such opposition), and
    b) the willingness to accept it despite disliking it – just like a visit to the dentist: you don’t WANT to do it, but you do it anyway.

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  14. thedavincimode (6,871 comments) says:

    “If Labour had a rose garden, all the dead wood and old buds would still be on the thirty year old rose bushes, there would be no fertiliser applied and insufficient growth would occur to support any new flowers.”

    Which is exactly what has happened. Fortunately, as long as the roots are not severed, all is well. And all will be well in the garden.

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  15. Southern Raider (1,831 comments) says:

    The best thing National could do is to get the Maori Party to help promote this to Iwi as intergenerational investment. If Iwi buy a large share of the public float there is no way Labour or Winston can claim the Chinese will end up owning these assets as the Maoris will have no intention of onselling. I think this would also be very positive for Maori to have a larger stake in NZ and receive the downstream dividends.

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  16. thedavincimode (6,871 comments) says:

    SR, that is exactly what is happening at the moment. Iwi are hungry for inter-generational assets. Pakeha are hungry for lattes, Sunday brunch, holidays in Fiji and face-lift motor vehicles.

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  17. nasska (11,797 comments) says:

    Southern Raider

    This would bring on board quite a few people (me included) who are not 100% certain that ownership of the companies will not end up offshore. Mum & Dad shareholders have a history of selling up if offered a few bob more than they paid for the shares. If a few large institutional investors are involved it ensures a measure of stability.

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  18. Caleb (479 comments) says:

    Are the people who do not want asset sales, mostly the same people who want an unaffordable social welfare system?

    I do not want asset sales, neither a totally debilitating social welfare system. Problem solved.

    Now, If assets are being sold, to release capital, to then spend on infrastruture,
    surely private enterprise should be responsible?
    Or are these investments not viable?
    Hense the taxpayer funds it, then sells at a discount, in future asset sales?

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  19. Johnboy (16,994 comments) says:

    But think of the humanity folks.

    If the power generators are sold how can a future Liarbour Government offer cheap power to the poor as an election bribe? :)

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  20. minto57 (197 comments) says:

    49 % is more than partial and thing that annoys me is the glib politians who wax on how wonderful all this going to be .
    It is just dumb.
    I am reminded of the Cromwell Dam which was foisted upon us, drowned productive land and destroyed a area of natural and historal beauty, has some amazing engineering features and then was flogged off to raise the price of electricity for foreigners.So here we go again and those with little brain cannot think of any thing else to do but to sell New Zealand down the river
    mom & pa investors pull the other one

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  21. adze (2,129 comments) says:

    I’ve noticed that the MSM aren’t always very careful to distinguish between an outright sale a la the 1990s, and the partial sale (withholding a controlling interest) that is being proposed. (I’m looking at you, Radio NZ)…

    The only thing that bothers be about what is being proposed is that the sales will only cover a small proportion of borrowing. I would hope that this was to reduce the ongoing cost of existing debt and is not just a means of buying time against future borrowing. Having said that, I wish I had 20 grand or so to invest in the power companies, Meridian especially.

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  22. Johnboy (16,994 comments) says:

    That was the Clyde dam minto57. Get your facts straight if you are attempting to impress with your vast knowledge here. :)

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  23. KH (695 comments) says:

    Well we get all these hints about Mum and dad investors. But the actual rules skirt around the subject.
    What would be wrong with
    a. Only natural individuals could hold shares.
    b. Also Kiwisaver funds.
    c. The indiviiduals would have to be New Zealand Citizens, and resident.

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  24. thedavincimode (6,871 comments) says:

    Caleb

    In this country (size & population, access to capital) significant infrastructural assets just won’t get out of the starting blocks without some sort of government impetus at the outset. Where has fast broadband got to? Most of our infrastructure wouldn’t exist without government involvement at the outset. Schools, roads, railway, hospitals, hydro generation, landline communication. There is a gap between initial saleability commerically and the infrastructural need identified. I’m not saying that’s perfect or desirable in a perfect world but I think that it is our reality. The need for government involvement diminshes as these assets approach commercial maturity. All Key is saying is lets sell down interests in mature infrastucture assets to fund the next generation of assets that will help us grow.

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  25. Johnboy (16,994 comments) says:

    It’s all so simple davinci except to those who cannot/will not see!

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  26. Johnboy (16,994 comments) says:

    The real socialist fear is having no assets to keep on bribing their stupid supporters with.

    Socialism fails when it runs out of other peoples money to spend.

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  27. thedavincimode (6,871 comments) says:

    Johnboy

    You demonstrate a remarkable level of perception for one who is so deluded by a particularly unfortunate romantic fantasy. :)

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  28. minto57 (197 comments) says:

    @Johnboy I am so sorry that I offended your sensibilities which was about Cromwell and how Goverments act against the people they were meant to serve but you do not addres what I say only attack with a personel putdown which illustrates the limits of your intellect

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  29. Johnboy (16,994 comments) says:

    One must be able to separate fact from fiction at all times davinci or one is totality fucked. :)

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  30. wat dabney (3,805 comments) says:

    Mum & Dad shareholders have a history of selling up if offered a few bob more than they paid for the shares.

    That’s fine, but perhaps the government shouldn’t be subsidising them with cheap shares in the first place.

    It’s not a question of who ends up owning the privatised assets, it’s a question of whether they operate in a competitive market. This can be very difficult to contrive in the case of utilities and the alternative – heavy regulation – is clearly a very distant second best.

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  31. Johnboy (16,994 comments) says:

    Didn’t offend my sensibilities minto57. I have none.

    Happy to carry out a personal attack on a sad little socialist scrote like you whenever you offer the many opportunities that creatures of your philosophy present. :)

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  32. minto57 (197 comments) says:

    you are truly a vacuous individual I wonder how may of 4000 odd comments actually had any thing to offer most probably the usual banal verbal diareha as displayed on this thread

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  33. Johnboy (16,994 comments) says:

    That would be ‘diarrhea’ minto57 but always deposited with a sense of humour.

    Something sad little leftie twits like yourself lack in huge abundance. :)

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  34. minto57 (197 comments) says:

    having seen your shit on the other thread I cannot help but wonder why you think you are so funny.

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  35. Viking2 (11,562 comments) says:

    questlove (153) Says:
    May 28th, 2011 at 11:16 am

    While a substantial majority do not like the idea of state asset sales I suspect that many also accept that it is necessary – like a visit to the dentist, or don’t actually feel very strongly about it – especially in the mild form National proposes.

    You suspect wrong. The actual question in the latest Herald poll was:

    “Do you approve of the partial sale of state-owned assets to raise $7 billion?“

    .
    The answer quest is the yes we do, but not for the reason you are trying to promote.

    For the very good reason that 7 Billion just ain’t enough. :lol: 8)

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  36. minto57 (197 comments) says:

    And those that attack others spelling are doomed to repeat it
    Diarrhoea (Queens English if you mind) and yes your bowels are really loose.
    I no more leftist than you are jack booted faeces or should that be feces

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  37. Johnboy (16,994 comments) says:

    Countdown has a 16 pack of Purex on special for $6.49 this week minto. I suggest you avail yourself of the offer.

    One roll to wipe your arse and the other 15 to soak up your dribble. :)

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