Fisking Cactus

June 22nd, 2012 at 9:00 am by David Farrar

Cactus has blogged on the , and there’s a few areas I have a different point of view so figured I might as well prod the cactus.

1. Half-cocked. They are going through all this hassle and outcry for just a 49% sale. I could understand it if it was 100% of all SOE’s but just a few and minority interests?

There is a good case to be made for 100% sale, but that is not what the election policy was, and realistically National would not have got 48% of the vote if their policy had been for 100% sales. If that was their policy, then Phil Goff would probably be Prime Minister.

2. Clearly Maori have been bought off with preferential deals that mean the Maori Party support it. Imagine the outcry if a pre-determined deal was done with consortiums of businessmen of any other race? The Maori Party would not have supported the Bill to this stage without something big in it for them. Will they get a cheaper price? Loans? Deferred payment? These are questions the Opposition should be asking as the answer will be dirty no doubt which will again infuriate National Party supporters.

Umm, the Maori Party do not support it. It is excluded from their confidence and supply agreement at at the main readings they have voted against. As far as I know there are no deals or preferences. Iwi may well apply to purchase a stake, but they will be in the same category as other domestic institutional investors I believe.

3. How does this Future Investment Fund apply in terms of winning votes in 2014? Long term investment never pays off until the long-term. No one is going to thank National in 2014 for throwing $250m in Kiwirail or “modernizing” schools that already are doing okay. As for public transport, National voters don’t use it. Health and education are best provided for in the private sector yet the National Party are selling assets (a pro-privatisation move) to fund increased spending on public services (acting against the philosophy of privatizing these services).

I don’t think there are a lot of votes in the FIF either. To be honest it is a bit of a marketing gimmick, trying to make the point that free up capital in one area allows investment in another. The policy would have been fine without this.

4. The sell has been awful. National do have a mandate for asset sales with their election victory but the policy has had such a s.l.o.w rollout that it will not gain more support it will only become more unpopular as people now have a chance to object to it in isolation with other policies they had to induce at election time.

The law change is about to occur six or so months after the election. It could only really have occured quicker by use of urgency, which would be highly undesirable and politically very unpopular. The fuss at the moment will recede somewhat by 2014, but if the Govt had used urgency it would be a cudgel to beat them with for years to come.

5. The incompetence of Government. I do not trust the current government to be skillful enough to actually sell these assets properly. I trust Labour less of course but they aren’t the ones promising to sell them.

Actually the sales of Contact and Auckland Airport in the late 1990s were done very well by Tony Ryall and Winston Peters respectively.

6. No win situation. If the price of the shares goes up on the NZX the Opposition will hammer National for selling the shares too cheaply. If the price goes down there will be a whole heap of National voting shareholders who will be pissed off and the Opposition will attack the Government again saying the sale was a failure.

Yep, a fair point. But I think there will still be a lot of share-holders who will just see it as a good safe long-term investment.

7. Reasons for the sale. When Labour sold assets during their glory years it was more because of an underlying philosophical that government should not run these businesses. I hear nothing substantial from National MP’s with respect to any philosophical objection for owning these assets, it is all about money so they can all have warm hugs and fuzzies using the “invest” word.

I agree that a case should be made that Government are better to  act as the neutral regulator of utility companies, rather than be an owner and regulator. As the policy is to sell 49% only, that is a more complex case to make but one worth still making.

8. Easy question – are the Nats selling the assets to pay down ANY debt or not to create new debt as they already have the spending earmarked in this FIF set-up? I don’t see much repayment of debt here or commitment in reduction in welfare and spending.

Even if the books are in surplus, there is always capital borrowing, so this is about reducing the amount of borrowing needed.

9. Looking after your electorate. I don’t care what people too poor to buy shares actually think as these people have not actually paid for the assets in the first place. They are not and never will be the National Party’s electorate. The people in Labour’s 80’s privatization were rewarded with massive cuts in tax, there is no such reward here.

The tax cuts occurred well before the asset sales, and were not linked together.

10. The question comes down to do we think the current Government’s damage with respect to stuffing up the partial sale of the few assets will be more or less than the damage done by having the SOE’s in collective ownership in the first place?

I don’t think there has been any stuff up. The fact Labour and the Greens are whining about losing the election isn’t surprising. By 2014, I suspect people will wonder what all the fuss was about – just as Contact Energy was not a big issue in 1999.

 

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18 Responses to “Fisking Cactus”

  1. tvb (4,430 comments) says:

    The government seems to be developing as wider ownership as possible. I would like to bring in a deferred payment option to enable all sorts of small investors in. The labour party will criticise that as well. But the government needs to get peoPle investing in the share market instead of just realestate. The treasury will moan at this policy say it costs money but the treasury is not that flash at present following the education stuff up

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  2. Keeping Stock (10,342 comments) says:

    TVNZ reported last night that the entry level for investors will be around the $1000 mark; definitely Mum abd Dad investor level. Tony Ryall put out a media release yesterday that links to the Government Share Issue website; the link is on the post below. I’ve already gone in and registered for notification of each of the share issues, and would suggest that others who are wishing to do so do likewise.

    http://keepingstock.blogspot.co.nz/2012/06/putting-our-money-where-our-mouth-is.html

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  3. Pete George (23,601 comments) says:

    but if the Govt had used urgency it would be a cudgel to beat them with for years to come.

    The bill will be used as a cudgel as it is, right up to the next election, using a multi-million dollar taxpayer funded referendum as nails in the cudgel.

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  4. Graeme Edgeler (3,289 comments) says:

    There is a good case to be made for 100% sale, but that is not what the election policy was, and realistically National would not have got 48% of the vote if their policy had been for 100% sales.

    National didn’t get 48% of the vote.

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  5. Mark (1,488 comments) says:

    All we can hope is that the Nats have a floor price below which they will not proceed with the sale. What concerns me is that this is driven by ideology rather than a common sense commercial imperative.

    The talk of discounting shares for small investors etc is simply stupid. If my assets, and in part they are my fucking assets, are to be sold I want the best price and I want the sale to be based on commercial common sense.

    I am not convinced yet I have to say.

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  6. berend (1,711 comments) says:

    Cactus Kate: I hear nothing substantial from National MP’s with respect to any philosophical objection for owning these assets, it is all about money so they can all have warm hugs and fuzzies using the “invest” word.

    The key phrase. The only defence the National Socialists can come up with is: Labour would be worse.

    Really? Borrowing $250 million a week, deficit growing to 8.3% by 2013, John Key is driving this country in the ground.

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  7. Ross12 (1,432 comments) says:

    “I don’t think there are a lot of votes in the FIF either. To be honest it is a bit of a marketing gimmick, trying to make the point that free up capital in one area allows investment in another. The policy would have been fine without this.”

    I totally disagree with this. The FIF is one of the better things the Govt. is doing with this. The public get to see where the money is going –transparency its called and its what the public want. At the moment the dividends of the SOEs just go into the slush fund and spent on anything. So they are just a defacto tax. If the public was aware of where the current dividends were “wasted” the opposition would not have any traction at all.
    The problem with politicians is they can treat the public as being stupid ( Labour did for 9 yrs). If the Govt explained what they were doing in “household budget” terms they would have no problems.

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  8. Keeping Stock (10,342 comments) says:

    @ berend – so you’ll be standing in 2014 as New Zealand’s Great Saviour then?

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  9. berend (1,711 comments) says:

    Keeping Stock, nope, not necessary, because the budget will be balanced by then promised John Key at the last election. And he never breaks his promises right?

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  10. emmess (1,428 comments) says:

    So much for assets sales being hugely unpopular.
    The poll on the Herald had only 53% against yesterday. A very slim margin.
    And yes the poll was self selecting, but in this case self selecting is better than a scientific poll, because the non-committed will naturally say they are against because of all of the demonisation of the evil p word from the left.

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  11. Lee C (4,516 comments) says:

    She’s Cactus Kate, guess that makes us all pricks.

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  12. first time caller (384 comments) says:

    When you have the Greens paying people to sign a petition against it, and not huge protest marches, it can’t be all that badly handled…It’s fair to say it’s not the most popular policy to go through the house, but I do think Cactus’s criticisms of the “incompetent government” and buying off Maori to name two are incorrect. Her post was full of loaded negative language but without fact or substance.

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  13. first time caller (384 comments) says:

    Oh, and the “half cocked” suggestion. This was well spelled out before the election. There is always an argument to be had about selling by a different method, but I agree with you David!

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  14. Tom Jackson (2,553 comments) says:

    Looking after your electorate. I don’t care what people too poor to buy shares actually think as these people have not actually paid for the assets in the first place. They are not and never will be the National Party’s electorate.

    If looking after your electorate is all that matters, Labour should simply threaten to renationalise them without compensation (that would put the kibosh on the sale).

    Somewhat surprised that DPF is bothering with Odgers’ lunacy. I guess there is always a clinical interest in such things…

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  15. Cactus Kate (551 comments) says:

    That’s a fisk?
    Jesus wept my grandmother hits harder.
    And she died 5 years ago.

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  16. mikenmild (11,247 comments) says:

    Who’d have thought that Cactus Kate could come up with a post substantial enough to invite fisking?

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  17. Cactus Kate (551 comments) says:

    That’s pretty funny for a guy who limits his thoughts to anonymous comments.

    It wasn’t a Fisk it was tamer than David’s herald column on same issue.
    You can’t Fisk someone while agreeing with pertinent points they’ve made. 3,4,6 and 7. In particular the FIF which is a knee jerk response to bad polls and feedback and central to the entire asset sales policy. David even calls it a marketing gimmick himself.

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  18. Francis_X (147 comments) says:

    “By 2014, I suspect people will wonder what all the fuss was about – just as Contact Energy was not a big issue in 1999.”

    Your’re kidding, right?

    Were you on Earth, or off-planet when ECNZ was split up into Meridian, Genesis, Might River Power, and Contact, and Contact was privatised thereafter? There was indeed a fuss kicked up about it – just as there was a shitstorm about the sale of Auckland and Wellington airports.

    If you’re going to re-write history, DPF, do it properly and do it through the Ministry of Truth – those guys are pros.

    Anyways, your analysis is better than Kate’s. Never have I seen so many errors of facts in one blogpost. Oi vey!

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