Kiwiblog

Hayden Donnell in the NZ Herald reports:

State owned mining company Solid Energy has revealed it wants to buy the Pike River Coal mine, pay off its unsecured creditors and recover the bodies of 29 men still trapped inside. …

Solid Energy, which operates several West Coast mines including the nearby Spring Creek Coal Mine, today announced it was one of those looking to buy the rights to extract the $6 billion of coal still at Pike River through a mixture of opencast and underground mining.

Chief executive Don Elder said recovering the 29 bodies still inside the mine would be a priority in that proposal.

It was committed to addressing the “many challenges” of making the mine economically viable while respecting the wishes of the families of the dead, he said. …

“As a non-negotiable part of that, the wishes of the families have to be a priority in considering all options including potential recovery, if feasible, of the 29 miners’ bodies. The same applies to the unsecured creditors on the West Coast; any solution to invest in and work the mine needs to address that issue as a top priority.”

That’s possibly the best news the Coast has had, since the explosion.

Elder said the company’s plan would include opencasting parts of the mine.

Somehow I suspect the usual suspects won’t oppose this mine being opencasted.

The Herald reports:

The chairman of Solid Energy says at least part of the state-owned coal miner should be sold off to raise billions of dollars needed for new projects, including more mines.

John Palmer – who is also chairman of partially privatised Air NZ – said Solid Energy needed up to $10 billion in additional capital over the next five years, and should be partially privatised if National wins a second term in office.

That was the best way to provide the money, given the state of the Crown accounts, he told the Herald yesterday.

“I don’t think it makes a lot sense for the Crown to put several billion dollars into a company like Solid Energy where it can retain all of its existing ownership and leverage and external capital can provide the opportunities for growth. It’s very much a win-win situation.”

Solid Energy is not a monopoly like Transpower or NZ Post. It is not a utility- it is a competitive business undergoing commercial activities that are not guaranteed to be profitable.

If Solid Energy can not access extra capital, it will not be able to reach its potential, which may mean less tax revenue and less jobs in NZ.

But do we want the NZ taxpayer borrowing money to invest in Solid Energy, and assuming all the risk? I think Palmer makes a good case for that risk to be shared around.

The EU had a reception at the Backbencher last night, so lots of MPs and journalists there to chat to.  The typical opening line from a National MP was “So about that B grade” while from Labour MPs it was “Unlike Annette we won’t use Farrar and respect in the same sentence unless there are some other words in between”

Phil Goff was there also, so I said I looked forward to him quoting me more often in future . Actually had an interesting chat generally on economic stuff, such as land tax. If Labour are bold they could consider proposing a land tax (tied to income tax reductions) for 2011. That could attract some support from economic reformers.

General consensus I got from pundits there was that there was definitely some good stuff in the Government’s work plan – in fact more detailed plans that most Governments announce in the PMs statement.

But what may trip the Government up is they misplayed the expectations game. Building the statement up as the “most important” one ever was a mistake, as was talking about it being a “step change”. Again, there is some good stuff there that certainly will help lift economic growth. But will the announcements alone close the gap with Australia? Of course not. But the rhetoric leading up to it, got expectations artificially high.

With the benefit of hindsight, it would have been better to have positioned the statement as a typical PMs statement – a general overview of the Government’s achievements and workplan, and then surprise the media and opposition when it turns out to have close to 30 specific initiatives in it.

As I said yesterday, I welcome the focus on growing the economic cake, not just how to split it up, and look forward to more details in the budget.

Reaction from others:

• John Armstrong – 4/10 for economic boldness
• Fran O’Sullivan – John Key deserves an A- for intent. But a mere D for the dreadful prime ministerial statement that buried a coherent economic agenda in a mass of confusion.
• Tax Working Group members seem happy
• NZ Herald editorial calls it a stutter not a step-change
• Bernard Hickey hits new levels of hyperbole
• Canterbury Employers call the package welcome but light
• Solid Energy is excited
• Colin Espiner gives it a pass, but with much more to do
• Tracy Watkins looks at the risks
• The Press editorial says it was lacking boldness
• The Dom Post editorial says it was a welcome focus on growth, not slogans

NZPA reports on testimony today from Solid Energy:

The Government could take up to $80 billion in windfall gains due to the climate change emissions trading scheme (ETS), Solid Energy chief executive Don Elder told MPs today. …

Mr Elder said the bill was not only about climate change, but was also the most far-reaching taxation legislation since the 1980s.

He said no one had seemed to consider the possibility that even if pollution targets were met, billions of dollars would end up in the Government’s coffers.

The ETS, as designed, would punish polluters for all their emissions, not just those above the 1990 level set by the Kyoto Protocol.

Even if emissions were reduced to 1990 levels by 2025/2030, which he felt was unlikely, it would mean the Government would still collect $20b over that period.

He said the $20b figure assumed a low price for carbon — $22 a tonne — and if it was replaced with a “realistic figure” of up to $200 a tonne the windfall gain over the period would be in the region of $80b.

“Now that may well be a justified policy and it may well be able to be redistributed, but that is a tax restructure…buried inside an emissions trading system.”

Climate Change Minister David Parker said he fundamentally disagreed with the analysis and said the Government would never allow such a scenario to occur.

Mr Elder told MPs the complexities of the scheme were creating unintended consequences that saw the details change on a weekly basis.

This was complicated by the number of processes going on simultaneously to write the policy even as the committee considered the legislation.

He said that the European Union took five years to design a much more modest trading system and still got it badly wrong first time around.

The climate change bill was laying down conditions that would exist 22 years away.

“People aren’t even born yet who will probably be playing for the All Blacks by the time this legislation is still showing its teeth…yet we are rushing this through in six months and it doesn’t make sense.”

Mr Elder said instead of having a prescriptive bill, it should be rewritten into more general enabling legislation.

Then over the next year the details could be thrashed out and slotted into place.

He said the rush to put the ETS in place was not necessary as most sectors were now not being hit by the scheme until 2011 and onwards.

So who thinks the Government will refund all those billions that they will accidentially accumulate?

It is worth noting Elder is not saying do not have an ETS. He said this is a scheme for the next 22+ years, and trying to finalise it is six months is going to be a disaster. The EU took five years. And with the Government delaying the first sectors by a year, there is no real reason not to delay it.

The Press Editorial:

Senior Government figures made it clear that Solid Energy, which is a State-owned Enterprise, must not itself stoop to such tactics nor countenance its so-called security consultant, Thompson and Clark Investigations, doing so. But TCIL director Gavin Clark has again attempted to hire a paid informer. Even if Solid Energy had no knowledge of this, its continued commercial relationship with the security firm places its own credibility on the line. It is time that Solid Energy cut TCIL adrift.

They really have no choice. It just does not survive the credibility test that TCIL’s activities were not motivated by having Solid Energy as a client, even if not explicitly mandated in this episode.

Can I suggest that if TCIL are gong to continue as amateur spymasters, they get better at it. You don;t try and turn an existing greenie – no wonder they keep getting exposed.

If I was TCIL, and wanting to infiltrate the Save Happy Valley Coalition I would go along to Act on Campus, and hire their scruffiest new member and give him or her a two to three year mission. Now your typical AoC member will do anything for enough money, so you probably need to be thinking $1,000+ a month to supplement their student allowance.

You need to pick someone who has not been publicly identified as an AoC member, and have them join up. But the key is not to have them start spying too soon.  You need to be prepared to invest in just having them spy for a year or so, and then start having them produce the bacon.

Now after a while they may develop a conscience. More money will help with this problem, but a good spymaster will also start giving them some perks they’ll miss. You see they are probably investing all their spy money on the stockmarket. So every six months or so you send them and their boy/girlfriend to Queensland for a holiday – that will keep them motivated to keep spying.

Anyway back to The Press:

On the face of it, the Government’s unambiguous directive to Solid Power last year had been breached. This might explain the speed with which the SOE chief executive Don Elder specifically ruled out his organisation having any involvement in or knowledge of the second effort to hire a paid informer.

For Solid Energy this latest spying row is hugely counterproductive. A coal company in this age of heightened environmental awareness is always going to struggle to get good publicity. But the SOE does have some positive stories to tell, such as its entry into the biodiesel market and its involvement in the first Southern Hemisphere carbon storage project.

Instead, it has become mired in accusations about a private espionage operation, an activity which was last year shown to be distasteful to most New Zealanders. Compounding the perception problem, the accusations could also create sympathy and publicity for the targeted protest groups which they do not necessarily deserve.

All true.