Fisking Cactus

Cactus has blogged on the asset sales, 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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