Key rejects comments by brokers and fund managers about Genesis float unlikely to happen; Govt considering new film subsidies

By Bernard Hickey

Prime Minister John Key said he remained confident that the Government's partial privatisation and stock market float of Genesis Energy was on track for the first quarter of 2014, despite comments last week from brokers and fund managers that the disappointing performance of the first three share sales made a fourth next year unlikely.

"It might be in their interests to say that, but all of these issues were over-subscribed," Key told a post-cabinet news conference in Wellington.

Brokers described the sale of Air New Zealand shares, which promptly fell after the government sold at NZ$1.65/share, along with the weak performances of Mighty River Power and Meridian Energy shares, as a 'bloody debacle' and that a Genesis float next year was now unlikely. Milford Asset Management's Brian Gaynor was reported as saying the floats had been 'terribly disappointing' and there wasn't a 'hope in hell' of Genesis being floated next year.

Key again called on the Opposition Labour and Green parties to pledge to buy back the shares in government to be consistent in their opposition to the sales. Labour and the Greens have said they would wait to see the state of the Government's budget position before making that decision.

Bigger subsidies?

Elsewhere, Key said the Government was looking at whether to alter New Zealand's system of subsidies for big Hollywood movies such as the Hobbit to be made in New Zealand, given other countries had increased their subsidies and the "exchange rate is hurting."

He said FilmNZ was considering the options.

Film industry figures have warned in recent days of a 50% drop in film industry work as Hollywood Studios shied away from New Zealand, given a currency stubbornly over 83 USc and higher subsidies offered by other markets. 

The current Large Budget Screen Production Grant has awarded rebates worth NZ$267 million between 2004 and 2011 in return for spending by the studios over that time of NZ$1.937 billion. It was tweaked as recently as July. See more here. 

Wider wage gap?

He also rejected comments from Labour Leader David Cunliffe that the National-led Government had failed to narrow the wage gap with Australia.

Cunliffe said a new wage gap figure of NZ$211.51 week calculated by the Parliamentary Library showed the gap had widened by NZ$90 a week since National took office. The figure compared gross average weekly earnings on a purchasing power parity basis.

“Who could forget National’s 2008 election slogan: ‘Wave goodbye to higher taxes, not your loved ones.’ “This hands-off Government has done nothing to reduce the wage gap with Australia. In fact, National’s unfair labour laws are keeping wages down,” Cunliffe said in a statement.

Key told the news conference Cunliffe's figures were wrong. He said the figures used to calculate New Zealand Superannuation payments, which measure the average ordinary time wage, showed real after tax incomes had risen 13% since 2008 while Australian wages had only risen 11%.

He also said Cunliffe's comments about New Zealanders leaving to live in Australia were wrong, given the net number of New Zealanders leaving for Australia had fallen to under 1,000 a month.

P update

Elsewhere Key announced usage of methamphetamine had dropped to 0.9% of the population or 25,000 people in 2013 from 2.2% i n 2009.

He said NZ$3 million of crime proceeds recovered by Police would be used to fund alcohol and drug treatment programmes and further measures to stop P dealing.

Since the Criminal Proceeds (Recovery) Act came into force in December 2009, the Police had obtained forfeiture orders for assets worth NZ$30.5 million, over half of which are related to methamphetamine offences.

About NZ$7 million had been set aside for anti-P initiatives and that would continue to grow, Key said.

(Updated with more detail, quotes)