By Selwyn Pellett*
Both the media and the public need to look deeper than the carefully constructed sound bites coming from the government on its asset sales plan, because the long term consequences for New Zealand are massive.
In effect John Key has, by resurrecting a failed strategy from our past, signaled that he and his government have no idea how to grow the economy and demonstrated that National’s ideological views are driving its decisions without reference to the reality of the situation we find ourselves in.
There are a limited number of arguments in favour of asset sales and so far that’s what most of the media is picking up on. But let’s ask the serious questions about what sits behind such a move for New Zealand’s economy, and how it may affect our society.
Firstly, the justification for the plan is invalid or at least greatly exaggerated. New Zealand doesn’t have anything like the same Crown (government) debt as Portugal, Spain, Iceland or Greece. The combination of private sector debt -- via our foreign banks -- and Crown debt is unacceptably high at around 90% of GDP. However the difference in New Zealand’s case is that a greater proportion of our debt is private sector debt. A default on this debt impacts on the balance sheets of foreign banks not the New Zealand government.
Our Crown debt is, by global standards, still low. Lumping these two types of debts together, as the Prime Minster is doing to attempt to justify this policy, is at best mischievous and at worst dishonest.
The second problem is a failure in the financial logic: Who gets the proceeds of the assets sold? It’s not the SOEs so all this talk of them suddenly behaving better and more efficiently is simply wafer thin spin.
Have we forgotten what happened with Telecom?
The dividend stream that flowed out of Telecom - and indeed out of the country - would have been enough to see our broadband infrastructure in place a decade ago, with all the positive effects on GDP growth. Telecom’s ability to extract monopolistic pricing effectively became a foreign tax on all New Zealanders and a handbrake on our economic development. That is the history of the failure of asset sales in this country. They simply do not deliver the alleged benefits the politicians of the time promise.
The promised benefits in this case? Debt reduction, for one. But what’s the real debt reduction involved here? If the government gets all the proceeds from the sale of the assets and later the SOE sees an opportunity to increase its business that requires additional capital it will come back to the market.
If the government is going to maintain its 51% shareholding it will be required to participate in a rights issue or allow its shareholding to be diluted below 51%. So now the Government’s spin doctors have a problem; either they say we will allow the shareholding to go below 51%, or there will be no need for capital for these SOEs, or the short to medium term benefits to New Zealand will be less than the $10 odd billion indicated.
The third issue here is sovereignty: John Key can stack up the initial sale however he likes, but he must know the reality is just like a fish quota: ownership will progressively roll up to less and less people and eventually it will end up becoming substantially foreign owned. It would take serious legislation to prevent this happening and that would hardly be free market behaviour.
Generational wealth
Finally, there are a few social issues to ponder. Is it right that a generation that inherited all these state assets and enjoyed those benefits for most of their life, leaves the next generation devoid of any? Shifting debt from the current generation to the next or removing wealth creation assets from a future government’s income stream are essentially intergenerational theft. It certainly isn’t strategic planning. Surely the current generation should be the one to knuckle down and pay for its mistakes, not future ones?
In the same vein should we be selling state assets to fund tax cuts? The reduction in taxes for the wealthy would enable them to participate in a share purchase with no change to their net income. In other word the Crown is effectively subsidizing the ability for wealthy individuals to take a private stake in what used to be public assets. Meanwhile, Joe Thirtysomething - with two kids, an average income, high expenses and not enough disposable income to join the sale bonanza - has had his and his children’s’ birthright sold to his wealthier neighbour.
The reality is the free market is not free and it is certainly not fair. We should all be fighting this move very hard if for no other reason than to be fair to future generations of New Zealanders.
* Selwyn Pellett is a technology entreprenuer who founded Imarda and was co-founder of Endace. He is a spokesman for the Productive Economy Council.
143 Comments
Wally - we have an annual $5.8bn current account shortfall. Total revenue from the SOE sales is estimated at ~$7.8bn. That will cover less than 18 months of this sort of reckless borrowing and then we're back where we started - but now also bleeding dividends from some of the nations most vital assets.
To fix a current account problem you reduce expenditure and increase revenue. You don't sell productive assets (as this reduces future income and merely exacerbates the problem). In short we should:
Cut expenditure by:
Scrapping WFF;
Reducing DPB as low as we can without putting babies on the street;
Cutting unemployment benefit by ~20% and utilise this free labour on national infrastructure projects (heck they could break key's new bike trail if they need to be productive at doing something!);
Policing sickness benefit properly;
Eliminate taxation on all benefits and cutting benefit amount by corresponding %;
Cut interest-free student loans (apart from nationally strategic subjects such as engineering and medicine - and these students should be indentured to spend the next 10 years working in NZ).
Eliminate state funding for some of the 808 tertiary education providers in this country (who train waiters, Baristas, golf cart drivers and telephone receptinists...).
Total savings ~$4bn per year.
Revenue: NZ should introduce
Stamp duty;
a bank licensing fee (ie the big 5 need to pay ~ 1bn fee to operate in this country -perhaps tie it to some long term insurance scheme - as they have already proved that they will be cap in hand the moment there's a problem anyway - they might as well pay long term insurance premiums for this behaviour).
Consider land tax on second homes;
Consider increasing GST to 17.5%;
Change oil, gas and mining royalty fees to 2% of extracted ore value (NOT profits);
Total income increase ~$3bn.
This pacakage would balance the budget and in 18 months we would have realised as much cash as this dopey asset stripping excercise would have realised anyway. The national government is off on a self-indulgent ideological rampage here, that has no bearing on the actual issues at hand. What's more I'm pretty sure you know this Wally - and are stirring by being flat-out dishonest in your portrayal of the facts....
Good list. You might also add increasing the age @ which superannuation can be taken. This doesnt have to be a vote loser as it can be done on a sliding scale on future dates ie superannuation will be taken at age 66 from 2015, age 67 from 2020 and so on. By the time it rolls around voters will have forgotten who to point the finger at. It HAS to be done.
You need to go further on pensioners they should have their income cut and be means tested to receive it.
Also euthanasia for those over 65 would be a great move to save the country money if we could sell it to them and if unemployed also had legal options perhaps we could save the country and continue to serve the rich as surfs.
I bags one of the jobs as a bureaucrat who manages the means testing machinery RB...I want a half million dollar salary...I expect a new office in a new building in wgtn....rest assured RB, I will manage to make sure the need to manage the machinery remains in place for as long as I want the money...oh can you please say where the money will come from...just a minor matter!
Great stuff CB...now try selling the ideas to a voting public more interested in what's in it for "me".
I suspect all the benefit clipping ideas, while great in the minds of Treasury salary bloated bureaucrats, would not reach the Cabinet table. Not one of them!
The effort needs to be in the revenue sector....but be careful that 'royalty fees' are not a big turnoff. Recall the recent mine investment losses in Pike River...surely that is a major lesson for all concerned. I nearly sank a hundred grand into that!. Would I invest in something similar...say an offshore oil hole...fat chance. Gambling on govt propping up property speculation would be far safer.
The voters would however not be put off by a move to throttle the property speculation...hefty stamp duty on properties other than the 'family home'...even fatter duty on property investment by those who are not Kiwi citizens. Ditto farms, timber and sea assets. Ooooops...none of these measures would reach the Cabinet table...vested interests old boy!
The problem then sits around a table on the 9th floor of the Beehive...an ugly building in every way. Too many pollies deeply into property...deeply in debt to the banks...
Higher gst?...fat chance of that...the reaction to the last hike will scare Cabinet from that idea. The trend toward family self sufficiency is not something the pollies want to see.
The bank fee...just another cost to be dumped on you.
I actually rather like some sort of tax on bank turnover, they get a free ride otherwise. Bread has a 15% tax, interest is tax free, lets see, that means banks are more important than food. SNAFU me thinks.
Income tax is turnover based, why not corporation tax?
It might be much fairer.
Chris B,
What an appalling solution. You have obviously chosen all of the things that do not affect you personally. Just load the problems on someone else is your answer.
Some reductions may be appropriate within your listed items but in the main it is people like yourself that have benefitted from the largesse of government inaction to stop the financially top end of society getting to where they are now.
What is being discussed belatedly and not just in NZ is a means of cutting the fat cats off at the knees over the next few years and bring their wealth under control. Increased personal tax at the top is already in UK. The US is totally gutless and ungovernable and seeing their individual states heading for bankruptcy.
Many of these people believe that they got their wealth by their skills/expertise and not as the result of the system created for them by recent Western mainly English speaking countries.
Most actually believe they can justify getting an income a 100 or more times the average income. It is their right!
Chris B, I suggest you go away and come back with some real solutions that will not alienate a very large proportion of society and not increase crime and further inequality.
I would bet it is a challenge you are not equal to.
Certainly JK is not up to it. Then neither is Goff in election year so you are in good company.
Robert Muldoon once made a comment about bringing a certain asian nation "kicking and screming into the twentieth century" That expression aptly applies to the top end of our NZ society and the reality of our present predicament.
Agree how many mums and dads have spare cash...the 10 billion wont come from NZ . I am an average kiwi I have a mortgage (try to pay it off as fast as we can), do kiwisaver..have three children who we put money aside for education at later date and we manage to save a small amount for holidays..dont have any left over to start putting into sharemarket. I guess they are banking on the Kiwisaver providers to invest our cash into these assets?
Tip Oh goody Selwyn....now can we have your solution please to the current problems...we will all sing your tune and keep our power generation assets and go on paying the taxes in our power bills and watch as the govt grows the govt debt mountain until what Selwyn...what happens when the mountain gets too bloody big...please tell us Selwyn.......!
Will we solve the problem by paying much much higher amounts of tax by way of far larger power bills..Selwyn?
You have had you dig at the older generation...all good fun...now give us the solutions to the problems.
believe you me there is a lot of cash around. returns are just not around at present. our business has been investing offshore for the past year as opposed to the local market. The fundamentals just aren't there. Some stimulus may give it a kick start. Furthermore our exchange needs to expand and maybe this would be the shot in the arm it so desperately needs
“The Wallstreet - Wait And See Smile”
…and Prime Minister why are ministers underperforming (e.g. Brownlee, Joyce) still in charge ?
…and why don’t media and the public make our parliamentarians accountable for their inactions ?
…and why in this country we always talk about parties and not about the performance of their members ?
…and why do we vote for parties and not just for capable politicians ?
…and why do we go around the circle without productive results ?
Every democratic nation deserves it’s government.
Excellent article Selwyn, Bravo.
"Our Crown debt is, by global standards, still low. Lumping these two types of debts together, as the Prime Minster is doing to attempt to justify this policy, is at best mischievous and at worst dishonest."
Bernard, are you listening? You have been as guilty of this as anyone. Private and public debt pose very different risks to an economy. NZ has a private debt problem, and public CURRENT ACCOUNT problem. Current account problems are fixed by balancing revenue and outgoings , not stripping assets.
Not a word from either Labour or National to actually reduce government spending . Labour 1999-2008 went on a spendfest , increasing government in size and in entitlement programmes by 50 % . A growth rate far in excess of the nation's GDP growth ............ And as much as I love to flail Michael Cullen for that , National as a government has increased spending over and above Cullen's budget .
........... As a nation , NZ is living beyond it's means .
Partially agree with this article. Telecom is a bad example to use. They are now suffering heavily for not re-investing their profits early on this decade. They have invested in mobile networks and more recently in NGN (next generation network) fibre network.
I'd support floating assets that requires more capital to grow, like Kiwibank. But not these utilities SOEs.
I agree with this article. I can't see how selling assets is going to help NZ, let alone get us out of our debt problem if that indeed is the point. What when there are no more assets to sell off?
I can't see what's so complicated about debt, or rather not getting into it. There is this basic, simple economic principle that can be understood even by my 4-year-old.
if (input > output)
Savings++;
else
country_status = in_deep_poo;
Rather elementary. Increasing inputs with one-off sales isn't exactly going to solve the problem long-term. Decreasing outputs on a permanent basis, or until such time that we have a surplus to play with, on the other hand...
Summary: government owned assets are more efficient than the market, and Telecom was just a brilliant company providing the market with an unbelievable number of advanced products their customers wanted to buy before it was privatised.
Selwyn, are we talking about NZ here?
Good point on private debt. Dealing with this structurally is a major difference between 'New' (?) Labour and NACT. Labour are saying they will reform monetary policy, NACT are still maintaining the TINA stance and have said zip on this. I expect Labour will make more of this difference as they deal with the NACT objections, as Labs reform ideas here would lead to a bigger pie by invigorating the real economy and improving export returns, receipts.
We can't turn a blind eye to public debt growth, but if private were lower and a greater proportion used for productivity growth instead of property price growth, (sigh) public debt would not need to have grown as much.
Indeed, mind-boggling that few are commenting on these aspects, or is it?
Cheers, Les.
Well put.........
One aspect of an earlier comment though is NZ has private debt and not public debt......try studying Ireland on that one.....ie stupid property investment/grred and the banks over-lending....when the fallout started the Irish Govn back stopped the Irish banks....would NZ have any option but to follow suit?
Steven Keen's works suggests that its the financial sector thats killing off worker and also real businesses, no sign if Jolly JK addressing that one.....indeed the world over its ignored....
regards
Selwyn; thanks for your comments it really is refreshing to see someone in business taking such an honest and objective view. I'm in business myself and I find the arguments for a partial float just don't make any business sense. Plenty of interested parties will make financial gain from it but neither the SOE nor the Govt or the economy will be among the beneficiaries.
There are many fundamental flaws which are being glossed over with vacuous claims & empty promises. There is a presumption that it will be business as usual with the whole electricity market listed on the sharemarket. That just will not happen, markets don't work like that. Some will get aggressive and want to expand, some will perform poorly over the longer term and lose value. Those that expand will need more capital and the govt will have to pay 51% of any rights issue, as Selwyn has pointed out. The govt will at the same time lose dividends & value in the shares that don't perform as well, effectively paying twice.
As for the 'deepening of the capital markets'; well seriously just exactly what kind of nonsense statement is that? They're talking about taking $10billion out of the investment market and this is somehow going to help other businesses who need capital? The NZX is only useful for businesses if we can use it to raise capital, how is this going to help us? It's a windfall for share speculators & traders but how do they contribute to the economy?
Bernard it would be nice if yourself and others began to deconstruct some of the arguments and zeroed in on the important issues. I agree with Selwyn on the social issues but that's more a question of morality and rather subjective. The business issues are objective and they need to be put under the microscope. How much in brokerage, commissions and consultancy fees are going to be paid out here and who will get them?
Thanks.
I heard bloody, slimey Winston Peters on Radio Live y/day dribbling on about the past and how terrible it was that we sold Telecom etc and that " lollies were no longer threepence a pound."..oooh, we should go BACK to old formulas that were so great in 19-0-blob.... (all in the pre-technology, global finance crash era )...pass the jam butties ,mother...and now i read the same financially illiterate drivel on here..except from that sage of the vineyards, Wolly?
As he indicates " what would you moaners and peddlers of the past actually do right now to save our financial credit rating from a downgrade and stem the need to borrow an unsustainable 300 million a week? "...C'mon!...how would YOU fund the running of our country as it's perched on becoming a banana republic?
Stop whingeing...front up and put a better option than what John Key is trying to achieve...stop burbling and show solutions....and don't give me that drivel about " fings ain't what they used to be " or i'll send my bot- spiders down the fibres and fry your computers !!!
I did read it, ChrisB and it was partly what got me reaching for the chunder bag!
Act party meets Libertarian party utopian, free market scenarios is all you're offering.....all done to death on dorkback radio...but never used, as largely it's impractical.
funnily, enough everything you put forward is probably right but some people said that about Hitler...your stuff is non-applicable truth in a seperate reality.
what i'm asking you and others is to put up a more workable scenario than the one proffered by John Key and the Nats...betcha can't find one !
Act party meets Libertarian party utopian, free market scenarios is all you're offering.....
EH? I've been called a lot of things in my time, but never that....
Just to recap. I am ENTIRELY OPPOSED to PRIVATISATION of the electricity industry. IT IS the LIFEBLOOD OF THE NATION (along with water, sanitation, health, education and the police force). Such fundamental infrastructrure is not a business and should not be run as one, it is part of the basic architecture of a sovereign nation and ceding control of any aspect of it will lead to highly detrimental consequences for the economy. the current pseudo commercial electricity market is already a pile of horse-manure that leads to perverse outcomes at every quarter. There are several alternative models available, but privatisation is not one of them. As such when considering chganging such things, I tend towards the hippocratic principle, "first, do no harm...."
BUT, we have a current account problem - a $5.8bn pa one to be precise.. and this is the strawman argument that is being put forward to justify SOE privatisation. Which is bollocks, as current account deficits are due to too much expenditure and not enough revenue.
Now I sympathise with the moderate liberal veiw that welfare is important with regard to social justice, and as a backstop against anarchy. But we really can't afford the welfare system we currently have, however desirable it may be, so changes have to be made. If you wish to elevate the discussion form the schoolyard, perhaps you ca n suggest your own expenditure cutting measures that willrpovide a long-term structural change to the government's book's?As I tend towrads pragmatism above raving ideological dogma, I'm willing to accommodate a lot of wiggle room on this, so long as the numbers add up, go for your life....
By the way I assume you are familiar with "Godwin's law"? You're not helping yourself......
Actually, Godwin's Law is very similar to Rob of the North's Law, ChrisB.."when you're in a hole;stop digging" and that applies well to your rationale and hurtful inferences today...
You're obviously a cracklingly dry rationalist but ,again, you're passing the buck on the issue of today..
my original question to you and one and all was simple ( not your waffle about expenditure cutting)..."what would you do to balance the nations current account other than what john key is expostulating as PART of the solution ( threw that big word in there just for you, ChrisB,you being an academic and all that?)
and btw...i'm not here to offer my version of cost -cutting measures..that was never the issue of my contentions
Sorry you're feeling hurt Rob - but if you come out with the gloves swinging you ought to expect an aggressive defence.....Just ignoring a suggested alternative scheme because you don't like it, doesn't mean its not a valid suggestion.
SOE sales will realise ~$7.8bn (if 51% of book asset values are realised). Current account deficit is $5.8 bn PER YEAR. So sales will offset only 18 months worth of deficit. This is not any sort of solution. Hence the actual requirement to balance the books by increasing revenue (through new taxes targeting financial transactions) and cutting unaffordable government expenditure. As JK rightly put it in his riposte to PG - there are no pixies at the bottom of the garden to magic up the extra money required.... Personally I don't want to cut health, police, or core education which means welfare has to take a hammering - but you can draw your priorities as you like. The key issue is to maintain sovereign control of vital national infrastructure.
i agree with you about retaining sovereign control of vital resources which is also why with the looming global agricultural crisis, we should not sell arable land to the Chinese etc.
all i'm trying to remediate is the instant slanging off of John Key's proffered SOE sales suggestions without any other viable alternative being put up, other than people raving about the past or in your case suggesting un-viable draconian cost-cutting.
at last , we have a prime minister who is prepared to even sacrifice his and his partys win at the ballot box in the name of doing what is fiscally right ( excuse the pun)
we have to pull Nz back from the abyss first and then look at a lot of what you expound etc.after the country is more settled.
already Goof and co. are signalling more vote bribes and actions guaranteed to drag us further down into a hopeless financial quagmire.
already Goof and co. are signalling more vote bribes and actions guaranteed to drag us further down into a hopeless financial quagmire.
I know - its one of the reasons I'm so damn angry!! Key has pulled away my last viable voting option. I have nowhere left to go (despite your earlier comments i despise both ACT and the wacko libertarianz).
Look how about if we just cut WFF and leave the rest of the welfare state for another day (and keep the proposed new taxes)? That'll cut expenditure by $2.5bn on its own - and leaves the total deficit at 300k - which is OK during recessionary times. My fundamental point is that you can't fix a current account deficit by selling productive assets. Such actions just exacerbate the problem by reducing future income (and in this case also will increase future taxpayer expenditure through increasing prices).
Fixing a current accoundt deficit is about balancing expenditure and revenue - one-off asset sales don't solve anything and just make matters worse.
Stop that GBH your scaring me now......ok, ok, tell you what I'll roll with the status quo if John Boy and Billy Bob go public with their underhanded agendas and welcome a public bitchslapping by say......Ron Marks....to just knock a bit of that arrogant smugness off their dummies............the fat man could use one too but I don't think Ron would be up to it....maybe Hone could vent a bit on him.
Dear Bernard...get Cunny..Kun Li...The Running Kun...back on the chair and speak with him of his ambitions.
p.S. did you see it was Banksie's boy that got the nod for Bottany ...over the gardener Maggie....he's 24....just what we need a snot nose joining the team with Banks pulling the strings.
Now I feel tetchy ! ...... Baggy Mary got beaten by a snot-nosed 24 y.o. ?
Shag ..... Alotta world experience there ..... Not .
[ the public will never embrace Ron Mark as leader of NZ First : Ron is a hardworking , honest , dedicated , straight-talking , commonsense , caring guy ........ no chance of him ever appealling to the public . They clamour for Winsome ....... he looks and sounds all smooth and shiny . That's the stuff we love . ]
So.... sooo.. very true! a shiny little man..with a natural wave and a glint in his eye...coins the almost (save Nixon) unequaled line "I am not in this for the Baubles of Office"..........I swear the sale of Adult Treasures jumped markedly that day for fear he might repeat his oath.
Rob o 't n - Regardless of Key spending his social capital, we have to operate within something more tangible - natural capital.
If the future can't guarantee the bits of paper we wave at it, then they're not worth what we thought they were.
Meaning neither are our pay-packets, investments, dividends, rents, pensions.
How about we recognise that by reducing the incomes of public servants?
To a point where the books balance on any given year (given that this will reduce incrementally).
"This is your share": kind of thing.
Will it reduce the over-the-counter take for retailers?
Bet your ass.
So everyone reduces their incomes, but the Key item is:
They fit within their real budget, yoy.
Accepting reality.
Too much to ask?
In some ways selling Telecom made huge sense, they were grossly inefficient and costly...today the SOE model seems to be way different, its pretty fitting fit and leaner. What selling telecom did do was export all the profits abroad and badly effect our wealth and balance of payments...that could have been addressed with strong regualtion, it wasnt....
What would I do....as the saying goes I wouldnt start from here.....the tax cuts I would undo they make no sense in giving those on higher incomes more disposable income....that raises a sum....
Banana republic, far from it....
The point is the boom and this subsquent bust have been mis-managed....by both labour and national and by successve Govns........
In terms of not starting from here, there is now little we can do but ride it out.....long term the fix is quite straighforward....but it ends the lolly scramble so noone would want it.
Briefly what we have is a tax revenue system that is only balanced in a boom period, at any other time its negative, thats nuts......the effect of that is Govn taxation is cyclic with the business cycle, it should not be it should be counter-cycical.
So Lets say in a boom period the tax rate only needs to be 27%, but in a bust period it needs to be 33%.....to give the revenue needed.
What should happen is the tax rate gets to be 30% all the time. During boom periods the extra tax goes in a rainy day fund and we minimal ise ublic works.....during the busts that fund gets drawn down and we maximise public works as a stimulus...the idea would be as we leave the bust and head into a recovery the rainy day fund should be pretty close to 0$.....if we judge it right....
Thats the simplest model....
Then there is another addon I like....in the boom periods the RB raises the OCR, this is to cool control the boom, the money though goes into investors pockets and not NZ....
So that 30% I would have set by the RB and allow them to increase the 30% in a boom instead of the OCR %, use that to brake the economy....that income goes into a seperate rainy day2 fund....
As the economy cools the RB can go back to 30%, if it cools further the RB can drop teh tax rate to 29% drawing down on theraint day2 fund to make up the shortfall....
regards
You gotta stop listening to Winnie Rob..you're getting his drivel down your front....the key to any future without debt has to be from personal savings leading to more investment and thence to more employment but with the immigration gate slammed shut and Labour's dirty fingers kept from opening it.
Said savings cannot increase from fatter incomes as you know. They must come from a lower cost of living and that comes from affordable housing either rents or mortgage payments.
Since there is no intention on the part of govt to cause a decline in property values, nor from the RBNZ....other than by debasing the dollar...you are just going to have to carry on listening to Winnie's drivel.
The recession environment is a product of policy aimed at protecting banks from a rapid drop in property values...the losses are being socialised! The govt is playing for time. Dollar already debased by 17% since the start of 07.
"A Maori leader says iwi could use treaty settlement cash to invest in state-owned enterprises (SOEs), ensuring they don't fall into foreign hands.
Waikato-Tainui chairman Tukoroirangi Morgan last night welcomed Prime Minister John Key's proposal for partial sales of state assets and said it gave Maori the opportunity to become cornerstone shareholders."
Oh, no ..that's put the trendy white liberals between a rock and a hard place already?
Same here.....given the depth of this recession I was pretty happy National won........a firm hand was needed, Labour didnt and dont have that.
This idea of JK is plain nutty, no sensible business sells the cash cows to finance a deficit short term it makes absolutely no sense to me...
regards
Selwyn gets the wrongs right
But the rights wrong.
Sorry to the others here (who've heard it before), but Selwyn: It takes energy to make things - anything - happen. Your breakfast this morning took 10 calories of oil - a finite energy source - to put each single calorie on your plate. Every building you pass, every road you drive on, every computer you sit behind, is made from oil - My kind call it 'embedded energy'. Think 'expended, never to be available for anything else, ever again'. Then we knock the buildings down, shift the road, trash the computer, and eat the breakfast.
You wanna 'grow the economy', you better come up with a cheap, compact, alternative source of energy. 'Cos we just peaked that one.
Or withdraw the comment - on the basis that you can't justify it.
:)
ps - I think that energy has been targeted, because in a finite world, energy and water sooner rather than later, will outrank gold in desirability. Those of conventional thinking, probably think they'll 'make more out of it'. I suggest their ship is based on exponential growth, and will sink first, for the lack of it.
"you better come up with a clean, compact, source of energy"
Hydro is fully renewable and cheap as chips. NZ has 5.5GW installed capacity and potential for another 2-3GW depending on future RMA deicisons. there is also a potential 2-3GW of geothermal still available in this country. This is all quite apart from potentially many GWs of wind, should we ever end up with a system where the market allows the wind and hydro to be properly twinned as required.
I'm not going to start the coal argument here, but we do have a truly spectacular amount of it in the ground as well - and CO2 priorities will change rapidly if living standards are genuinely threatened....!
You generally have the right end of the stick on Pek Oil/Energy PDK. But the NZ electicity supply is highly sustainable and requires only good management and copious cheap capital to remain so for many, many years to come. Oil of course is a different matter - but now whirinaki has been decommissioned there are no oil-powered generators anywhere in the system.
But it's a case of displacement at the margins, Chris B.
Anything driven by one source, will change to a cheaper, if it technically can.
Which brings us to quality - all energies ain't energies.
It currently takes a barrel of light sweet crude, to make a barrel of corn ethanol. Energy profit on that transaction - nil. Subsidy is the only reason it's done.
Likewise coal-to-oil, shale-to-oil, lignite (slightly drier peat) to oil, and coal to electricity (70% of the planet does that) are lower than 'light sweet crude' in EROEI. Lignite, for instance (forget ccs mitigation) can't pack enough punch-per-barrel to keep us running as we are. Economists are nuts - I've yet to hear one who treats barrels differently by quality.
When you're down to shale at the margins, you can bet your bottom dollar that anything which can convert to electricity, will do so. Driving up demand. Every new generation plant is sequentially more expensive that the last (and the oil which makes them will be so too, compounding) so I suggest your comments depict a temporary situation.
Yes. hydro is marvellous - the biggest cleanest battery known to man. But it's going to be hammered hard and soon, think enectric cars, think diesel boilers to heat pumps, think rail, think trolley-buses, lawnmowers........ folk will use it because they can't afford/get the other.
You're right about the coal - we will be desperate, we will burn it, there will be no sequestration (it would take nearly all the energy) and the resultant weather events will make Queensland look loke a paddling-pool.
have a nice day ;)
Agreed that, electrification of the national transport fleet could be the biggest structural challenge facing the electricity industry at any point in the last 80 years. It would make Telecom's broadband farting-about look like toys in the sandpit. Can you imagine how difficult it will be to enact meaningful structural change in the sector if it has been privatised by then?
Still, we genuinely do have enough raw energy resources to make it happen - as long as we have a governance structure that will allow whole-of-system structural changes to be enacted swiftly and coherently....
EROEI is a complete nonsense ...
If the energy in costs costs say $1 / gj and we use say 5 gj ex tar sand to make just 1 gj of diesel at $ 10 gj we are well ahead and there is absolutely no problem.
EROEI is a nonsense dreamed up by individuals with zero understanding of economics.
Of course you wouldn't mine a resource using the same energy in as out if the energy was of the same value before and after - but that's not how it works !
Hydro is not as reliable as you make out CB....It takes but a couple of dry years to expose Hydro. Currently (the pun is fun) the state generators are demanding insane property rights in Marlborough and an open gate to plant their wind turbines on private property....!
Geothermal options exist but Maori resource rights add an extra cost!
The freight transport sector is 100% dependent on diesel and petrol.
Tidal power generation is an option but again you come up against Maori claims leading to higher costs.
I think that we need some new long term thinking here. Apart from the other valid arguments for not part selling the SOEs. As a country we are half the population of a city overseas, dispersed over a large difficult terrain and low wage to boot. A free market does not work for electricity here. 70%+ increases over the past decade. I think the govt should look at nationalising the generation and supply of power as it is a national essential, that needs long term central planning, not short term profit imperatives. The goal should be reasonable priced, efficient supply to the people of NZ including domestic consumers. I know it may sound a bit communist but I can just see in the not too distant future the power supply all being controlled from Shanghai investment funds. Rather ironic that a communist country should be the likely eventual owners of our essential services.
Selwyn rating agencies like or them or no look at a country’s overall debt picture and where that trend is headed and the overall trend in our case the trend it’s ominous. It’s all very well criticizing but as Wolly says give us an alternative. I am all for the suggestions by some that we slash major areas of Govt spending however that would be political suicide in an MMP environment we simply aren’t there yet. A sovereign debt default oversea could occur at any time this would immediate impact on international lenders. International interest rates are already on the move imagine the consequences for NZ inc if we need to star paying 6-8% to raise debt..
Selwyn rating agencies like or them or no look at a country’s overall debt picture and where that trend is headed and the overall trend in our case the trend it’s ominous. It’s all very well criticizing but as Wolly says give us an alternative. I am all for the suggestions by some that we slash major areas of Govt spending however that would be political suicide in an MMP environment we simply aren’t there yet. A sovereign debt default oversea could occur at any time this would immediate impact on international lenders. International interest rates are already on the move imagine the consequences for NZ inc if we need to star paying 6-8% to raise debt..
New Question.
Does being and ex Foreign Currency FX trader put you in the right head space to build an economy. All you have ever done is clip the ticket on someone else’s transaction and take speculative positions (gamble). You have never actually built anything. No disrespect intended but does that background give us a clue to the mentality and why as a country we have so many disparate policies that actually take us nowhere.
Selwyn - I couldn’t agree more with your comment. The media should inform the public. We should know what our parliamentarians did before going into politics. As I wrote earlier we also have to make our parliamentarians accountable.
A year ago our politicians in power talked about productivity – now about selling valuable state assets – a nation lead by politicians without ideas and direction.
What i said : New Zealand doesn’t have anything like the same Crown (government) debt as Portugal, Spain, Iceland or Greece. The combination of private sector debt -- via our foreign banks -- and Crown debt is unacceptably high at around 90% of GDP. However the difference in New Zealand’s case is that a greater proportion of our debt is private sector debt. A default on this debt impacts on the balance sheets of foreign banks not the New Zealand government
Our Crown debt is, by global standards, still low!!!!
Lumping these two types of debts together, as the Prime Minster is doing to attempt to justify this policy, is at best mischievous and at worst dishonest.
I have been having a think. Is John boy being at the “best mischievous and at worst dishonest” when he lumps the private and public debt together? Ireland had a low public debt until it took over the Banks’ defective loans. At the time of the last New Zealand election the outgoing Government, although apparently Cullen did not like the idea, agreed that they would not oppose the new National Government guaranteeing the Australian Banks overseas funding. I have heard that this guarantee is still on the books although apparently, it is marked nil as a contingent liability. So theoretically, if that is the case, John boy is being truthful, although very devious, when he lumps the two together.
As the Productive Economy Council has said for some time....
We need a coherent Strategic Plan for New Zealand where the long term welfare of New Zealanders is first and foremost in that strategy.
Many will sacrifice for the common good if the plan makes sense. Few will sacrifice for disparate populist policies. Our problems are a result a lack of real economic leadership replaced with leadership to achieve power.
David Cunliffe echos a similar sentiment ...... And once he garners more levers for the government , to control and direct the economy , he will be able to complete the good work that Michael Cullen started .
Central planning is wot we need . It works for Singapore & China ..... Gotta be good for us . .................Go Cunny , go go go ..............
@ Selwyn 11:17am
Since a few years I write articles into Bernhard’s blog. I’m under the impression that every time I’m using words like - strategy, organising, structured, plan, etc. in relation to government Kiwis think of Russia – no, we don’t want dictatorship in this country.
The problem in my view - our economy is in fact failing because of lack of strategy, structure, planning and therefore muddle along since years.
Considering the worldwide developments, I think we are dealing with very traditional ways of thinking in this country and as we can experience real progress is very difficult to achieve.
Does the nation need a real shake up, before we become politically and economically educated ?
I am happy to sit down with anyone and expand on what I would do if I was the PM but its a very very long conversation and not one you deal with in small parts.
This medium is great for getting debate and bad for putting a coherent strategic plan of even small parts of it as everyone has different starting points, experience and concerns.
I am not sure I understand everything required to fix this economy but I sure now a lot about what’s buggering it up. Fix exports and it will all come right. That’s the key and aligning EVERY policy behind that is the starting point.
"I am not sure I understand everything required to fix this economy( right...you don't know what you don't know ) but I sure now a lot about what’s buggering it up. Fix exports and it will all come right. That’s the key and aligning EVERY policy behind that is the starting point."sic
Err...and "fix exports" means what Selwyn?...
Sorry... did you say anything about the fact that property is seriously unaffordable and a fair chunk of household income is going to pay the rent or to feed the banks?......is this not "buggering it up"?
Hmm Fix exports and she'll come right, Let's talk to the Chinese about how to do that.
Twas was exports which gave us the highest standard of living in the world at one time and tis exports that have given the Chinese the best balance of trade in the world today and dragged millions of Chinese out of poverty.
We could do with a bit of dragging up to be sure.
What can we sell to the rest of the world?
If it were myself in the Driving seat I'd nationalize Air NZ ( opps they are already ) and bring everyone here for free and get them to spend their dosh in our fair land. That is export dollars right there. That would be better than asset sales.
The Herald reported:
Consumer NZ chief executive Sue Chetwin agreed with Mr Key’s assessment that electricity prices would not increase with partial privatisation.
“The power companies over the past 10 years have been rapacious in putting up their prices and I don’t see that making part of the company available for the public to invest in will make much difference there.”
However, Ms Chetwin said companies would become more transparent and would have to explain their actions to the public.
“At the moment nobody really looks at the SOEs [state-owned enterprises] because their shares aren’t being traded. But once they are being traded, the company will have to adhere to stock exchange rules and be much more publicly available.”
Was it coincidental that during those 10 years we had a rapacious govenment , hell bent on a spendfest the likes of which the country had never endured before ....... And said government not only socked tax-payers directly , through the 39 % impost , but also through a raft of indirect taxes , such as several increases on the fuel excise duty .
SOE's listed on the NZX will be accountable for their actions . And those SOE's will provide investors with another avenue for their savings , ..............alongside houses and finance companies .
Happy New Year to all.
Is selling assets a good idea?
- We look to one of the longest standing, most successful, elites in the world – the English aristocracy, their strategy “don’t sell land– lease it” that way you hold onto stuff.
- If the asset gives a return at or above your weighted average cost of capital, don’t sell, particularly if there are some capital gain and inflation offsets along the way.
Are all assets the same?
- Let’s face it given the opportunity to buy into a monopoly or near monopoly, or an asset that can priced to leverage the selling price of production we would, or conversely you held it why would you sell it? Power generation fits this profile an airline does not.
Does the type of ownership influence the quality of governance and management of an asset?
- Maybe but there is no clear answer, assets in private hands are run badly and very well, the same applies to public ownership.
So a few conclusions:
- Without a good reason to sell don't, feeling you have to might say more about your state of mind on alternatives than the wisdom of selling.
- Unless you really, really have to, and it is hard to see why that would be the case on any asset that is providing a return above the weighted average cost of capital, there is no good reason countenance privatisation of a near monopoly, and see monopoly rents transferred from the public domain.
- Sell the all the airline but not the power companies.
www,johnwalley.co.nz
My personal proposal for a better future - including the next generation and after.
Listening to our economists/ politicians sitting in offices in the 2nd floors+ upstairs- studying economics from old books and charts comparing and analyzing. Yes, yes, yes all good, but in today’s ever and fast changing real life – not more then telling us more about our “Traditional Patchwork Economy” (TPE) – with some exceptions to be fair.
Well, the world is struggling, fast moving and changing for ever- time for New Zealand to find visionary solutions. Smaller countries have to think smaller, but with bigger ideas.
In the current situation it is probably wiser to listen to philosophers, environmentalists, ecologists and humanists (I’m not religious - sorry) and find the right answers to solve our upcoming challenges.
Greed & Megalomania
The people of New Zealand are not only suffering under too much consumption but Greed, Megalomania of a minority – including corruption and a bloated government without a clear economic direction for years.
How much longer is the younger generation waiting for a revolt in “Beautiful New Zealand” ? The “Powerfools” in this and other countries are not only destroying theirs, the public’s natural environment, the land, the waterways and the air, but also their future, our souls and pride. The BB generation is currently causing enormous damage in our society not investing, but for them selves– costing this, but especially the next generation Billions to clean up the mess in may sectors/ levels. Not to mention our bubbly Property Industry – making our NZkids renting flats on Rock Creek Rd or worse, while foreigners living in flash houses on Orchid Park Drive – HA this is all crazy!
For years our economy is so unbalanced, unstructured and unorganised- badly managed, when serious philosophical questions have to be asked.
The large and increasing national account deficit seems to force the government into more stupid actions because of desperation. Obviously falling into a trap by considering revenues form:
- natural resources damaging our environment/ nature our health and eco- tourism -
- opening more land for extensive (dairy) farming destroying our environment, undermining animal welfare standards and in disregard of the influence of climate changes –
- doggy immigration policies leading to social, employment and housing problems etc.-
- it doesn’t create skilful jobs (see below) -
Ethics- Philosophy- Economy
What is New Zealand way of life in the 21st century ?
More and more country are losing the battle against a clean and green environment, healthy food supply/ production, fresh water and air – quality of life. The hunger for purity in most people’s life is unmistakable.
As a remote and rather under-populated country we have an exceptional chance to be different. The key is branding New Zealand - the introduction of a “GREEN & CLEAN” economic philosophy – why ?
---
.I’m proposing a clear, consistent, long term strategy for our economy to be the world leader:
“New Zealand’s Green Sustainable Economy Model of the World”
http://www.green-innovations.asn.au/econ-mdl.htm
Such a model would make us unique in the world, inspires, lift ethics, spirit, pride among the population and feed into many sectors of our economy and society. But it also supports strong and already existing sectors. It would make Billions in revenue, the country would prosper.
--
Industry and Ecology
Today and in the future “Green Industries” offer new, good opportunities for NZ’s economy. Manufacturing Research & Development in sectors like Power, Transport and Telecommunication, in fields where we relay on foreign dependency most, even to a degree that our national security is at risk is essential. The government needs to pick winners, so building sustainable niche markets, producing and branding quality goods for us and to cover export demand will be successful.
Energy, Public Transport, Telecommunication
Two examples of how we should proceed with infrastructure needs in Energy and other such as Public Transport:
Financially and economically it doesn’t make sense to import or to produce heavy and expensive machinery/ equipment like turbines/ generators, nuclear power plants or heavy trains.
Such imports are mostly under overseas contracts, managed and installed by overseas technicians and workers, without hardy any local workforce especially skilled ones.
In stead we should research, develop and produce –SMALLER UNITS- manufactured and installed by Kiwis in our own country. A step, when ordered by government with enormous, but positive implication for our country:
- increase employment opportunity -
- better education after school –
- technical skill and knowledge improvements -
- higher wages/ imports of brainpower –
- positive influence to other sectors/ fields such as Science and Research - Export -
- better logistic solutions -
- less quality imports / reduction of account deficit -
- control and sovereignty –
- quality infrastructure services –
- national security improvement –
- almost no affects caused by natural events -
Sustainable Public Transport - developing a sector of industry to cover public mobility within a 100- 150km radius. Innovative businesses producing SMALL QUALITY UNITS starting from bikes, scoters, light rail systems and the interaction within, hardly seen in other countries. All planned, developed, installed, maintained and ran by Kiwis.
Sustainable Power supply/ savers SMALLER QUALITY UNITS developed, produced, locally/ regional installed and ran/ maintained by Kiwis.
We do need a “Mixed Economy Model” with a clear strategy to master the international dependency on fossil fuel, gas and power consumption.
Please, read and understand this article in context to my many other articles.
Walter Kunz 20.8.2009 (edited slightly in 2011)
JK has missed the plot - Fix the Income Statement - Not the Balance Sheet!!
You never sell assets (esp monopolies like these) to pay for operating short falls. You address the real problem - You don't sell enough product (in this case taxes) or you spend to much on producing that product (in this case gov't services).
Many of the ideas above are valid and also spin off to booster economic growth. WFF, Pensions, Student Loan Interest, No Capital Gains Tax. Many many more all which address the core issue you spend too much and you don't get enough in each year!
We are not in crisis, we don't have the IMF at the door, we don't have difficulty selling gov't paper to the chinese.
JK has failed to say what this actually achieves. Telecom is a disaster, and just wait till the Aussies and whoever buys the power companies start colluding.
My message is simple.
If you run with Asset Sales in the next election
I won't vote for National
An important aspect of improving revenue, is about improving exports, is about improving monetary policy. It's interesting that few are commenting on this major difference between the stalls set out by the two main parties.
Wally - appropriate change in this area would address, to a reasonable extent, the affordability issue as well.
Rob - what aspects of what John and G'fox have said about the difference in asset type and improving the income statement are you having difficulty with?
Cheers, Les.
You Know I've read a lot of threads here last few days and just lost the urge to respond short of taking the piss....which has not been received in the good nature it has been in days of old here.....people are getting more tetchy .
Anyhoo for Key and English and their backers this has been a managed agenda on every level bar public response to the sale or part thereof sale of SOE's ....in fact billbo and dickhead thought the public would scream for it if they could just convey we may go broke...uuuuuuuunless! da dah!
Bernard...correct me if I'm wrong but in a mid to late mid year interview didn't English state... he was comfortable with the level of borrowing and their (the GOVT's)management of that situation............I would appreciate you having a scroll to see what he did say...I would add that Key went mainstream news in support of that statement by English.
Now da dah we open the books ...go holy shit frodo we gotta sell something fast.....bullshit.
A Managed agenda....that perhaps while it has merit...is still enacted by means of deception with (I believe) clear intent to deceive......upon a witless hopelessly distracted public...who have had quite a year .
Well just for the record I hope it blows a shit storm all over their pretty blue sky.. just for the sneaky...underhanded...slimy ....smug...way they have handled it..
Oh P.S. for the stupid ...the Crafar thingy is back on the table purely for distraction value...eat up ya gormless twats....so says Billy Bob.
people are getting more tetchy .
That's 'cos the rubber just hit the road C-o-C! There is of course one more really cynical explanation for all this B-S, which goes something like this:
Nats have a problem come the election as both their main coalition partners are in tatters. ACT may well be dead by Nov, and the Maori party are all over the place at the moment with no certainty they'd get back into bed in november anyway. The greens might as well rename themselves the communist party as they will never get into bed with JK, and Dunne is all alone and under thresat from Shanks in Ohariu-Belmont. All this means that National could poll 49.9% of the party vote and still end up in opposition. The reality is that National needs Winston back, badly - so they've given him a whopping big platform to stand on. He can tell the voters - Vote NZ First to prevent privatisation by the Nats. This could lift his still stable grey vote share from 3-4% to 6-7% which would tip NZ First/nat back over the bar - and all is hunky-dory for another 3 years.
Don't you just love MMP......?
JK has ruled Winsome out ......... He has left the door open to everyone else . ....... And if the Greens stop shooting themselves in the foot , that means they could have some power in the next parliament ......... NZ First only has Labour to woo ......... To wit , to woo
Greens are announcing they will bring in a capital gains, they are more 'red' than any other party, green is now just a cover for their socialism, social engineering etc. But if Labour want POWER then they will have to accept some of the Greens demands, like capital gains tax, although Labour should be able to water it down to have a whole lot of exclusions with net effect it would raise little tax revenue- but politics of envy doesn't worry about that.
Yes Chris B ....very possible save the fact that any return by Winston politically speaking would cause the media to descend upon John Boy for the hollowness of his own words.
I have no doubt that if the Maori party can't fix ...gag...sort out Hone...the Nats hit squad will fit him for some thing unsavory or other....so don't bank on any implosion there.
Do I love MMP....i don't know anymore...do I love FFP...I don't know anymore....at least you know what your getting with a Junta...popularity loses it's importance and so in a measured sense...the bullshit is superfluous.
Liked your response though.
Even if partial sales of SOE's are not required to balance the books , the listing of 49 % of each of them on the NZX bolsters our stockmarket enormously ...
[ ...And unless we change the rules on the public availability of shareholder names and addresses , Bernard Whimp is gonna have a field-day , sopping up the small holdings at pennies to the pound ....]
Good point GBH....but the wet nurse delivery...is for me unacceptable...maybe if they were paraded with a placard with something like....Sorry for approaching the subject in such a dickless backdoor manner...it's just that we thought most of you were thick....so you know...sorry.
Yes , the sale of SOE's ( or float onto the NZX ) ought to be a stand alone issue ....... It should not be lumped into fixing the gumnut's books .......... As many have said , how idiotic to sell the family silver , to mend the balance sheet .
..... But I'd love to see the NZX bolstered by some more big dividend paying companies . And SOE's fit the bill . ..... A secondary benefit is to re-ignite investor interest in shares , and to lure them away from their property and finance company obsession .
JK being slimey ? Cor blimey ............ Our sweet lolly pollie ... Good golly !
Tetchy ? ....... You betchy !
O ye of little faith!
what is the slimy secret agenda that Johnny Key and English et al have hiddden whereby they're going to all this trouble to pull the wool over our poor lil sucker eyes?
pray tell and expose.
Cue Bernard and the 5 Black Swans...take it away ,Bernie..."oh yeah..giant steps are what we take , walking on a spoon"
A comment above underlined that New Zealand has a long history as a balance sheet economy, fiscal policy has underwritten if not created that instinct.
What matters most is the income statement – we need much more policy focus there – a side show on asset sales implies our policy makers have given up on the income statement.
That really is a worry – policy needs to support activity not assets.
Smile and Wave? or is it Sleight-of-Hand
Sleight of hand, is the set of techniques used by magicians to manipulate objects such as coins secretly. Sleight of hand is not a separate branch of magic, but rather one of the means used by a magician to produce an effect. It can be contrasted with the flourish, where the magician intentionally displays skills.
From http://www.rbnz.govt.nz/statistics/extfin/e3/he3.xls
Total NZ Foreign Debt as at September 2010 = 132.4%
Corporate Sector as % of GDP = 115.8%
Central Government as % GDP = 16.6%
If Private Sector = 70% (source?) then SOE and Local Body Sector = 45.8%
From http://www.rbnz.govt.nz/statistics/extfin/e3/data.html
Definitions are
Corporate Sector
Includes the overseas liabilities of the Private Sector + SOEs + Local government Organisations.
Official Government Sector
The official government sector includes The Treasury, the Reserve Bank of New Zealand and all government departments. Source: Statistics New Zealand.
Statistics New Zealand changed New Zealand's overseas debt survey from December 1992 by discontinuing the Private and Government Corporations series for reasons of commercial sensitivity.
Remind me what happened in 1992? When did AU banks get control of NZ banks, and
Selling SOEs and paying down the debt will reduce corporate debt and not the Government Sector Debt.
Kunsty, you are way off the mark that all polticians are idiotic as I've personally met the 2 who aren't.
Mind you, have to say you are coming across like a poltician with all your pronouncements, are you a poltician in real life away from blogland mania? I see some t shirts saying 'everyone is entitled to my opinion', would you like to wear one, think you should.
It's Friday YAY!! time for your Friday smile..........
Yesterday my wife was at the local Foodtown buying a large bag of Purina dog chow for my loyal pet, Biscuit, the Wonder Dog and was in the checkout line when a woman behind her asked if she had a dog. My wife picks up the story from here .....and says What did she think I had, an elephant? So since I'm retired and have little to do, on impulse I told her that no, I didn't have a dog, I was starting the Purina Diet again. I added that I probably shouldn't, because I ended up in the hospital last time, but that I'd lost 50 pounds before I awakened in an intensive care ward with tubes coming out of most of my orifices and IVs in both arms. I told her that it was essentially a perfect diet and that the way that it works is to load your pants pockets with Purina nuggets and simply eat one or two every time you feel hungry. The food is nutritionally complete so it works well and I was going to try it again. (I have to mention here that practically everyone in line was now enthralled with my story.) Horrified, she asked if I ended up in intensive care because the dog food poisoned me. I told her no, I stepped off a curb to sniff an Irish Setter's ass and a car hit us both.
The real money question would be to find out if this has been part of discussions with rating agencies in the recent past. Or have other strategic ideas that national had not come to fruition and they are now clutching at straws?
I do like the point about intergenerational theft here. Its all well and fine being told we cannot look at superannuation, the retired and retiring have paid their taxes and built this country. But if key assets are just going to get flogged off, then its all a big fat lie.
I think I have run out of parties to vote for now.
Looks like the argument is getting to much traction so we will play the man. No problem. Please all read this piece.http://whaleoil.gotcha.co.nz/2011/01/28/more-left-wing-hypocrisy/
How about not selling SOE, but making more? Let's get a big wind farm enterprise going. Close tiwai smelter and create an enormous data warehouse and sell backups and storage solutions. Create an enterprise solution laying Internet fibre cable ... Not in nz, but elsewhere. Nz taxpayers pay for a cable from australia to the US or China and then sell the traffic... Set up a water department to begin getting ready to export water. Create a government robotics department and fund it with kiwisaver in a new high risk long term portfolio.
Turn the business model on it's head. Start finding things that governments are not involved in and then compete against business in these areas. Have the nz taxpayer fund this.
Then as a topping, instead of canceling just things that help the bottom rung of society, hit the top equally as hard. Get rid of trusts completely, or max them out at $500,000. Put in capital gains tax. Clean up accounting practices so they are crystal clear. Like drug laws that seize assets of of the growers ... Then accounting malpractice = seizure of assets. Make tax avoidance as big a crime as it's poor cousin robbery.
Make rail a norm rather than an exception. Raise petrol taxes, to get ready for the impending cost increases.
Use the cash generated to pay off debt. Then use it to buy promising companies overseas, then use it to buy other countries SOE's that have to start fobbing them off because the old thinking continued to be shite... Until of course they start thinking about ..."How about not selling SOE, but making more? Let's get a big wind farm enterprise going. Close tiwai smelter and create an enormous data warehouse and ...."
There is no hypocrisy in what I have said. Everything I have said or written for the last 9 or so years is the same. Nothing wrong with foreign capital if it's to fund something new that we didn't have before. It's not as good as being funded locally but companies have to go where they get funded and many times that's not New Zealand.
As for sucking on the government tit of R&D grants,perhaps whale oil should have a look around the web and they will see I have been saying that such grants should be clawed back by the crown when and if the company is sold.
Yes in 2005 we (Endace) listed on AIM. We where a 6 Million dollar revenue company and it was the boards belief (after investigation) that the only place that Endace could list was the UK. However the board and major shareholders made the expensive decision to remain a News Zealand company specifically so we would pay tax in this country. That decision cost the company at listing an extra million USD in fees due ton the complexity of the listing.
I have said publicly I would not do a listing in the UK again and i wouldn't.
As an aside I am big fan of R&D tax credits as everyone has the same opportunity to make a success of their endeavors. The current scheme has Government picking winners which is never a great idea.
I repeat all such grants should be clawed back if the company is sold with interest attached.
As for being a Pinko. Interesting. Was I a pinko when I went door knocking for John Banks in Northland. I guess you become one when you disagree with a ruling right wing party.
Selwyn - not sure what that's all about.
Here's your comment: " how to grow the economy"
I asked you to defend the concept of growth, beyong peak energy flows.
More's law doesn't apply to raising an object of X weight up a height of Y metres in Z seconds - that energy requirement remains forever constant. (Just to close that door while we have the energy to do so :)
Here's Bollard - from today on another thread:
"But as oil prices rise, this places pressure on inflation not just in New Zealand, but globally, risking a bursting of the commodity boom just like the 2007-08 event. Indeed if oil prices escalate beyond US$100 for long, growth in much of the world will suffer again,"
Anyone who touts growth, says it's desirable, has to prove that it is achieveable. Which essentially means, they have to point to a compact energy source capable of infinite (any doubling-rate graph goes vertical with time) increase.
Can you?
I've studied energy for more than 30 years, and given a lot of thought to what the ramifications are. End of growth is one of them.
cheers
@robothenorth
"let's remember that Key is only talking about partial privatisation with us remaining as lead shareholders"
I've a nice bit of low lying Otago Harbour you might be interested in.
If you believe a Politicians promises then you will believe anything.
None of them have any honour at all. But im old fashioned. I believe i should keep my word.
More fool me i suppose
My take on asset sales is like the prodigal son living in his completely owned house who decides he can' fund his lifestyle. So instead of spending less he sells his house and rents. Thus freeing up capital to be spent on whatever.
BUT WHAT HAPPENS WHEN THIS MONEY RUNS OUT TOO
You still have to adjust your lifestyle (or steal from someone else (Declare war maybe))
SO LETS ADJUST OUR LIFESTYLE NOW AND STILL HAVE THE ASSET FOR LATER
Farky - have you got a mate called FarGoff?
You could claim to be inpartial. :)
Do I go past your patch?:
http://www.odt.co.nz/opinion/opinion/142927/another-day-office
get over your lack of trust, farky parky sarky!
john key is the first non-politician this country has ever had whereby he is not driven by ego or the need to make personal financial gain....he won't stick around forever on that basis so we should back him and steven joyce ( another multi-millionaire from media ownership)and the brighter Nats. while we have the advantage of their skillset.
if key doesn't get voted back in.. his dog will still lick his face in the morning.. it's just that it'll be in a backyard in a compound he owns on an island in hawaii or ?? as he works on another deal somewhere in the world.
i'd far rather trust him and his financial team than blast back to the past with Goff and his bunch of ex-school teachers and butchers...analyse their policies if you want to see bribe lollies and crazed thinking..
hey but there's still Win-stoned " cheater " Peters...he's like property...you can never lose investing in him for your future
Farky : You gotta be new around here , or have very poor vision ......... 'Cos we've been banging on for 2 years now , that JK oughta abandon his promise to keep the seriously dopey policies of Michael Cullen ( WFF & interest-free-student loans ) , and his promise not to touch NZ Super ( the pension or its eligibility ) ........
...... JK has kept his word on so many issues , that he'd have to qualify as the most honest PM since Sir Keith Holyoake .
Heedless of the GFC swirling around him , JK has stood fast , and that is why we wizzle so much . We wanted him to break those promises and reform the economy .......... He is lumbering it with debt , because his election 2008 promises are paramount to him .
NZ needs to pull the plug on free everything an do nothing.To grow we need trained workers that turrn up on time everyday.This is the new welfare,everybody has to perform an be kept busy learning an earning.Could we farm rabbits an possums for lean meat,Russia an China would buy everything.We should sell coal now while china still wants to buy it.On the news they are saying there is world food shortage,we could get busy an grow things that the world needs.
NZ people have to lift there game big time,we are being left behind.
NZ should be treating the working tax payers like kings,the trouble is all we see is more statehouses getting build for people who are never going get a job.
This is why hard working people will leave this country.
Stop pandering to the bottom feeders an start to look after people the who do get out in the mornings.
Funny. This is a country in which a companys thinks there's nothing strange about issuing one of my former workmates with a written warning for coming to work 20 minutes early.
This is where companies and corporations love to talk the talk about "upskilling" , and claim that they want their staff to apply for and take training course, yet whenever the staff try to do just that, the corporations refuse to walk the walk: "Insufficient business case" anytime anyone applies to do any kind of training.
And it's a country where those at the top decry the lack of skilled employees, and complain about a lack of motivation and reliability and loyalty, while fighting tooth and claw to not only prevent the minimum wage from being increased, but also to get it reduced.
Executives demand that Kiwi employees continue to live to work, then blame everyone but themselves when Kiwi employees decide they'd rather just LIVE.
Good old Key, borrows 15 billion for tax cuts we couln't afford and know is trying to figure out where the money went! Thier great idea to sell off out assets to fund everyday expenses is just idiotic. When they do sell to the well used phrase "Mum and Dad" investors we all know there will be a maximum entitlement of shares probably about $5000 and the rest will go to brokers to dish out to thier favoured clients. I haven't heard any media asking him about that.
not sure...although he could be a poxy proxy for that damn foxy from the Roxy...what a fleahouse dat joint was?
Willie and his friend, Hand Jive?....well, i couldn't possible comment other than to say " what's a nice kiwi like you doin' under a palm tree like that?"
Selwyn Pellett has a bit of an agenda here and he gets it wrong on at least two counts.
The Nats are not resurrecting "failed strategies of the past" they are selling the minority in assets much like AIR NZ which has been a reasonably successful model.
Is example of Telecom is a poor one because he ignores the fact that as a Government department it often took months to get a phone connection and prices were exorbitant.
Competition and tech would have been worse had TEL been State owned.
If we're talking about cutting Government spending the place to start is National Superannuation, by far the biggest expense: 9.58 billion = 11.67% of total spending according to http://wheresmytaxes.co.nz/
Maybe individuals should be saving for their own retirement?
I would be in favour of selling some SOEs though, I wouldn't mind investing in some of them. It's a one-hit strategy for reducing spending though; you can only sell them once.
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