Archive

Posts Tagged ‘Mighty River Power’

Winston Peters recycles pledge to “buy back state assets” – where have we heard that before?

31 March 2014 1 comment

.

no

.

Over the last two years (give or take), NZ First leader, Winston Peters, has stated on numerous occassions that buying back shares in the three energy SOEs (Meridian, Genesis, and Mighty River Power) will be a “bottom line” in any post-election coalition deal.

On 20 June 2012, NZ First posted this statement on their website,

New Zealand First will use its influence on the next coalition Government to buy back our state-owned power companies which are being flogged off by National.

Rt Hon Winston Peters says New Zealand First is committed to buying back the shares at no greater price than paid by the first purchaser.

“State-owned assets rightfully belong to all New Zealanders but National is intent on handing them over to rich foreign investors.

“It is simply lining the pockets of the wealthy by selling off well-performing assets that already provide the Government with extremely healthy dividends.”

Mr Peters says it is only fair to alert potential investors that New Zealand First’s intention to buy back the shares will be part of any coalition negotiations.

“As things stand now, the assets will end up in foreign ownership which is an outright attack on our sovereignty. We are committed to repelling that attack.”

The pledge was repeated on 29 November 2013;

New Zealand First is the only political party that has said since the beginning that if the Government did go ahead with this idiotic decision, then when we are in a position to influence the next Government, we would buy back the shares at a price no more than that initially paid for them.

On ‘The Nation‘, on 15/16 March, interviewed by Patrick Gower, Peters repeated NZ First policy that a share buy-back, at a cost no greater than the original purchase-price, was a bottom line policy for his Party;

Gower: So that means buying Genesis back?

Peters: That’s right. At no greater price than they paid for it.

Gower: And does that mean buying back the other power companies as well?

Peters: It means exactly that. That’s what our position has been for some time.

Gower: So that’s a priority for you in any negotiations?

Peters: It is a priority, and it also has the blessings in terms of economic calculations from Treasury.

Taken at face value, Peters’ committment to buy back shares in the powercos seems more comprehensive and radical than either the Greens or Labour. Neither have committed to buying back shares in Meridian, Genesis, and Mighty River Power until the government books allow it.

But, can Peters’ pledge be taken at face value?

Can he be trusted to make good on his word to (a) make a share buy-back a bottom-line in any coalition deal and (b) actually follow through?

His track record on such matters is not good.

On 27 September 1996,  the then-Bolger-led National government sold the Forestry Corporation of New Zealand Ltd cutting rights to a private  consortium (Fletcher Challenge Forests, 37.5%, Brierley Investments Ltd, 25%, and Chinese state-owned company,  Citifor Inc, 37.5%)

This became a major election issue in  the lead-up to the first MMP election in  1996, with the Alliance organising a CIR petition to halt the sale.

NZ First leader, Winston Peters, pledged to buy back the cutting rights, stating on several occasions that any government he was part of would “hand back the cheque“;

.

The game plan - what we're all playing for - NZ First buy back forest corp

.

During the election campaign, Peters stated unequivocally his intentions that the privatisation of Forestry Corp would not stand under any government he was part of;

“I want to tell the Chinese buyers and I want to tell Brierleys that they had better not make any long-range plans because the day after the election is over we will be sending them an emissary to them them exactly what is going to happen, that is, that we are going to keep out promise, they can give back the asset and we will give the money back.” – Winston Peters,  Otago Daily Times, 1 Feb 1997 (on pre-election statement/promise)

.

http://fmacskasy2.files.wordpress.com/2013/07/otago-daily-times-1-february-1997-winston-peters-asset-sales-forestry-corp-buy-back-hand-back-the-cheque.jpg?w=605&h=729

.

On 11 December 1996, Peters announced that he would be entering into a formal coalition arrangement with the National Party, to form the first MMP coalition government.

Subsequently, Peters’ pledge to “hand back the cheque” and buy back the forestry cutting rights, was ‘quietly’ dropped;

.

NZ First ignored chance to implement own policy

.

“… NZ First did not make any attempt to include  in the [Coalition] agreement its policy of placing a 24.9% limit on foreign ownership of strategic assets.

Neither did they raise the NZ First promise to buy-back Forestry Corp, which was sold earlier this year to a consortium including Fletcher Challenge.” - Otago Daily Times, 16 Dec 1996

As Treasurer and Deputy Prime Minister in the National-NZ First government, Peters had ample opportunity to implement his Party’s buy-back policy. It was a promise he could have kept. And should have kept.

Instead, NZ First opted to implement National’s policy of tax cuts on 1 July 1998. With even more tax cuts promised by then-Finance Minister, Bill Birch.

This was money that Peters could have allocated and spent of re-nationalising our forests – but was instead wasted on cutting taxes, thereby reducing the ability of the coalition government to implement a buy-back, as Winston Peters had promised.

If Peters holds the balance of power after 20 September, and if he forms a coalition with either bloc, he may well carry out his promise to buy back shares in our energy utilities.

Or then again, he might not.

.

*

.

References

NZ First: NZ First Committed To Buying Back State-Owned Assets

NZ First: Our asset sales buyback promise – Radio Live Column

TV3: Winston Peters: Asset buy-back ‘a priority’

FAO.org:  Devolving Forest Ownership in New Zealand: Processes, Issues and Outcomes

Treasury: Income from State Asset Sales as at 30 September 1999

Wikipedia: CITIC Group [Citifor]

Wikipedia: Referendums in New Zealand

Otago Daily Times: Alliance quits quest for forestry petition

Otago Daily Times: NZ First ignored chance to implement own policy

Otago Daily Times: NZ First opts for National

Otago Daily Times: Further tax cuts unlikely before next century

NZPA: Birch pledges more tax cuts

.

*

.

Be careful what you wish for - Key and Peters

Above image acknowledgment: Francis Owen

This blogpost was first published on The Daily Blog on 16 March 2014.

.

.

= fs =

Employers and Manufacturers Association – wishing for cheaper power is not enough

1 January 2014 5 comments

.

HeraldCartoon3413

.

Recently, EMA CEO, Kim Campbell, issued a media statement condemning the current high power prices and promises of a “price freeze” by Mighty River Power as inadequate. Campbell’s own words were that the so-called price freeze is  “simply not enough”.

By the way, I refer to MRP’s price freeze as “so called” because, as CEO,  Doug Heffernan stated,

We are now confirming that for our customers there will be no increase in our energy prices for a further 15 months. However, there will likely be changes in customer pricing from April 1 due to variables over which we have no control that we pass through on our bills – such as transmission and distribution charges and any increases in metering costs due to regulatory requirements.”

Source

Unfortunately, the Employers and Manufacturers Association – whilst calling for a drop in power prices – offers nothing constructive in making it happen.

Indeed, in May 2013, soon after the combined LabourGreen announcement on the creation of a single-buyer desk called NZ Power, the EMA (and others) roundly condemned the move.

The EMA was a co-signatory to an open letter  on 2 May, from BusinessNZ and the heads of several chambers of commerce. The letter said, that the policy would harm jobs, growth and investment, causing interest rates to rise, reducing KiwiSaver retirement savings and making people less well off (source).

The associated media release stated,

The signatories to the letter offer to work with the Labour and Green parties to help increase public understanding of the operation of the electricity market and in ensuring consumers have better choice as the electricity market becomes more competitive.”

IBID

BusinessNZ Chief Executive Phil O’Reilly, stated,

More price competition – rather than damaging price controls – is needed to drive down electricity prices.”

IBID

Well, that “price competition” has worked so amazingly well that seven and a half months later, on 16 December, one of the signatories to that letter condemning NZ Power wrote,

With power supply clearly outstripping demand, electricity prices are now too high and should come down, the Employers and Manufacturers Association says.

“New Zealand clearly now has an excess of installed electricity capacity,” said Kim Campbell, EMA’s chief executive.

“Demand for power is well below the country’s generation capacity and its price should reduce to help stimulate New Zealand’s economic recovery and offset inflationary pressures forecast in other parts of the economy.

“At present projections the savings available to business and residential consumers would be at least $67 million a year, but we suspect it could be much more.

“Stating as Mighty River Power has, that they will not increase the electricity price for three years is simply not enough.

“The Major Electricity Users Group notes the futures price for wholesale power for the year from 1st April 2014 is 7.14 c/kWh, down 0.17 c/kWh for the year. In a competitive market this reduction would be reflected in wholesale costs which would be passed through to retail customers.

“MEUG calculates that an average household using 8,000 kWh per year would save at least $13.80 per year or $23 million for all households.

“For all businesses and residences the potential cost reductions amount to $67 million in 2014/15.

“To maximise competitiveness our electricity market structures need to ensure the lowest possible power price while signalling the right time to invest in future generation and transmission.

Source

Unfortunately, Campbell then shoots himself in the proverbial foot by adding,

The Labour/Greens electricity proposal to underprice our existing power assets is no answer.

“To spur on market competition businesses should seek out the best power deals at www.whatsmynumber.org.nz/mybusiness

As I said, hasn’t that worked out well?!

So, if I understand Campbell’s stance on this problem; the LabourGreen proposal for NZ Power “is no answer“.

Instead, begging the power companies to drop their prices is Campbell’s only solution?!

Pathetic.

His “solution” is a do-nothing, beg-for-the-best, whilst New Zealanders are having to pay for higher and higher power prices.

To remind Campbell and his fellow businessmen and women; the more that we consumers pay for electricity -

.

MED Prices-httpwww.med.govt.nzsectors-industriesenergyenergy-modellingdataprices

Source

.

- the less disposable income we consumers have to spend on their goods and services.

Without drawing a bright, pretty, picture with crayons, I can’t make that simple truism any clearer to understand.

Which is why, when the EMA joined BusinessNZ in an ideological vendetta against the LabourGreen proposal, they were not only doing consumers a grave disservice – but also slitting their own financial throats.

The. More. We. Spend. On. Power, The. Less. We. Have. To. Spend. On. Other. Goods. And. Services.

Perhaps Campbell and his supposedly astute business colleagues should re-visit their position on NZ Power?

Who knows – it might actually be good for business!

.

.

This blogpost was first published on The Daily Blog on 25 December 2013.

.

*

.

References

Otago Daily Times: Lower power prices coming says Bradford (3 June 1999)

MoBIE: Power prices

Statistics New Zealand: The history of electricity reform

NZ Herald: Labour, Greens make power promise

Scoop media: Open Letter to Labour, Greens: Please Withdraw Your Policy

TV3: Mighty River Power promises price freeze until April 2015

Scoop media: Electricity prices should come down

Fairfax media: Business urges Opposition to dump power plans

Previous related blogposts

The Politics of Power and a Very Clear Choice – Part Tahi

The Politics of Power and a Very Clear Choice – Part Rua

The Politics of Power and a Very Clear Choice – Part Toru

The Politics of Power and a Very Clear Choice – Part Wha

It’s Official, The Sky Will Fall – Phil O’Reilly

Labour, Greens, NZ First, & Mana – A Bright Idea with electricity!

History Lesson – Tahi – Electricity Sector “reforms”

.

.

= fs =

The Politics of Power and a Very Clear Choice – Part Wha

new zealand high electricity prices

.

Continued from: The Politics of Power and a Very Clear Choice – Part Toru

.

First NZ

.

As Chris Trotter pointed out in his excellent blogpost just recently,

ONLY STEVEN JOYCE could offer up JB Were, Woodward Partners, Milford Asset Management, First NZ Capital,  and Forsyth Barr as credible critics of the Labour-Greens’ energy policy. As if these six financial institutions were ever likely to offer the Opposition parties their fulsome support!.”

Acknowledgement: The Daily Blog – No Dog In The Fight: Whatever happened To Academic Expertise?

We can add to the above list; AMP Capital, Morningstar Research, BusinessNZ, and Federated Farmers – all of which appear to be the front-line foot-mercenary-soldiers in National’s counter-attack to the Labour-Green’s NZ Power.

Minister of the Known Universe, Steven Joyce’s actual comment was,

Financial analysts including JB Were, Woodward Partners, Milford Asset Management, First NZ Capital, Devon Funds Management and Forsyth Barr are unanimous in their condemnation. One has labelled it a ‘hand grenade’ to the New Zealand economy, while others have said it will cut the value of every New Zealanders’ KiwiSaver account and lead to rolling blackouts. ”

Acknowledgement: Scoop –  Labour-Greens Power ‘Plan’ Economic Sabotage

Rolling blackouts“?!

He left out a plague of locusts and rivers turning into blood (though with farm run-offs, these days it’s more like Rivers of  Excrement).

We’ve had power black-outs in the past, due to dry weather; equipment failure; shut-downs for maintenance; human error; etc. And we will continue to have unavoidable power cuts, in the future;

.

Damaging gales forecast for north 5.5.2013

Acknowledgement: NZ Radio – Damaging gales forecast for north

.

Joyce added,

Kiwis are deeply suspicious about the Labour-Greens announcement and its timing. It’s simply economic sabotage. ”

Hmmm, considering the high value of the New Zealand dollar’s destructive effects on our manufacturing/export sector and the 40,000 jobs that’s been lost in the last four years – if I were Joyce, I would not be too keen to bandy about charges of “economic sabotage”. National’s policies in the last few years have been more than effective in that regard,

.

Exporters tell inquiry of threat from high dollar

Acknowledgement: Radio NZ – Exporters tell inquiry of threat from high dollar

.

It’s hardly surprising that most of the negative response has been from the financial markets and commercial firms. They are the ones with the naked vested interests.

To date, the following fear-threats have been thrown at the New Zealand public – because make no mistake, these  doomsday scenarios are directed at voters, and not Labour or the Greens.

Perhaps the most outrageous claims – or outright lies – came from share broking company, First NZ,

“Despite the alleged “excessive price increase in the 13 years since 2000 we are not convinced the system is broken. If it isn’t, then it doesn’t need fixing.

Since 2008, the “real” rate of increase (net of line charges) has slowed even further to 0.5 per cent per annum. Your writer knows for a fact he is paying less for electricity today than three years ago.

Our modelling assumes 11.6 per cent residential tariff increases over the next four years, however net of line charges this reduces to 3.2 per cent over four years.

We believe the Opposition’s desire for a 10 per cent reduction in power prices can mostly be achieved through the current market without the need for a complex and costly change of market structure.”

Acknowledgement:  NZ Herald –  Power price cuts coming anyway, says First NZ

In another document, First NZ made the extraordinary claim,

“Despite the alleged “excessive” price increases in the 13 years since 2000 we are not convinced the system is broken. We estimate that, net of line charges and after allowing for inflation, residential electricity prices have risen 2.6% since 2000.

Acknowledgement:  First NZ – Contact Energy – If it ain’t broke don’t fix it

Hold on.

Is First NZ is really telling the public that power prices have only risen 2.6% since  2000?!?! Well, they do qualify that with “net of line charges and after allowing for inflation”. Though why they would omit line charges seems pointless; the public are still paying at the end.  “Clipping the ticket” seems the norm and impacts on the end-consumer regardless of how it is done.

Which also raises a question in my mind;  why is First NZ making this assertion only now? Why did they not make the effort to rebut National’s claims when Dear Leader issued public statements like this, on 27 January, 2011,

“In the nine years Labour was in government, power prices went up 72 per cent and the Government owned 100 per cent of the assets.”

Acknowledgement:  NZ Herald – Power price fears if Govt stakes go

Why did First NZ not issue public statements ‘correcting’ National’s “misrepresentations” at the time?

Why have they left it only till now, to counter the assertion that “power prices went up 72%”?

Why is a single-buyer desk for electricity sending brokerage firms into a panic? Especially, considering, that we already have single buyer-desk’s in the form of Fonterra, Zespri, PHARMAC, etc.

The answer, I submit, is fairly obvious. First NZ’s fanciful statements and assertions are part of an orchestrated litany of bullshit to scare Joe & Jane Public to run back into the cold, dead arms of Nanny Neoliberal.

The Financial Money Men, with their Federated Farmers allies, are propping up their neo-liberal stooges in Parliament. The rats are out of the woodwork, and we can see who is lined up against the best interests of the public.

Because, in the final analysis, this all boils down to money – who makes it and who gets to keep it. And because so much money is at stake, we are told that rising power bills is the price for living in a “free” market.

We’re also promised that power prices will drop. Sometime. In the future.

We just have to be patient.

Maybe another thirty years?

It will be interesting if people buy into this propaganda BS.  Will voters believe the fear-mongering campaign from the money-pushers?

Or will they realise that share brokers and merchant bankers are  interested only in seeing that power prices remain at stratospheric levels, to provide maximum returns for their shareholders?

Because one thing is as certain as the sun rising tomorrow; these firms are not remotely interested in our welfare. Nor in the welfare of Kiwi families being gouged with higher and higher power bills.

I’m struck senseless that so many National supporters believe  that siding with the likes of JB Were, Woodward Partners, Milford Asset Management, First NZ Capital, Devon Funds Management,  Forsyth Barr, Business NZ, Federated Farmers, et al, will somehow gain them some kind of  ‘benefit’. Are National supporters so masochistic and blinded by their faith in the “free market” that they are willing to tolerate  paying higher and higher prices for electricity?

I hope they realise that JB Were, Woodward Partners, Milford Asset Management, First NZ Capital, Devon Funds Management,  Forsyth Barr, Business NZ, Federated Farmers, et al, will not pay the power bills for National supporters.

Good luck with that!

The Labour-Green coalition should welcome these attacks as an opportunity. Every time one of these money-pushing firms launches a critical attack on NZ Power – the Labour-Greens should counter with press conferences where facts, stats,   and more details are presented for the public and nice, big, colourful  graphic-charts presented.

Like this one, from the Ministry of Economic Development/Business, Innovation, and Employment;

.

Ministry of Economic Development - Power Prices 1974 - 2011

Acknowledgement: Ministry of Economic Development/Business, Innovation, and Employment – Power Prices

.

(Note price drop around 1999. Whilst Industrial and Commercial prices fell, residential prices continued to rise. There is more to explain the 1998/99 price fall here;  Statistic NZ –  Electricity consumption. It had little to do with Bradford’s reforms, and more to do with competing retailers changing their  methods of calculation for the CPI electricity price index and building extra generation capacity. The cost of the latter had shifted from the State and onto domestic consumers.)

Where possible, David Parker and Russell Norman should  speak at engagements around the country at public meetings. (Community newspapers and other local media should be engaged, as they love anything that happens within their community.)

Invite others such as  the Salvation Army, and experts such as energy-sector expert, Molly Melhuish, and Victoria University researcher Geoff Bertram, should be invited to address media events.

Invite members of the public; families, etc,  to present their power bills as evidence of skyrocketing prices.

Build a Broad Front of support. Show the country that there is support for NZ Power.

People want reassurance. We need to give it to them. And we need to show them why the National and the  finance sector are working in cahoots.

Because ain’t it funny that no community organisation has come out, demanding that the electricity sector remain unregulated and welcoming higher and higher prices?

And if the media aren’t presenting the full story, use progressive blogs to publish the information. We, too, can be  “foot soldiers” in this struggle. (Because surprise, surprise,  we too, use electricity.)

This is a war between the Neo Liberal Establishment and Progressive forces fighting to roll back thirty years of  a failed experiment.

That war began on 18 April.

There is no reason on Earth why we should not win.

.

NZ First

.

I find it hard to trust  NZ First. Or, to be more precise; I find it hard to trust it’s leader, Winston Peters.

His parliamentary colleagues; party members; and supporters – I have no problem with. They are people who, generally, want the best for this country and dislike the false religion of neo-liberalism as deeply as those on the Left do.

But Peters…

Peters has ‘form’. He has changed direction  on numerous occassions, and I find it hard to take him at his word.

Some examples…

1.

In 1996, Winston Peters campaigned to defeat the National Government and remove it from power. His campaign statements at that time seemed unequivocal;

Jim Anderton: Is the member going into a coalition with National?

Winston Peters: Oh no we are not.” – Parliamentary Hansards, P14147, 20 August 1996

.

There is only one party that can beat National in this election that that is New Zealand First.” – Winston Peters, 69 & 85 minutes into First Holmes Leaders Debate, TVNZ, 10 September 1996

.

Of course I am not keen on National. Who is?

… This is a government bereft of economic and social performance  [so] that they are now arguing for stability.” – Winston Peters, Evening Post, 25 June 1996

.

The prospects are that National will not win this election, that they will not form part of any post-election coalition.” – Winston Peters, The Dominion, 5 October 1996

.

It is clear that this National government will use every means at its disposal to secure power… Come October 12…  Two months ago I warned that the National Party would use every trick and device at their command to to retain their Treasury seats.” – Winston Peters speech to Invercargill Grey Power, 26 August 1996

.

The Prime Minister [Jim Bolger] is not fit for the job and come 12 October he will be out. He should not get on his phone and call me like he did last time, because we are not interested in political, quisling  behaviour. We are not into State treachery.” – Winston Peters, Parliamentary Hansards, P14146, 20 August 1996

.

We believe the kind of politician depicted by Bolger, Birch, and Shipley is not to be promoted into Cabinet. As a consequence we will not have any truck with these three people.” – Winston Peters, NZ Herald, 22 July 1996

.

We are a party that says what we mean and mean what we say, regardless of the political consequences.” – Winston Peters, Speech to public meeting, 9 October 1996

Despite Peters’ assurances,  on  11 December 1996  the public woke up to this nightmare,

.

.

2.

In 1996, one of the biggest election issues was the sale of  Forestry Corporation of New Zealand Ltd (cutting rights only,  not the land). In 1996, the then Bolger-led National government had announced it’s intention to privatise the SOE,

In 1996, the Minister of Finance announced the government’s intention to sell its shares in the Forestry Corporation of New Zealand (formerly Timberlands Bay of Plenty). The corporation’s assets were Crown Forestry Licences to planted forests, which had expanded to 188 000 ha in the central region of North Island, processing plants in various locations, a nursery and a seed orchard.

A handful of large forestry companies and consortia submitted bids. The sole criterion was price. However, as the strength of the bids was not as great as hoped, bidders were asked to resubmit their bids. In August 1996, it was announced that the Forestry Corporation of New Zealand had been sold to a consortium led by Fletcher Challenge in a deal that valued the assets at $NZ 2 026 million.

Acknowledgement:  Devolving forest ownership through privatization in New Zealand

The sale went ahead and the  final sale-price was $1,600,000, to a consortium made up of  Fletcher Challenge Forests (37.5%), Brierley Investments Ltd (25%) and Citifor Inc (37.5%).

Acknowledgement:  Treasury – Income from State Asset Sales as at 30 September 1999

Throughout 1996, Winston Peters engaged in an election campaign to “hand back the cheque” should he and his Party be elected into a position of power,

.

Forests Buy back signalled - Evening Post - 13 August 1996

Acknowledgement: (hard copy only): Evening Post, 13 August 1996

.

the Game plan - what we're all playing for - Eveni ng Post - 2 October 1996

Acknowledgement: (hard copy only): Evening Post, 2 October 1996

.

To quote  Peters, who said on 13 August 1996,

I ask both the Labour and Alliance parties – putting politics aside for  this one day – to join New Zealand First in it’s post-election pledge to reverse the sales process“.

As many who lived through the times will recall, Peters pledged to “hand back the cheque”. It was a powerful message.

But it never happened.

Peters joined in coalition with National  (consigning Labour and The Alliance into Opposition) and the pledge to buy back the forests was dropped – much to the disgust of people at the time..

Sixteen years later, and Peters has made the same promise all over again.  On TV3′s The Nation, on 24 June 2012,  Winston Peters stated,

 “The market needs to know that Winston Peters and a future government is going to take back  those assets. By that I mean pay no greater price than their first offering price. This is, if they transfer to seven or eight people, it doesn’t matter, we’ll pay the first price or less. ”

Acknowledgement: TV 3 – The Nation

On 4 March this year (2013), Peters announced,

New Zealand First will use its influence on the next coalition Government to buy back our state-owned power companies which are being flogged off by National and we are committed to buying back the shares at no greater price than paid by the first purchaser.”

Acknowledgement: Scoop – One More Quisling Moment from Key

Another quote from Winston Peters, who  said in a speech to the NZ First Conference,  in 1999,

All the policies and manifestos in the world are meaningless when you cannot trust the leadership. That is what leadership is about – trust. Nobody expects leadership to be infallible. But you have a right to expect it to be trustworthy.”

Acknowledgement: (hard copy only):  Speech by Rt Hon Winston Peters to the New Zealand First Conference, 18 July 1999, at the Eden Park Conference Centre

Indeed; “All the policies and manifestos in the world are meaningless when you cannot trust the leadership.”

If Peters and NZ First hold the balance of power in 2014 and choose to enter into a coalition arrangement with National – will he carry out his pledge this time?

Or will that promise be dropped and buried for political expediency and some babbled, weak excuse?

It’s happened once, before. And not too long ago.

Can he be trusted for a second time?

I am of  the belief that folks can learn from their mistakes. God knows I’m made a few in my early adulthood.

Has Winston Peters learned to honour his electoral pledges and not to treat the voting public as fools? Has he learned that he betrays voters at his peril? I hope so.

Because the public exacted a fitting response to his behaviour in 2008, as he and his Party were punished and spent three years in the political wilderness (see;  New Zealand general election, 2008).

More than ever, the future of this country – and the power –  is in our hands,

.

NZ Power Shearer Norman

.

Residents Vote In Mana By-Election

.

Don’t screw up this time, Mr Peters.

This blogpost was first published on The Daily Blog on 6 May 2013.

.

*

.

Previous Related Blogposts

History Lesson – Tahi – Electricity Sector “reforms”  (4 March 2012)

John Key: Man of Many Principles (28 Sept 2012)

Labour, Greens, NZ First, & Mana – A Bright Idea with electricity! (10 March 2013)

Additional Sources

Statistics New Zealand: The history of electricity reform

Ministry of Economic Development: Electricity Prices

NZ History Online:  Dancing Cossacks political TV ad

The Treasury: Income from State Asset Sales as at 30 September 1999

References

NZPA: Splitting up ECNZ expected to cut wholesale power price (16 Dec 1998)

NZPA:  Reforms aimed at business – Luxton (21 April 1999)

Otago Daily Times: Power Prices Set To Soar (12 May 1999)

Otago Daily Times: No case for regulation (24 May 1999)

Otago Daily Times: Lower power prices coming says Bradford (3 June 1999)

Otago Daily Times: Power prices to rise by up to 15.1% (29 June 1999)

Otago Daily Times:  Reforms blamed for hike (13 July 1999)

Scoop: Alliance to hold Winston Peters accountable (8 Oct 1999)

NZ Herald: Peters ‘forgets’ NZ First support for power reforms (13 Aug 2008)

Fairfax: Government to seek inquiry into power price rise  (30 September 2008)

NZ Herald:  Put prices on hold, Brownlee tells power companies (21  May 2009)

NZ Herald: Mighty River directors’ 73pc pay rise realistic – Key (5 April 2013)

Scoop:  Labour-Greens to rip up the book on electricity pricing (18 April 2013)

NZ Herald:  Labour-Greens plan could work, says Vector CEO (19 April 2013)

NZ Herald:  National gobsmacked at Labour idea (19 April 2013)

NZ Herald: Power plan likened to Soviet era (19 April 2013)

NZ Herald: MRP chief slams socialist’ plan (21 April 2013)

TVNZ:  Q+A – Transcript of Steven Joyce interview (21 April 2013)

NZ Herald:  Bernard Hickey: Power barons fail to fool the public this time around (21 April 2013)

Radio NZ: Power prices nearly double since 2000 (21 April 2013)

Other blogs

Kiwiblog: Electricity Prices

Tumeke: MANA threaten overseas investors not to buy assets – Bloomberg pick up on the story

.

.

= fs =

The Politics of Power and a Very Clear Choice – Part Toru

.

new zealand high electricity prices

.

Continued from: The Politics of Power and a Very Clear Choice – Part Rua

.

On a more Positive Note

.

With all the scare-mongering from some quarters (National, right wing blogs, conservative media commentators), and naked threats of economic sabotage (JB Weir, Brian Gaynor, etc), there have been commentators with a more positive, up-beat assessment of the Green-Labour proposal for NZ Power.

Bernard Hickey wrote,

“But sometimes the sheer size of the profits becomes so obvious that it invites a backlash. The National Government realised the power-consuming public was nearing the end of its tether in 2008, so it acted to force more competition with its 2009 sector review and the very successful “Whatsmynumber”. It helped increase the switching rate over the past couple of years towards 20 per cent. Annual residential power price inflation halved from 8 per cent in the decade from 1998 to 2008 to 4 per cent since then.

But it is still running at quadruple the general inflation rate and it’s clear that “competition” hasn’t worked to reduce or even restrain power prices for voters, as opposed to businesses.

[...]

The SOE sales programme changed all that. It proposed handing those super profits to the richest New Zealanders in the form of shares and dividends.

That was the moment the Government and the industry crossed that red line and triggered the regulatory backlash promised this week by Labour and the Greens.”

Acknowledgement:  NZ Herald – Bernard Hickey: Power barons fail to fool the public this time around

Vector chief executive, Simon Mackenzie, seemed to agree,

The electricity policy announced by the Labour and Green parties could be made to work and the current debate is overly emotive, says the chief executive of the regulated monopoly electricity and gas network owner, Vector.

Simon Mackenzie told BusinessDesk he was encouraged by the fact the proposed central purchaser system would incentivise commercially rational investment in energy efficiency, and that the Opposition parties were not pursuing direct subsidies.

He also welcomed the fact Labour was proposing to simplify regulation of lines companies, which has become enmeshed in the courts after policies Labour implemented was “not tracking as was intended,” Mackenzie said.

There was “no perfect model” for electricity systems, and other countries used similar methods to set prices and to procure investment in new power plants as demand rises. At present, new generation is procured by competing generators identifying the “next least-cost” of new generation and deciding to build it.

[...]

“The model is used in other jurisdictions. It has its pros and cons. It’s made to work.”

Acknowledgement:  NZ Herald – Labour-Greens plan could work, says Vector CEO

.

Inevitable Conclusions

.

1. The term “Government-in-Waiting” is well known.

But there is a corollary to this concept.

The Green-Labour policy has not only put National on the “back foot” with the audacious nature of the plan – but has placed National Ministers – from John Key up – into a ‘No Man’s Land’ of a Government-in-Opposition role.

National finds itself faced with a policy that is so novel; so unforeseen; that their initial reactions were indignant splutterings of “North Korean school of politics”; candles; brown-outs; “United Soviet Socialist Republic of New Zealand” [sic]; threats of economic collapse; economic “sabotage”, and other doomsday scenarios.

The responses could be likened to the indignant temper-tantrums of a teenager who has been used to getting things all his/her life – and was suddenly being brought to heel by exasperated parents.

Key has said he never wants to be in Opposition again,

“I don’t think it suits me as a person. I’m not a negative person and a lot of Opposition is negative.”

Acknowledgement: NZ Herald – Key says he’ll quit politics if National loses election

Well, that is precisely where he now finds himself: the new quasi-Opposition in Parliament. The Green-Labour coalition is setting the agenda, and National can only react,

.

Labour-Greens plan forces government to suspend MightyRiverPower offer, amend documents

Acknowledgement:  Sharechat – Labour-Greens plan forces government to suspend MightyRiverPower offer, amend documents

.

2. On 20 April,  Labour finance spokesperson, David Parker, told  TV3′s The Nation,

It’s not like the money disappears from the economy, just that people have more money in their pockets. Instead of spending it on inflated power prices, they’re spending it somewhere else in the economy.”

Which is pretty much the rationale that National used to justify it’s fiscally irresponsible tax cuts in 2009 and 2010,

“In the short term, National’s tax package will give households confidence and some cash in their back pockets to keep the economy going and to pay down debt.”

Acknowledgement: National – Economy/Tax Policy

3. If New Zealanders could tick National in 2008 for their promised tax cuts (in 2009 and 2010, despite being unaffordable and demanding massive borrowings to fund) – then I’m sure as hell confident they’ll be ticking Labour and/or Green in 2014 (if not earlier) for cheaper electricity.

There is nothing as easy to sell to voters than giving them what was theirs in the first place. That applies equally, whether tax dollars or electricity.

Unlike the academic nature of who owns our State Assets – which for the poor underclasses means very little – everyone can understand a very simple concept of cheaper power.

Consider if those 800,000 missing-in-action,  non-voters were asked the simple question; do you want cheaper electricity?

If the answer is “yes” – they need only tick the box for Labour and/or Greens.

For the Nats: game over.

Continued at: The Politics of Power and a Very Clear Choice – Part Wha

This blogpost was first published on The Daily Blog on 26 April 2013.

.

*

.

Previous Related Blogposts

History Lesson – Tahi – Electricity Sector “reforms”  (4 March 2012)

John Key: Man of Many Principles (28 Sept 2012)

Labour, Greens, NZ First, & Mana – A Bright Idea with electricity! (10 March 2013)

References

NZ History Online:  Dancing Cossacks political TV ad

NZPA: Splitting up ECNZ expected to cut wholesale power price (16 Dec 1998)

NZPA:  Reforms aimed at business – Luxton (21 April 1999)

Otago Daily Times: Power Prices Set To Soar (12 May 1999)

Otago Daily Times: No case for regulation (24 May 1999)

Otago Daily Times: Lower power prices coming says Bradford (3 June 1999)

Otago Daily Times: Power prices to rise by up to 15.1% (29 June 1999)

Otago Daily Times:  Reforms blamed for hike (13 July 1999)

Scoop: Alliance to hold Winston Peters accountable (8 Oct 1999)

NZ Herald: Peters ‘forgets’ NZ First support for power reforms (13 Aug 2008)

Fairfax: Government to seek inquiry into power price rise  (30 September 2008)

NZ Herald:  Put prices on hold, Brownlee tells power companies (21  May 2009)

NZ Herald: Mighty River directors’ 73pc pay rise realistic – Key (5 April 2013)

Scoop:  Labour-Greens to rip up the book on electricity pricing (18 April 2013)

NZ Herald:  Labour-Greens plan could work, says Vector CEO (19 April 2013)

NZ Herald:  National gobsmacked at Labour idea (19 April 2013)

NZ Herald: Power plan likened to Soviet era (19 April 2013)

NZ Herald: MRP chief slams socialist’ plan (21 April 2013)

TVNZ:  Q+A – Transcript of Steven Joyce interview (21 April 2013)

NZ Herald:  Bernard Hickey: Power barons fail to fool the public this time around (21 April 2013)

Radio NZ: Power prices nearly double since 2000 (21 April 2013)

Other blogs

Robert Guyton: Murray Kerr on MRP

Kiwiblog: Electricity Prices

.

.

= fs=

The Politics of Power and a Very Clear Choice – Part Rua

.

new zealand high electricity prices

.

Continued from: The Politics of Power and a Very Clear Choice – Part Tahi

.

Evidently, the sky will fall if New Zealand proceeds with Labour-Green’s NZ Power proposal…

The four Donkeys of the Fiscal Apocalypse

.

  1. Lack of New Infra-structure – The argument goes that without massive profits, state owned powercos will not have sufficient funds to pay for new power production or to maintain transmission lines. Really?! In which case, how on earth did we ever build up this country’s energy infra-struction in the first place???
  2. Brown Outs – We’ve been told we’ll have brown outs (see Collin’s Tweet above).  Really?! It beggars belief how we ever got out of bed in the mornings and tied our shoelaces, prior to to introduction of neo-liberalism. What a hopeless lot we must’ve been.
  3. Share Falls – Yes, the sharemarket will fall if  the NZ Power propopsal goes ahead. In fact, they’ve already dropped (see:  Power shares keep falling). So what people like Nick Lewis, an analyst at Wellington-based brokers Woodward Partners, is telling us is that the sharemarket is dependent on the New Zealand public held to ransom by way of exorbitant power pricing? We’re subsiding the sharemarket?  I wonder what reaction the share market might have if competition really worked, and drove down power prices???
  4. Investors abandoning NZ – Yes, for a while, the jittery bastards at Boston, Beijing, or Berlin  might panic and withdraw investment funds. For about half-a-f*****g second. Then they will get over themselves and return to invest elsewhere in our economy. Such as green technology in power production – technology which can be exported overseas for a tidy profit.

The fear-mongering from National, business, conservative media commentators, and other assorted right-wing nutjobs, assumes that New Zealanders are little children who are easily frightened by shadows.

We are not (much).

.

Max Bradford and That ‘Dip’

.

After Bradford’s reforms, power prices went north, skyrocketing by a jaw-dropping 87%  since 2000. If food had increased that much since 2000, there’d be wide-spread starvation in this country. And wide-spread rioting that would make the 2010 London riots pale by comparison.

Bradford, though, has insisted that his “reforms” would have worked, had the new  Labour government not ‘tinkered’ with them in the early 2000s. On TV3′s “The Nation“, on 21 April, Bradford stated,

“When the competive market was allowed to work, prices fell. And, ah, between 1998 and 2002, before Labour started fiddling with the market, prices did fall. So if you let the competitive market work,  then prices will either rise more slowly than  otherise they would, or  they fall. ”

Acknowledgement:  TV3 – The Nation

On Kiwiblog, David Farrar kindly provided a graph, attempting to support  Bradford’s claims,

.

Electricity-Prices-1982-2012 - ex kiwiblog

Acknowledgement:  Kiwiblog/Stats NZ

.

The graph is even helpfully marked with a black line and labelled “Bradford Reforms”, between 1997 and 1998.

Unfortunately, this in itself is not quite correct.  Despite Bradford’s Electricity Industry Reform Act 1998  taking effect in mid-1998,  the electricity sector  reforms did not fully take effect until April 1999, when Contact Energy was privatised and ECNZ was split in three; Mighty River Power, Meridian, and Genesis.

In the same year – 1999 – power prices surged (see:  Power prices to rise by up to 15.1%, see; Reforms blamed for hike), as Farrar’s own graph shows  with crystal clarity.

But then, curiously, there is a considerable dip in 2000 and 2001, followed by  a sharp, massive series of rises thereafter.

So, what happened in 2000 and 2001?

The Asian Crisis is what happened, folks.

As then-governor of the RBNZ, Don Brash reported,

“In July 1997 the Thai baht fell sharply, triggering a period of turbulence in the financial markets of East Asia. Many currencies declined p re c i p i t o u s l y, along with share markets and real estate prices.

The banking sectors of the countries most affected were severely damaged, and real economic activity fell, in some cases sharply, for the first time in decades. The direct effect on the New Zealand economy was adverse and substantial, and looks likely to continue for some time. The indirect effect, through business and household sector confidence, was also significant. The impact of the Asian situation reduced inflationary p re s s u res in New Zealand markedly.

[...]

Inflationary pressures had been slowing for some time previously, so that as far back as December 1996 monetary policy began to ease in response. Then late in 1997 and into 1998 the Asian financial crisis added to the slow-down, as growth prospects in many Asian economies, including Japan, deteriorated (see box 2). In December 1997, when easing monetary policy further, the Bank cited the likely impact of the Asian crisis on the New Zealand economy, and noted that the disinflationary impact of that crisis could become markedly worse. During 1998, this happened, and in response monetary policy was eased more aggressively still.

[...]

For New Zealand, reduced exports to the region, which previously accounted for 36% of our merchandise exports, had a negative impact on economic activity. The likely effects of the crisis were a particular focus in each of the Bank’s quarterly Monetary Policy Statements from December 1997 onwards. In the Reserve Bank’s March 1998 projections, we judged that the severity of the crisis was being underestimated by many observers. As a result the Reserve Bank eased monetary policy by more than New Zealand markets had expected.”

Acknowledgement:  – Don Brash, Reserve Bank of New Zealand Annual Report 1997-1998

Here is the NZ Reserve Bank chart of economic growth, measuring Real Gross Domestic  Product (GDP), from 1990 to 2012,

.

reserve bank of nz real gross domestic product 1990_2012

Reserve Bank of New Zealand – Real Gross Domestic  Product, 8 January 2013

.

Note  the RBNZ statement, from the above  January 2013 report,

Following the 1998 “Asian crisis” New Zealand’s Gross Domestic Product (“GDP”) recovered strongly. Annual GDP growth from 2001 through to 2004 (on average) exceeded that of its major trading partners, partly as a result of strong net inward migration and associated population growth.

 

Acknowledgement: IBID

.

Now let’s compare the period from 1997 to 2002, on both graphs,

.

RBNZ - GDP - electricity prices

.

A closer look at the 1997 – 2002 period,

.

NZ GDP annual growth rate Jan 1997 - Jan 2002

Acknowledgement: Trading Economics/Stats NZ – New Zealand GDP Growth Rate

.

Aside from a “dead cat” bounce in the Third Quarter of 1999, the  correlation between economic activity and power prices is self-evident. The drop in electricity prices in 2000 and 2001 followed a slump in economic activity in Asia, and it’s subsequent global flow-on effects.

As PBS Frontline reported,

The Asian financial crisis that was triggered in July 1997 was a shocker. Even two years after it ended, anxiety still loomed over global financial markets. What was at the time perceived to be a localized currency and financial crisis in Thailand, soon spread to other Southeast Asian countries–including Malaysia, Indonesia and the Philippines.

By the fall of 1997, the contagion extended its reach to South Korea, Hong Kong and China.  A global financial meltdown had been ignited. In 1998, Russia and Brazil saw their economies enter a free-fall, and international stock markets, from New York to Tokyo, hit record lows as investors’ confidence was shaken by the volatility and unpredictability in the world’s financial markets.

Acknowledgement: PBS – Timeline of the Crash

As the Reserve Bank stated above, “annual GDP growth from 2001 through to 2004 (on average) exceeded that of its major trading partners” – and 2001 is when power prices started to rise again.

Also worthy of attention is  that the electricity CPI also drops in 2009 and 2011, during the latest Global Financial Crisis and resulting Great Recession.

Unfortunately, for reasons of their own (but which we can guess at), Mr Farrar and his National Party friends fail to point out this salient fact. The Right will mis-represent facts and re-write history to suit their own  narrowly-defined ideological agenda.

Labour-Green’s NZ Power is a threat to that ideologically-based agenda.

Continued at: The Politics of Power and a Very Clear Choice – Part Toru

This blogpost was first published on The Daily Blog on 25 April 2013.

.

*

.

Previous Related Blogposts

History Lesson – Tahi – Electricity Sector “reforms”  (4 March 2012)

John Key: Man of Many Principles (28 Sept 2012)

Labour, Greens, NZ First, & Mana – A Bright Idea with electricity! (10 March 2013)

References

NZ History Online:  Dancing Cossacks political TV ad

NZPA: Splitting up ECNZ expected to cut wholesale power price (16 Dec 1998)

NZPA:  Reforms aimed at business – Luxton (21 April 1999)

Otago Daily Times: Power Prices Set To Soar (12 May 1999)

Otago Daily Times: No case for regulation (24 May 1999)

Otago Daily Times: Lower power prices coming says Bradford (3 June 1999)

Otago Daily Times: Power prices to rise by up to 15.1% (29 June 1999)

Otago Daily Times:  Reforms blamed for hike (13 July 1999)

Scoop: Alliance to hold Winston Peters accountable (8 Oct 1999)

NZ Herald: Peters ‘forgets’ NZ First support for power reforms (13 Aug 2008)

Fairfax: Government to seek inquiry into power price rise  (30 September 2008)

NZ Herald:  Put prices on hold, Brownlee tells power companies (21  May 2009)

NZ Herald: Mighty River directors’ 73pc pay rise realistic – Key (5 April 2013)

Scoop:  Labour-Greens to rip up the book on electricity pricing (18 April 2013)

NZ Herald:  Labour-Greens plan could work, says Vector CEO (19 April 2013)

NZ Herald:  National gobsmacked at Labour idea (19 April 2013)

NZ Herald: Power plan likened to Soviet era (19 April 2013)

NZ Herald: MRP chief slams socialist’ plan (21 April 2013)

TVNZ:  Q+A – Transcript of Steven Joyce interview (21 April 2013)

NZ Herald:  Bernard Hickey: Power barons fail to fool the public this time around (21 April 2013)

Radio NZ: Power prices nearly double since 2000 (21 April 2013)

Other blogs

Kiwiblog: Electricity Prices

.

.

= fs =

The Politics of Power and a Very Clear Choice – Part Tahi

.

new zealand high electricity prices

.

Historical Background

.

New Zealanders, by and large, are not stupid.

We can recognise a rort when we see it. And in the case of electricity prices, we see it on a regular basis in our power bills and media headlines,

.

2008

.

Government to seek inquiry into power price rise - 2008

Acknowledgement: Fairfax: Government to seek inquiry into power price rise

.

2009

.

More profit than power for state-owned energy companies - 2009

Acknowledgement:  NBR – More profit than power for state-owned energy companies

.

2010

.

High spot prices hint at power price rise - 2010

Acknowledgement: Fairfax Media – High spot prices hint at power price rise

.

2011

.

Power bills set to rise up to 8pc from March - 2011

Acknowledgement: NZ Herald- Power bills set to rise up to 8pc from March

.

2012

.

Electricity prices tipped to rise steeply - 2012

Acknowledgement:  Fairfax Media –  Electricity prices tipped to rise steeply

.

2013

.

Power prices rise by average $120 nationwide - 2013

Acknowledgement:  TVNZ –  Power prices rise by average $120 nationwide

.

We all know the facts and figures by now,

None of Bradford’s promises came to fruition and on 27 November 1999, Bradford lost his Rotorua seat to Labour’s Stephanie Chadwick (see: Rotorua – New Zealand electorate).

.

A Bold New Plan

.

On 18 April, Labour and the Greens announced a bold new policy initiative to reign in escalating power price rises. Called NZ Power, the reform would work thusly,

Key to the proposals is the creation of a central buying and electricity system planning agency, dubbed NZ Power, which would drive down power prices because of its market power and would not be required to make a profit.

It would also be the market regulator.

“It will not just supervise the market, it will be actively involved,” said Labour’s finance spokesman David Parker, a Minister of Energy in the 1999 to 2008 Labour-led administration.

It would tender for new electricity generation, or potentially energy efficiency measures, rather than the current crop of generators competing to identify the next least costly unit of new generation when demand rises.

In some cases, industrial users would be able to contract directly with NZ Power.

Power prices would be set not by reference to the cost of the next new unit of generation, but by average costs that include the anticipated price of new generation. However, there would still be a traded market in wholesale electricity, which could reflect regional variations.

Acknowledgement: Scoop –  Labour-Greens to rip up the book on electricity pricing

This new plan was the confirmation (if any was needed) that National’s grand experiment in privatisation and “competition” in the electricity sector was not working. Only  fools  (mostly those posting on right-wing, pro-National Kiwiblog) could possibly argue that the current system was “succeeding”.

In fact, even as far back as May 2009, National Minister Gerry Brownlee demanded that power generators put price rises on hold. He stated,

There is something fundamentally wrong in the way in which we’re marketing electricity in New Zealand.

Acknowledgement: NZ Herald –  Put prices on hold, Brownlee tells power companies

And even the architect of this ill-conceived “reform”, Max Bradford, was reported in May 1999 in the media as planning to regulate electricity line charges,

Enterprise  and Commerce minister  Max Bradford  is to press ahead with regulations to control electricity line charges, but sees no reason to implement regulation in the competitive end of the market.

Acknowledgement: Otago Daily Times – No case for regulation

So even National ministers reluctantly concede that the electricity sector cannot work in an unregulated “freemarket” model, and is unable  to deliver the ‘golden fruits’ of de-regulation and so-called competition.

.

Carping & Criticisms

.

After the press conference on 18 April, criticism flew thick and fast from National ministers; right wing bloggers;  pro-National sycophantic elements of the media, and their ideologically-wedded fellow-travellers.

On Steven Joyce’s twitter account,

.

Steven Joyce - Tweet - NZ Power - soviet style nationalisation

Source: Twitter/Steven Joyce

.

Judith “Crusher” Collins added this bit of gratuitous fantasy-fear mongering,

.

Judith Collins - Tweet - NZ Power - soviet style nationalisation

Source: Twitter/IBID

.

From Simon Bridges, this little bit of muppetry,

They may want to return to sort of United Soviet Socialist Republic of New Zealand days but National certainly doesn’t.”

Acknowledgement: NZ Herald – Power plan likened to Soviet era

It was  actually the Union of Soviet Socialist Republics, Mr Bridges, not “United” Soviet Socialist Republic. Get your Evil Empires  right, mate.

And anyway, most of New Zealand’s centralised planning occurred during National’s administration, from 1975 to 1984, under the late Robert Muldoon. Remember the price/wage freeze?

Mighty River Power chief executive Doug Heffernan, also called the plan “socialist” (by the way, is that a bad thing?) He declared,

“What you’ve just described is a socialist consumer model.”

Acknowledgement: NZ Herald – MRP chief slams socialist’ plan

To which I would point out to the reader,

  1. Heffernan benefits from a $1.49 million p.a. salary – whilst Mighty River Power keeps raising it’s power prices. So the gentleman has a vested interest in this issue.
  2. In February this year, Heffernan announced that Mighty River Power’s half-yearly profit has quadrupled; prices had risen by 2%; despite demand “being flat”. (see:  Mighty River Power profit quadruples )
  3. Saying that “Mighty River Power would not have made the $1billion investment into geothermal energy that we’ve made in the last five years … The risks would have been too high” - insults our intelligence.  Mighty River Power was built up by the State, with taxpayers’ money.  Heffernan forgets himself; MRP is not a private company.
  4. And anyway,  is it the role of  SOE chief executives to be promoting privatisation?

Steven Joyce added to the “red menace scare”on TVNZ’s Q+A on 21 April,

“By definition, it’s socialism.

“They are not just talking about the price, they’re talking about telling the generators when they can generate, which generating assets they can use, which ones they can introduce to the markets.”

The Minister said the proposed plan would also scare off investors, with evidence of this seen late last week when the market dropped.

“On Thursday and Friday, the market dropped nearly $600 million across three companies because they said, ‘Jeez, we’re not interested in this’.”

Which is rather strange… Joyce, Bridges, Collins, Key, et al, are likening Labour-Green’s plans to “North Korean economics” or “Soviet style socialism”.

But when did the former USSR or the current North Korea ever have a share market or multi-party Parliamentaty democracy?!?!

.

hyperbole will sink legislation

.

Could it possibly be that National ministers have no intellectual, rational response  to the proposed NZ Power scheme?

Could it be that they must rely on fear-mongering?  Which reminds me of this,

.

dancing cossacks - national fear mongering

Acknowledgement: NZ History Online:  Dancing Cossacks political TV ad

.

Could it possibly be that National ministers are placing their faith in free market economics – vis-a-vis the partial sale of state powercos – to get prices to drop? (Which, after 14 years is yet to happen for the domestic consumer.)

Could it be that National ministers are… panicking?!

Because as NZ Herald columnist, John Armstrong wrote on 19 April,

“There may be good reasons for the seemingly constant above-inflation hikes in retail prices. But politicians have given up explaining because consumers long ago stopped listening.

All this would suggest there is fertile ground for Labour and the Greens, who yesterday foreshadowed plans to slash power prices by setting up a new agency, NZ Power, to act as a single buyer of wholesale electricity.

National was truly gobsmacked. It accused Labour of “Muldoonism”, “loony tunes” policy making and “North Korean economics”.

National accepts that at the outset there might be lower prices. But it argues the policy would distort price signals that are so vital to matching supply and demand. That could lead to power shortages. The policy would distort and even discourage investment in power generation.”

Acknowledgement: NZ Herald:  National gobsmacked at Labour idea

Gobsmacked” is about right.

And ironically enough, “Muldoonism” was a product of the National Party – not Labour. Hilarious stuff, indeed!

This is nothing less than a full-scale retreat from market-driven political orthodoxy. In effect, Labour has done the unthinkable; it has publicly announced that neo-liberalism and it’s supposed “free” market economics does not, and cannot,  deliver all of society’s needs.

We get a glimpse  of what it must have been like in 1989 when Mikhail Gorbachev sat down with his colleagues in the Soviet Politburo and announced to a stunned meeting,

Comrades, our communist ideology and centralised economic system has failed.”

Mark 18 April 2013 on your calendar as the day that one of our two main Parties (or, two out of our three main Parties, if  Green political support keeps increasing) renounced neo-liberal free market ideology as a failure.

There is now a clear, unequivocal difference between an increasingly  right wing, ideologically-driven  National, and a decidely more-leftist – but  pragmatic – Labour.

And the public now has a clear choice as well, for whom to vote;

Option A (for the Blue Team): maintain the neo-liberal status quo; proceed with privatisation; and hope-like-hell  that Max Bradford’s promises eventually, maybe, one day, will  come true.

Option B (for the Red Team): vote for change; abandon our slavish adherence to neo-liberal dogma; and, as a side-effect, enjoy cheaper power bills.

Continued at: The Politics of Power and a Very Clear Choice – Part Rua

This blogpost was first published on The Daily Blog on 24 April 2013.

.

*

.

Previous Related Blogposts

History Lesson – Tahi – Electricity Sector “reforms”  (4 March 2012)

John Key: Man of Many Principles (28 Sept 2012)

Labour, Greens, NZ First, & Mana – A Bright Idea with electricity! (10 March 2013)

References

NZ History Online:  Dancing Cossacks political TV ad

NZPA: Splitting up ECNZ expected to cut wholesale power price (16 Dec 1998)

NZPA:  Reforms aimed at business – Luxton (21 April 1999)

Otago Daily Times: Power Prices Set To Soar (12 May 1999)

Otago Daily Times: No case for regulation (24 May 1999)

Otago Daily Times: Lower power prices coming says Bradford (3 June 1999)

Otago Daily Times: Power prices to rise by up to 15.1% (29 June 1999)

Otago Daily Times:  Reforms blamed for hike (13 July 1999)

Scoop: Alliance to hold Winston Peters accountable (8 Oct 1999)

NZ Herald: Peters ‘forgets’ NZ First support for power reforms (13 Aug 2008)

Fairfax: Government to seek inquiry into power price rise  (30 September 2008)

NZ Herald:  Put prices on hold, Brownlee tells power companies (21  May 2009)

NZ Herald: Mighty River directors’ 73pc pay rise realistic – Key (5 April 2013)

Scoop:  Labour-Greens to rip up the book on electricity pricing (18 April 2013)

NZ Herald:  Labour-Greens plan could work, says Vector CEO (19 April 2013)

NZ Herald:  National gobsmacked at Labour idea (19 April 2013)

NZ Herald: Power plan likened to Soviet era (19 April 2013)

NZ Herald: MRP chief slams socialist’ plan (21 April 2013)

TVNZ:  Q+A – Transcript of Steven Joyce interview (21 April 2013)

NZ Herald:  Bernard Hickey: Power barons fail to fool the public this time around (21 April 2013)

Radio NZ: Power prices nearly double since 2000 (21 April 2013)

Other blogs

Kiwiblog: Electricity Prices

.

.

= fs =

Corporate Welfare under National

.

begging-corporations

.

In case there are still one or two New Zealanders remaining who haven’t yet cottoned on to one very simple truism about National in office, let me spell it out; they are rank hypocites of the highest order.

And in case you, the reader, happen to be a true-blue National supporter, let me explain why.

In the last four years, National has been beavering away,

  • slashing budgets
  • sacking nearly 3,000 state sector workers
  • closing schools
  • attempting to close special-needs services such as Nelson’s Salisbury school
  • cutting state services such as DoC, Housing NZ, Police, etc
  • freezing wages for state sector workers (whilst politician’s salaries continue to rise)
  • cutting back on funding to various community services (eg; Rape Crisis ands Women’s Refuge)
  • and all manner of other cuts to  state services – mostly done quietly and with minimum public/media attention.

In return, the Nats successfuly bribed us with our own money, giving us tax-cuts in 2009 and 2010. (Tax cuts which, later, were revealed not to be as affordable as what Dear Leader Key and Little Leader English made out – see:  Key: $30b deficit won’t stop Nats tax cuts, see: Government’s 2010 tax cuts costing $2 billion and counting)

One such denial of funding for public services is an on-going dispute between PHARMAC and the New Zealand Organisation for Rare Disorders (NZORD) which is struggling  desperately to obtain funding for rare disorders such as Pompe’s Disease,

.

mum-not-prepared-to-wait-and-die

Acknowledgement: Fairfax Media – Mum not prepared to wait and die

.

NZORD and it’s members have been lobbying National for the last four years to gain funding for much-needed medication. They are in a dire situation – this is a matter of life or death for them.

This blogger has blogged previously about their plight,

Previous related blogposts

This blogger has also  written directly  to the Prime Minister and to Health Minister, Tony Ryall.

One response from Minister Ryall is presented here, for the reader’s attention,

.

email-tony-ryall-pompe-disease-5-dec-2012-b

.

So there we have it, folks. If you’re a New Zealander dying from a rare disease, and PHARMAC won’t fund life-saving medication – don’t expect an assistance from this rotten government. Their response will be, and I quote,

While I share your concern [snort!!!]  for people with Pompe disease, as I advised you in my letter of 22 November 2012, in the current fiscal environment, unfortunately funding is not available for all treatments.”

So “in the current fiscal environment, unfortunately funding is not available for all treatments“?!

But funding is available for;

$1 Rugby – $200 million to subsidise the Rugby World Cup (see:  Blowouts push public Rugby World Cup spending well over $200m)

$2 Movies – $67 million paid to Warner Bros to keep “The Hobbit” in New Zealand (see:  The Hobbit: should we have paid?) and $300 million in subsidies for “The Lord of the Rings” (see:  Hobbit ‘better deal than Lord of the Rings’ – Key)

$3 Consultants - After sacking almost 3,000 state sector workers (see:  555 jobs gone from public sector) – and with more to come at DoC – National seems unphased at clocking up a mind-boggling $1 billion paid to “consultants”.  (see:  Govt depts clock up $1bn in consultant fees)

And on top of that, we are now faced with the prospect of a trans-national corporate – Rio Tinto – with their hands firmly around Meridian Energy’s neck, attempting to extract a greater subsidy from the SOE powerco. The story began in August last year,

.

Rio Tinto seeks power deal revision

Acknowledgement: NZ Herald – Rio Tinto seeks power deal revision

.

We know why. Despite implausible assertions to the contrary by National Ministers, Genesis Energy, and Rio Tinto executives – the partial sale of SOE powercos (Meridian, Genesis, and Mighty River Power) have made them vulnerable to the demands of Big Businesses.

Rio Tinto  knows that the share price of each SOE will be predicated on marketplace demand for shares.

They know that if there is less demand for electricity, then the price of power may (note: may) drop; those SOE’s profits will drop; and the price of shares will drop.

That leaves shareholders out of pocket and National with egg on it’s face. And a whole bunch of  Very Pissed Off Voters/Shareholders.

Think: Warner Bros. Think: corporate blackmail to shift ‘The Hobbit’ overseas. Think: National not wanting to risk the wrath of Peter Jackson and a thoroughly manipulated Public Opinion. Think: National looking at the 2011 election. Think: panic amongst National ministers and back-room Party strategists.

National capitulated.

This is precisely what is happening with Rio Tinto, Meridian, and National.

In the space of six and a half hours yesterday (28 March 2013),  events came to a dramatic head. The following happened in one day:

9.15am:

Via a Press Release from Merdian Energy;

Thursday, 28 March 2013, 9:15 am
Press Release: Meridian Energy

New Zealand Aluminium Smelter’s electricity contract

For immediate release: Thursday, 28 March 2013

Meridian was approached by Pacific Aluminium, a business unit of global mining giant Rio Tinto Ltd, the majority shareholder of New Zealand Aluminium Smelters Ltd (NZAS), in July 2012, to discuss potential changes to its existing electricity contract.

Since talks began, various options have been discussed and Meridian has offered a number of changes and concessions to the existing contract.

Chief Executive of Meridian Energy, Mark Binns, says that Meridian has advised Pacific Aluminium of its ‘bottom line’ position.

“Despite significant effort by both parties there remains a major gap between us on a number of issues, such that we believe that it is unlikely a new agreement can be reached with Pacific Aluminium,” says Mr Binns.

In the event no agreement can be reached, Meridian will seek to engage with Rio Tinto and Sumitomo Chemical Company Ltd, the shareholders of NZAS, who will ultimately decide on the future of the smelter.

Meridian signed a new contract with NZAS in 2007, after three years of negotiations. This current contract commenced on 1 January 2013 and remains unaltered and binding on the parties.” - Source

To which Rio Tinto replied,

10.15am:

In a NZ Herald story,

CEO  of Pacific Aluminium (the New Zealand subsidiary of Rio Tinto), Sandeep Biswas responded with,

“We believe a commercial agreement that is in the best interests of NZAS, Meridian, the New Zealand Government, and the people of Southland can be reached. We look forward to continuing productive negotiations with a view to achieving a positive outcome for all parties.” – Source

De-coding: “This ain’t over till the Fat Chick sings, and she’s nowhere to be seen. You guys better start hearing what we’re saying or this is going to turn to sh*t real fast; we’ll close our operations at Bluff; 3,200 people employed by us directly or  indirectly will be told ‘Don’t Come Monday’;  your Southland economy will collapse like a Cyprus bank, and National can kiss goodbye to it’s re-election in 2014. Ya got that, sunshine?”

11.15am:

That got the attention of National’s ministers Real Quick,

The Government has opened discussions with Tiwai Point aluminium smelter’s ultimate owners Rio Tinto in a bid to broker a deal after talks between the smelter and Meridian Energy reportedly broke down.

[...]

“With this in mind, the Government has been in contact with Pacific Aluminium’s international parent company Rio Tinto this week to discuss helping to bridge the gap in their positions over the short to medium term, if this could be of assistance in concluding an agreement.

“In the meantime, we understand Meridian’s existing contract with Pacific Aluminium remains in place at least until 1 January 2016 with significant financial and other obligations beyond that.” – Source

Barely two hours had passed since Meridian had lobbed a live grenade into National’s state asset sale programme, and it’s fair to say that the Ninth Floor of the Beehive was in a state of panic. It was ‘battle stations’. Red Alert. National ministers were, shall we say, slightly flustered,

.

http://fmacskasy.files.wordpress.com/2013/03/headless-chickens.jpg?w=320&h=274

.

12.00pm:

By noon, the markets were reacting. Though share-market analysts were attempting to down-play the so-called  ‘Phoney War’ between Meridian and Rio Tinto, Devon Funds Management analyst, Phillip Anderson, remarked that,

“…the announcement had hit Contact’s share price – the company was down 3 per cent in early trading but is now down only 1.2 per cent.” - Source

If Contact’s (a fully privatised ex-SOE) share price had dropped 3% on the strength of these media stories, it is little wonder that share-market analysts were down-playing the brinkmanship being played out by Meridian and Rio Tinto. If the share-market was spooked enough, Contact’s share price would plummet, as would that of Mighty River Power – estimated to be in the $2.36 and $2.75 price-range. (see:  Mighty River share tips $2.36 to $2.75).

In which case, National would be floating shares worth only a fraction of what ministers were seeking. In effect, if Rio Tinto closed down operations, Key could kiss goodbye to the partial sale of energy SOEs. They would be worthless to investors.

3.43pm:

By 3.43pm, and six and a half hours since Meridian’s press release, National had negotiated some kind secret deal with Rio Tinto.  We don’t know the terms of the deal because though it is our money, National ministers don’t think we have a right to the information,

The Government is negotiating a new taxpayer-funded subsidy with Tiwai Point aluminium smelter’s owners and has all but acknowledged its assets sales programme is being used by them to get a better deal on power prices.

State Owned Enterprises Minster Tony Ryall this morning said the Government has opened discussions with the smelter’s ultimate owners global mining giant Rio Tinto in a bid to broker a deal over a variation to the existing electricity contract.

[...]

“With this in mind, the Government has been in contact with Pacific Aluminium’s international parent company Rio Tinto this week to discuss helping to bridge the gap in their positions over the short to medium term, if this could be of assistance in concluding an agreement.”

Mr Ryall indicated the Government had offered Rio Tinto “a modest amount of money to try and help bridge that gap in the short to medium term but there’s still a very big gap in the long term… We’re not interested in subsidising this business in the long term”. – Source

Ryall added,

“…they’re pretty tough negotiators and I’m sure they look at what else is happening in the economy when they make their various decisions…

…”they certainly haven’t got the Government over a barrel.”

Three questions stand out from Ryall’s statement,

  1. If  State subsidies for electricity supply to Rio Tinto’s smelter are “short to medium term” – then what will happen when (if?) those subsidies are lifted? Will shareholders “take a bath” as share prices collapse in value?
  2. Does Ryall think we are fools when he states that Rio Tinto did not have the government “over a barrel” ?! Is that how National views the public – as morons?
  3. How much is the “a modest amount of money” that Ryall is referring to?

Perhaps the most asinine comment from Ryall was this, as reported by TVNZ,

“The electricity market is capable of dealing with all the issues relating to the smelter,” said Ryall.

Acknowledgement: TVNZ News – Talks break down over Tiwai smelter contract

Really?! In what way is “the electricity market … capable of dealing with all the issues relating to the smelter” when the government has to step in with what could be millions of dollars worth of subsidies? Is that how “the market” works?!

This blogger has two further questions to put to Minister Ryall. Both of which have been emailed to him,

.

Date: Thu, 29 March 2013, 6.43pm
From: Frank Macskasy <fmacskasy@yahoo.com>
Subject: Re: Your correspondence to Hon Tony Ryall
To:  Tony Ryall  <Tony.Ryall@parliament.govt.nz>

Kia ora,  Mr Ryall,

I am in receipt  of your emailed letter to me, dated 5 December 2012, regarding the non-funding of certain medications for sufferers of Pompe Disease. Firstly, thank you for taking the time to respond to this issue in a thorough and timely way. Several of your other ministerial colleagues seem to lack that simple etiquette.

I note that, as Minister of SOEs, you have been in direct negotiations with Rio Rinto, and have offered the company subsidised electricity for the  “short to medium term”.

This will no doubt cost the taxpayer several millions (hundreds of millions?) of dollars.

If  National is able to provide such largesse to a multi-national corporation, please advise me as to the following;

1. Why is the same subsidy for cheaper electricity not offered to ALL New Zealanders? Or even those on low-fixed incomes? Why provide a multi-million dollar subsidy just to a billion-dollar corporation when New Zealanders could do with a similar cut in their power bills?

2. In your letter to me, dated 5 December 2012, you point out that,

“While I share your concern  for people with Pompe disease, as I advised you in my letter of 22 November 2012, in the current fiscal environment, unfortunately funding is not available for all treatments.”

If National has millions of dollars available to subsidise multi-national corporations, them obviously your statement on 5 December 2012 that “in the current fiscal environment, unfortunately funding is not available for all treatments” – is simply not credible.

It is obvious that your government can find money when it wants to. This applies to Rugby World Cup funding, consultants, movie-making subsidies, etc.

As such, I hope you are able to find the necessary funding for medication for people suffering rare disorders.

You are, after all, Minister for Health as well as Minister for State Owned Enterprises.

Regards,

-Frank Macskasy
Blogger

PS: Please note that this issue will be canvassed further on the blogsite, The Daily Blog.

.

Minister of Health. Minister for SOEs. Minister for corporate welfare.

Which ‘hat’ will Tony Ryall be wearing today?

And will he find the necessary funding to save the lives of sick New Zealanders?

This blogpost was first published on The Daily Blog on 31 March 2013.

.

*

.

References

NZ Herald: Rio Tinto seeks power deal revision (10 Aug 2012)

Scoop.co.nz:  New Zealand Aluminium Smelter’s electricity contract Press Release (9.15am, 28 March 2013)

NZ Herald:  Smelter counters Meridian – power deal still possible (10.15am, 28 March 2013)

NZ Herald:  Govt steps in to sort out stalled Tiwai power deal (11.15am, 28 March 2013)

NZ Herald:  Tiwai stoush may affect Mighty River price  (12.00pm, 28 March 2013)

NZ Herald:  Govt offser Tiwai subsidy (3.43pm, 28 March 2013)

Related references

NZ Herald:  Mighty River share tips $2.36 to $2.75 (20 March 2013)

Related to previous blogposts

Pharmac: The politics of playing god (16 June 2011)

$500,000 a year to keep toddler alive (5 Feb 2013)

Rare disease sufferers want pricey treatments (1 March 2013)

Rare disease takes awful toll on boy (1 March 2013)

Call for an Orphan drugs access policy to overcome Pharmac’s systems failure (28 Feb 2013)

Bill English – do you remember Colin Morrison? (4 Feb 2013)

Related Opinion

NZ Herald – Fran O’Sullivan – Govt intervention doesn’t cut mustard (30 March 2013)

.

.

= fs =

Blogger lays complaint with Commerce Commission – *UP-DATE*

30 April 2013 5 comments

.

Continued from: Blogger lays complaint with Commerce Commission

.

Commerce commission logo

.

On 1 April (not an April Fools Joke) this year, this blogger laid a complaint with the NZ Commerce Commission, regarding National’s dealings with Mighty River Power and Rio Tinto’s Tiwai Pt aluminium smelter.

The complain was as follows,

.

Tony Ryall has recently announced that the NZ Government is intervening directly in negotiations between Meridian Energy and Rio Tinto (which is 80% owner of Tiwai Aluminium Smelter).

Mr Ryall has said,

“With this in mind, the Government has been in contact with Pacific Aluminium’s international parent company Rio Tinto this week to discuss helping to bridge the gap in their positions over the short to medium term, if this could be of assistance in concluding an agreement.

“In the meantime, we understand Meridian’s existing contract with Pacific Aluminium remains in place at least until 1 January 2016 with significant financial and other obligations beyond that.”

Ryall added that “all relevant information – including about the smelter electricity contract – will be reflected in the Mighty River Power offer document which is currently being finalised”.

Source: NZ Herald, Govt steps in to sort out stalled Tiwai power deal ( http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10874174)

I therefore submit the following;

(1) This appears to be a prima facie case of the NZ Government manipulating the future stock price of Mighty River Power (and other state owned powercos), by offering a subsidy to Rio Tinto.

(2) This subsidy is not available to any other company nor individual.

(3) As such, I submit that the NZ Government’s intention to subsidise electricity that is provided to Rio Tinto is done with a view to reduce competition in the market.

Specifically, I draw the Commission’s attention to the Commerce Act 1986; sections 27, 30, and related clauses.

(4) Furthermore, I submit that if any other corporation, company, institution, or individual attempted such an act, that they would be deemed to be guilty of price fixing and manipulation of the market.

I await your response and thank you for your consideration of my complaint.

-Frank Macskasy

.

Being somewhat naive, I believed that attempting to  instigate events, that would keep the price of shares for a specific company at an inflated value,  would constitute a form of manipulation of  the share market.

Silly me.

What was I thinking?!

The Commerce Commission replied four weeks later,

.

from:     Contact <contact@comcom.govt.nz>
to:     “fmacskasy@gmail.com” <fmacskasy@gmail.com>
date:     Mon, Apr 29, 2013 at 9:56 AM
subject:     282199 Meridian Energy Limited and the government

Thank you for the information you provided the Commission regarding the Government’s announcement that it will intervene directly in the negotiations between Meridian Energy and Rio Tinto (owners of Tiwai Aluminium Smelter).  You suggest that this intervention would amount to price fixing

 We assessed the information you have provided and we are satisfied that the Commerce Act is unlikely to have been breached in this instance. Although it owns one of the parties to these negotiations, Meridian Energy, the Crown appears to have tried to meditate in this dispute on an “honest broker” basis. As such, the Crown probably would not have been in trade for the purposes of this exercise.

 The above is merely our view that no prima facie breach of the Commerce Act has occurred. Such a view is not a ruling of law, as only the courts can decide whether there is a breach of the Act. The Commission’s decision not to pursue this matter does not prevent an individual from initiating their own action.

 We have closed the file in regard to your complaint enquiry number 282199.

 Yours sincerely

 Katey Salmond

Commerce Commission |Senior Contact Centre Adviser
44 The Terrace |PO Box 2351 |Wellington 6140 |New Zealand
Free phone 0800 943 600 |Fax +64 (04) 924 3700
Follow us on Twitter @NZComCom

.

One would have thought that by providing subsidised (cheaper) electricity to Rio Tinto’s aluminium smelter; for a short term period (as Dear Leader has stated:  PM John Key says fresh Mighty River Float detail due on Friday; may include detail on risks around Tiwai Pt closure);  for the purpose of maintaining a high price for Mighty River Power’s shares – would constitute a form of share-market manipulation.

After all, the point of the whole exercise was to maintain Mighty River Power’s share-value. As Key himself pointed out on 2 April,

“But obviously, for the number of people involved, the jobs, the impact on the local community and the impact in the short term on the electricity markets, the government would like to see the orderly exit of the smelter, or a long term agreement between the companies.”

Acknowledgment: Interest.co.nz – PM John Key says fresh Mighty River Float detail due on Friday; may include detail on risks around Tiwai Pt closure

In an ironic side-issue, it’s interesting to note that merchant bankers, share-brokers, Federated Farmers, etc, haven’t raised merry hell on this issue – as they did with the Labour-Green proposal for a single electricity buyer-desk, NZ Power.

I think we can see all manner of vested interests involved here.

Last point, Ms Salmond writes in her 29 April email to me,

The Commission’s decision not to pursue this matter does not prevent an individual from initiating their own action.”

That almost comes across as a sly hint…

.

.

= fs =

Mighty River Power, Members of Parliament, and Conflicts of Interest

26 March 2013 16 comments

.

.

On 27 June last year,  on the last episode of TVNZ7’s ‘Backbenches’, Minister for Courts, Associate Minister of Justice, and Associate Minister for Social Development, Chester Borrows, admitted his intention to  buy shares in partially-privatised state owned enterprises.

In an  exchange between ‘Backbenches’ Host Wallace Chapman and Chester Burrows,

CHAPMAN:  “Will you be buying shares in Mighty River Power?”

BORROWS:  “Yes, probably.”

CHAPMAN:  “Ok.”

BORROWS:  “I’m a mum and dad investor, well I’m half of a mum and investor partnership.”

CHAPMAN:  “So you will be.”

BORROWS:  “Yep.”

On 2 July, when I blogged this issue (see: Conflicts of Interest?), I asked three questions,

  • Is this a vested interest in partial-privatisation?
  • Is this a conflict of interest?
  • Is this verging on self-serving corruption?

It will be interesting to find (if at all possible to uncover), how many National/ACT/United Future members of Parliament will end up owning shares in Mighty River Power, and other part-privatised SOEs?

A recent Sunday Star Times story told readers that members of Parliament and government ministers would follow a self-imposed “moratorium” on not buying any shares in SOEs for 90 days,

Cabinet ministers have agreed to a voluntary “moratorium” preventing the purchase of shares by all ministers, and some of their staff, until 90 days after the initial sale.

Finance Minister Bill English’s office said: “Cabinet also agreed that ministers and the staff in those offices . . . should use their best endeavours to ensure that their partners and dependent children adhere to the same moratorium.”

Acknowledgment: Fairfax Media – Call to ban ministers from share float

That is simply not good enough. A politician could easily instruct a solicitor to buy shares on his/her behalf. Or purchase shares via a ‘shell-company‘. There are as many ways to dodge scrutiny as the human mind can imagine.

The implications of government MPs and Ministers owning shares in state assets which they themselves have decided to privatise is a serious matter.

The only three ways to avoid such a spectacular conflict of interest is,

  1. Pass legislation banning MPs or their spouses from ever owning shares in SOEs (not very practical)
  2. Make the Pecuniary Interests register a permanent feature for all politicians to fill out for the rest of their lives. (possible – though a real pain in the arse)
  3. Scrap the asset sales programme. (Much easier.)

If politicians such as Borrows purchase shares in SOEs, it will further lower their reputations in the eyes of the public. “They’re in it for themselves” will become a reality in the minds of people, rather than just a vague suspicion.

We’re treading on thin ice here and the prospect of real political corruption takes one step closer to reality.

.

*

.

Additional References

Call to ban ministers from share float (24 March 2013)

Previous related blogposts

Conflicts of Interest?

.

.

= fs =

392,000 New Zealanders send a clear message to John Key – Part Rua

12 March 2013 3 comments

.

.

Continued from: 392,000 New Zealanders send a clear message to John Key – Part Tahi

NZ, Wellington, 12 March 2013 – Ms Maniapoto Jackson introduced the first speaker, Greypower’s President, Roy Reid,

“So please welcome up the man who initiated this historical moment for us – the biggest citizens initiated referendum in [New Zealand's] history!”

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

Roy Reid

.

“As President of Greypower, I wish to inform you  that Greypower has been opposed to the  sale of state owned assets  for a number of years. And this was reconfirmed at our annual general meeting two years ago. We advised all the political parties in this  House that we were opposed to them selling any of our assets.

Our generation worked hard. We paid the taxes, to build our existing assets. They’re not for sale. They belong to  all New Zealanders.

I sincerely thank all those who worked from one end of New Zealand to the other, to collect those 394,000 signatures just behind us.  It’s the biggest petition  ever presented to this House.
I pay tribute to our co-supporters, the New Zealand students association. For being involved with us, because it shows the country that we are united from the elderly to the younger generations…

…I’m sure that we’ve got enough valid signatures in those boxes to force the referendum. And [despite] no respect for what this government today says, the people of New Zealand will have their say.”

It as perhaps fitting that Mr Reid was given first opportunity to address the crowd.  It was indeed his generation, and others before him, who sacrificed so much to build what we have in New Zealand today. And which a few greedy, short-sighted number of our fellow New Zealanders seem unable to comprehend that these assets do, indeed, belong to us all.

Not just to those with the cash to buy shares.

Our elected representatives certainly did not hesitate to show their agreement with Mr Reid’s comments,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

.

Ms Maniapoto Jackson then invited the next speaker; ex-Vice President of the Auckland Students Association and  Ngai Tahu; Arena Williams,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

Arena Williams

.

Ms Williams greeted the crowd in Te Reo and her following message was short, blunt, and to the point,

“There’s one message that the government needs to take home from such an over-whelming support of this petition, and that’s Stop the asset sales and give New Zealanders a chance to have a say on this really important issue!”

.

The next invited guest-speaker was  economist, Peter Conway, from the Council of Trade Unions,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

Peter Conway

.

Mr Conway said,

“The Union movement is really proud to be here today  at this amazing event and I just want to say, fantastic effort. Well done everybody! It’s awesome.

Now it might have been a little bit easier if for me to have the backing of a one million dollar advertising campaign, and maybe if we we’d been able to do it all on line. But I actually think that the fact that we went out there into communities where people work, live, and play and debated the issues; talked to people about it and got such a fantastic response, is really a testament to our democracy…

… So this is part of our democracy. And what we’re saying to the government; respect democracy… Let’s get this referendum up,  and the Council of Trade Unions, on behalf of the union movement, is calling on the government to halt all asset sales and listen to the people.

Kia kaha, and thanks very much.”

Ms Maniapoto Jackson then welcomed the Leader of the Labour Party and MP for Mt Albert, David Shearer,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

David Shearer

.

 After expressing his welcome,  Mr Shearer gave a brief thanks to the people, followed by a similarly brief message,

Look, I just wanted to start by saying ‘thank you’, ‘thank you’ for all of those people who went out day after day, weekend after weekend, who stood on cold corners in the middle of winter and got people to sign this petition. Thank you to the hundreds of thousands of New Zealanders who care about this country so much that they put their signature to this petition.

This is about the transfer of an asset that we all own into the hands of a very few. That’s what it’s about, it’s about fairness. It [asset sales]  is not fair.

This referendum will make the government listen to New Zealanders.

The fight will go on. It’s not finishing today. It will go on and we in the Labour Party will continue to fight this until 2014.

I wanted to say, as the boxes were being put up there, I was thinking that “Another Brick in the Wall” tune came into my mind, and I was thinking “We Don’t Want your Asset Sales Programme John Key”…

… Once again thank you for your effort, thank you for being here today. Kia Kaha,  let’s take  it to the government.”

Before Ms Maniapoto Jackson introduced the next speaker, Green Party co-leader Russell Norman, she briefly pointed out  that the Parties behind her were unified, “with only the odd absence, which was duly noted“.

Mr Norman then addressed the people,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

Russell Norman

.

Mr Norman then addressed the people,

“Today we stand here here on behalf  of the millions of New Zealanders who are opposed to the sale of their assets. Today we stand here on behalf of the hundreds of thousands von New Zealanders who have signed this petition, behind us. Today we stand here on behalf of future generations who are relying on us to stand up for our country.

And that is why we have done this massive piece of  work that you see behind us.

It has been incredibly hard work on behalf of thousands and thousands of people to go out and collect these signatures. It is despicable that the Prime Minister  then says that the people who signed this petition were children and tourists! Prime Minister you do not know New Zealanders!

If the Prime Minister of New Zealand thinks that the people who signed this petition, the 400,000 people who signed this petitition, are not real New Zealanders, then he is in the wrong country…

… Real New Zealanders are the ones who worked and laboured to build those assets up so that we could inherit them. Real New Zealanders are the ones who will look after them so that we can pass them on to those who come after us…

… We have a mandate to keep our assets. The Prime Minister has no mandate to sell them.”

Ms Maniapoto Jackson then introduced Mr Peters, saying  “if there’s anyone who can talk about justice and fairness, it’s Winston Peters“,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

Winston Peters

.

“…Mr Key does does not have a mandate to make these sales. We all know the last election result and he relies upon the vote of Peter Dunne, who you know, with your money, at the last election had TV adverts saying that he would not do that.  So there is no mandate.

We come now to the referendum, which  is a chance for Mr Key to see whether he’s got the public backing and he doesn’t have even have the backing of one third of the National Party vote by every survey that you and I have seen.

Ladies and gentlemen, it’s going to be difficult over the next few months on this issue, but I want to make something very, very,  clear. Unless we make it clear to everyone who’s buying, that after the next election, whenever they fly the white flag, we intend to take back those shares at no greater price than they bought it for, then we will not be making the message very clear for Mr Key who governs for the few and very few.

Now your problem is,  you don’t own a casino. Otherwise he’d be listening to you.

And you’re you’re not a Hobbit or some wide-boy from Hollywood, otherwise, he’d be listening to you.

No wonder he fell upon the defence of tourists, because that’s what Mr Key is; a CV Prime Minister, who will soon go, on issues like that…

… this is just the beginning. It is not the end.”

Next up, Ms Maniapoto Jackson introduced “the wonderful leader of the Mana Party, and MP for  Te Tai Tokerau, Hone Harawira“,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

Hone Harawira

.

Mr Harawira injected a note of humour into the afternoon, and the crowd enjoyed his off-beat way of giving a speech,

“Look I’m going to do most of my korero in Maori, so the best way for you to support it is, every time I stop to take a breath,  clap like crazy!”

The crowd obliged with enthusiasm, clapping and cheering each time he paused  during his korero.

Ending his speech in  Te Reo, he  added,

“Now just for a short chant, a short chant, eh? Because Moana get’s all the the recording rights for this little gig, so mine is going to be a short little chant. So just follow after me. You ready?

“Aotearoa is not for sale!”

The crowd responded, “Aotearoa is not for sale“.

“C’mon, c’mon, now you can do better than that,” he ‘admonished the crowd with a smile.He repeated, “Aotearoa is not for sale!”

The responded boomed back, AOTEAROA IS NOT FOR SALE!”

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

.

“Tell John Key to Go to hell!”

“TELL JOHN KEY TO GO TO HELL!”

And with that, Hone  Harawira finished with a cheerful “Kia ora tatou!”.

As far as political speeches went, it was one of the shortest and more entertaining that this blogger has heard for a while. He certainly injects a bit of fun into a political event.

As an intriguing aside, this blogger managed to capture this picture of two Davids and a Damian. Their body language seemed to belie any suggestion of tension or ‘struggle between Messrs Cunliffe and Shearer.

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

(L-R) David Shearer, David Cunliffe, Damien O’Connor

.

Hmmmm… One has to wonder…

On a closing note, Ms Maniapoto Jackson ‘encouraged’ (dragged!)  Hone Harawira back to the microphone to sing a duet – an old song from their protest days together,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

.

And final posed-pics from Ms Maniapoto Jackson and  Hone Harawira, after their singing-duet finale,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

.

It’s interesting to compare the persona of Hone Harawira in the media, especially in his early days in Parliament – with the man who presents to the people, at public gatherings.  There is a warmth and sincerity to the man that is almost wholly lacking in his MSM appearances – but a warmth and humour that is obvious when seeing him in person.

And from the Green Party caucus, this lovely snapshot. They deserve thepride they were feeling in being part of a movement to collect nearly 400,000 signatures,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

.

In conclusion…

John Key’s casual dismissal of the petition, and the nearly 400,000 New Zealanders who signed it,  was not a “good look”. It spoke volumes of Key’s persona; his arrogance; and his pettiness.

He could just as easily have accepted the petition as part of the democratic process and congratulated New Zealanders for   participating. It would have made him look statesmanlike; stand above petty politics; and increased his mana.

Being derisive; suggesting that the signatures were from “children and tourists”;  was offensive.

It was unnecessary and uncalled for.

It was childish.

It publicly revealed John Key’s innermost insecurities – as he knows that the people are not with him on this issue. It must be a debilitating, depressing feeling, knowing that three million New Zealanders are angrily opposed to what Key and his cronies are up to.

“Where is the love”, he may well ask?

“Where is the respect”, we ask him.

An open message to John Key…

The Prime Minister insists he has a “mandate” to part-privatise our state assets.

I disagree. More people voted for Parties opposing state asset sales than voted for Parties endorsing said sales.

John Key has a one seat “majority”, due in part to manipulations during the 2011 election, and MMP rules that prevented some Parties from gaining representation in the House.  For example, the Conservative Party won twice as many votes as ACT – but gained no seats. (see: Mandates & Majorities)

That’s not a mandate, Mr Prime Minister – that’s an accident of circumstances.

Mr Key – if you truly insist that you have a mandate, then put it to the test. Hold off on the sharefloat for Mighty River Power. Let the people have their say in a referendum.

I, for one, will accept the verdict of a referendum, whatever the outcome. If the majority – even the slimmest margin over 50% – support your asset sale programme, you’ll not hear one more word from me on this issue ever again.

Are you willing to  put your “mandate” to the test, Mr Prime Minister?

Are you willing to listen to, and abide by, the will of the People?

I am.

.

.

*

.

Additional

Radio NZ: Petitioners confident of asset sale referendum

Dominion Post: Government to ignore asset sales referendum

NZ Herald: Asset sales petition arrives at Parliament

TV3: PHOTOS: Asset sales petition presented

TVNZ: Petition against SOE sales delivered to Parliament

Newstalk ZB: Opposition MPs greet anti-asset sales petition

Copyright (c)  Notice

All images are freely available to be used, with following provisos,

  • Use must be for non-commercial purposes.
  • At all times, images must be used only in context, and not to denigrate individuals.
  • Acknowledgement of source is requested.

.

.

= fs =

392,000 New Zealanders send a clear message to John Key – Part Tahi

12 March 2013 3 comments

.

.

NZ, Wellington, 12 March 2013 – Another beautiful sunny day with blue skies  (apologies to farmers) was a perfect setting this afternoon in Wellington, when a couple of hundred marchers arrived on Parliament’s grounds, bearing 68 boxes, containing 392,000 signatures.

The referendum requires 304,000 valid signatures to precipitate a nationwide referendum. The 392,000 signatures gives a 22% ‘buffer’ against invalid signatures; people not on the electoral roll; duplicate signatures; and malicious attempts to undermine the petition.

There was a small number of people on Parliament’s grounds  awaiting the march, amongst them tino rangatiratanga activists, Brenda and Fran,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

.

At about 1pm, marchers arrived, bearing the boxes that contained a priceless treasure – signatures of 392,000 New Zealanders. Media flocked around them. This was an historical event,

.

12-march-2013-presentation-of-anti-asset-sales-petition-parliament-referendum

.

They walked onto Parliament’s grounds to cheers and applause of those waiting,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

.

On the steps to Parliament, more media and elected representatives from Opposition Parties were waiting. (Curiously, none from National, ACT, or United Future were in attendance. Their ‘invites’ must’ve been lost in the post?)

Politicians clapped as the marchers approached. Men, women, young, old, Maori, Pakeha, these were New Zealanders who believed that the People’s Assets were not to be stripped and flogged off by a handful of politicians,

.

12-march-2013-presentation-of-anti-asset-sales-petition-parliament-referendum

.

Sixty eight marchers proudly carried a prized box each,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

.

The boxes were carefully passed over a security barricade, to be stacked on the Parliamentary forecourt,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

.

Meanwwhile, the crowd watched, as the stacking of boxes progressed,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

.

The leadership of the Green and Labour Parties,  with Brendan Horan (far left, standing beside Metiria Turei); former AUSA President, Arena Williams (standing beside David Shearer); Grey Power National President, Mr Roy Reid; Annette King; and (far right – no slur intended, Mr Conway) CTU Economist and Director of Policy, Peter Conway .

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

.

Mana Party leader, Hone Harawira, joined the Party leaders shortly afterward (NZ First lreader, Winston Peters was standing off-camera, to the left),

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

.

NZ First leader, Winston Peters, being interviewed by a MSM journalist,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

.

A panoramic view of part of the assembled crowd,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

.

Green MP, Jan Logie; NZ First leader, Winston Peters, and NZ First MP, Andrew Williams, at the stacked petition boxes. At this point, the  invited guest-speakers were preparing themselves – and  their notes – to address the crowd and media,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

.

With a  unique style and flair she has become reknowned for, Moana Maniapoto Jackson welcomed people to today’s presentation of the petition,

“We are celebrating people power…”

Coaching the crowd, to chime in with “Ohhhh yeahhhh” as the chorus, Ms Maniapoto Jackson launched into a short protest-style song. Her powerful voice belted out the words, making her microphone and speakers practically redundant, as she filled Parliament with her lyrical sounds,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  12 March 2013 - presentation of anti-asset sales petition - parliament - referendum

.

“Hey, hey Mr John Key,

You say you’ve the mandate
We’re here to help,
it’s not too late,
People here are standing strong
a hundred thousand – can’t be wrong
We’re here to help you get back on track,
Let’s stop the sales,
Let’s pull it back.

Crowd’s chorus, Ohhhhh Yeahhhhh!

All together now!

OHHHHH YEAHHHH!”

Ms Maniapoto Jackson then welcomed the first of “a long line of luminaries, that are positively glowing with energy and excitement as we deliver to the government a very strong call from New Zealanders.”

.

To be continued at: 392,000 New Zealanders send a clear message to John Key – Part Rua

.

*

.

Additional

Radio NZ: Petitioners confident of asset sale referendum

Dominion Post: Government to ignore asset sales referendum

NZ Herald: Asset sales petition arrives at Parliament

TV3: PHOTOS: Asset sales petition presented

TVNZ: Petition against SOE sales delivered to Parliament

Newstalk ZB: Opposition MPs greet anti-asset sales petition

Copyright (c)  Notice

All images are freely available to be used, with following provisos,

  • Use must be for non-commercial purposes.
  • At all times, images must be used only in context, and not to denigrate individuals.
  • Acknowledgement of source is requested.

.

.

= fs =

A Clear Warning to Investors in SOEs…

11 March 2013 12 comments

.

soe powercos

.

The recent financial crisis and near-collapse of Solid Energy – one of the five, state owned enterprises planned for partial-privatisation – should serve as a warning for those investor-vultures circling to buy shares in any of the SOEs.

In fact, recent history regarding Air New Zealand, Kiwiwail, and (non-privatised) BNZ in 1991,  are indicators that privatisation of state assets is not a guaranteed roadmap to wealth,

.

The Air New Zealand crash

Source

.

It is noteworthy that one of the cause of Air New Zealand’s collapse was it’s foolhardy buy-out of Australian airline, Ansett,

First, the decision by Air New Zealand to pay dividends and second, the decision to buy the second half of Ansett. Both moves turned out to be considerably more beneficial to the interests of Brierleys than those of Air New Zealand.

Take the Ansett purchase. In early 1999, Cushing announced that Air New Zealand was vetoing Singapore Airline’s bid to buy News Corp’s 50% of Ansett Holdings (Air New Zealand had held the other 50% of Ansett since September 1996). Instead, it decided to pay News Corp $A580 million and get 100% control.

It’s most likely true that Air New Zealand paid too much for the stake and that directors had too little information about Ansett’s financial and engineering state. These are well-aired opinions, but are secondary to the main question that should be asked: Why did Air New Zealand buy the second half of Ansett at all? It’s not just that it was hopelessly out of its depth buying an airline twice its size. It’s just hard to see any benefits – to Air New Zealand, that is.

Source: IBID

On top of that were big dividend demands from one of Air Zealand’s major shareholders, Brierley’s,

The at times cash-strapped investment company held between 30% and 47% of shares over the period so, based on the total dividend of $765 million, Brierley reaped an estimated $250 million to $380 million from the airline. And Air New Zealand’s decision to buy the second half of Ansett, cutting Singapore Airlines out of the deal, contributed to Brierleys being able to do its own deal with Singapore.

In April last year, two months after Air New Zealand bought Ansett, Brierleys sold Singapore Airlines all its Air New Zealand “B” shares for $285 million, or $3 a share. It was arguably the last exit option for Brierleys from these shares, and, apart from a spike at the end of last year, Air New Zealand shares have largely tracked downwards ever since – they were trading around 30 cents as Unlimited went to press.

Source: IBID

In other words, Air New Zealand had over-extended in unwise investments (as has Solid Energy), and was bled dry by rapacious demands for dividends (as did Faye Richwhite in NZ Rail in the early 1990s).

How does this relate to the upcoming partial-sale of Mighty River Power?

Recent revelations that Mighty River Power has shaky investments on Chile, should cause potential investors to pause for thought,

.

Key struggles to push Chilean investments

Source

.

According to the TV3 story above, “Mighty River Power has spent $250 million at the geothermal plant in southern Chile, but has just written off $89 million as the investments struggle“.

To which Key responded casually,

There is always risk.”

Dear Leader  seems somewhat blase about investors’ risks? Of course he is. It’s not his money.

The Crown Ownership Monitoring Unit (COMU) reported,

Impairments

During the period, the Company recognised $91.4 million of impairments principally reflecting its investment in the GeoGlobal Partners I Fund (GGE Fund), and its greenfield explorations for potential developments in Chile and Germany.

This impairment followed higher than expected costs at the Tolhuaca project in Chile due to the worst winter in 40 years adversely affecting drilling performance and only one of the two wells having proven production capacity. The value of GGE’s investment at Weiheim in Germany, has been impacted by increased costs due to required changes in the drilling location following the 3D seismic surveys and delays from environmental court challenges which have been resolved post balance date.

The GGE Fund had not raised capital from other investors by the end of the 2012 and Mighty River Power made the decision not to invest further capital into the existing structure. Overall, the impairment charge of $88.9 million for the German and Tolhuaca assets and the management company of GGE LLC leaves a residual book value of $91.8 million.

Source: Mighty River Power LtdResults for Announcement to the Market

On top of  Mighty River Power’s dodgy investment in Chile, New Zealand is now experiencing what is being called the worst drought in seven decades  (see:  North Island’s worst drought in 70 years). As Climate scientist Jim Salinger said about New Zealand’s current weather patterns continuing, and becoming  similar to the Mediterranean,

What it means is that if it just doesn’t rain for at least four months of the year, it means you have to bring in your water from elsewhere.”

Source: IBID

As all investors should bear in mind; most of our power generation is generated from  hydro stations. Mighty River Power, especially, derives most of its electricity from eight  hydro-electric stations on the Waikato River.

Mighty River Power CEO, Doug Heffernan has given a clear warning,

Following the lower than average inflows into the Waikato catchment during the last quarter [to December 31], Mighty River ended the half year at just 69 per cent of historical average [hydro storage].”

And Equity analyst Phillip Anderson of Devon Funds stated,

The same period last year they got really strong inflows, and this is the exact opposite . . .

In the second half of this reporting year they’re going to have to buy a lot more electricity to feed their customers, either on the spot market at a lot higher cost or use their [Southdown] gas plant.

We expect the second half of this year is going to be a lot tougher for them, they should get their margins squeezed if that all plays out.”

Source: Parched Waikato could hit Mighty River Power

The equation is blindingly simple,

Less rain = less water = less electricity generation

The question that begs to be asked is; where does the risk of investing in SOEs fall – private investors, or the State?

The answer I submit to the reader is, that like Air New Zealand, it will be private investors who bear the brunt of all risk. The State will simply pick up the pieces,  buying up shares at bargain basement prices, should anything go wrong.

Electricity generators like Mighty River Power will simply never be allowed to fail. Had the Labour government in 2001 allowed Air New Zealand to collapse, the fall-out to the rest of the reconomy would have been too horrendous to contemplate, and flow-on effects to other businesses (eg; exporters and tourism) and the economy would have been worse than any bail-out.

But any bailout will involve a massive loss for investors, as their share-value plummets. Again, Air New Zealand was an example to us all.

As the impact of climate change creates more uncertainly for our state power companies, investors need to think carefully before committing one single dollar toward buying shares,

Do I really want to bear all the risk?

Those who lost out on their investments in Air New Zealand in the 1990s will probably answer,

No.

.

*

.

References

The Air New Zealand crash (1 November 2001)

A history of bailouts (7 April 2011)

Foreigners important for SOE sell-downs: Treasury (30 June 2011)

No law stopping foreign investors (16 Dec 2011)

Parched Waikato could hit Mighty River Power (22 Feb 2013)

Mighty River Power shares float mid-May (4 March 2013)

Taking the plunge in Mighty River (9 March 2013)

Key struggles to push Chilean investments (9 March 2013)

North Island’s worst drought in 70 years (10 March 2013)

Other blogs

Seemorerocks: An Appeal for a New Zealand Risk Assessment

.

.

= fs =

Labour, Greens, NZ First, & Mana – A Bright Idea with electricity!

10 March 2013 15 comments

|

|

What?

A part of me is mightily pissed off at Labour.

Like, really ticked off.

From 2000 to 2008, they had ample opportunity to safeguard state assets and remove them from any prospect of privatisation by ideologically-driven,  rightwing elements in our political system.

But perhaps, I suspect that most folk – including the Left –  had believed that privatisation had been abandoned by National as an  ideological dead-end experiment, leading nowhere except eventual foreign ownership and profits remitted to offshore investors. Which, as a consequence, worsened our already shabby Balance of Payments deficit.

More importantly, we had every right to expect that National believed that asset sales would be a sure-fire way of losing an election.

However, someone – some bright, zealous, political strategist working in some back-room somewhere – must’ve come across a “cunning plan” to make asset sales palatable to at least half the voters.

That’s all the Nats needed; 50% of voters.

Why?

To pay for tax cuts in 2009 and 2010. Those tax cuts dug a $2 billion-plus hole in government revenue (see:  Govt’s 2010 tax cuts costing $2 billion and counting, see: Outlook slashes tax-take by $8b). The shortfall could only be made up by borrowing more – or selling something. National opted for the latter.

How?

Post 2011 Election,  has demonstrated that National has not changed it’s free-market stripes. Given an opportunity, they would hock off as much of the country as possible. For “the good of the nation”, you understand.

At the 2011 election, National were handed that opportunity, on a gold plate*,  by a voting public who seemed to be distracted by smoking magic mushrooms. Whilst voters expressed disdain at National’s privatisation – they voted National regardless.

(Call me old fashioned, but I tend not to vote for things I disagree with.)

Go figure.

Note that I said “they voted National” – they didn’t vote for National. It may seem as if I’m splitting hairs on a molecular level – but bear with me.

Consider the facts;

  • 1. In 2011, National won 1,058,638 votes – or 47.31% of votes cast. That gave them 59 seats.
  • 2. The 2011 election was the lowest voter turn-out (74.21%) since 1887.
  • 3. Whilst Labour’s vote dropped from 2008 to 2011, overall the anti-asset sale bloc gained more popular votes in 2011 than the pro-sale bloc,
National , ACT, United Future Party Votes Labour, Greens, NZ First, Maori Party, Mana, and Conservative Party votes

National – 1,058,636

Labour – 614,937

ACT – 23,889

Greens – 247,372

United Future – 13,443

NZ First – 147,544

Maori Party – 31,982

Mana – 24,168

Conservative Party* – 59,237

TOTAL – 1,095,968

Total – 1,125,240

* Whilst the Conservative gained no seats in Parliament (because of the 5% threshold), their numbers are included because they gained over double the electoral-support for ACT.

In effect, Key could claim an mythical “mandate” simply because the MMP rules in 2011 gave ACT a seat, but no representation for the Conservatives – even though support for the latter was double that of ACT.

  • 4. Voting patterns are reflected in polls which consistantly show public opinion opposed to asset sales. Generally, the figure is around two thirds opposed and less than a third supporting. (see: Most of us oppose selling NZ)

In fact, this blogger cannot find any reputable poll favouring National’s privatisation programme.

However, the harsh reality is that, for politicians, unless faced by a populist revolt and tens of thousands taking to the streets (see: Huge protest says no to mining on conservation land) , the only numbers that really count are bums-on-seats. Parliamentary seats.

Political machinations in Epsom and Ohariu gave Key the two seat Parliamentary majority he needed, and that’s what counts as a “mandate”. For the Nats, that’s the end-of-story.

Who?

As Dear Leader has oft been quoted,

 “On the mixed-ownership model debate, the Government has been very clear about its intentions since well before the 2011 election.” – John Key, 24 June 2012 (see: Most of us oppose selling NZ)

Thus far, 200,000 have pre-registered (see: Mighty River pre-registrations top 200,000) – which, whilst a sizeable number, is still only around five percent of those who voted for National in 2011. And I suspect many are pre-registering for a variety of reasons,

  • self interested naked greed
  • a desire to keep shares in local hands
  • and a few bogus pre-registrations to subvert the process (a surreptitiously organised covert resistance? You might say that, but  I couldn’t possibly comment)

The 200,000 pre-reguistrations is still dwarfed by signaturies to the petition, which is fast approaching 400,000 (see: Asset sales referendum likely)

So, did all 1,058,638 voters  who voted National in 2011 also endorse asset sales, either in whole or partial?

The answer is a clear no.  In a poll just over a year ago (see:  Poll shows asset sales unpopular), around 32% – about one third – of National supporters disapproved of asset sales.

That’s 338,764 voters who opposed asset sales who ticked the box for National in 2011, despite knowing full well that Key was promising partial floats on Meridian, Genesis, Mighty River Power, Solid Energy (now in doubt), and a further sell-down of Air New Zealand.

338,764 people who voted for something they didn’t want.

As Marcus Lush said on Radiolive on 28 February this year (2013),

.

Why would anyone vote National and be opposed to asset sales -  28 February 2013 -  Radiolive - Marcus Lush

[click on image to access Radiolive link]

.

Good question.

The answer, I think, can be distilled  down into two categories of voters.

  1. The first group simply either didn’t taken notice of  the asset sales campaign, or, more likely did not believe that Key would go ahead with the policy. They may even have thought that Key’s coalition ally(ies), United Future and/or the Maori Party, would stop the sales from proceeding. There was a kind of  “in denial” mentality going on here.
  2. The second group is perhaps more complex. Whilst they don’t support asset sales per se, they perhaps believed National Party rhetoric that shares would remain in New Zealand hands. Considering the consequences of Contact Energy’s privatisation – where the majority of shares are now in Australian hands – this would seem to be a forlorn hope.

Having spoken with National Party voters belonging to Group 1, I believe that asset sales will impact to varying degrees on National’s support at the next election. Having woken up to the fact that Key has no intention of backing away from  sales,  there are 300,000 National voters who may think twice before voting National again.

Expect National to drop in the next few polls following the sale of Mighty River Power.

However, unless something totally unanticipated happens between now and May, the partial sale of Mighty River Power will probably proceed. Followed by Genesis and Meridian. Followed by hefty power price increases if past history is anything to go by.

Where (to from here?)

NZ First’s Winston Peters has promised that any government he is part of will buy back state assets. (Which, by the way, if he’s not telling lies, means that any coalition deal with the Nats is off the table. I’m not holding my breath on this. The 1996 election is still fresh in my mind.)

On 4 March this year (2013), Peters announced,

“New Zealand First will use its influence on the next coalition Government to buy back our state-owned power companies which are being flogged off by National and we are committed to buying back the shares at no greater price than paid by the first purchaser.”

Source: One More Quisling Moment from Key

This is do-able. Especially if NZ Superannuation funds are used, which would not impact or have any bearing on a new Government’s books.

By announcing that the shares would be re-purchased  “at no greater price than paid by the first purchaser” – Peters is effectively putting all purchasers on notice: expect to incur a loss if you buy into National’s thieving (and let’s be clear – selling goods that don’t belong to you is theft) programme.

And a year earlier, in March 2012, Hone Harawira had promised the same in an open letter to investors,

“So today I think it only proper to send a warning to overseas investors – steer clear of any share offer in the above SOE’s. The purchase of these shares is likely to see you caught up in legal battles and direct action from citizens determined to protect their own interests, both of which will be lengthy and costly and have an adverse impact on the value of your investment.

As the leader of the MANA Movement and Member of the New Zealand House of Representatives, I wish to advise that MANA is opposed to the privatisation of state assets and will strongly argue for any shares sold to overseas investors to be returned to New Zealand hands.”

Source: Hone Harawira: Open letter to overseas investors

By contrast, in an attempt to appear “fiscally responsible” to Middle Class voters, Labour and the Greens were luke-warm, at best.

Green co-leader, Russel Norman said,

“We just can’t make the promise that Winston is making. We will do whatever we can, but it is two years away, the books are getting into a terrible mess because of National, and closer to the time we will make an announcement but at the moment we can’t.”

Source: Peters: Use super funds to buy back state assets

And Labour’s Clayton Cosgrove effectively went, ‘ditto’,

“… I can’t commit to an open-ended fiscal envelope. That would be fiscally irresponsible in my view.”

Source: IBID

Which is all pretty timid stuff.

This, my fellow New Zealanders, is why the Centre-Left lost the 2011 Election: no boldness in vision; no measurable difference to the Nats; and no unshakeable courage of  their/our convictions.

All that Labour and the Greens  said was “no” to asset sales.

And when Cunliffe suggested that a future Labour-led government would re-nationalise these SOEs – he was firmly slapped down by his Party.

On 4 December 2011,

I don’t stand for a paler shade of blue, and I want to look down the barrel and say this: if the Government is going to sell off precious state assets then we would not rule out re-nationalising some of them. And people need to be aware of that regulatory risk.”

When asked by host Guyon Espiner whether he would buy them back, Mr Cunliffe replied “we would look very hard [at buying them back].” - Source

On 5 December 2011,

Labour leadership aspirant David Cunliffe has moved to clarify his position on the buyback of state assets.

He believed comments he made in a weekend interview, where he didn’t rule out buying back partially privatised SOE’s, had been misinterpreted.

Mr Cunliffe said it was not an explicit promise to buy back all shareholdings National may sell. - Source

That’s not “manning the barricades” stuff – that’s an open retreat in the face of a remorseless enemy.

Which, in turn, emboldened National to openly mock and taunt the Labour Opposition, seven months later,

Hon BILL ENGLISH (Deputy Prime Minister) : I move, That the House take note of miscellaneous business. We are still waiting, this week, for the Labour Party to commit to buying back the shares of the 49 percent of the energy companies that the Government is planning to sell, mainly to New Zealanders. New Zealand First has made that undertaking. New Zealand First has shown that the Labour Party has persuaded New Zealand First that its arguments are so strong, New Zealand First should go and buy them back if it has a role in a future Government. But the Labour Party has not been able to persuade itself. Labour members have been in the Chamber arguing, hour after hour, day after day, week after week, that these proposed share offers are fiscally irresponsible, economic nonsense, and a sell-out to foreigners, but they are not so fiscally irresponsible that they are going to buy them back. They are not such a sell-out to foreigners that they are going to buy them back. They are not such an economic nonsense that they are going to buy them back.” – Source

At a time when Labour should be tearing strips of National and setting their own counter-agenda – we’re getting precious little of that. Instead, the agenda is being set by Key and his cronies with bugger-all opposition. The Greens and NZ First have scored more ‘hits’ against the Nats than Labour.

On top of that, the Greens have become the “go to” opposition Party, for criticism of National policies. If you doubt me, check out the next 6pm TV news bulletin. Which opposition party spokesperson is interviewed? Keep tabs over a few night. You’ll quickly see what I mean.

So, what options does Labour have?

It has two options;

  1. Carry on with a conservative course. There is a 50/50 chance it will lead the next government, with perhaps a one or two seat majority, consisting of Labour/Greens/Mana/NZ first.
  2. Strike out with a strategy of  aggressive and bold announcements of initiatives. Announce;
  • radical policies that are a departure from neo-liberalism and declare that the Great Neo-liberal Experiment is dead; “we come to bury the bastard, not praise him”.
  • focus on the message that the 30 year experiment in neo-liberalism has failed utterly, and is one reason we’re driving our young people to Australia
  • a policy that all state assets will be re-purchased at cost-price (as a coalition deal with NZ First)
  • a list of National policies that will be ruthlessly  reviewed and dumped (eg, the Hobbit Law)
  • a focus on job creation; attacking the root causes of child poverty; and a committment for decent housing for all New Zealanders
  • a full review of the tax system, with a plan to reduce (or eliminate gst) and replaced with a comprehensive Capital Gains Tax; Financial Transactions Tax; and other non-income related taxes
  • Comprehensive food-in-schools programmes
  • looking at how our Scandinavian and Nordic cuzzies are running their economies/societies
  • cheaper education for our kids
  • a conversation with New Zealanders as to what kind of society we want to live in – and are we willing to pay for it and set goals to achieve it?
  • etc, etc.

As part of Option 2, I have one further Bright Idea…

A Libertarian acquaintaince and I were chatting one evening at  ‘Backbenches’ (prior to it catching fire – and no, our conversation wasn’t that heated) . We were talking about the three state owned power companies.

He asked me; why should there be  three state owned companies; all producing the same service; at roughly the same costs and prices – have three sets of management; CEOs; offices; accounting systems; staff; etc? Wouldn’t  it make more sense to combine the three and pass the savings onto consumers?

Damn it, he was right. What is the point of having three state owned electricity companies?

One could do the same job – and cheaper.

Just as we had the old ECNZ, prior to Max Bradford’s so-called “reforms” in the late 1990s. At the time, Mr Bradford promised cheaper electricity through competition. Instead, power prices have doubled sinced the start of the century. (see: The 30-year power price hike , see: Power prices over decade)

“Ministry of Economic Development (MED) statistics show average power prices rose from 13.9 cents per kilowatt-hour on average in May 2001 to 26 cents in May 2011.” - Source

The problem is not just to re-nationalise our electricity companies.

The next problem is what do we do with them?

How do we make them socially responsive to domestic consumers as well as  efficient?

Do we re-combine Mighty River Power, Genesis, and Meridian back into one single unit, a new ECNZ?

Do we ensure that there are Board members elected to a new ECNZ whose constituents are domestic users? Perhaps any such Board should have directly-elected  representation?

Do we entrench a new, state owned ECNZ in legislation so it’s future is protected from predatory governments seeking either maximum returns (ie, price gouging) or to privatise it?

Could a new ECNZ afford to offer each domestic household their first 300kwh per month, free,  as has been suggested by Victoria University researcher, Geoff Bertram? (see: Call for free power )

These are the issues which the Opposition should be focused on.

And thus far, we’ve not heard much from them.

If  Labour-Greens-NZ First are serious about being an alternative government, then by the gods, they should be serious about giving us that alternative.

Conclusion

When National started campaigning in the 2008 election, it began two years in advance with a series of  aggressive policies. It was acting like a Government-in-Waiting.

By contrast, Labour and the other parties are an Opposition-in-Waiting.   They are timidly watching and waiting for the public love affair with Key to wear off, and for National to f**k up.

Well, news flash guys.  That doesn’t seem to be working too well. The Nats have been excoriated with scandal after scandal last year and this year; unemployment rising; Mainzeal and Solid Energy collapsing – and the Nats are still high in the polls?!

My message to Labour, Greens, NZ first, and Mana;

If you want the voting public to take notice of you, you have to give them something that’ll make them notice you.

Be bold.

Be aggressive.

Offer alternatives.

Offer practical solutions.

Give the public a vision.

And at all times, work together.

If you don’t give the public an alternative, why should they look away from National?

Give the people of New Zealand an alternative, better way of living – and they will look at you.

But not until then.

.

*

.

(* Plate will soon be auctioned on Trademe.)

Previous Blogposts

Politics through a crystal ball, palmistry, or chicken entrails?

History Lesson – Tahi – Electricity Sector “reforms”

Additional

Power prices over decade

The 30-year power price hike

Call for free power

Cunliffe: buy back any sold assets

Cunliffe not promising to buy back assets

Parliament: Hansards – Wednesday, 20 June 2012, Bill English on Asset Sales

More heat in power struggle as prices go up

Government in $112b barney over accounting

Electricity prices tipped to rise steeply

Heavy traffic hits Mighty River Power share site

One More Quisling Moment from Key

Other blogs

MANA threaten overseas investors not to buy assets – Bloomberg pick up on the story

.

.

= fm =

319 million reasons not to part-privatise our power companies

26 February 2013 5 comments

.

SOEs

.

.

There are at least 319 million reason why it is sheer madness for National to be considering part-privatisation of  state-owned power companies,

.

Half year profit jump for Meridian Energy

Source

.

Genesis Energy half-year profit

Source

.

Mighty River Power profit quadruples

Source

Acknowledgement for above media reports: Radio New Zealand

.

The half year (not even a fullyear!) profit for the above three power SOEs is: $319.5 million.

Combined dividends paid the the government will be: $224 million.

If 49% of all three SOEs is sold to private investors, the State (ie, You and Me) will lose out on approximatelt $110  million.

That will be $110 going into bank accounts of  institutional investors, or the pockets of wealthy New Zealanders with sufficient income to buy shares.

It will mean a drop in government income.

Worse still, going by historic events in the late 1990s when the  ECNZ (Electricity Corporatrion of NZ)  was split up, and the newly formed Contact Energy was split off and fully privatised, power prices will continue to skyrocket,

.

power-prices-set-to-soar

National-led government – NZPA – 12 May 1999

.

Privatisation will not mean competition resulting in cheaper power prices any more than competing fuel companies are giving us cheaper petrol prices.

In fact, as Economics Professor, Geoff Bertram said on 13 February 2013, at an anti-asset sales rally in Wellington,

.

“… It’s my view that probably the  most important political consequence of the part-privatisation of SOEs is to place private investors in those enterprises  and thereby immunise them against possible future policy that might reduce their value.

And since  I think an important part of an improved government policy would indeed reduce their value, I am opposed to the asset sales…

…The companies have a very high valuation. The reason why they have a very high valuation  is that they have successfully participated in a long-running rort to extract cash from residential electricity consumers by the inexorable driving up of prices of electricity.

That rort, has been possible, because government policy has allowed and has indeed supported the emergeance of a cartel of five, large, vertically-integrated, generator-retailers – three of whom are SOEs  – which have been able to operate without any effective regulation, at the expense of  consumers who were too vulnerable to protect their interests against price hikes.

And if you looked at the tracks of electricity prices over the last 20, 30 years you will have noticed that large industry has protected itself very successfully; commercial electricity buyers have done fine; residential who are the dis-organised, unrepresented, undefended, captive group of customers have seen their prices go up in real terms 100% since 1986.

And the main consequence of the electricity reforms has indeed been that doubling of the cost of electricity to ordinary  households. 

That’s a major cause of energy poverty; it’s been an important part in the growing  inequality of income and wealth in this country; and it’s something that a socially responsible government would,  in my view,  be taking serious action to reverse.”

Geoff Bertram continued,

“Just to put that doubling of the residential price in context. New Zealand’s pretty much on it’s own in the OECD and if you look at  the figures for other countries around the OECD, from 1986 to the present, the price of electricity to residential consumers  in OECD Europe, in Australia, and in the United Kingdom, is still the same as it was in 1986. In the United States, Japan, and France, prices are down 25% , compared to where they were in 1986, in real terms.  In South Korea they’re down 50%, compared to where they were in 1986.

New Zealand is the only only OECD country that has gone out there and driven up electricity prices 50%. We’re also pretty much the only country that doesn’t have a regulator in place, and where government doesn’t have any particular social policy relating to the pricing of essential services to the public.”

Prof Bertram explained,

And here’s how it works.

You take a bunch of assets with a given value, and you look at the existing price, to consumers of the product, and you say “well look, we can get the price up”; so you project  that higher price; you capitalise that; and then if you can get the price up the asset will be worth more; so then you re-value the asset; and then you go and use the higher value of the asset to justify raising the prices, and then you repeat.

And this is the circular process which has been going on in New Zealand now, in electricity, for more than a decade. It is completely legal under New Zealand law.

It is not illegal to profiteer or  to gauge captive customers in this country. [In] very few countries is that true.

And it’s consistant with New Zealand’s generally accepted accounting practice which basically tells you that there’s a rotteness at the core of accounting practices in this country.”

And added this shocking insight,

Here’s the problem. Electricity was once an essential service provided to households at the lowest price, consistent with covering the industry’s costs. 

Since 1986 the sector has been corporatised and part-privatised, and it’s pricing has been driven by the quest for profit by giant companies that have the market power to gouge their consumers.

As the owner of three of those companies, the New Zealand government has therefore become a predator. And now the Treasury wants to cash in on that rort by selling out half the government’s stake.

What that means in terms of the options for the future for government to turn around and come back from the predator model and return to a social service approach  for energy supply, is being closed off.”

Concluding with,

But if you want to deal with energy poverty and get kids out of hospitals with asthma and other respiratory diseases and so on, one of the really good  things that you can do is get cheap energy into New Zealand households and that would be sustainable on the basis of the current government owned assets.

About 300 kwh free. [But if] you sell Mighty River and what’s feasible comes down to 200 [kwh]. You sell Genesis and what’s feasible comes down to 100 [kwh]. You sell Meridian and it’s gone…

What I’m saying is the contract  that supplies the Rio Tinto smelter down at Bluff, the old Comalco contract, is the contract New  Zealand households should have had from the start.

And it still could be done.”

See previous blogpost: Wellingtonians rally to send a message to the Beehive! (part rua)

As Radio NZ reported on 21 February,

“Electricity prices paid by Mighty River customers rose 2% over the period while costs fell 22%.”

See: Mighty River Power profit quadruples

Which leads us to these points to consider,

  1. Despite a glut of electricity, prices continue to rise. There is price-gouging going on by all power companies, whether State Owned or by privately-owned Contact Energy.  There is no competitive force driving prices down. There is no indication that part-privatisation will create any competition.
  2. At least state ownership means that most electricity profits stay in New Zealand and contribute to the State, to pay for health, education, roading, etc. However, one wonders if this sort of punitive,  indirect-taxation, on low income families is fair, whilst more affluent households can afford insulaion, solar power, and other energy-saving strategies.
  3. As Prof Bertram maintains, partial privation will most likely close off future progessive governments’ abilities to reform  the electricity industry and return to a  social service approach.

See also previous related blogpost – with Max Bradford’s response on this issue: History Lesson – Tahi – Electricity Sector “reforms”

Meanwhile, some of our past political leaders are waking up to the realities of historical state asset privatisations,

.

Bolger -Telecom sale a mistake

See: Bolger – Telecom sale a mistake

.

Better late than never?

Nah. Better now than later.

These mistakes are too expensive and we all end up paying.

.

.

= fs =

Wellingtonians rally to send a message to the Beehive! (part toru)

17 February 2013 3 comments

.

SOEs

.

Continued from:

 

Wellingtonians rally to send a message to the Beehive! (part rua)

 

NZ, Wellington, 13 February 2013 – At this point, there was some light entertainment – firstly from this chap,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

“John Key” – first tried to convince the crowd that he’s really a “nice guy”.  The response from the crowd was anything but ‘understanding’.

“John Key” then sang his now-famous version of the New Zealand anthem, which he said was now “partially privatised” – so minus every third or fourth word. Thwe song made bugger-all sense – much like asset sales themselves.

The anthem was missing the last line, which he said, had been “sold in it’s entirety, including the word ‘New Zealand’.

After “John Key” was ‘helped’ off the stage with accompanying boos and cat-calls, Energy campaigner, Molly Melhuish took the microphone.

Ms Melhuish spoke for Greypower. Like Geoff Bertram, she is also deeply knowledgeable about all facets of the energy industry, including pricing systems used for residential, commercial, and industrial sectors.

As always, listeners leave a talk by Ms Melhuish with a greater knowledge and insights into the electricity industry in our country,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

Ms Melhuish first explained a bit of the background of the  “Keep our Assets” campaign,

“… Greypower was essentially asked to front this campaign, and we said at the first strategic meeting of the ‘Keep our Assets’ campaign that we wanted to co-front it with the youth, so we found a youth group, it was the University Students Association.

Because we believe this campaign is about those older people. Surprisingly many of our members were involved in building those assets. We said they’re ours, we want to keep them.

But we speak to our grand-children and our grand-children recognise… they just don’t want them sold. So the Greypower group board as a group, supported this ‘Keep our Assets’ campaign, all seven zones.

There are a small number of individuals in our meetings who really believed John Key when he said ‘we have to sell the assets so we can  re-pay the debts’. Geoff [Bertram] told you how wrong that is, but people are conservative,  want to be safe, and many, or most of the people who still say ‘we have to sell the asssets’ do so because they believed [John Key]. John Key is a show pony, he’s… telling the story told to him by others. He’s  a used car salesman. Would you buy a used car off that guy? I wouldn’t.”

“…Just yesterday afternoon, I spoke to Mana Tawa… The very very first question I asked was ‘Why can’t we have solar power on our houses? Our family in the U.K., you know, they got money to put photo-voltaics [on our roofs] and they were able to pay it off on our power bills. She said, ‘Why can’t we have that?”

We could, but we have to vote for it.

We won’t under this administration.

Another one  said, when I bought my place in a retuirement village in Porirua, we were promised lower bills. We are now paying more for our little retirement village than I paid for a four bedroom house.

So you get a captive consumer and they  can hike power bills not twice, but four times!

Greypower now has a policy that says energy leglislation must say [that] all household energy and especially electricity must be provided in a manner that’s fair, sustainable, efficient, and reliable. That was the law in 2001- Labour changed the law to make that. [But] National government took away “fair and sustainable” [from legislation]. That is wrong.

What to do about it? Change the government!

The only way you will get a change is to change the government! Vote for it! Peter Love told you that  in the first speech; vote for change. Greypower sez vote for change. That’s your job – We Greypower can support it but it is your job to vote for change.”

And she’s right. The only way we can effect change is by the ballot in the Voting Booth. Deciding not to vote because of some half-arsed cliche about “all politicians being the same”  is defeatist garbage. It is  craven surrender to forces who welcome people giving away their vote because vested interests have persuaded you that “change is not possible”.

Change is possible. But not when cynicism guides your decisions.

Molly Melhuish was followed by Aotearoa Not For Sale activist, Frances, who spoke of her own ‘journey’ to  set aside her apathy and become active. Despite English being a second language from Frances, her words were truly inspiring. A million New Zealanders like her, and no government would dare risk selling our treasures,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

Frances first described the desperate conditions that afflict the poor or unemployed in other countries, where social welfare services barely exist, or not at all. She referred to the shame of someone loosing their job, and killing themselves and their entire family by mass-suicide – because the provisions that we often take for granted (or that right-wingers complain about), do not exist in their society.

“…I saw this country as a country so beautiful and with a humanity and the government with a heart [?] to looking after the poor and the under-privileged and  the vulnerable groups. But throught the years I don’t know what has happened, I was too busy looking after kids, young children, and being someone who didn’t speak very good english. I sort of stayed low and keeped quiet and don’t want to say much about nothing against   government. Although I do complain a lot at home if I say something, I see the government doesn’t do something nice to people.

But then I accidently walked through a public meeting … beginning of last  year and then that was about state asset sale. And I was so shocked about what ‘s going to happen. And I thought, well,  for the last 15 years my shower time from … ten minutes down to three minutes, because we need to have a budget for our power because the power bill kept going up.And then I cut my hair short so I don’t have to spend so much time [in the shower]. So all these things, and  I decided maybe this year I will not harass my kids to have a showers if they don’t want to because it’s just getting more and more expensive.

There might be more stinky people around the city.

And hey, we are from middle income family, and during the winter time we fight often … argue with my husband about whether we should have the heater on. And I just never thought  will  come to this day!

And now they’re going to privatise these companies and  sell to all those rich, only going to benefit the very rich few. Especially some foreign companies. And I was like,  that’s not right, I can’t afford to pay even higher bills.”

And I thought, what happened? … From me not paying attention to politics. I actually don’t like politics. I  want to just appreciate art and literature, but then from me not doing anything for so many years, what has this country become? Because a lot of people are like like me, they don’t like politics. They don’t want to take action; “I often give them moral support, I’ll  give you some  dollars, but you do the work. You go against the government.”

But then this time I realised what example I was setting for my children…

… But I feel great because I work with so many dedicated people and so many beautiful people, and  selfless. And they are wonderful. We are all trying to make this country a better place for us, for others,  for our children.

And for middle income like us, we struggle, and I just hate to think how the low income, how the  beneficiary actually survive. And this government keep taking things away from the general  public, from the  weaker and from the vulnerable group. …

… Being a housewife, what can I do? I go out to collect signatures because that’s  easy thing for me to do. It takes a lot and time and a lot of effort, but I’m glad I can make  contribution. And I feel everybody here can make contribution…

… And being at home I can teach my kids, say, well don’t believe everything you heard from the media. And don’t just listen to what people say, you watch what they do. Especially our Prime Minister.

Frances finished with these thoughts,

“We can all make a difference… I saw so many people on the street. Some  are angry but most  of them are so depressed because they think government will never listen, and they think what we are doing going to be  in vain, just not going to change anything.  And I say to them, I say, if you don’t make any noise for this, what do you think government are going do to us next?

I want to set  example to my children to say, if you really believe, and you have to believe, you can make a difference, you can change something. You just take actions and do whatever you can….

… But  we have to still have to pressure the government, we want our referendum now, not later!

… One day when my kids ask me ‘mum have you done anything to protect us from being attacked by our government’ then I can say, I have done something. And I hope we can all say that, say  we have done something to protect you from bad government policies.”

Amen to that, Frances.

Frances struggled at times with the English language  – but the message she gave was as clear and meaningful as words could possibly convey.

This blogger found her to be truly inspirational.

As clouds darkened the evening sky, and the southerly ‘breeze’ gave a ‘bite’ to the assembled crowd, there was final entertainment from Steve and  John,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

And finally, a rousing applause given to Richard, who shouldered much of the responsibility in organising the event,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

Meanwhile, further down the waterfront, others were more comfortable with their boutique beers and frothy lattes,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

*

.

Want to help?

Make a donation (any size) to: BNZ, 02-0560-0158770-00

Volunteer by contacting: saynotoassetsales@gmail.com

Go to: any of the Relevant orgs listed below.

Additional

TV3: Asset sales referendum likely (6 Feb 2013)

TV3: Govt under fire over Contact redundancies (14 Feb 2013)

NBR: Supreme Court to ignore govt deadline on water rights decision (15 Feb 2013)

Youtube: Say No to Asset sales in Aotearoa NZ.mov

Copyright (c)  Notice

All images are freely available to be used, with following provisos,

  •     Use must be for non-commercial purposes.
  •     At all times, images must be used only in context, and not to denigrate individuals.
  •     Acknowledgement of source is requested.

Relevant orgs

It’s Our Future

Keep our Assets

Aotearoa is not for Sale

Aotearoa is Not for Sale | Facebook

.

.

= fs =

Wellingtonians rally to send a message to the Beehive! (part rua)

17 February 2013 6 comments

.

SOEs

.

Continued from:

 

Wellingtonians rally to send a message to the Beehive! (part tahi)

 

NZ, Wellington, 13 February 2013 – The first speaker was Peter Love; Te Atiawa, and Board Member of the Wellington Tenths Trust,

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

Peter Love spoke of having to buy a bottle of water from the dairy – and yet Maori were castigated for trying to assert their own water rights. Holding up a plastic bottle of water, he said it’s not about “Maori owning the water”,

We have to make sure you don’t have to go into a dairy to buy this!

He spoke of countries such as China sending their workers into Pacific Island nations to build infra-structure and buildings for the locals, but for a price.  Peter Love spoke of powerful interests  seeking valuable resources  such as the fish in Cook Islands territorial waters.

He said asset sales would be a magnet for overseas investors,

They’re after our assets!”

Which is why“, he said, “we’re all here this evening challenging the government.”

Peter Love finished with a humorous touch,

My wife said, ‘hullo – don’t get arrested Peter...”

He encouraged the crowd,

“…Don’t forget, keep it up. Sign the petition against it. And we may have to call you again to go to Parliament.”

The next speaker was Peter Love’s mokopuna (grandchild), Kaira Ranginui-Love, of Te Atiawa, who spoke directly to the many young people in the crowd,

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

Ms Ranginui-Love spoke with deep passion about her feelings for this country, and how others wanted a piece of our paradise,

I love Aotearoa! I don’t know about you but I absolutely love this country. I believe Aotearoa is Heaven on Earth…

… For many of you, Aotearoa has been a home for you and your families since the time of the settlers, and for others.”
 
“… But regardless of how we all got here and what we’re all doing here, I think we can all agree  what connects us is our love for Aotearoa.”

“We are very lucky to live here. We have the oceans, the rivers, the forests, the lands,  and all that dwell therein. So we must look after our country, and be the caretakers, for now and for the future generations to come. We need to be wary that we don’t allow our country to be exploited by those in a position of power. The National government, the National Party, they have an immoral agenda based on monetary gain only…”

“…Is this government listening to our views?”

“I think this govermnment blatantly  ignores it’s people and what they want. What we all want. No thought has gone into the rippling effect that this will have on our futures.”

“…We’ll have no say, and we’ll  have no rights. This referendum will help to stop the government from making a terrible mistake. Remember, everybody wants a slice of our country, our paradise. So it is time to stand up. It is time to fight for this generation and the generations to come….”

“…The time to act is now, before it’s too late.”

Next, the Mayor of Wellington, Celia Wade-Brown – a veteran campaigner against the privatisation of Wellington’s former “Capital Power” company in the 1990s – spoke of her thoughts on selling strategic assets that belong to the people,

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

Mayor Wade-Brown welcomed people to the rally and acknowledged the hard work by organisors to set up the rally,

Let’s give the organisors a big round of applause!”

This week there’ve been a number of really important issues raised that resonate with all of us; leadership; jobs; a fair go; and a clean environment; public ownership of strategic assets. Those aren’t alternatives to each other, they go hand in hand.”

The Mayor spoke of Deborah Littman visiting Wellington and talking to Council (see: Mayor pushes to give hundreds a pay increase ) about how a living wage has in helped  many aspects of society in Vancouver and London, by raising incomes,

Low pay doesn’t help the local economy; low pay doesn’t educational failure, and low pay doesn’t help poor health. So the living wage is an idea to inspire us, it’s a journey, not an overnight transformation… … a living wage is good for the local economy.”

Mr Wade Brown referred to a Greenpeace economic report which outlined ambitious ideas for new jobs, new prosperity, and a clean economy. She outlined Greenpeace’s ideas for how huge wealth could be created for New Zealand by building an economy based on 100% renewable energy,  energy efficiency, and sustainable transport.

The mayor went on to describe one of her earliest actions soon after being elected to the City Council in 1994,

I voted in one of the earliest political decisions when I was elected on Council against the sale of Capital Power. And now the energy retail and lines businesses have been split up and sold and sold again  and it’s really impossible to assess what they would  be worth now.

But it could’ve been a huge help to the capital city as a basis for a smart grid, for electricity demand management, and for more manageble bills for people on low incomes. So I understand your concerns about selling of power generation companies.

More successfully, Wellington City Council voted against the sale of our Airport shares. Although one third does not give us control. But it does keep us in the loop and it gives us a considerable dividend that keeps your rates down.

And in the ’90s there were really truly mutterings –  I saw Cr Stephanie Cook here earlier and she’ll back this up – there were muttering about selling of our council social housing. It never did get to a vote, thank goodness... “

Social housing for vulnerable tenants was a social partnership, she said.

Mayor Wade-Brown then described Wellington’s water supply and categorically stated,

The basic public infrastructure should remain in public ownership and the charging policies and the conservation policies should be set democratically.”

She took a good natured ‘dig’ at Peter Love with the remark,

And I would like to add that you don’t need to buy in bottles because there are free water fountains along the waterfront.

Ms Wade-Brown told the audience that Council, in partnership with local Iwi, was bringing back alienated land to return to the Town Belt.

The Mayor added,

So local government faces the same financial pressures as households do, as you do,  as business does, and as central government does. But we’re not going to face those pressures by selling of our strategic assets. We won’t sell social housing, we won’t sell water infrastructure, we won’t sell the reserves that make this capital city so special.”

The mayor implored people to sign the petition – but not ten times,

It doesn’t help to sign it ten times, ok guys? If you’ve signed it, you’ve signed it…
… And tonight people are tweeting, blogging, using Youtube, and everything else to have your say. And that’s my main message; stand up and have your say, in the capital city!

Kia kaha.”

Next up – perhaps the country’s sanest, most common-sense economist – Ganesh Nana, rose to tell it from an economist’s  perspective.

Perhaps surprisingly, he wasn’t tied up and thrown into the harbour. Economists in the last thirty years have had a bad rep – perhaps only second to certain policians.

But Ganesh Nana is a rare breed of economist. He sees through the neo-liberal fantasy world of ideology and tells us that the dogma of the New Right simply does not work as ‘the label on the can’ promised,

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

Ganesh Nana started by saying,

I’m an economist, ok, so I promise not to say anything about ‘The Phoenix’ or anything about cats…”

That elicited a laugh from the crowd and then he launched straight into the issue of asset sales and started by asking,

You might ask why would you at all be interested in hearing from an economist, and I ask the same thing; “why is anybody  interested in hearing from an economist given whate total mess we’ve made of the economy to date, but never mind… You guys should really be asking for an apology from the economists given the mess we’ve made...”

“… But I will apologise on my own behalf for not not actually shouting out a lot louder evertime we’ve made a wrong turn. So today here I am shouting out just a bit louder for making a wrong turn yet again.”

The audience warmed quickly to Ganesh Nana’s self-deprecating comments and clapped at his remarks. Only a lone heckler, yelling out comments he must’ve thought were very hilariously witty (mistakenly),  stood apart from the crowd.

Ganesh Nana continued,

From a business perspective; a business person’s perspective;  this is a very, very, very,  simple problem facing us, or a simple question; why would you sell an asset?

I ask you that question and from my own academic perspective or background, when faced with that question  I go to a dictionary and look up the definition of an asset.

It’s really quite simple… … you’ll find some words around something that is valuable and of use. And then I started to think as a business person or as an ordinary person why would I get rid of something that is valuable and of  use?”

He then asked,

“…These assets that the Crown have, [that] the government on our behalf, [as] taxpayers, are holding. Do they continue to be valuable and useful?

And if so why are we getting rid of them?”

… From a business perspective the only reason I’d get of an asset is if it suddenly became a liability.

That is, it required a lot of upkeep and it wasn’t paying it’s way, so it wasn’t really an asset. And then, yes,  you get rid of it fast.

But is anybody seriously trying to tell me that those electricity generation stations, and all the infra-structure around it,  is something that we, as a nation, ‘ain’t gonna’ need for the next 20, 30, 40, 50 years?

Because if the answer to that is ‘yes’, then let’s get rid of it, because we don’t need it. But if we do need them, we need to hold onto them. It’s really quite that simple.”

Ganesh Nana was also adamant that not all economists follow the neo-liberal, monetarist line,

“…People who think that businesses or economists totally agree with getting rid of assets or following the market path, and there are lots of other reasons we could go into which are far too technical to go into tonight, about following the market and about how government shouldn’t be involved in assets; and shouldn’t be involved in the economy – those are smokescreens.

There are quite surprisingly some economists, myself included, who don’t follow that [ideology], and actually go back to the textbook… If it’s an asset, and it’s going to earn something over the future, you hold onto it for dear life. Because that’s what your future relies on!”

Ganesh Nana’s speech was well-received by the crowd. One could sense  that it was a relief for many who were listening,  that not all economists were wide-eyed free-marketeers demanding the dismantling of the State.

Ganesh Nana was followed by Geoff Bertram, Senior Economics lecturer at  Wellington’s Victoria University, and one who had been closely studying the energy sector. Mr Bertram understands the mechanisms by which our energy companies are valued and re-valued – and his simple explanations quickly reveal these valuations as clever, malevolent, rorts.

The same rorts used to drive up power prices on an almost annual basis,

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

Now, the government’s aiming to sell off nearly half of some state-owned companies worth about ten billion [dollars], so it’s hoping to get a bit about under half… perhaps $4.5 billion from the sales from anybody prepared to buy the shares that they’re going to issue.

I’m going to talk tonight really about the motivation  that might lie behind those sales, and I personally think it boils down to two things.

The first is the desire of  the Treasury to get the money and run before certain things become very apparent about the way that electricity prices have been set over the last two decades.

And the second reason I think is to close off policy options that might remain open to future governments if the assets remain in full public ownership. Because while the assets are in full public ownership, it is possible to change the way they are managed and change the way that  electricity is supplied…”

Geoff Bertram then made an explosive accusation against the government which, if true, revealed a shocking reason why National is so hell-bent on privatisation of certain state assets,

“… It’s my view that probably the  most important political consequence of the part-privatisation of SOEs is to place private investors in those enterprises  and thereby immunise them against possible future policy that might reduce their value.

And since  I think an important part of an improved government policy would indeed reduce their value, I am opposed to the asset sales…

…The companies have a very high valuation. The reason why they have a very high valuation  is that they have successfully participated in a long-running rort to extract cash from residential electricity consumers by the inexorable driving up of prices of electricity.

That rort, has been possible, because government policy has allowed and has indeed supported the emergeance of a cartel of five, large, vertically-integrated, generator-retailers – three of whom are SOEs  – which have been able to operate without any effective regulation, at the expense of  consumers who were too vulnerable to protect their interests against price hikes.

And if you looked at the tracks of electricity prices over the last 20, 30 years you will have noticed that large industry has protected itself very successfully; commercial electricity buyers have done fine; residential who are the dis-organised, unrepresented, undefended, captive group of customers have seen their prices go up in real terms 100% since 1986.

And the main consequence of the electricity reforms has indeed been that doubling of the cost of electricity to ordinary  households. 

That’s a major cause of energy poverty; it’s been an important part in the growing  inequality of income and wealth in this country; and it’s something that a socially responsible government would,  in my view,  be taking serious action to reverse.”

The audience broke into heavy applause as the implications of Geoff Bertram’s comments sank in.

It is simply extraordinary that none of the media present at the rally that day has reported Geoff Bertram’s amazing – and disturbing – analysis of the energy sector and electricity pricing in New Zealand. Is what he’s saying boring?! Too complicated?! Risking opening a can of worms?!

This should be a prime-time story on TV3’s “Campbell Live” and Radio New Zealand.

Geoff Bertram continued,

“Just to put that doubling of the residential price in context. New Zealand’s pretty much on it’s own in the OECD and if you look at  the figures for other countries around the OECD, from 1986 to the present, the price of electricity to residential consumers  in OECD Europe, in Australia, and in the United Kingdom, is still the same as it was in 1986. In the United States, Japan, and France, prices are down 25% , compared to where they were in 1986, in real terms.  In South Korea they’re down 50%, compared to where they were in 1986.

New Zealand is the only only OECD country that has gone out there and driven up electricity prices 50%. We’re also pretty much the only country that doesn’t have a regulator in place, and where government doesn’t have any particular social policy relating to the pricing of essential services to the public.”

Geoff Bertram then explained what he called “the re-valuation game”, as it applied to electricity pricing in New Zealand,

And here’s how it works.

You take a bunch of assets with a given value, and you look at the existing price, to consumers of the product, and you say “well look, we can get the price up”; so you project  that higher price; you capitalise that; and then if you can get the price up the asset will be worth more; so then you re-value the asset; and then you go and use the higher value of the asset to justify raising the prices, and then you repeat.

And this is the circular process which has been going on in New Zealand now, in electricity, for more than a decade. It is completely legal under New Zealand law.

It is not illegal to profiteer or  to gauge captive customers in this country. [In] very few countries is that true.

And it’s consistant with New Zealand’s generally accepted accounting practice which basically tells you that there’s a rotteness at the core of accounting practices in this country.”

Geoff Betram further described how the ECNZ had sold power stations to the newly formed Mighty River Power, in 1999, at a considerable mark-up. In effect  government sold these power stations to itself and in the process pocketed a huge profit. To pay for those power stations, prices were raised, forcing captive residential consumers to pay more and more for their electricity. He added that we have been,

“…living under a government which for two decades has  become effectively  a corporate predator, in this sector, where once it used to be a social provider.

The applause that followed that statement was louder than before. People were ‘getting’ what Geoff Bertram was telling them. He continued,

Here’s the problem. Electricity was once an essential service provided to households at the lowest price, consistent with covering the industry’s costs. 

Since 1986 the sector has been corporatised and part-privatised, and it’s pricing has been driven by the quest for profit by giant companies that have the market power to gouge their consumers.

As the owner of three of those companies, the New Zealand government has therefore become a predator. And now the Treasury wants to cash in on that rort by selling out half the government’s stake.

What that means in terms of the options for the future for government to turn around and come back from the predator model and return to a social service approach  for energy supply, is being closed off.”

Geoff Bertram suggested that every household in New Zealand could be allocated 300kwh [kilowatt hours] of free power every month, and pay market rates for anything over and over used. He added,

But if you want to deal with energy poverty and get kids out of hospitals with asthma and other respiratory diseases and so on, one of the really good  things that you can do is get cheap energy into New Zealand households and that would be sustainable on the basis of the current government owned assets.

About 300 kwh free. [But if] you sell Mighty River and what’s feasible comes down to 200 [kwh]. You sell Genesis and what’s feasible comes down to 100 [kwh]. You sell Meridian and it’s gone…

What I’m saying is the contract  that supplies the Rio Tinto smelter down at Bluff, the old Comalco contract, is the contract New  Zealand households should have had from the start.

And it still could be done.”

Imagine, every household in the country, receiving a dividend of 300 kwh, each month. The positive benefits for low-income families, in damp, drafty houses, would be incalculable. Coupled with providing free meals in schools for children, it would be a major blow against child poverty in New Zealand.

But not if National get’s it’s way.

A new Labour-Green-NZ First-Mana coalition government must listen to people like Geoff Bertram, Ganesh Nana, et al, if we are to progress forward.

After Geoff Bertram, the crowd was entertained by Maarama Te Kira and Lucky Ngatuere,

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

Following on from the entertainment, Jane Kelsey, Law Professor from Auckland University, addressed the Rally. Professor Kelsey is also one of the country’s acknowledged experts on globalisation, and a staunch critic of the TPPA (Trans Pacific Partnership Agreement), which is being negotiated in secrecy and condemned worldwide.

Professor Kelsey has also been the target of some fairly vindictive statements from the NZ Herald (see: Gordon Campbell on the NZ Herald’s attack on Jane Kelsey).

Professor Kelsey started by welcoming old friends to the rally,

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

“…It was great to see lots of familiar faces from battles of the past, but it was also great to see so many young people here, because these battles are your battles for the future…

… I congratulate not only the organisor here, but  those who have been running the campaign  in Wellington gainst the asset sales, because it’s been a real inspiration across the country, and I know it’s being watched by people outside the country as well.

Some of those who are here will remember those battles we had in the mid 1980s when we were told that state-owned enterprises were simply a way of creating more efficient ways of keeping assets in  our hands. And we said at the time that it was a lie. And we knew it was a lie and they knew it was a lie. And we proved it was a lie and then they sold them off and then we had to buy them back.

Because as we predicted would happen, when you have private owners, especially private foreign owners, who have no stakes in our future, they will strip the assets. And thats what Bell-Atlantic and Ameritech did with Telecom and that’s what Wisconson Railways  did with the railways, and that’s what the [foreign ]banks that still own our banks, did with the Post Office Savings Bank and the BNZ and the Rural Bank, and so on, and we’ve been there and done that and we know what it means.”

At this point, Professor Kelsey held up a metre-square white board with heavy black lettering on it; ‘SAY NO’. It was a take on Winston Peter’s ‘NO’ sign from the Owen Glenn Donations affair in 2008. (see: Peters denies latest Owen Glenn allegations)  The placard provoked laughter from the crowd who obviously recalled the significance of it.

” They also know that the problem [for the neo-liberals] was that we were able to reverse some of those failed privatisations, and other things that failed. Like when they tried to privatise ACC. Like when they tried to de-regulate the electricity market. … So what they have is a new strategy designed to lock-in and make potentially irreversible the kinds of policies that they want to see rule in the interests of their cronies for the indefinite future.
These particularly  toxic legal products are known as Free Trade and Investment Agreements but they have nothing to do with trade, they’re actually investment protection agreements that make it almost almost impossible for us to be able to do the kinds of reversals of failed privatisations we’ve done in the past. We have a number of those agreements already.

And they are potentially causing some problems.
Some of you will have followed what’s happening with the tobacco companies, and their threats to sue over the introduction of plain-packaging tobacco. What we have now now is a particularly virulent strand of this this toxic disease. It’s known as the Trans Pacific Partnership Agreement, or the TPPA. We have other ways of describing the TPPA – Taking People’s Power Away. Toxic Profiteers Plundering Aotearoa.
What it’s designed to do, in particular in relation to investment, is to say ‘You have to open your doors without restrictions to the rights of foreign investors to be able to buy any of the assets within Aotearoa’.
Now, we already have an open door,  and they’ve already signed away the ability to reverse some of that.

But now they want to raise the thresholds even further, so that our ability to vet foreign owners is effectively taken out of our hands. But worse than that, once the foreign investors own the assets, these agreements give special guarantees to those foreign companies. They give guarantees that we will  not alter our future laws and policies in ways that significantly affect the value or the profitability of their investments.
So once we have – or they have – given away our assets, our ability to do anything to recover them is not only constrained by the kinds of threats that we’ve seen in the past and concerns about ‘crisis’ and ‘investor confidence’ and all of that other bullshit – we have threats from foreign investors under an agreement like the Trans Pacific Partnership Agreement, that they will sue our government not only for the loss of the value of their assets but the for the loss of future profits from those assets.
…It will not be a case that will be brought in our domestic Court. It is a case that will be brought in a secret, off-shore tribunal, where there will be three Arbitrators who would sit on the Hearing who last week were acting for an investor, and this week are acting as a judge in the cases brought before them by an investor. There is no system of  precedent, there is no openess so we can see the documents, or even sit in on the Hearings. There may not even be a publication of their judgement at the end of it!
These kinds of secret offshore tribunals are  so discredited now that many  governments are saying  they won’t agree to deals that allow foreign investors to have those powers.  And the Australians have said in the Trans Pacific Partnership Agreement that they won’t agree to foreign investors having those powers.

Our government – when John Key was first asked about this – said, “Oh, well if the Australians don’t think it’s a good thing, it sounds a little bit off-beam to me, so I suppose we’d go where Australia goes”.

Then his officials officials briefed him and said, “Well, actually Prime Miniter, no, we’re going to agree  to foreign investors having these powers”.
So this Trans Pacific Partnership Agreement is currently being negotiated. They want to try to close off the negotiations in October this year. The negotiations are all taking place in secret. We don’t get to see the final agreement until it’s signed off by the eleven countries negotiating it, which includes the US where the big foreign investors are based.
So, effectively the government is negotiating a Bill of Rights for foreign investors not only to enter and buy up this country, but to be able to threaten us in the future if we try to take back control of what is ours.”

Professor Kelsey invited the crowd to join in the campaign to oppose the TPPA, and pointed out information that was freely available on nearby tables. She warned the crowd,

“Join us in the campaign against the Trans Pacific Partnership Agreement, because so many of the things that we care about – We will not be able to effectively regulate in the future; we will not be be able to take back control of our future; if this agreement is passed. Parliament doesn’t get  an effective say on it. This is an agreement negotiated by the  Cabinet, it can be ratified by the Cabinet; and we have no say until it is a done deal.
We know that the Prime Minister is very good at secret done deals. We know that the Prime Minister is happy to do deals on behalf of his cronies. We know that the Prime Minister is prepared to sell out democracy, sovereignty, and tino rangatiratanga. And if we’re going to take back control of our futures then this agreement is a priority to stop this year, along with the asset sales.”

Professor Keley thanked the audience, who in turn cheered and clapped for her.

Meanwhile, Shane and Ariana (?) held aloft the anti-TPPA banner,

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

Next up, Bishop Justin Duckworth – the Anglican Bishop of Wellington. He had some very personal but salient anecdotes to share with us,

.

aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

Bishop Duckworth greeted the crowd and started with this story from his own family,

” I was sitting out before and listening to the speakers, who were awesome, and I was suddenly talking to a new friend, I met a new friend, and he was telling me he was a father like I was a father, and we were discussing our children, and I suddenly remember a story that happened between my wife and my teenage boy. Classic conversation went down about domestic chores. And my beautiful wife, Jenny was saying to my boy, “it’s your turn to do the dishes”.

And he sort of said, “No, I did the dishes last night”.

And then she said, “I vacuumed the floor.”

And then he said, “Well, I watered the garden.”

And then she said, “Well, I dropped you to school.”

And it was escalating. Until my wife finally busted what I thought was the argument to end all arguments. And she said this; “I gave birth to you.”

I thought;  that’s it. Argument stopped. How could you argue with that?

My teenage boy had this comeback, “And your generation destroyed the environment for us.”

Good line, eh?

And it’s true isn’t? It’s true that our generation not only did we destroy the global environment, but  we have also instigated the global recession as well. And I think that the issues that we are talking about today about asset sales; the reason why that this issue in particular hits our public so strongly, and we have such a good turnout to this rally, is that because I think it’s at the core of a whole lot of other issues.

And so, as a man of faith, as a follower of Jesus, I just want to tell you what concerns me. And these are questions I have, I haven’t got the answers, but these are just questions.

Around asset sales I have questions  around the lack of regulation already  in place in the assets that we own…

… I heard Geoff speak, and I also read his articles, the reports about his papers a couple of weeks ago.  I am concerned that that it is simply not fair, and not just …”

“If we were to sell our assets how less a control do we have? If we already have such limited control at the moment on the regulation of them, how much more limited will it be in the future?”

My second question I would have is this. Recognising… that the Kai Tiaki of New Zealand is Tangata Whenua’s Maori people, and the wairua of this country, the spirit of this country is held by that Kai Tiaki, by the Maori people. I would have questions around what happens if we start selling our assets overseas, what does that mean for the Kai Tiaki here?

“… Third question would follow on from the Greenpeace speaker [Bunny McDiarmid - no recording of her speech made; blogger's stuff-up], and that woud be this; What happens to the environment longer term if we lose responsibility and control of our power companies? What guarantees do we have whether actually our environment and our global climate change issues will actually be positively addressed by our country? I think there are huge issues there if we choose to sell our assets.”

Bishop Duckworth then concluded with this sobering anecdote – something personal, yet with global implications in how we treat each other,

“…Those of you who don’t know, my father was born in Burma – in Myanmar. A few years ago I went back with him; never visited before, me and my brother went back to Burma. Took my dad, visited a whole lot of wider family.

Once we were on a temple tour, as you do on these sort of trips. We were touring around these temples, and me and my brother, having a lot of sibling rivalry, we’d constantly compete to see who could get the best bargain for the little knick-knacks. You know that I mean? Those little things you buy constantly. So me and my brother were constantly competing for who could get the best deal  on knick-knacks.

One night we were just finishing another temple tour and this guy sidled up to me and was selling me hand-painted pictures of Burmese countryside. Now I’ve been around long enought to know what you can normally get these pictures for.

Normally you pick these pictures up for about three US dollars.
But I was militant that night. And I thought I’m going to prove once and for all that I can run the biggest, best bargain in the world. So I drilled that fellow down to get the best  bargain I could. And in the end I managed to get four pictures for five US dollars!

…We were getting a lift home, and I was showing the pictures to my brother and saying, “Look, I’ve got the best bargain ever!”

And the driver of our horse and cart leant over and asked, “Hey, um, what’d you pay for those?”

I said, “I paid five US dollars for the four of them”.

He sez, “Ohhh, it must’ve been a bad day.”

I go, “What do you mean?”

“The man musn’t have been able to sell anything that day, so he had to sell his goods at cost price, at least at cost-price,  just to buy rice for his family.”

And suddenly I realised what was just some crazy game, ideological game, for me, was actually  life and death for other people.

And my big questions I have around this issue is this; is this some crazy ideological issue that we’ve been driven  here, or is it actually about everyday people who are struggling, who need jobs, who need security, who need a future, and who need decent power.

And that’s my question.”

Ariana then troduced Maanu Paul, Chairman of the Maori Council, and  who was currently taking the Government to the Supreme Court over water rights. Maanu Paul had some interesting observations, and made a call to action,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

Maanu Paul offered a greeting to the people at the rally, and then began with,

“When I was asked to come and speak, at this,  I asked, “who makes money out of this lot [asset sales] ‘?

And the answer was, we need to raise the consciousness of our nation in respect of our opposition to the sale of assets. The New Zealand Maori Council has had a long history of opposing the sale of our assets, beginning in 1986, when we established Section 9 of the State Owned Enterprises Act, which we said, “nothing in this Act shall be contrary to the Treaty of Waitangi”.

And then we had the lands case in 1987 when we stopped the sale of state owned land. And then we had a negotiation with the Crown over the sale of the biggest man-made forest in the southern hemisphere – the Kaingaroa Forest. And then they sold the spectra. And  we had an argument with the Crown over who owned the spectra. It’s about the same argumwent as who owns the water.

And the government of the day said, ‘Maori did not know anything about the spectra’. And I shot back to them, ‘Neither did they. An Italian  fellow named Marconi knew about it, and the Poms didn’t know anything about it at all’.

The upshot is that they allocated us a portion of the spectra and now we’re a part of Two Degrees.

Finally we come to the sale of the dams and the capacity to generate power. The whakapapa so far tells us that the constant that is present in all this is that the Maori Council has ensured that state owned assets stay in this country.”

There was strong applause at this point, and with a smile, Maanu Paul continued,

“Thank you. Because I’m going to ask you to put your hands in your pockets, because you owe us.”

More good natured laughter, and Maanu Paul’s smile widened, as the audience understood the nature of his remarks. He explained,

“You owe us because if we didn’t take this government to the Tribunal, to the High Court, and the Supreme Court, our assets would’ve been gone, would’ve been sold by now.

That is the reality of what we’re facing. And so the Council is dedicated to ensuring that we leave the world a better place for our mokopunas. We leave the world a better place that wehen we were born to it. And the world we were born to was, as far as I was concerned, I had the right to go and fish in my foreshore in my foreshore and seabed… heh heh heh…

I had the right to swim in my rivers and my lakes and call them my own. I had the right to do what I wanted with my land without having it confiscated.

And all of these tell me right now, that those rights have been eroded. Those rights have been eroded because this government, and previous governments, have failed to properly honour the Treaty of Waitangi.”

At this point, Maanu Paul called for direct action of a sort that up until now had not been considered. His comments have been reported in the media, and this is what he said, verbatim,

“And so my  message today, to us, is quite simply, is that we need to do more than sign a petition. We need to do more than gather in Frank Kitts Park, and what we need to do is to sit outside of Parliament and demand that we maintain the control of our assets.

What I’m suggesting – and I don’t know whether my Council’s going to agree with me about  this – but what I’m suggesting  is that we have a Noho Kainga [sitting] on Parliament grounds!

And we sit there until a fellow called Winston Peters might have put a Bill in Parliament that says ‘we are wishing to maintain ownership of the assets that we paid for in the taxes that’ve been levied upon us in the name of the public good’.

The audience resoponded enthusiastically to this suggestion, and the feeling was strong that many would’ve upped and left for Parliament’s ground at that very moment.

Maanu Paul continued,

“And the reason I’m saying this to you is that simply because there is no protection of your assets paid for by your taxes, which were levied upon you in the first place, in the name of the public good.

And we are the public and we should have a Nono Kainga to protect to protect our public good.”

Maanu Paul then sang a new “public anthem” to the crowd. This blogger can report that  his singing is something to behold – Maanu Paul has an awesome singing voice. Firstly his song was rendered in Maori, and then for the benefit of those who don’t yet know the language (including this blogger), in English,

‘I am the water, the water is me,

Cascading down,

from Ranginui,

Enveloping all,

The environment,

I am the water,

the water is me.’

Ariana asked the crowd,  “Yes, yes, yes! A sit down at Parliament – who’s up for it?

The response was shouted from the crowd loud and in affirmation.

A new people’s action may be in the offing… Stay tuned, folks. This ain’t over – not by a long shot. Or by John Key’s lamentable imagination.

A new chapter is unfolding.

Continued and concluded at:

Wellingtonians rally to send a message to the Beehive! (part toru)

.

*

.

Additional

TV3: Asset sales referendum likely (6 Feb 2013)

TV3: Govt under fire over Contact redundancies (14 Feb 2013)

NBR: Supreme Court to ignore govt deadline on water rights decision (15 Feb 2013)

Youtube: Say No to Asset sales in Aotearoa NZ.mov

Copyright (c)  Notice

All images are freely available to be used, with following provisos,

  •     Use must be for non-commercial purposes.
  •     At all times, images must be used only in context, and not to denigrate individuals.
  •     Acknowledgement of source is requested.

Relevant orgs

It’s Our Future

Keep our Assets

Aotearoa is not for Sale

Aotearoa is Not for Sale | Facebook

.

.

= fs =

Wellingtonians rally to send a message to the Beehive! (part tahi)

17 February 2013 6 comments

.

SOEs

.

NZ, Wellington, 13 February 2013 – Set against an overcast early evening sky, and a chilly southerly, several hundred Wellingtonians of all ages, races, political affiliations, and backgrounds came together at Frank Kitts Park, on Wellington’s waterfront,

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

Their common unity of purpose was to oppose the partial sale of state-owned assets,

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

Electricity-dustry expert, Molly Melhuish, with others from DEUN (Domestic Electricity Users Network). Ms Melhuish (center, holding white clipboard)  is  intimately familiar with the working of the electricity industry in this country and was a key member in   campaigns to oppose electricity privatisation in the 1990s – including Wellington’s Capital Power.

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

The messages were simple, and to the point. From Labour,

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

.

… to the Mana Party,

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

The message for National  was clear – what’s ours is ours,

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

This Wellingtonian understood the folly and false-economy of selling state assets which are money-making cash-cows. Right wing politicians know this – but their zealous obedience to neo-liberal dogma seems to over-ride any semblance of common-sense,

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

Many in the crowd were of an age to recall the sale of Telecom – something that was resisted by 93% of New Zealanders,

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

Interestingly, at least one right-wing politician has belatedly realised that selling state assets was a mistake – see: Bolger: Telecom sale a mistake

Dedicated ANFS activist, Frances, had a very simple question for Dear Leader,

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

ANFS activist, Athena, handing out leaflets to people in the crowd and discussing issues with them,

.

Frank Macskasy   Frankly Speaking  blog  fmacskasy.wordpress.com  aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

With media filming the event, ANFS co-convenor, Ariana, opened the Rally with a welcome to the crowd and  an introduction of the speakers who had been invited to address the rally, with their thoughts on the sale of state assets,

.

Frank Macskasy  Frankly Speaking  blog fmacskasy.wordpress.com aotearoa not for sale - 13 february 2013 - frank kitts park - wellington - anti asset sales

.

The speakers came from a variety of backgrounds, and each gave their perspective on the issue of selling the people’s assets.

To be continued:

Wellingtonians rally to send a message to the Beehive! (part rua)

.

*

.

Additional

TV3: Asset sales referendum likely (6 Feb 2013)

TV3: Govt under fire over Contact redundancies (14 Feb 2013)

NBR: Supreme Court to ignore govt deadline on water rights decision (15 Feb 2013)

Youtube: Say No to Asset sales in Aotearoa NZ.mov

Copyright (c)  Notice

All images are freely available to be used, with following provisos,

  •     Use must be for non-commercial purposes.
  •     At all times, images must be used only in context, and not to denigrate individuals.
  •     Acknowledgement of source is requested.

Relevant orgs

It’s Our Future

Keep our Assets

Aotearoa is not for Sale

Aotearoa is Not for Sale | Facebook

.

.

= fs =

Dirty Dealings with Solid Energy

26 October 2012 14 comments

.

.

Last year, on 19 May,  Solid Energy was one of five SOEs that National announced would be partially privatised (see: Budget 2011: Govt seeks $7 billion in asset sales). Bill English announced, with a naivetee usually reserved for wildly idealistic, wide-eyed  youth,

Well targeted investment in infrastructure helps lift productivity, which over time will mean better wages and higher living standards for New Zealand families.”

To which, as the youth of today might reply,

Yeah, whatever.”

By 29 August, this year,  as   demand from China lessened, and the price of coal dropped, Solid Energy announced plans to make 363 workers redundant.

CEO, Don Elder, said,

I am very aware of the impact these decisions will have on affected staff members and our communities, but we’ve had to make these difficult decisions to cushion the impact of the market and protect as much as we can of the long-term value of the business.”

Source

On 25 September, Key stated,

Now that the coal price is collapsing, essentially Spring Creek is not viable.

It’s never been in the position where it was going to come on to the market today.  It’s been a five-year programme, and if you ask me in three, four, five years’ time, the anwer might be different.” .

Source

Along with Maori Treaty claims over water rights, and papers being filed in the High Court on 23 October (see: Mighty River sale paused during court action) which will see a delay in removing Mighty River Power from the SOE Act, the realisation that Solid Energy was also unsaleable under current economic conditions was another unwanted ‘hiccup’ for National.

On the same day, Solid Energy anounced that redundancies would increase from 363 to 460 and staffing levels would reduce from 1,800 at the beginning of the year, to 1,360.

Christchurch was to lose half of the 313 jobs at Solid Energy’s head office – another ‘hit’ against this quake ravaged city, along with planned school closures; problems with insurance companies; and Cantabrians leaving the area.

Remember that, ostensibly, redundancies were related to international coal prices and profit losses – not the deferred partial-privatisation of the SOE.

Yet, according to Solid Energy’s own Results Announcements 2012 report,  the company’s income was actually better than the preceding year,

Good operating performance overtaken by asset write downs

• Trading performance was good in a deteriorating market with strong NZD. Underlying earnings were $99.7 million (2011: $86.2 million).
• Asset write downs of $110.6 million net of tax and other adjustments have resulted in a $40.2 million loss after tax (2011: $87.2 million).

See: Solid Energy New Zealand Ltd Results Announcement 2012

In plain english (not the mumbled  Prime Ministerial  version), Solid Energy made an after-tax profit of $99.7 million – an increase from $86.2 million in 2011.

Employing a  book-keeping, accountancy “trick”, Solid Energy  reduced their own asset values by $110.6  million. (That’s like saying your house was worth  $300,000 in 2011, but only $250,000 this year. You still have your house and you’re living in it – nothing else has changed. Only the theoretical valuation has ‘reduced’. Next year that valuation could rise back to $300,000 or even more or maybe less. That’s creative accountancy for you.)

The point is that Solid Energy’s profit rose from $86.2 million to $99.7 million.

In fact, Solid Energy’s revenue in 2012 was $978.4 million – almost a billion dollars – an 18% increase from the previous year.

The proposition that Solid Energy is more profitable than either Don Elder or National make out is born out by this interesting article,  in Taranaki’s ‘Daily News‘, on 12 October this year. It appears that Australian coal mining giant, Bathurst, is experiencing a growth in share value as it discovers greater coal reserves at its Buller project on the West Coast,

.

Source

.

Bathurst is proceeding with “an extensive drilling programme” – indicating that the company appears unphased by current coal prices and is investing long-term in recovering this resource.

So what to make of the planned 460 redundancies?

What to make of Bathurst’s share price rising and continuing to invest in a comprehensive drilling programme?

The only conclusion that one can arrive at is that planned redundancies are a covert operation to “maximise” Solid Energy’s value and “efficiency”. The cost of redundancies – estimated at around $10 million – will be paid by the taxpayer and not the shareholders of any future part-privatised company (see:  Foreign workers lured by ‘work for life’ among sacked miners).

Reducing staff numbers – commonly referred to as “re-structuring” – is a common technique for  companies to cut costs in an attempt to return to profitability, or to make it more attractive to potential investors or buyers.

It is interesting to note that National’s secret agenda  of “re-structuring” Solid Energy, to make the SOE viable for privatisation, is a technique quite familiar to our Prime Minister, John Key,

During Key’s brief spell for Merrill Lynch in Sydney in 2001, he helped fire 500 staff as part of savage worldwide retrenchment by the bank. In the past, Key has appeared proud of his ability to sack without feelings. He told Metro magazine: “They always called me the smiling assassin.”

These days he insists these were not cheerful sackings.

“In the end I had to carry out wider responsibilities, but I think I’m fundamentally a nice guy, but have to follow instructions,” he says. “

Source

As  Don Elder said,

I am very aware of the impact these decisions will have on affected staff members and our communities, but we’ve had to make these difficult decisions to cushion the impact of the market and protect as much as we can of the long-term value of the business.”

460 workers face the sack.

No doubt John Key is simply  “having to follow instructions“?

.

*

.

Related previous blogpost

The real cause for Solid Energy mass redundancies? (5 September 2012)

Sources

Sunday Star Times: Who is John Key? (3 February 2008)

NZ Herald: Spring Creek mine work suspended (29 August 2012)

Dominion Post: Miners march on Parliament (25 September 2012)

Radio NZ: Hundreds of jobs going at Solid Energy (25 September 2012)

Daily News: Bathurst lifts Buller coal totals (12 October 2012)

.

.

= fs =

Citizen A – 20 October 2012 – Online now!

.

Citizen A

.

- 20 October 2012 -

.

- Chris Trotter & Selwyn Manning -

.

.

Issue 1: Is a WINZ kiosk less leaky than a GCSB staff meeting? What to make of the security lapse at the Ministry of Social Development?

Issue 2: Where does the Kim Dotcom case end?

and Issue 3: Government tells Maoridom to get lost over the sale of Mighty River Power – what now for the Maori Party and asset sales?

.

Acknowledgement (republished with kind permission)

Tumeke

.

.

= fs =

Is John Key ‘losing the plot’?!

18 September 2012 3 comments

Lifted from the media today,

.

Full story

.

When the Leader of the pro-capitalist National Party starts talking about “nationalising elements such as water and wind”  – whilst at the same time instigating a programme to partially privatise Genesis Energy, Mighty River Power, and Meridian – the question has to be asked; has John Key flipped his lid?!?!

Regardless of whatever atmosphere they are breathing on the Ninth Floor, there must be some severe oxygen depletion at work to have affected Key’s mental processes so badly.

New Zealanders from both ends of the spectrum, Left and Right, as well as the general populace, must be wondering what is going on in the land of Planet National.

Right wing National supporters must’ve wondered if they had heard their Dear Leader correctly when he uttered the taboo “N” word (“nationalisation – not “n—-r”).

The Left would have been rolling their eyes and shaking their heads in dismay, and wondering, “How much more of this clown will the public take? Does he have to decapitate and eat a kitten before his popularity takes a nose-dive and drops lower than John Banks’ credibility?”

Nationalisation of water and air…

Whilst selling of our state assets at the same time…

The breath-taking audacity of the man.

In reality, what he is saying is that  the government is toying with the idea  of making a grab for certain natural resources – before selling them to private investors.

His comment is as ludicrous as his statement on TVNZ’s Q+A on 16 September when he dumbly blurted out,

… So if you accept that viewpoint, then I think you have to accept that elements like water and wind and the sun and air and fire and all these things, and the sea, along with natural resources like oil and gas, are there for the national interest of everyone. They’re there for the benefit of all New Zealanders, not one particular group over another. “

See: TVNZ Q+A Interview with Prime Minister John Key

Yeah, right, Dear Leader. I’m sure that came as a bit of a surprise to the private oil and gas companies currently exploiting our gas and oil fields.

John Key – always a laugh a minute with his incredibly outrageous remarks. Unfortunately, his clownish behaviour is ultimately at our expense.

.

water rights state asset sales waitangi tribunal Maori King SOEs John Key

.

.

= fs =

A lesson in Energy Economics

17 September 2012 Leave a comment

.

I

.

This is the Treaty of Waitangi, signed by most tribes in New Zealand, and by the Representative of Her Majesty, Lieutenant-Governor, William Hobson,

.

.

The full English text can be read here: Treaty of Waitangi.

The relevant part to the treaty, guaranteeing rights to land, forests, water, mountain, etc, is this bit, Article 2,

Article the second [Article 2]

Her Majesty the Queen of England confirms and guarantees to the Chiefs and Tribes of New Zealand and to the respective families and individuals thereof the full exclusive and undisturbed possession of their Lands and Estates Forests Fisheries and other properties which they may collectively or individually possess so long as it is their wish and desire to retain the same in their possession; but the Chiefs of the United Tribes and the individual Chiefs yield to Her Majesty the exclusive right of Preemption over such lands as the proprietors thereof may be disposed to alienate at such prices as may be agreed upon between the respective Proprietors and persons appointed by Her Majesty to treat with them in that behalf.

Seems fairly clear; what’s theirs is theirs and no nicking each others’ stuff.

Now, unfortunately, I have fellow New Zealanders who hold to the belief that the Treaty of Waitangi is “no longer relevant” or is “outdated”.

Interesting idea that; “no longer relevant”.

Firstly, the Treaty has no “expiry date” or “statute of limitations”. Nothing in the  small print  states that the Treaty is valid for only X number of years.

Secondly, imagine trying to tell our American cuzzies that their Declaration of Independence – signed in 1776AD, and therefore some 64 years older than our own Treaty – is “no longer relevant” or  “outdated”? They’d have half their US Marines camped outside your front door – and not in a happy way, either.

And of course, there is the Magna Carta, signed in 1215AD, and which is the basis of much of our modern law.  If the Magna Carta is “no longer relevant” or  “outdated” then we are in serious trouble, as the state would have arbitrary powers of detention and imprisonment without right of trial, and we would lose other legal protections from State abuse.

And then there are the Ten Commandments, several thousand years old, which state the most basic laws of a civilised society; no killing, no stealing, no false accusations, etc.

Few people would try to assert that these basic laws are “no longer relevant” or  “outdated”?

Time does not extinguish rights.

Those who object to the principles of the Treaty do so out of fear and misconceptions (and sometimes out of downright racist hostility) than any notions of fairness.

The Treaty is the basis upon which our ancestors agreed to live together and to respect each other. We should respect that agreement and use it in the spirit in which it was signed.

Otherwise we disrespect our forebears (on all sides) and do ourselves a dishonour in the  process.

Moving forward and onward…

.

II

.

In replying to Maori claims of water rights, Dear Leader John Key has stated earnestly that “no one owns the water”.

Until now,  Maori have made no claims over water in terms of this country’s energy production. With Meridian, Mighty River Power, and Genesis Energy under collective  state ownership, it could equally be said that “no one owned the power companies – they belonged to us all.

If, until now, we all benefitted from collective ownership of power companies, then, equally the source of that power was in collective ownership. Now National is attempting to privatise 49% of  Meridian, Mighty River Power, and Genesis Energy – effectively changing the rules.

The concept of private ownership is now contemplated for up-till-now collectively-owned assets. So what about the source of that power which will now benefit a small group who will own 49%?

Can the source of hydro power be owned, especially when it produces profits?

Let’s test that idea, shall we?

Simple question: who owns the following resources?

.

.

Oil. Natural  gas. Coal. Uranium. None of this stuff  is free. Someone owns the ground or the process used to extract it.  There is a concept of private ownership  over these energy sources that can be quantified, measured, controlled,  priced, and sold.

Until Pakeha arrived on these fair shores as the second wave of  “boat people” – refugees from a class-stratified society – Maori had no concept of private ownership. Property was not owned by individuals. Iwi and hapu held collective kawanatanga over their lands, waters, forests, hills, seashores, etc.

Once Pakeha arrived, the notion of private ownership and Land Titles were introduced to Maori.

Some Pakeha might object – but water is sacred!

So is land. God knows enough of our young men have gone off to war to defend our nation; our people; our lands, from foreign domination, in two World Wars.

Some Pakeha would object – but water is ephemeral!

So are radio/television  frequencies. But that hasn’t stopped the government to leasing/selling those to private companies. (Try broadcasting on the same wavelength as TVNZ or TV3, and see what the reaction from those companies and the State would be.)

This is a hydro power station,

.

.

Powered by this stuff,

.

.

Water  generates the turbines which produces the power that is on-sold to consumers.

So how does water differ from oil, gas, coal, and uranium?

Private ownership?  It suited us Pakeha when it was used to our benefit to “acquire” land from Maori.

Maori learnt that lesson well and the shoe is now on the other foot.

If Pakeha are going to flog of 49% of  assets that, up till now, no one owned and collectively benefitted us all, then by the gods, Maori can – and should – apply precisely the same principle.

Welcome to the world of capitalism – our ‘gift’ to Maori

.

III

.

Pakeha schizophrenia over private ownership was nowhere better summed up than on TVNZ’s Q+A, on 16 September, when Shane Taurima interviewed Dear Leader John Key on this issue,

.

.

In a stunning act of conversion to social democratic principles, John Key equated the collective ownership of water with oil and gas,

… So if you accept that viewpoint, then I think you have to accept that elements like water and wind and the sun and air and fire and all these things, and the sea, along with natural resources like oil and gas, are there for the national interest of everyone. They’re there for the benefit of all New Zealanders, not one particular group over another. “

See: TVNZ Q+A Interview with Prime Minister John Key

Really?!?!

JohnKey is telling us that, ” natural resources like oil and gas, are there for the national interest of everyone. They’re there for the benefit of all New Zealanders, not one particular group over another “?!?

Since when did National or Labour nationalise the oil and gas industry???

This little piece of news-trivia slipped by me, that’s for sure. (Must’ve been announced on the other TV channel when we wasted two minutes watching ‘The Ridges‘.)

It’s pure bullshit of course. John Key is spinning porkies when he’s suggesting that the oil and gas industry is ” there for the national interest of everyone “. These resources belong to various corporations – not ”  for the benefit of all New Zealanders “.

In fact, the last time New Zealand held any State ownership in any aspect of the oil and gas industry was  with Petrocorp and Maui gas – both  privatised, respectively, in 1988 and 1990.

See: Treasury – Income from State Asset Sales

John Key’s assertion that the oil and gas industry is ” there for the national interest of everyone ” is either delusional (spending too much time with John Banks?) or a clumsy fairytale to try to woo New Zealanders into a cosy, cotton-wool, fantasy world.

This blogger would welcome and support National nationalising all oil and gas production in this country, ”  for the benefit of all New Zealanders “.

The fact is that Dear Leader blew it.

Not only was his paradigm absurdly false – but it actually shored up the legitamacy of Maori claims over water rights.

If private ownership can be conferred over this country’s oil and gas resources, for the private benefit of shareholders, then John Key needs to explain – in far more truthful terms this time – why water is different.

This blogger  believes that so far he has made a complete hash of things.

More importantly, will a Court take a similar view?

My money is on Maori winning this one.

.

IV

.

An email sent to Dear Leader,

Date: Monday, 17 September 2012 12:11 AM
From: Frank Macskasy <fmacskasy@yahoo.com>
Reply-To: Frank Macskasy <fmacskasy@yahoo.com>
Subject: Nationalisation of oil and gas resources
To: John Key <john.key@parliament.govt.nz>
Cc: David Shearer <david.shearer@parliament.govt.nz>,
    Russel Norman <Russel.Norman@parliament.govt.nz>,
    Metiria Turei <metiria.turei@parliament.govt.nz>,
    Winston Peters <winston.peters@parliament.govt.nz>

Kia Ora Mr Key,
 
On 16 September, you stated on TVNZ’s Q+A the following statement,
” … So if you accept that viewpoint, then I think you have to accept that elements like water and wind and the sun and air and fire and all these things, and the sea, along with natural resources like oil and gas, are there for the national interest of everyone. They’re there for the benefit of all New Zealanders, not one particular group over another. “
 

Source:  http://tvnz.co.nz/q-and-a-news/interview-prime-minister-john-key-5085886

I missed the occassion when our oil and gas industries were nationalised, so that profits would remain in New Zealand,  “for the benefit of all New Zealanders, not one particular group over another”.

This is an excellent state of affairs and I welcome your government’s conversion to social democracy whereby  our ”  natural resources like oil and gas, are there for the national interest of everyone “.

I take it as a given then, that you have not only abandoned your asset sales programme, but will be re-nationalising Contact Energy.

In which case, it is a truism that “no one owns the oil and gas” in the ground, and subsequently these resources belong to all New Zealanders collectively.

I may have to reconsider my vote, come 2014, as I wish to support the newly discovered  social-democratic principles shown by your Party.

With regards,
-Frank Macskasy
Blogger

See: http://fmacskasy.wordpress.com/2012/09/17/a-lesson-in-energy-economics/

.

.

.

= fs =

From Parliament, 2011, to Greymouth, 2012

4 September 2012 5 comments

Nothing better illustrates National’s Epic Fail in the matter of generating new jobs than these two events…

Last year, as National delivered it’s budget, Dear Leader John Key stated,

New Zealand can’t keep borrowing money at $380 million a week. We can’t have New Zealanders exposed to high interested rates, New Zealanders need a plan for jobs.

This is a budget that actually delivers that.

Treasury say in the Budget, as a result of this platform on what we’ve delivered, 170,000 jobs created and 4% wage growth over the next three to four years.”*

.

Full Story

.

Fast forward sixteen months later, to Greymouth,

.

Full Story

.

It seems an extraordinary situation  that we have arrived in when New Zealanders have to take to the streets to protest.  Not protesting to save our Conservation estates; nor our state assets from being flogged of;  or in favour of  gay rights; nor any other environmental, political,  or civil rights  issue – but merely to protect jobs in a community.

It is bizarre that this is what we’ve come down to; protesting for jobs.

Unfortunately, this is about as “good” as it gets for a National-led government. National, being a Party that adheres to free market  principles that only private enterprise can create jobs, is trapped in it’s own ideology.

Which means that, unlike the past government of Mickey Savage, National refuses to be proactive. It will not get involved in job creation initiatives because it believes it has no role to play in such an area. That is for the Marketplace to deliver.

We may be waiting for quite a while.

In  May of this year, unemployment stood at 6.7%.

See: Unemployment rate lifts to 6.7pc

By August it had risen to 6.8%.

See: Unemployment rises: 6.8pc

The next Quarterly result, for the September-November period, will most likely show a similar increase.

If  the partial-privatisation of  Meridian, Mighty Rive Power, and Genesis Energy proceeds – expect more redundancies further still.Privatisation nearly always results in job losses (and price increases) to generate greater dividend returns to private investors.

That is what it means to elect National to power.

See:  Highest jobless rate in 2 years

National is so wedded to free market dogma that this situation will worsen until such time as New Zealanders can no longer stomach a right-wing government and follow their French cuzzies into electing a more proactive centre-left government.  Only then will a centre-left government deal with unemployment and focus on proactive stategies to create jobs.

See: Labour shortage here to stay, so we had better get used to it

We’ve been ‘here’ before, in history.  This blogger has seen this political drama repeated decade after decade since the 1970s.  (In fact, it’s getting rather tediously predictable.)

Unfortunately for the decent, hardworking people of Greymouth and elsewhere in New Zealand, the tragic drama  of unemployment, family life disruption,   social dislocation, and harm to business,  must play out before the final Act is staged on Election Night.

.

* At least, that’s what we hope he said. This blogger is checking the Parliamentary Translation Unit to confirm.

.

.

= fs =

Asset Sales: all down?

24 August 2012 10 comments

.

.

Continued from: Asset Sales: two down, three to go!

.

As predicted, the Waitangi Tribunal has issued a report endorsing a delay to asset sales until the issue of water rights can be resolved,

.

Full story

.

Specifically, the report recommends,

  • Maori have long established property rights over water bodies
  • Ownership precedents date back to 1929 when Nga Puhi was granted ownership of Lake Omapere
  • Maori culture and rights should not be relegated and ignored.
  • The claim is not opportunistic
  • Offering shares in the companies to Maori is not a remedy
  • Shares in conjunction with enhanced power on the boards of these companies could provide meaningful recognition
  • It is impossible for the Tribunal to recognise all Maori water rights across the whole country
  • It is possible to devise an appropriate scheme for Maori affected by the sale of the assets but more time is needed

Source

If, as Dear Leader John Key stated on 10 July, that National could decide to  ignore the Tribunal’s findings (because they are non-binding), then the matter will head to the High Court.

Either way, the asset sale process has been stalled.

The Tribunal’s decision is yet another nail in the coffin of this wretched privatisation agenda.

As pointed out in a previous blogpiece ( Asset Sales: two down, three to go! ), the process has been hampered by corporate interests; low shares prices (Air New Zealand); poor international commodity prices (Solid Energy’s coal); and lower than anticipated revenue from certain electricity companies.

This blogger sez; thank god for the Treaty of Waitangi. We may yet save our state assets from being stolen from us, the people.

Who would have thought that the Treaty – designed in 1840 to protect Maori assets from ruthless activity by colonials – would 172 years later protect the assets owned by ALL New Zealanders.

National and it’s redneck supporters may object with shrill hysteria.

Tough.

These assets belong to all of us. Not just those with the money to buy them.

And it’s a bit rich for National politicians and their sycophantic supporters and fellow travellers to now be insisting that “no one owns the water”.

Especially since the concept of private ownership for land, trees, fishing quota, airwaves, etc, etc, etc, was inytroduced by Pakeha to New Zealand.

Now the architects of the capitalist notion of private ownership are screaming for collective ownership over water?

Get real, you rednecks.

Vocal right wingers and anonymous commentators on various internet fora are simply livid that Maori are exercising the same rights that Pakeha themselves have used for their own benefit and wealth-accumulation for the last two hundred years.

National may well begin to comprehend that it is on a hiding to nowhere on this issue.  It is time for John Key to comprehend,

  • The majority of New Zealanders do not want state assets privatised
  • Maori have a legitimate intrerest in water rights if states assets are privatised
  • Privatisation is opening a can of worms with corporate vultures circling overhead, looking for cheaper power deals
  • The State will not earn anything near the $5 to $7 billion that Bill Enlish has been anticipating

John Key, it is time to knock asset sales on the head.

You’ve lost.

.

*

.

Additional

Asset sales in Air New Zealand also doubful this term

Solid Energy revenue slump could delay sale by years

Tribunal finds SOE share sales a breach, but offers solution

Energy float may turn into a s(t)inker

Other blogs

No where to go on Maori water rights

.

.

= fs =

Asset Sales: two down, three to go!

22 August 2012 21 comments

.

.

Oh dear, National seems to be in a spot of bother over it’s planned partial privatisation of  five SOEs…

Earth, Air…

One state owned enterprise, Solid Energy, appears now to be off the sales list. According to Finance Minister Bill English,

.

Full story

.

On top of that, there appears to be a real questionmark over the sale-value of Air New Zealand, as well, according to outgoing chief executive Rob Fyfe,

However, outgoing chief executive Rob Fyfe has said he would be “surprised if the Government would be wanting to sell” at the current low share price.

The company was in the midst of a “cyclical low” on its share price, Fyfe said in June.”

See: ibid

Fyfe is correct.

A look at Air New Zealand’s recent and longer term share price history shows that it has been badly affected by the Global Financial Crisis (GFC).

In 2007, Air New Zealand’s share price stood at $2.47 a share,

.

.

Source: Google Finance – Air New Zealand Ltd

At the end of trading (22 Aug), today, that share price stood at 92.5 cents each. That’s a loss of  $1.545 per share,

.

.

Source: Google Finance – Air New Zealand Ltd

In fact, the share price dropped from 94.5 cents a share yesterday (21 Aug) to it’s current level of 92 cents.

Looked at another way; it’s like having your home valued at $247,000 in 2007, prior to the onset of the GFC – and having it valued at only $92,500 today.

Not a good environment to be a seller.

NOTE: It is interesting that, of all the SOEs, Air New Zealand is the only one that has a small, privately-owned component. The state owns 73.13% of Air New Zealand, other investors own 26.87%.

See: Air New Zealand – Shares on Issue

This situation is a ‘quirk’ of Air New Zealand’s re-nationalisation in October 2001, when it faced collapse under a massive $NZ1.425 billion operating loss incurred by then-private owners.

See: Wikipedia – Air New Zealand, Re-nationalised era

So it’s current share value is a relatively true reflection of it’s present market-value.  There is no “guesswork” involved, as Bill English revealed in February this year, with the other four SOEs,

See: English admits his SOE figures just a guess

Helluva way to run an economy…

Most sane people wouldn’t sell at such a ridiculously low price and would wait for the market to recover.

However, despite misguided belief, National’s commercial nous is vastly over-rated. In fact, some of their commercial decisions have been absolutely apalling.

The most famous being that these assets – especially the power companies – actually return a higher dividend to government than would be the cost of borrowing that same money. As BERL reported in May,

Partial asset sales will do nothing to curb New Zealand’s growing debt problem, a new report by economic analysts Berl says.

The Berl report, commissioned by the Green Party and released today, says the Government’s partial asset sales programme to build new assets would leave the Crown accounts ”permanently worse off”.

Government debt, the ratio of debt to assets, net worth and total assets would all be worse off after the programme was carried out, Berl found.

”The interim loss of earnings resulting from reduced dividends and the period of time before the new assets reap benefits is never recouped,” the report said.

”Subsequently, the option of asset sales can only significantly improve the Government’s accounts if a set of assumptions are adopted that are at the extreme ends of plausibility“.”

See: Asset sales will leave Govt worse off – BERL

Madness.

The up-shot?  Unless the global economy stages a miraculous recovery in the next two years (about as likely as The Second Coming or Klingons camping out in my backyard),  and National ministers are dumber than I thought, Solid Energy and Air New Zealand can be scratched from the privatisation agenda.

Added to this, is a brewing toxic mess involving commercial interests and  Treaty claims over water rights…

Water…

At the beginning of August, Key realised that the partial-sale of SOEs was not going to go smoothly.  Until now,  state owned power companies were exploiting water resources for the benefit of the nation as a whole.

Maori were content with that status quo; for as long as no one owned the power companies – they were owned by us all – the same could be said of water.

But the moment that private ownership of  hydro-power generation was mooted – the situation changed. Water would be used to generate power, which would be sold, and would deliver profits to private owners.

Saying that “no one owns the water” that hydro-power stations use is akin to saying no one owns the coal or gas that are used in coal-powered and gas-powered stations.  Ridiculous.

The Waitangi Tribunal will shortly be delivering it’s response to Maori Council claims over water rights.

Most likely, the Tribunal will find in favour of Maori. This blogger can conceive of no reason why this should not happen, and just as land can be owned – so can water rights.

It’s a bit late-in-the-day for capitalist National voters and politicians to now be claiming socialist principles of  “collective ownership”. That just ain’t gonna wash, Jethro.

If National over-rules the Tribunal findings, then Maori will go to Court – the High Court to be precise. Of all Pakeha institutions, Maori have a great affinity for the legal system. They know how to use it for greatest advantage.

Going to Court will have one result; a lengthy delay in the asset sales programme.

On 22 August, National admitted what the rest of us already knew,

The Government says it is going to have to start making judgments about how much of its partial asset sales programme can be completed in this term of office…

[abridged]… Finance Minister Bill English says the Government also has to deal with other issues, such as the Waitangi Tribunal report on water rights relating to the partial sale of Mighty River Power, and possible legal action.

Mr English says he is not taking it for granted that the Government will be able to complete the full programme this term. “

See: Govt less bullish about partial asset sales

Fire…

And as if that was not enough to put a spoke in the wheels, two corporate interests have recently made announcements that could have a significant impact on share prices for the remaining three SOEs; Mighty  River Power, Meridian, and Genesis.

Norske Skog Tasman

Norske Skog Tasman’s plan to halve newsprint production at its Kawerau mill will have implications for the power generation industry if it goes through with it, says an industry analyst.

The company, which accounts for about 2.9 per cent of New Zealand’s power demand, is looking at cutting its annual production to 150,000 tonnes from 300,000 tonnes because of dwindling domestic and offshore sales.

The analyst, who requested anonymity, said the partial closure would further extend the “significant” generation over-capacity in the New Zealand electricity market.

A 50 per cent reduction in Norske Skog Tasman’s electricity demand would equate to about one year of demand growth estimated in Ministry of Economic Development forecasts. “

See: Paper mill cuts threat for power industry

By coincidence, Norske Skog buys most of its power from Mighty River Power, which is the first SOE that National  plans to partially privatise.

Any potential “mum and dad” investors may be warned off from investing in MRP shares. If  Norske Skog proceed with their plans, power consumption will decrease dramatically – and so will profits.  Which will mean a cut in dividends paid to shareholders.

Tiwai Aluminium Smelter

Perhaps the ‘nastiest’ surprise for National and it’s Dear Leader was this announcement on 11 August from multi-national conglomerate, Rio Tinto,

Meridian Energy’s announcement that it had been approached by New Zealand’s biggest power user, Rio Tinto, to discuss potential changes to its supply contract has created uncertainty for the Government’s plans to partly privatise the three power generators, analysts said.

State-owned South Island power generator Meridian said it had been approached by Pacific Aluminium, a business unit of Rio Tinto, the majority shareholder of New Zealand Aluminium Smelters (NZAS), to discuss potential changes to the electricity contract with the smelter.

The statement comes a time when Rio Tinto is assessing its options for the NZAS smelter at Tiwai Pt.

Tiwai takes about 15 per cent of New Zealand’s electricity, so the prospect of changes to the contract between Meridian and Rio was enough to send Contact Energy’s share price down 20c to $4.80 on Thursday.

Few in the financial markets expect Tiwai Pt to close, but if it did, much more power would be added to the national grid, depressing prices and affecting the profitability of all the power generators. “

Rio Tinto’s announcement immediatly  sliced 20 cents off  Contact Energy’s share price. What will it do to the three state owned power companies?

It’s hardly surprising, really. Everyone else appears to be putting their hand out, or up, to gain benefit from the asset sales – why not multi-national corporations who are already parked here in our country?

The Herald report goes on to say,

Morningstar analyst Nachi Moghe said there was ongoing concern about the feasibility of Tiwai Pt and the possibility that it might eventually shut down.

“Obviously, if that happens it will hurt everyone, but it will hurt Meridian the most,” he said.”That additional supply will throw the supply-demand balance out of kilter.”

One fund manager said the news was a “bolt from the blue”.

In the contract negotiations, he said, the pressure could go on Meridian to reduce its price, or to reduce the volume of power it supplies, which would have an impact on the wholesale electricity market.

“It’s poor timing but great timing on behalf of Rio Tinto as we go into the mixed ownership model process,” said the fund manager, who did not want to be identified.”

See: Smelter power review ‘bolt from blue’ for asset sales

Rio Tinto appears to be exploiting current uncertainties and confusion in  the current  environment.  As pressure mounts on National from every direction, this appears to be an opportune moment for corporations to start  flexing their own muscles.

Just what the Nats needed – their own corporate allies to shaft them at the worst possible moment.

Capitalism. Ya gotta laugh.

Weather

And the most critical factor to impact on the electricity generation industry: the weather.

This is something that even the “invisible hand” of the free market is utterly powerless to influence. Meridian’s profits have already been affected,

The worst inflows into its hydro lakes for 79 years took a toll on Meridian Energy’s earnings in the year to June 2012.

The state-owned generator and electricity retailer yesterday reported a net profit after tax of $74.6 million, down from $303.1 million the year before.”

See:  Dry year helps knock 28%  off Meridian profit

At this point, Dear Leader John Key might be starting to wonder. With all these ‘forces’ ranged against his Party’s plans to flog off our state assets – perhaps the Fates are trying to tell him something?

What next?

This blogger is surprised that China and Australia – both nations with which we have Free Trade Agreements – have not put their hands up to line up and buy shares.

After all, that is what FTAs are about. Legally, we might not be able to stop them.

Will we be hearing from our Chinese and Aussie cuzzies next?

Watch this space.

.

*

.

Additional

Tiwai Pt threat could delay Mighty River sale

Energy float may turn into a s(t)inker

Other blogs

No where to go on Maori water rights

.

.

= fs =

Investing in someone elses’ future

5 August 2012 54 comments

.

.

Mandates

.

Firstly, let’s cut to the chase and address John Key’s assumption that he has a ‘mandate’ from the country to pursue many of his Party’s unpopular policies, including state asset sales.

No, he does not.

As Bryce Edwards said on Radio NZ last year,

.

Full Story

.

As reported in the NZ Herald,

Moreover, only an estimated 93.2 per cent of the 3,276,000 people who were eligible to vote were enrolled, so the 2,254,581 people who did cast their votes (including special votes) leaves just over 1 million who stayed at home. “

See: 1 million didn’t bother to vote

So doing a bit of simple arithmetic,

  1. 2,254,581 people voted
  2. 1,058,636 voted National
  3. The population of New Zealand is approximated 4,430,000
  4. 1,058,636 is about 24.5% of the entire population.
  5. John Key’s “mandate” is roughly one quarter of  the country’s population.

The Nats can dress that  up any which way they like, but that’s not a mandate. That is  a minority in drag, masquerading as a “majority”.

But still a minority.

.

National Conference

.

Let’s cut to the next ‘chase’.

The recent National Party Conference in Skycity had nothing to do with conferencing or  the Party’s internal workings. It was purely and simply a public relations exercise  to raise “troop” morale and present National in a positive light to the public.

It was about appearing decisive and on-message. It was about strong leadership and confidence, reminiscent of Rob Muldoon, and Dear Leader played his part perfectly as he gave the rallying cry to his fellow MPs and Ministers.

Key thundered,

Our policy of partial share sales is a win-win and I stand totally behind it.”

See: Labour, Greens hit out at asset share plans

After months of various scandals, resignations, disastrous flip-flops, and gaffes, the Party pulled out it’s “ace-in-the-hole” – John Key. “The Boss” laid down the law, and as Tracey Watkins from Fairfax said,

No more tip-toeing around. That is the clear message from National’s annual conference, where the Government’s economic programme has been invested with a new sense of urgency.”

See: Damp protest shows heat gone from asset sales fire

Ms Watkins tends to present political issues  from a position favourable to National  and her piece on 23 July was no exception. But she also had a valid point – National was fighting back. They were on a counter-offensive on several fronts.

But as the dust settled, and the “whizz-bang-gosh!” factor faded, the public’s  momentary distraction returned to the issues and problems currently confronting us as a nation.

As much as Dear Leader might wish it, those issues and problems will not go away.

.

State Asset Sales

.

National is desperate to sell this lemon to the public as a going concern. Indeed, the issue was presented as one of several issues on a leaflet/questionnaire that the Parliamentary wing of the Party mailed out,

.

.

The Nats are sensitive to recent public protests and an ‘insider’ advises this blogger that Ministers are tracking correspondence; internal polling; and letters-to-editors on the subject.

In an effort to “sweeten” the deal and to assuage public opposition, National is offering,

  • preference to “mum and dad” investors
  • a three year loyalty share-bonus scheme
  • a minimum of $1,000 dollar share parcels
  • a guarantee of shares to New Zealand investors wanting parcels of up to $2,000
  • Treasury setting up a retail syndicate of share brokers and banks to help first time share investors potential investors.

See: Kiwis encouraged to take up SOE shares

National’s “carrot” is matched by it’s “stick”.  As Bill English threatened in June last year,

We are saying that New Zealanders are at the front of the queue, but if not enough of them show up, it won’t be 49 per cent. I wouldn’t want to exactly guarantee every share but we have got to look at how to make that happen.”

See: ‘Buy state-asset shares or foreigners will’

So the message is crystal-clear; ‘If  we don’t buy these assets (which we already  own),  John Key and Bill English will sell our companies to overseas interests’. It’s like watching a rather bad, cheaply-made, B-grade gangster movie from the 1940s.

But the ‘rort’ doesn’t end there.  Treasury estimates that any loyalty scheme will end up costing taxpayers up to half a billion dollars. That’s because giving away free shares as a “loyalty bonus” still incurs a cost – nothing is for free,

A “loyalty” scheme to sweeten state assets sales for investors could cost the taxpayer $500 million – more than $100 for every man, woman and child in New Zealand – according to Treasury numbers.

[abridged]

In a report to the Cabinet last year, the Treasury said incentives to encourage local investors to buy shares “typically range from 5 to 10 per cent of total value ($250 million to $500 million based on a $5 billion programme)”.

The Government says it expects to raise $5 billion to $7 billion via the sales programme.

Based on the Treasury’s $500 million upper estimate of the cost of a loyalty scheme, the forgone revenue works out to just under $113 for every man, woman and child here.

See: $112 a head for asset loyalty

Labour Leader, David Shearer summed it up thusly,

Effectively, the taxpayer will be paying for a loyalty scheme that a small number of New Zealanders who can afford to buy shares will be able to enjoy. It’s clear there’s some real winners here, and the losers are most New Zealanders. “

Based on the Queensland experience where Queensland Rail was privatised in 2010;  where  a share-bonus loyalty scheme of 1:15 shares was used; the cost to Queensland taxpayers would be $360 million, according to our  Parliamentary Finance & Expenditure committee. To which Key was reported as saying, that the figure was,

“… a possible number. I haven’t seen their workings so I wouldn’t want to agree with that at this point.”

Key’s comments were reported on the NZ Herald website at 5:30am, Tuesday 24 July, 2012.

By mid-day, on the 24th, he had changed his views from ” a possible number  “, to,

These numbers that the Labour Party are coming up with and the Greens are farcical.”

See: PM: Asset loyalty won’t cost hundreds of millions

First point: that report on the Herald’s website was posted at 12:18pm on the same day;  Tuesday 24 July, 2012.  Not quite seven hours had passed before National’s spin-doctors had noticed Key’s blunder, and Dear Leader changed his stance.

Second point: the figures were not from the Labour Party, nor The Greens. They were Treasury’s figures.

Was this a deliberate attempt to undermine the credibility of those figures by shifting it’s provenance from Treasury to opposition parties?

Key then made this extraordinary comment,

If you think about the entire float that could be in the order of $5 billion to $7 billion. Let’s argue that it’s $5 billion for a moment if you then turned around and said about 20 per cent of that could be for mum and dad, it could be more it could be less – but just for the purposes of maths that’s a billion. If you apply the Australian Queensland model that’s one in fifteen shares – that’s 6 per cent. Six per cent of a billion is $60 million for the entire programme.”

20 per cent “?!?!

What happened to the 49% that Key and English have allocated to “mum and dad” investors,

Counting the Government’s controlling shareholding, we’re confident 85-90 per cent of these companies will be owned by New Zealanders, who will be at the front of the queue for shares.”

See: Running up $5-$7b more debt not the answer

Was this an unintended slip from Key that National is counting on only 20% of shares going to New Zealanders?

And did he think that no one would notice?

Acknowledgement:  Cheer up Mr Key – Fairfax still love you

This is disengenuous of Dear Leader. On the one hand, National is claiming that 49% of shares will be allocated to local “mum and dad” investors – and on the other, they are calculating a bonus-share loyalty scheme on a figure of 20%. Key is shuffling figures around and quoting them to suit daily events.

This is not the first time Key and English have done this.

In January last year, when John Key announced National’s policy to part-privatise five state assets, he stated,

If we could do that with those five entities … if we can make some savings in terms of what were looking at in the budget and maybe a little on the upside you’re talking about somewhere in the order of $7 to $10 billion less borrowing that the Government could undertake.”

See: John Key reveals plan for asset sales

The figure of $7 billion to $10 billion proceeds from a partial asset-sale then shrank,

First, the Government gets to free up $5 billion to $7 billion – less than 3 per cent of its total assets – to invest in other public assets like modern schools and hospitals, without having to borrow in volatile overseas markets.”

See: Running up $5-$7b more debt not the answer

And finally, English confessed all,

If we did get $6 billion, that would be a gain of sale [of $800 million] which is just a product of the accounting. I just want to emphasise that it is not our best guess; it’s just a guess. It’s just to put some numbers in that look like they might be roughly right for forecasting purposes...”

See: English admits his SOE figures just a guess

Key did precisely the same thing over the Skycity-convention centre-pokie machine contra-deal.

He advised the country that building a new convention centre (in return for changing the law to allow up to 500 additional pokie machines for Skycity), would result in up to 1,900 new jobs in Auckland,

It produces 1000 jobs to build a convention centre, about 900 jobs to run it, and overall the number of pokie machines will be falling although at a slightly lower rate.

See: Key defends casino pokie machine deal

Key’s figures turned out to be rubbish.  The true numbers were disclosed last month by Horwath Ltd director,  Stephen Hamilton,

Horwath director Stephen Hamilton said he was concerned over reports the convention centre would employ 800 staff – a fulltime-equivalent total of 500.

He said the feasibility study put the number of people who would be hired at between 318 and 479. “

See: Puzzle of Key’s extra casino jobs

Key  had either made them them up out of thin air, or else he has some very poor advisors.

.

Frustrated – Where to from here?

.

And lastly, the sheer economics of the partial asset-sales cannot be  commercially sustained, as  BERL reported in May of this year,

The interim loss of earnings resulting from reduced dividends and the period of time before the new assets reap benefits is never recouped.

”Subsequently, the option of asset sales can only significantly improve the Government’s accounts if a set of assumptions are adopted that are at the extreme ends of plausibility.”

‘While the initial offering may be directed towards domestic purchasers, future private share transactions could increase the portion of shares [and earnings] in overseas investors hands.

”Such an outcome would lead to a further deterioration in the external deficit and external debt position.”

See: Asset sales will leave Govt worse off

Unbelievable.

Unbelievable that a number of New Zealanders still believe that National is a sound manager of the economy. These muppets couldn’t run a corner Dairy – they simply wouldn’t have a clue how much to charge for a packet of chippies.

No wonder Labour Leader David Shearer expressed his frustration at Dodgy John’s slippery numbers, when he said,

We absolutely have no idea how much this loyalty scheme is going to cost New Zealanders. He was happy to go out and announce the loyalty scheme at the National Party conference but he’s not prepared to come out with the numbers now.”

See: PM: Asset loyalty won’t cost hundreds of millions

Either way, National is keeping information on asset sales secret – or they have no idea what’s going on. Conspiracy or cock-up – neither option is particularly reassuring.

The ground keeps shifting, and this blogger believes it is a deliberate ploy to deny information to sales-critics and the public. Without solid information, it becomes harder to mount a sound critique of National’s plans – though BERL has done a fairly reasonable job of it.

Accordingly,  this blogger invites “mum and dad” investors to exercise caution as shares are made available to the public,

.

Full story

.

A Possible Solution?

.

As BERL stated in their report, selling state assets will eventually impact on the government’s balance sheet. Quite simply, any short-term gain through sales proceeds will  eventually be whittled away by reduced dividends from half of these state assets sold into private ownership,

The interim loss of earnings resulting from reduced dividends and the period of time before the new assets reap benefits is never recouped. “

Plain english: we will  lose money on the deal.

Selling any of these State assets defies understanding.

As Treasury stated last year, the revenue stream is quite significant according to their own SOE Economic Analysis  that, “…on average, the SOEs have performed favourably when compared to the averages for the quartiles computed for the benchmark companies“.

See: Treasury SOE Economic Profit Analysis 25 November 2011

On average, Treasury show a 14.5% average shareholder (Government) return. Compare that to other investments, and it’s a fairly remarkable achievement for state enterprises which – according to free marketeers – are not supposed to operate more effectively than private enterprise.

See: Assets returning record dividends – Greens

In a further,  surprising turn of events, in February 2001, Finance Minister Bill English agreed, stating,

Generally the SOE model has been quite successful in that respect.”

And even  went so far as to complain that they were making excessive profits! (There’s no satisfying the National Party!? They sell under-performing state assets, explaining that the “market will improve their performance” – and then complain when state assets are making too much money! Then the Nats will flog them off to reduce returns and make them more “competitive”.)

See: State-owned power returns excessive, says English

By contrast, Contact Energy – an electricity corporation privatised in 1999, and now mostly Australian-owned – retails it’s electricity at a higher price than it’s competing, state-owned rivals.

See: 226,000 shop for power savings

National has stated several reason for wanting to sell 49% of Meridian, Genesis, Might River Power, Solid Energy, and further down-sell Air New Zealand – but their   main, carefully-worded, rationale has been to “reduce debt/invest in new assets/infrastructure”,  according to Bill English,

We are firmly focused on keeping the Government’s overall debt as low as possible and that is the most important consideration over the next few years.”

See: Govt says asset sales will cut debt

If  National is planning on extracting $6 to $7 billion from most New Zealanders’ pockets, then they are dreaming. A small minority (the 1%, as usual) might have the resources – but even they, I suspect would have to off-load their own assets to buy into the five offered SOEs.

It is more than likely that, like Contact Energy, the majority of new shareholders will be corporate and/or offshore  investors.  New Zealanders simply don’t have the savings to buy their own energy comnpanies and airline.

If National wants to realise $6 to $7 billion  from partial-privatisation and is serious in not wanting major foreign ownership, then it has only one other option: the NZ Superannuation Fund.

Selling half of five state assets to the NZ Super Fund would achieve several desired goals,

  1. Keep state assets in New Zealand ownership
  2. Prevent an outflow of profits to offshore investors, which would worsen our current account deficit
  3. Satisfy Maori that water resources were not about to be privatised, and therefore any claims before the Waitangi Tribunal could be set aside
  4. Fulfill a government-ordered directive that the NZ Super Fund invest more heavily in New Zealand

In May 2009, Finance Minister Bill English wrote to the NZ Super Fund, instructing that,

The Government believes that is is in the national interest for the Fund to have significant interests in New Zealand. Consequently, persuant to section 64 of the New Zealand Superannuation and Retirement Income Act 2004 (the Act), I direct the Guardians to note that it is  the Government’s expectation, in relation to the Fund’s performance, that opportunities  that would enable the Guardians to increase  the allocation of New Zealand assets in the Fund should be appropriately identified and considered by the Guardians. “

See: Letter from Minister of Finance Regarding NZ Directive and Funding May 14 2009

How much does the NZ Super Fund have invested in overseas businesses?

Answer: NZ$6,459,938,145 – Nearly $6.5 billion. Possibly more  by now.

See: NZ Superannuation Fund: Full Final Equity List – 30 June 2011

How much was National expecting to gain from it’s privatisation programme? Between $6 and $7 billion dollars.

$6.5 billion happens to lie smack in-between $6 and $7 billion!

Considering that the NZ Super Fund is actually a state owned entity, selling five SOEs, whether partially or the whole damned lot, would not matter one iota. They would still be state-owned.

National has an opportunity here; they literally can have their SOE Cake, and eat it.

  • The state assets would remain state assets.
  • National would gain a guaranteed NZ$6.5 billion – no mucking around with messy share floats.
  • The revenue from the state assets would remain in New Zealand.
  • The Super Fund would have even more profitable investments in their portfolio.
  • The Super Fund will be investing in our future – not someone elses’, in another country.
  • Maori may well be satisfied that their taonga, water, was not being privatised.
  • Our current account would not be blown further into the red.
  • New Zealanders would be happy chappies, as the great majority oppose losing ownership of state assets.
  • Opposition from the Left would most likely evaporate – heck, we might even vote for you in 2014, Mr Key!!

Where is the down-side in this compromise?! Damned if I can see any.

And the strangest part in all this proposal? I may just  have saved John Key’s arse from being thrown out at the next election.

.

.

= fs =

Follow

Get every new post delivered to your Inbox.

Join 775 other followers