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Archive for August, 2012

Tobacco Corporations are interested only in our “intulecktualul property rights” – agree/disagree?

28 August 2012 13 comments

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Some (most?) folk will have seen an advert currently running on television, featuring the above image.

It is part of a campaign by tobacco companies to oppose plain packaging here in New Zealand. In Australia, recently, a million-dollar law suit brought by tobacco companies against the Australian government was fought on this specific issue.

The tobacco companies lost.

See:  Tobacco packaging: cigarette companies lose Australian court case

This trans-Tasman conflict was viewed closely by National and it’s coalition-partner, the Maori Party. Especially by Associate Health Minister, Tariana Turia.

See: Tariana Turia welcomes Australian plain packaging decision

Plans for a similar law are being mooted here in New Zealand; to replace the glamourous, brightly-coloured cigarette packets with plain packages featuring mostly the usual ghastly images of cancer victims.

In response, British American Tobacco New Zealand, the biggest tobacco company in the country  launched a counter-campaign on 23 August, called Agree-Disagree.

Part of that campaign is a short, animated advertisement running at prime time on several (?) television networks. The campaign pushes the proposition that if a business creates “intellectual property” then it should be free to use it.

This blogger has seen the ad.

It’s rubbish.

If the aim of the campaign is to mobilise public opinion to log on to the Agree-Disagree website, then they pushing poo uphill with a garden fork. Ain’t gonna happen, sunshine.

This is the New Zealand public we’re talking about here. A million of my fellow Kiwi brothers and sisters couldn’t be stuffed voting at the next election. If  apathy had been a political party, it might’ve beaten National comfortably.

At the same time, we have pressing issues such as chronic alcohol abuse (which most of the country is in denial about); child abuse (except for a small group prone to moral panic attacks); child poverty; growing unemployment; a stagnant economy; blah, blah, f*****g  blah.

Unless it’s a stranded penguin or some big white letters on a cliff-face overlooking a Wellington suburb or some silly bint making unwise comments on a Facebook page about dead soldiers – the public is too ‘busy’ to care.  Hey, the latest episode of “The Block”, “The Voice”, “The Latest Really Exciting Cooking Show”, etc, etc, is on – and people are positively mesmerised by 21st century junk-TV.

By the time their particular favourite  Reality-show porn is over, folk will have forgotten that ad, plus fifty others that might’ve flashed across our screens during that time.

Thank you, Television, for turning our minds into short-term attention spanners.

Sorry… um, what was I writing about?

Either tobacco companies have wasted their hard-earned cash (derived from customers just dying to enjoy their products) on a disastrously mis-judged campaign – or this blogger is missing something.  If the public are not going to rear up on their collective hind legs in moral outrage that innocent drug peddlers tobacco giants are being treated unfairly – then what is the point of these adverts?

On another excellent blog – Tumeke – well-known left-wing commentator, Chris Trotter made this interesting comment,

The ads aren’t aimed at us, Bomber, they’re aimed at the newspaper publishers and broadcasting networks.

Add up the amount of money being spent – then look at the response from editors and columnists.

See how it works?

See: Dear Big Tobacco – why I refuse to agree to disagree

Well, that’s as valid as any interpretation, I guess.

Because otherwise, BAT has just wasted several hundreds of thousands (millions?)  of dollars on a campaign  that is futile and doomed  to be forgotten.

One final question to tobacco companies…

They make the point,

If I create it, I should own it.”

Can that same statement be applied to everything else that tobacco companies created?

Like the millions of cancer sufferers who are dying from use of their product?

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Dear Leader – fibbing again?!

27 August 2012 16 comments

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In the 1960s TV science fiction series, ‘Star Trek‘, a sub-theme of humour ran through some of the episodes. The young ‘Mr Chekov’ – a proud Russian character played by American actor, Walter Koenig – would often claim several inventions, cultural icons,  famous historical figures, as being of Russian provenance,

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“Perhaps you have heard Russian epic of Cinderella?”

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It was a comic sub-text that ran through the series and we smiled at the subtle mocking of nationalistic fervour.

Not quite so funny, though, when our own Dear Leader John Key does it,

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Full story

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By any measure, the National Government’s home insulation scheme launched in 2009 has been a success…

… We set up the scheme as a four-year programme to insulate 188,500 homes – but we are now doing an extra 40,000 thereby taking the total to around 230,000.”

See: Ibid

Say whut?!

Who set up the home insulation scheme, Mr Key?

If I may jog peoples’ memories,

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Full story

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Why yes – it was a Green Party initiative! John Key is claiming credit for another Party’s policy initiative!?

National did refer to home insulation in their Policy 2008: Environment document. The sum total their “policy” on  home insulation consisted of twenty words,

National will:

… Work with councils to provide financial assistance to help low income households change to clean heating and improve their insulation.”

See: Policy 2008: Environment – Environmental Standards

The same document that stated, that National would,

• “Honour New Zealand’s Kyoto Protocol obligations.
• Support international efforts to reduce global greenhouse gas emissions, including working to achieve further global alliances that build on the goals agreed at Kyoto.
• Legislate for a well-considered, carefully balanced emissions trading scheme (ETS) for efficiently reducing emissions across the economy”

None of which it has achieved. Our ETS is certainly not “carefully balanced” as farming and other industries are exempt until 2015, with taxpayers having to foot the bill for those exemptions.

See:  Slow economy puts ETS plans on hold

By the 2011 General Election, National had appropriated the Green Party’s home insulation initiative entirely,

Key facts

• Over 130,000 homes so far are warmer, drier, and healthier thanks to our Warm Up New Zealand: Heat Smart scheme.”

See: Policy 2011 ENERGY & RESOURCES

And the tobacco companies complain of their intellectual property rights being ripped of?!?!

When Key writes,

We’ve also worked with the Green Party on the insulation programme as part of our Memorandum of Understanding.”

… he is taking credit where none is deserved.

Following Key’s piece in the Herald, a reader posted this comment,

Ennill (Beach Haven)

01:13 PM Sunday, 26 Aug 2012

Are you also proud of other government progress?

A “Best of.” list might include:

1. Making more people redundant than any other employer
2. Growing the exodus to Australia of our best and brightest
3. Maintaining zero growth for New Zealand
4. Making 90% of New Zealand poorer by restricting wages and raising GST
5. Selling off New Zealand’s laws to the highest bidder
6. Taking away basic rights and protections for workers
7. Supporting John Banks
8. Spending hundreds of millions of dollars on consultants
9. Not sacking Paula Bennett and Judith Collins for leaks of private information
10. Pushing ahead with asset sales when 85% of the country are against them
11. Charter Schools – a failed experiment elsewhere that have been introduced for ideology and not for the benefit of our kids
12. Ignoring the advice of experts when it doesn’t suit policy such as National Standards
13. Cutting Health spending to such an extent that they are struggling to deliver on anything except government-imposed targets
14. Making dodgy deals that are described by legal experts as ‘riding rough-shod over New Zealand’s laws’ such as the Sky City pokie deal
15. Encouraging mining on National Parks

Ennill’s  criticism of Key and National is damning. It is also accurate.

S/he points out one salutary fact; National has failed to achieve anything except   tax cuts in 2009 and 2010. And even those are now being paid for by increased borrowing and asset sales.

National’s failure in managing the economy is so dire  that it has taken to resorting to stealing policy successes from other political Parties it has worked with.

Why not?

They are about to steal our billion-dollar state assets and flog them of to already wealthy buyers and corporate investors.

I wonder if the Greens could sue for theft of intellectual property?

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The more things change…

27 August 2012 4 comments

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From 1999, the final year of  the Shipley-led National government…

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Source: Otago Daily Times

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To 2012 – some thirteen years later – and now led by a smiling, waving shark from  the commercial sector that kindly gave us the Global Financial Crisis and fifteen million unemployed, worldwide,

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Full story

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Some things that we can always rely on, when National is elected into power; poverty will worsen; unemployment remains high;  taxes will be cut for the rich, and welfare beneficiaries – the victims of National’s policies – will cop the blame.

Eventually,  the realities of National’s mis-management filters through to the television-distracted middle classes and a mixture of guilt and fear prompts them to switch their votes from the Tories to Labour/Greens/NZ First.

Thus it was in the 1990s – and thus it will be in 2014 (if not earlier).

In the meantime, while it takes umpteen bad news-stories to awaken the TV-addled brains of  baby-boomers, we continue to waste lives and the locked-in potential of people trapped in poverty, unemployment, and a stagnant economy. Child poverty remains New Zealand’s dirty little secret, to the rest of the world.

For National and their rabid ACT supporters, the fault lies elsewhere,

See: Poor better off than before: Kerr

See: Where is welfare policy heading : Muriel Newman

The Right is very ‘big’ on personal responsibility. Except when it comes to failed Right Wing policies. Then it’s someone elses’ fault.

Meanwhile, the real bludgers in our society continue to live their lives, enjoying the fruits of a developed nation, but not paying their fair share of taxes,

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Full story

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One of the constant refrains of the neo-liberal establishment and sycophants for the rich & powerful is that New Zealand society cannot afford things like decent housing and school meals for our children.

Of course not.

When the rich are not paying their fair share, they are denying society of the means to address poverty-related issues.  At the same time, they enjoy living in a society built up with the taxes paid by others.

That’s bludging.

See previous blogpost:  Greed is good?

In the meantime, our society income/wealth gap widens and we move further and further away from any notion of egalitariansism we once had.

If  that’s the sort of society New Zealanders want, then let’s be 100% up-front and honest about it. Let’s prepare ourselves for outbreaks of disease; increased crime; drugs; beggars in the streets; and eventual outbreaks of mass violence.

See: England riots: was poverty a factor?

I doubt, though, that Middle New Zealand could stomach an overtly class/wealth-stratified society – especially if poverty becomes so entrenched that it becomes more visible and inescapable. We prefer our poor to be out-of-sight and out-of-mind, so we can focus on who is going to win “The Block” or “The Voice” or “The Whateverthefucktelevisionisdishinguptoustotakeourmindsofreality“.

As long as Middle New Zealand is prepared to accept such a bleak future, then the rest of us can plan and prepare accordingly.

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Or, we can turn our backs on that vision, and instead look elsewhere for inspiration.

The Scandinavians and French may be a good start.

Or are we, as a nation, so gullible and thick that we keep going around in circles, decade after decade?

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Additional

Baby boomers clogging the job market

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Haven’t we been down this track before?

25 August 2012 11 comments

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The Situation

In a further sign that National is dusting off more of it’s failed policies from the 1990s, Kiwirail recently made this startling announcement,

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Full story

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In fact, the planned multi-million dollar cutbacks were so startling that Kiwirail tried to gag Radio NZ and other news media from reporting on this issue.

See: KiwiRail accused of gagging media

Kiwirail’s business plan had suddrenly become so “contentious” that National even prevented the Labour Opposition from tabelling it in Parliament.

See: NZ Parliament:  KiwiRail—Tournaround Plan and Confidence in Board

Evidently, National was unhappy that this document was now in the public arena.

In short, Kiwirail’s business plan calls for $200 million to be cut from their spending,  over the next three years. This involves cutting track maintenance crew.

Kiwirail CEO, Jim Quinn, says,

In terms of our network, we have reduced our network spend over the next two or three years by $200 million. That is not to say we are going back to the bad old days where the business was not invested in.”

See: KiwiRail plan revealed: $200m must be cut

Where have we heard all this before?

History

New Zealand Rail Ltd (NZRL)  was privatised in 1993 by the Bolger-led National government. It was sold for  $400 million to a consortium of Wisconsin Central Railway (40%), Berkshire Partners (20%) and Fay, Richwhite & Company (40%).

The company was renamed Tranz Rail in 1995, with urban passenger trains rebranded Tranz Metro, long-distance passenger Tranz Scenic, and freight Tranz Link.

In 2004, Tranz Rail was purchased by Toll Holdings  and renamed Toll NZ.

In 2008, the Clark-led  Labour Government announced  that the rail and sea operations of Toll NZ Limited, less its trucking and distribution operations, was to be purchased for $665 million. After re-nationalisation, the  company was renamed KiwiRail. 

The Labour government and KiwiRail  planned to spend an estimated $1 billion, over five years,  upgrade the  rail system. Most of this expense was geared toward purchasing new rolling stock.

During rail’s fifteen years in private ownship, this blogger can find no evidence that any investment was made in any new rolling stock. The only capital purchase was the new interisland ferry, ‘Kaitaki‘, in 2005.

By 2008, the rail network was badly run-down, as very little had been invested in anyt form of maintenance with regard to rolling stock, tracks, stations, etc.

Breakdowns became common.

Eventually the LTSA (Land Transport Safety Authority) had to step in,

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During the summer of 2002, when a mini-heatwave hit the country, rail tracks were buckling to such a degree that trains were running at a much reduced speed.

Track de-stressing staff were working hard-out to prevent a situation where de-railment became inevitable,

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The rail network was close to collapse in many areas,

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By 2008, the Labour-led government had decided that the Great Experiment in privatisation had failed, and was delivering the country a spectacular mess.

Enough was enough, and re-nationalisation went ahead.

In the ensuing years, millions were poured into upgrading the rail network; new rolling stock was purchased; stations were renovated (many having been badly vandalised with  no identifying signage for several years); and signalling equipment upgraded.

As Micharel Cullen said in June 2008,

We will now be able to make the investments necessary to develop a world-class 21st century rail system for New Zealanders.”

See: Trains now called KiwiRail

Which now seeminbly brings us, full circle, back to National – the same Party that privatised railways in 1993.

Full Circle

In another act of futile penny-pinching, National has demanded that KiwiRail cut it’s budget by a whopping $200 million.

This will involve cutting rail workers -many of whom are responsible for rail track  maintenance (remember 2002 and 2003, above?),

Kiwirail workers are warning the Government that they or the public may die because of poor maintenance on the main trunk line.

It comes as 181 workers face losing their jobs, but Transport Minister Gerry Brownlee says their claims are “a beat-up”.

Kiwirail workers in Hamilton arrived late today for a stopwork meeting, angry 181 workers are being laid off nationwide. Many do maintenance work on the main trunk line, which they now claim is dangerous as sleepers are loose and rotting.

“We don’t want to see any one get killed, it’s as simple as that,” says Paul Spanswick. “We don’t want to see anyone die.”

The workers say there have been six derailments in six weeks.

“A train could come off and be derailed,” says Mr Spanswick.

At a level crossing at Ruffel Rd, north of Hamilton, that 3 News was taken to today sleepers are loose and the line moves.

“It’s a ticking time bomb,” says Mr Spanswick.

One of the workers who arrived for the stopwork meeting today told 3 News: “These sleepers are bouncing up and down like a trampoline. Something will give, a wheel will jump off the track. I’m concerned for our workers and for the public – someone could die”.

See:  ‘Someone could die’ – rail workers speak out

Transport Minister Gerry Brownlee’s response?

I think the issue about the sleepers is being over beaten-up.”

Unbelievable.

National is so hell-bent on it’s fiscal policies that it is prepared to allow our rail system to run down again, and possibly endanger lives.

National’s low-information supporters often deride Labour governments for spending money.

This is correct: Labour governments do tend to spend money on state services and infra-structure.

That is because irresponsible, short-sighted, foolish  right wing governments inevitably constrict investment and allow services and infra-structure to be run down – often to the point of  endangering lives.

In the 1990s, the running down of railways was left to the ineptitude of private corporations.

Now it is the turn of National.  Their track record, quite simply, has gone off the rails.

Something else for Labour to fix (again!) in 2014.

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Additional

News & Views: Railways

Wikipedia: New Zealand Railways Corporation

Radio NZ: Listen to more on Morning Report (24 Aug)

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John Key – Practicing Deflection 101

24 August 2012 6 comments

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Full story

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As much as this blogger wholeheartedly  supports  the concept of legalised euthanasia – with safeguards similar to that in The Netherlands – I view Dear Leader’s comments on Newstalk ZB earlier this week with contempt and disdain.

This is a shameful attempt at using a highly emotive issue for political ends to deflect from National’s on-going political ineptness and mis-management of the economy.

Let’s not forget;

  • unpopular asset sales
  • growing inequality in incomes
  • rising unemployment
  • on-going victimisation of unemployed, solo-mums (but never solo-dads), and other welfare beneficiaries
  • rising number of fatalities in Afghanisatan
  • cutting the state sector and social services
  • privatisation-by-stealth of our prisons, schools, and other state services
  • inability to address alcohol abuse by not implementing all 150 recommendations from the Law Commission
  • more people leaving New Zealand
  • a stall reconstruction of Christchurch
  • falling wages
  • and increasing child poverty

These are the matters that National is trying desperately to deflect our attention from.

These are the issues that National is failing badly to address.

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Asset Sales: all down?

24 August 2012 10 comments

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Continued from: Asset Sales: two down, three to go!

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As predicted, the Waitangi Tribunal has issued a report endorsing a delay to asset sales until the issue of water rights can be resolved,

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Full story

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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.

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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

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Asset Sales: two down, three to go!

22 August 2012 21 comments

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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,

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Full story

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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,

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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,

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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.

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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

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