Archive

Posts Tagged ‘AMI’

To intervene or not to intervene, that is the question…

8 February 2013 8 comments

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To intervene, or not to intervene, that is the question:

Whether ’tis nobler in this government’s mind to suffer The slings and arrows of outrageous recessionary fortune,

Or to take arms against a global sea of economic troubles,

And by opposing end them? To be hands on, and interventionist…

(With apologies to The Bard…)

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Farmers get it…

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'Well-deserved' $80m for irrigation

Full story

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Rich families get it…

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Richlisters up for Govt bailout

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Kids from rich families  get it…

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$43 million should be saved from private school subsidy

Full story

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Insurance companies get it…

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Government announces $500m bailout for insurer AMI

Full story

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Even cute, furry-footed Hobbits get it…

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OECD knocks 'Rings' films' multimillion tax subsidies

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And more for the Precious

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Hobbit tax rebate swells to $67.1m in second year of production

Full story

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Hell, practically everyone can get it…

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business.govt.nz Grants & incentives

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Subsidies for everything and everyone…

But not, it seems, to assist struggling construction companies until the Christchurch re-build kicks in, in earnest, and they can trade their way out of difficulties,

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Mainzeal collapse 'tip of iceberg'

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In a brutally frank analysis of the industry,  NZ Herald journalist Anne Gibson wrote this piece about other failed construction companies and the effect it was having throughout the country – see: Recession hammered building firms, say chiefs

Greg O’Sullivan, of  Takapuna-based building consultants Prendos, said,

The recession has hammered the industry to the ground.  It becomes a very acrimonious environment. Builders are having to watch every penny to survive.”

Source: IBID

And it was all so unnecessary.

No government could  not have prevented the recessionary effects of the Global Finance Crisis. But a more proactive government could have mitigated the harshest effects of the international recession with careful stimulation of the economy.

And by “stimulation” I do not refer to the wasteful, blunt-instrument-style tax cuts of 2009 and 2010. Those tax cuts added nothing to economic growth and only served to cut government revenue (see: Outlook slashes tax-take by $8b).

Thousands of jobs could have been saved. Thousands more jobs created.

A proactive government, with Ministers able to look ahead, would have immediatly implemented strategies to counter damaging recessionary effects;

  • a dynamic building programme post-2009’s “Job Summit” (and I don’t mean Key’s wretched cycleway idea – see:  Cycleway jobs fall short)
  • increased investment, incentives, and  subsidies for apprenticeships and other training/education for young people and other unemployed New Zealanders
  • reform of tax laws which see inefficient investment in speculative house-buying/selling less attractive, and re-direct investment into productive industry

National should never have allowed our economy to get where it is now.

This is a government that is derelict in it’s duty, and for Steven Joyce and his cronies to carp on about  “overseas investment” is a moronic cargo-cult mentality that simply defies understanding.

If New Zealand businesses leaders and Captains of  Commerce still believe that National is a “prudent manager of the economy” – then going by the last four years and events in the 1990s – I promise you that you will get what you richly deserve if they are re-elected in 2014 (or earlier).

This isn’t governance. This is economic decline by a thousand cuts.

Expect things to get worse.

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Other Blogs

Keys bald-faced lies

Additional

NZ Herald: Collapse ‘gut wrenching’ for roofing business (9 Feb 2013)

NZ Herald: Rise and fall of a very modern businessman (9 Feb 2013)

NZ Herald: Brian Gaynor: Mainzeal collapse needs investigation (9 Feb 2013)

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Kiwirail – back on track, on the sea

22 September 2011 3 comments

Full story

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It’s nice to see more investment in the up-grading of our rail and inter-island ferry service.  Kiwirail is fast being brought back up to standard, after 15 years of neglect under private ownership.

Railways was privatised in 1993, by the then-Bolger-led National Government.  (Source)  The new owner, Tranz Rail Ltd,  paid $400 million to the government and was made up of  a consortium consisting of  Fay, Richwhite & Company (40% ),  the American railroad Wisconsin Central (40%), and Berkshire Partners (20%).

From then, until 2008 – when railways was re-nationalised by the then-Clark-led Labour government – the asset was owned by a variety of private owners. In 2003, one of the major institutional shareholders was AMI – now facing insolvency after several major earthquakes in Christchurch.

Continuing losses, such as $346 million lost in the half-year ended December 2003, did not help the companies viability, despite carrying considerable amounts of freight such as 2.1 million tonnes of coal on the Midland line in the South Island.

The rail network was badly run-down by 2008, with many urban lines and stations dilapidated, vandalised, and in need of urgent maintenance.

In the Hutt Valley, for example, very few stations had any identifying signage which indicated which stop it was. They had all been mostly vandalised beyond recognition or destroyed totally. It was not until post-2008, and with State investment, that suburban rail began a programme of considerable improvements and upgrades. New passenger carriages; freight wagons; and locomotives were purchased, and Kiwirail began a slow progression back to a modern service, that is fit-for-purpose and a valuable asset for the 21st century.

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The privatisation of railways has been a stark and expensive reminder that privatisation is not a guarantee for better service. In the case of railways, the taxpayer is now footing the bill for fifteen years of neglect – even when the directors and managers of Tranz Rail walked away with $6 million in severance payments. Not exactly a good look,  one might think.

In fact, the only pirece of major capital investment in 15 years of private ownership was the sub-charter of the new inter-island ferry,  ‘Kaitaki, in 2005. No other capital investment, rolling stock, or improvements were made to the rail system during the period of private ownership.

As the price of fossil-based fuels continues to rise, transport based on alternative systems such as railways will become more and more critical to a modern, functioning economy.  Railways is simply too vital to be rested in private ownership which – as recent history has demonstrated – is not capable of managing such a strategic asset.

In the coming decades, this author predicts that railways will assume a greater role in our economy and society.  As petrol and diesel escates in price, rising on an almost weekly or monthly basis, rail will once again become profitable. It may also reverse the primacy of the internal-combustion automobile, making rail a preferred option for long-distance travel.

In the decades to come, it may become apparent that the decision of the  Labour Government in 2008 to re-nationalise railways was perhaps the single most prescient act on their part.

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In retrospect

Lack of ongoing maintainance reached critical levels in the summer of 2002/03, when high temperatures resulted in tracks buckling and the LTSA ordering Tranz Rail to reduce train speeds and to re-hire track de-stessing crews,

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Broken-down trains… unmaintained tracks… disgruntled passengers. Sound familiar?

It is fairly evident that the current maintenance and purchase of new rolling-stock are things that should have been carried out over the last couple of decades. The neglect of our rail system allowed private owners to attempt to make short-term gains, over long-term necessary expenditure.

The tax-payer is picking up the ‘tab’ for this misguided experiement in privatisation.

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