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Twelve fun facts about National’s failed housing policies for Parmjeet Parmar to consider

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A recent story by Daily Blogger, Martyn Bradbury, raises serious questions about National’s questionable track record around state housing.

National’s List MP, Dr Parmjeet Parmar, has launched a scathing attack on Housing NZ on social media and in a story in the NZ Herald;

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The family was living in a HNZ property that was obviously sub-standard;

The toilet floor had sunk into the ground, making it difficult for Sheraz to use, given his condition.

The shower is also problematic for him as it’s inside a deep bathtub and he needs his wife’s help to use it.

The family has also complained about bugs coming through a hole in the wall of the bathroom.

The hole has been plugged by toilet paper, while a piece of wood was placed to cover the bathroom floor.

Ms Parmar lambasted Housing NZ for “inaction” and called the situation “unbelievable”. Her social media statements were linked to the NZ Herald story,  ensuring maximum exposure gained from the Loun family’s dire circumstances.

But Ms Parmar noticeably glossed over a salient point regarding the state of the NZH property;

Around 8 months of repeated contact and no action.” – Twitter

The Loun family, two parents and three kids, have been complaining to HNZ about rats, fleas, bugs, an unsafe bathroom and an unsuitable shower at the property for eight months.” – NZ Herald

“… they were chasing them for nearly 8 months, yes nearly 8 months and there was no action…” – Facebook

Eight months?

Fun Fact 1: That suggests this problem has been ongoing since before the election of the current government. In essence, the rot set in (literally!) during National’s term in office.

This brings back memories of Emma-Lita Bourne, who was two years old in 2014, when she perished from a brain haemorrhage resulting from a clot. She had been suffering from a pneumonia-like illness. The toddler and her family had also been living in a sub-standard HNZ property that was cold, damp, had mould on the walls and floor, and the roof leaked.

The coroner, Brandt Shortland, said matter-of-factly;

“I am of the view the condition of the house at the time being cold and damp during the winter months was a contributing factor to Emma-Lita’s health status.”

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Fun Fact 2: Ms Parmar was a Member of Parliament at the time of the Coroner’s findings into Emma-Lita’s death.

In October 2015, Labour’s Phil Twyford introduced the Healthy Homes Guarantee Bill to Parliament. That Bill  – eventually passed in November 2017 – would create a “warrant of fitness” for rental properties.

Fun Fact 3: Ms Parmar was one of National and ACT Party MPs who voted against the Healthy Homes Guarantee Bill. The Healthy Homes Guarantee Bill would have “changed the current law to ensure that every rental home in New Zealand meets minimum standards of heating and insulation“.

Ms Parmar voted against the very thing she was railing against on social media and the Herald.

Fun Fact 4: In 2008, Housing NZ’s state housing stock comprised of  69,000 rental properties.

By 2014 – when Ms Paramar entered Parliament, the number of state houses had dropped to 68,229 – a loss of 771 potential homes for the most needy families and individuals in this country.

By 2016, that number had fallen to 61,600 (with a further 2,700 leased) – a reduction of 7,400 properties.

And by 2017, Housing NZ’s stock of owned or managed properties had fallen to “approximately” 63,000 homes. The 2017 Annual Report  does not differentiate the number of owned rental properties from “managed” assets. However, the number is still 1,300 owned/managed properties fewer than the previous year (see above).

National’s policy of selling state housing was obviously proceeding at pace despite Housing NZ posting a loss on the sale of properties of $10,781,000 for the financial year (Annual Report, p108);

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National’s ideological mania for selling state assets was proceeding unchecked, incurring significant losses for the taxpayer.

By 2018, the new Coalition Government had staunched the loss of properties. According to their 2017/18 Annual Report, Housing NZ owned 61,500 properties, with a further 2,500 leased – 64,000 in total and an increase of about a thousand homes.

This is still a far cry from the 69,000 properties owned by Housing NZ when National took office.

Fun Fact 5: Ms Parmar was part of a government that sold/disposed of 7,500 properties.

Fun Fact 6: During her four year tenure in Parliament, Housing NZ lost 5,229 homes from it’s stock

Fun Fact 7: Whilst the National government – of which Ms Parmar was an eagerly participating member – was busily selling off state housing, the waiting list for people needing a home was steadily rising;

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Fun Fact 8: When Ms Parmar entered Parliament in September 2014, there were 4,189 people on Housing NZ’s waiting list.  By the time voters threw out the National government in late 2017, that number had risen to 6,182.

Alongside a covert mass-sell-off of state housing, National was also raiding Housing NZ’s coffers.

Fun Fact 9: The government department tasked with looking after some of the most vulnerable, poverty-stricken families and individuals was stripped of “dividends” of $532 million from 2010 to 2015 – over half a billion dollars. The dividends did not include gst and interest payments from Housing NZ to central government;

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2010: $71 million

2011: $68 million

2012: $77 million

 2013: $90 million

2014: $108 million

2015: $118 million

Total: $532 million

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At a time when thousands were on a waiting list for a home and entire families were living in over-crowded houses; garages, and cars and vans – National was helping itself to cash that could have alleviated a large measure of homelessness.

(Note: Labour, under the Clark/Cullen leadership, also demanded dividends from Housing NZ. It is nothing to be proud of that Budget surpluses were achieved – in part – off the backs of the poor. At least Labour did not cut taxes, as National did in 2009 and 2010, thereby transferring wealth from the poor/HNZ tenants – to the wealthy/high-income earners.)

Fun Fact 10: Ms Paramar voted for successive National government Budgets  which rapaciously extracted millions from Housing NZ.

The Loun family’s HNZ home could have been properly maintained and ongoing faults repaired with that $532 million.

If Ms Parmar wants to vent her anger, she should direct it at herself and her colleagues. It is National (and it’s minor support parties) that are solely to blame for our growing homeless crisis. At a time when New Zealand most needed state houses, National was disposing of them as fast as they thought they could get away with it, as well as bleeding the corporation of it’s money.

So much for John Key promising no further asset sales in February 2014;

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But former Dear Leader Key was not the only one “flexible” with the truth.

Fun Fact 11: A year after entering Parliament, Ms Parmar was caught out attempting to mis-use taxpayer’s money by exploiting an official government housing “roadshow” to promote her personal political profile in the Mt Roskill electorate. The Mt Roskill electorate would shortly be vacated by then-sitting MP,  Phil Goff, who was planning to run for mayor of Auckland.

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According to documents released under the OIA, NZ Herald  journalists discovered that Housing NZ officials were attempting to cover up for Ms Parmar;

Housing officials tried to hide a National MP’s attempt to use a Government housing roadshow to raise her own public profile, documents show.

The Labour Party said National list MP Parmjeet Parmar was guilty of trying to use taxpayer money for political campaigning, and officials had been caught red-handed trying to cover it up.

Documents released to Labour MP Kris Faafoi revealed Dr Parmar wanted to co-host a meeting for the Government’s HomeStart programme near Mt Roskill, where a by-election will be triggered when current MP Phil Goff runs for the Auckland Mayoralty.

Parmjeet Parmar has … expressed a keen interest in hosting a roadshow as she is keen to raise local profile in Mt Roskill in case of a by-election,” an email from Housing Minister Nick Smith’s private secretary said.

Supposedly “neutral” civil servants were caught out attempting to suppress Ms Parmar’s plans to use the housing roadshow for her own benefit;

There was also a further twist. The key passages which revealed that Dr Parmar wanted to use the roadshow for campaigning were redacted by housing officials in three other versions of the email released to Labour.

The passages were redacted by officials on the grounds that they were “out of scope” and to preserve “the free and frank expression of opinions by or between or to Ministers of the Crown”, their employees, or departments.

Fun Fact 12: Despite protestations, Ms Parmar did indeed contest the 2016 by-election when Phil Goff resigned from Parliament. She came second to Labour’s candidate, Michael Woodhouse – a result Ms Parmar richly deserved.

It is unknown if any of the Housing officials who attempted to cover for Ms Parmar were asked to resign. It would be surprising if there were any ensuing job losses from this scandal.

If  Ms Parmar wants to use her taxpayer-funded time lambasting Housing NZ, that is her prerogative.

But at the very least, it would be helpful for New Zealanders to understand the fullness of National’s woeful under-performance in the state housing sector and the role Ms Parmar played. At the very least she exhibited no moral courage on behalf on HNZ tenants whilst she was in government.

There is something repellent about a previous government that actively sabotaged and crippled a vital state housing service – only for former Finance minister Bill English to lament about that very same service unable to fulfill it’s duty to house the most vulnerable families in our society;

“Housing Corp has done its best with the policy settings governments have given them over the last twenty or thirty years.

But you’ve just got to drive round the countryside, or round the cities and suburbs to see that it hasn’t always had the best results. So we just want to get more people helping us to solve the problem of serious housing need.”

This is the legacy Ms Parmar shares.

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References

The Daily Blog: I’m sorry, National had the audacity to say WHAT about State Housing?

Parliament: Dr Parmjeet Parmar

Twitter: Parmjeet Parmar – Housing NZ – 4 Jan 2019

Facebook: Parmjeet Parmar – Housing NZ – 3 Jan 2019

NZ Herald: National says HNZ failed the Loun family after ignoring repeated requests to fix safety issues

Fairfax media: Damp state house played part in toddler’s death

Parliament: Healthy Homes Bill – Setting new standards for rental homes

The Daily blog: The MPs who voted against Warrants of Fitness for all rental properties

Housing NZ: Annual Report 2008/09

Housing NZ: Annual Report 2013/14

Housing NZ: Annual Report 2015/16

Housing NZ: Annual Report 2016/17

Housing NZ: Annual Report 2017/18

Ministry of Social Development: Housing Register

Scoop media: State rental housing milked for dividends while tenants die

Radio NZ: Housing NZ readied for sale – Labour

Radio NZ: Housing NZ to pay Crown $118m dividend

NZ Herald: PM – no more SOEs to sell after Genesis

NZ Herald: National MP busted ‘trying to use taxpayer money for political campaigning’

Radio NZ: Govt pushes on with state house sales

Additional

Radio NZ: State housing plan ‘not an asset sale’

Labour Party: Nats still planning to take Housing NZ dividend

Housing NZ: Our statement of performance expectations (deleted from HNZ website)

Previous related blogposts

The housing crisis: NZers deliver their verdict

The Mendacities of Mr Key # 12: No More Asset Sales (Kind of)

 

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This blogpost was first published on The Daily Blog on 10 January 2019.

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The Mendacities of Mr Key # 17: The sale of Kiwibank eight years in the planning?

11 April 2016 8 comments

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we will give you honest government - yeah right

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National Makes Good on 2008 Threat to Sell Kiwibank

NZ Post’s, announcement on 6 April that it intends to sell-down  45% of it’s subsidiary, Kiwibank, appears to make good on Bill English’s inadvertent threat in August 2008 that Kiwibank would “eventually be sold”.

English was secretly recorded by an un-named person during a 2008 National Party Conference, and encouraged to talk freely on the prospect of selling Kiwibank;

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English - I didn't choose my words well - NZ Herald - Kiwibank sale

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English subsequently complained; “I did not choose my words well“.

However, it now appears that English expressed his words honestly,  disclosing a secret agenda to sell Kiwibank to someone he believed was a loyal National Party apparatchik.

Another secret recording, this time from National MP Lockwood Smith, also hinted at a secret agenda held by National;

“There’s some bloody dead fish you have to swallow, to get into government to do the kinds of things you want to do. Once we have gained the confidence of the people, we’ve got more chance of doing more things.

We may be able to do some things we believe we need to do, perhaps go through a discussion document process. You wouldn’t be able to do them straight off.”

With the 2008 General Election only three months away, and with a new, untested Leader of the National Party (John Key) facing a seasoned, popular Prime Minister, the secret recordings forced National’s hierarchy to take rapid steps to “kill” the story.

Both English and Key issued public statements  resiling from any intention to sell Kiwibank;

It’s not my view. It’s not my private view. I simply used loose language – I made a statement I shouldn’t have.” – Bill English

We would never make a change to that decision without a mandate.” – John Key

Again in 2008, Key resiled from any sale of Kiwibank;

“I’m ruling out selling Kiwibank at any point in the future.”

And again in 2010,

“National would not sell Kiwibank at any stage, ever. We have ruled it out.”

Making a Promise

On 25 February 2014, our esteemed Dear Leader, John Key, announced to the nation that National’s asset sales programme was over;

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“Just as we did before the last election we’re making our position on share sales clear to New Zealanders before we go to the polls later this year. We’ve achieved what we wanted with the share offers in energy companies and Air NZ. We’re now returning to a business-as-usual approach when it comes to [state-owned enterprises]. The truth is there aren’t a lot of other assets that would fit in the category where they would be either appealing to take to the market or of a size that would warrant a further programme, or they sit in the category that they are very large like Transpower but are monopoly assets so aren’t suited.”

Just as we did before the last election we’re making our position on share sales clear to New Zealanders before we go to the polls later this year. We’ve achieved what we wanted with the share offers in energy companies and Air NZ. We’re now returning to a business-as-usual approach when it comes to [state-owned enterprises]. The truth is there aren’t a lot of other assets that would fit in the category where they would be either appealing to take to the market or of a size that would warrant a further programme, or they sit in the category that they are very large like Transpower but are monopoly assets so aren’t suited.”

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Two years and nearly two months later, and Key’s promise- like so many other committments he has made – appears to have been watered-down to permit a de-facto partial-sale.

The intended purchasers would be two other SOEs,  NZ Superannuation Funds (25%) and ACC Funds (20%);

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NZ Post to sell 45 per cent of Kiwibank for $495m cash injection

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Breaking the Promise

Even as NZ Post’s Directors were announcing the partial sale of their subsidiary, Kiwibank,  Finance Minister Bill English was engaged in some well-rehearsed damage-control.

No doubt with considerable prompting by Party strategists and media-minders, English reassured the public that National would not allow the people’s bank to end up in private ownership, as the former Postbank did February 1989 when it was sold to the ANZ Bank.

English promised;

“Kiwibank will remain 100 per cent government-owned – that is a bottom-line. To ensure this occurs, the proposal includes a right of first refusal for the Government over any future sale of shares – which we would exercise.”

To be blunt, National cannot be trusted to keep it’s word.

Key knew in advance!

Despite  Key’s  committment to end asset sales on  25 February 2014, it appears from Michael Cullen’s own statements that our esteemed Dear Leader was already aware at around the same time, that a partial asset-sale was being planned by NZ Post.

During a video-taped press-briefing by Fairfax media, Cullen admitted that he and Key had discussed the partial-sale of Kiwibank that year (2013/14).

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So Brian [Roche] and I after discussion, and [I] think I remember correctly, I had a brief discussion with the Post Board, went to see the Prime Minister, to see whether there would be a kind of visceral reaction from the government, as our ultimate share holder, to that happening. That was not the case. Mr Key indicated he was very comfortable with that prospect and on that basis therefore we began to proceed...”

So when Key made his public promise on 25 February, 2014, that National’s asset sales programme was over – he was making that committment whilst knowing full well that the partial sale of Kiwibank was already underway.

Broken promises and secret agendas – this story has it all.

Who Pays? Loyal Kiwibank customers do!

There is a hidden cost to the partial-sale of  Kiwibank.

As David Hargreaves from Interest.co.nz reported;

The move could see Kiwibank’s credit rating slip by one notch from the current A+ to A as NZ Post will likely not guarantee Kiwibank’s future obligations once the deal proceeds.

When a financial institution’s credit rating is reduced, it means (generally) that they become a greater risk of lending money to them.  According to Investpedia;

“…While a borrower will strive to have the highest possible credit rating since it has a major impact on interest rates charged by lenders, the rating agencies must take a balanced and objective view of the borrower’s financial situation and capacity to service/repay the debt.

A credit rating not only determines whether or not a borrower will be approved for a loan, but also the interest rate at which the loan will need to be repaid.

… and a high interest rate is much more difficult to pay back.”

It is entirely likely that when a credit down-grade occurs (as happened to New Zealand under National in September 2011), the cost of borrowing funds will increase for the bank.

Which is precisely what Hargreaves reported;

Standard & Poor’s has indicated that following the announcement of the proposed transaction, Kiwibank’s long term issuer credit rating (A+) will be placed on credit watch negative pending the proposed termination of the standing guarantee provided by NZ Post. Should the guarantee be terminated, Standard & Poor’s has indicated it will result in a one notch downgrade to Kiwibank’s long term issuer credit rating (from A+ to A). 

That cost will either have to be absorbed, reducing their profit margins and making it easier for Key and English to justify full privatisation – or will be passed on to the banks customers.

English will most likely not permit Kiwibank’s profit to fall as that would mean lower dividends paid into government coffers.

Which leaves Kiwibank’s Mum & Dad customers  to foot the bill for the partial-sale.

The Agenda #1

The sale to ACC and NZ Super Fund is a clever ploy. On the face of it, Kiwibank remains in wholly State ownership, albeit shifting it’s shareholders around, from one SOE (NZ Post) to three (NZ Post, ACC, NZ Super Fund).A kind of multi-million dollar Musical Chairs.

At the same time,  this would allow a healthy dividend payment (an amount  yet to be disclosed) to be paid to the government. As Cullen said on 6 April;

“The proceeds would allow New Zealand Post to invest in its core parcels, packages and letters business and pay down debt. It is anticipated that a special dividend would also be paid to the Crown…”

This was confirmed a day later by Bill English speaking with Guyon Espiner, on Radio NZ’s Morning Report;

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Guyon Espiner: “Ok, let’s look at what happens to the $495 million that NZ Post gets from this sale. I understand it doesn’t go to generate any extra capital for Kiwibank, it goes to NZpost to pay down debt and invest in it’s parcel and mail business, right?”

Bill English: “That’s right, and then if there’s, subject to negotiations there may be special dividend passed back to this [inaudible] government.”

English said any dividend payable to the government would “likely be several hundred million“. This would prove a godsend to English who otherwise would be struggling to create another Budget surplus in his May budget.

The Agenda #2

National has not only increased it’s revenue, thereby alleviating a major headache for Bill English, but they have pulled the rug out from under the Greens who, three days earlier, had been calling for increased $100 million investment in Kiwibank. As Greens co-leader James Shaw stated in a recent policy announcement;

“Our plan will help Kiwibank lead a change in New Zealand banking, by giving it a clear public purpose that requires it to drive competition to generate better interest rates for New Zealanders.

We’ll help Kiwibank to grow faster by injecting $100 million of capital into the bank and let it retain more of its profits.

Strengthening Kiwibank so it can create competition in the banking sector is the smartest way to ensure all banks pass on the best interest rates to Kiwis.”

The Agenda #3

A deeply cynical person might suspect that after the defeat of John Key’s pet vanity-project  (the recent flag referendum debacle) that National has decided to exact revenge against the many Labour and Green voters who voted to retain the current flag,  by partial privatisation of a favourite state owned enterprise.

Does such  cynicism border on paranoia? In an era of Dirty Politics; tax-havens with trillions hidden away; and increasingly corruption of state leaders, officials, organisations, and institutions –  the demarcation between healthy scepticism and paranoid fantasies blur, merge, and are tomorrow’s headlines waiting to be made public.

Labour’s Response?

Labour and the Green Party both responded to Cullen’s announcement. As Stacy Kirk wrote for Fairfax Media on 6 April;

The response of opposition parties has been mixed, with the Greens calling it a step down the path of privatisation. 

Labour leader Andrew Little said it was important Kiwibank stayed in public ownership.

“And this does that, there are some good conditions around it,” he said. 

“This provides a way to get extra capital from these sovereign wealth funds, and hopefully for NZ Post to use the funds that they raise from the sale, to put more capital into Kiwibank. 

Meanwhile, Labour Party state-owned enterprise spokesman David Parker said Cullen should be congratulated on the idea. 

“Michael Cullen should be congratulated for securing a route to expand KiwiBank and keep it in public ownership, given the refusal of National to provide more capital for NZ Post or KiwiBank.

“Michael Cullen’s solution only works to ensure the bank will remain in public ownership if National promises that if ACC or the Super Fund sells its shares, then the government of the day would exercise its first right of refusal and buy them back.” 

Labour’s response has not only been weak and naive – but it also appears that David Parker is not “up to speed” with the terms of the sale. It is extraordinary that both Labour’s SOE Spokesperson, David Parker,  and Labour’s Leader, Andrew Little, believe that;

“This provides a way to get extra capital from these sovereign wealth funds… to put more capital into Kiwibank” and that “Michael Cullen should be congratulated for securing a route to expand KiwiBank”.

Nothing of the sort will happen.

Both Cullen and Bill English have been crystal-clear and surprisingly honest in stating that;

  1. “The proceeds would allow New Zealand Post to invest in its core parcels, packages and letters business and pay down debt.” “
  2.  “It is anticipated that a special dividend would also be paid to the Crown.”
  3.  Kiwibank will get nothing.

So where Parker and Little get their cozy ideas about “putting more capital into Kiwibank” is unclear.

Instead,  Green Party co-leader, James Shaw, seemed more cognisant to National’s real agenda;

“The fact is the Government forced Kiwibank’s hand and today’s announcement will make it easier than it was before to move Kiwibank into private ownership.”

Labour needs to get it’s act together on this issue.

The future of the people’s bank depends on it.

As for the mainstream media, it is high time they became aware of the many promises made by both Key and English – and their subsequent breaking. Otherwise, they too are failing the public.

National, in the meantime, has carried out the  perfect bank “heist”.

It only took eight years to accomplish.

 

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References

Fairfax Media: NZ Post to sell 45 per cent of Kiwibank for $495m cash injection

NZ Herald: English – I didn’t choose my words well

TV3 News: National hit by more secret recordings

Fairfax Media: Facebook Video – NZ Post to sell 45 per cent of Kiwibank for $495m cash injection

NZ Herald: PM pledges not to sell Kiwibank after all

Faifax Media: Key – Why I should be the PM

Otago Daily Times: Key not ruling out Kiwibank sale in future

NZ Herald: PM – no more SOEs to sell after Genesis

Fairfax Media: Key ‘no GST rise’ video emerges

NZ Treasury: Income from State Asset Sales as at May 2014

Interest.co.nz: NZ Super Fund and ACC proposed as new minority shareholders in Kiwibank

Investopedia: Credit Rating

NZ Herald: S&P cuts NZ credit rating

Radio NZ: Bill English – Kiwibank will stay 100 percent New Zealand-owned

Green Party: Greens will repurpose Kiwibank and save Kiwis hundreds of millions

Additional

Fairfax media: Kiwibank tape catches English

Scoop Media:  Bill English Talks On KiwiBank Being Sold (audio)

Other bloggers

No Right Turn: Plunder

The Daily Blog: KiwiBank another privatisation by stealth – Robbing Fred to bribe Dagg to pay John

The Dim Post: A fascinating precedent

The Standard: Kiwibank sale to NZ Super, ACC privatisation by stealth

Previous related blogposts

Westpac, Peter Dunne, & Edward Snowden

The Mendacities of Mr Key # 12: No More Asset Sales (Kind of)

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the sale of kiwibank - nz herald cartoon - john key

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This blogpost was first published on The Daily Blog on 11 April 2016.

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Letter to the editor – John Key’s broken promises, a habit?

26 July 2015 4 comments

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Frank Macskasy - letters to the editor - Frankly Speaking

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from: Frank Macskasy <fmacskasy@gmail.com>
to: Sunday Star Times <letters@star-times.co.nz>
date: Thu, Jul 23, 2015
subject: Letter to the editor

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The editor
Sunday Star Times

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If recent recent comments by Finance Minister, Bill English, are any indication, National appears to be engaging in a “softening up the public” exercise for further asset sales. On 23 July, English announced at a Commerce Commission conference;

“Why do you want us to keep owning broadcast media – it was worth a billion, it’s worth $300 million today, and soon it will be worth nothing. Same with post offices – was worth a billion, worth $300 million today, soon be worth nothing.” (Radio NZ, “No plans to sell SOE ‘relics’ – English”)

Yet, only seven months before last year’s September General Election, our esteemed Prime Minister promised no further asset sales after Genesis Energy was partially privatised;

“The truth is there aren’t a lot of other assets that would fit in the category where they would be either appealing to take to the market or of a size that would warrant a further programme, or they sit in the category that they are very large like Transpower but are monopoly assets so aren’t suited.” (NZ Herald, “PM: no more SOEs to sell after Genesis”

One can only assume that collapsing dairy prices will impact on tax revenue to a greater magnitude than the government has been advised and English is desperate to look at any alternative income revenue.

The sale of State houses was an unmitigated disaster. It seems that other State assets may be on the block soon.

So much for John Key keeping his word.

This is becoming a habit.

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-Frank Macskasy

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[address & phone number supplied]

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References

NZ Herald: PM – no more SOEs to sell after Genesis

Radio NZ: No plans to sell SOE ‘relics’ – English

 

 


 

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Letter to the editor – softening us up for another broken promise?

23 July 2015 3 comments

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Frank Macskasy - letters to the editor - Frankly Speaking

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from: Frank Macskasy <fmacskasy@gmail.com>
to: Dominion Post <letters@dompost.co.nz>
date: Thu, Jul 23, 2015
subject: Letter to the editor

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The editor
Dominion Post

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Recent comments by Finance Minister, Bill English, appear to be an exercise for “softening up” the public to further asset sales. On 23 July, English announced at a Commerce Commission conference;

“Why do you want us to keep owning broadcast media – it was worth a billion, it’s worth $300 million today, and soon it will be worth nothing. Same with post offices – was worth a billion, worth $300 million today, soon be worth nothing.” (Radio NZ, “No plans to sell SOE ‘relics’ – English”)

Is this a prelude to another broken promise from National?

Seven months before the 2014 General Election, our esteemed Prime Minister promised no further asset sales after Genesis Energy was partially privatised;

“The truth is there aren’t a lot of other assets that would fit in the category where they would be either appealing to take to the market or of a size that would warrant a further programme, or they sit in the category that they are very large like Transpower but are monopoly assets so aren’t suited.” (NZ Herald, “PM: no more SOEs to sell after Genesis”

National is facing a greatly reduced tax revenue as collapsing Dairy prices impact on our economy.

If National wants to sell more assets, they should call an early election and seek a mandate. Otherwise they are breaking yet another election promise.

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-Frank Macskasy

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[address and phone number supplied]

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References

NZ Herald: PM – no more SOEs to sell after Genesis

Radio NZ: No plans to sell SOE ‘relics’ – English


 

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John Key - carpet sale - Dannevirke

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The Flag Referendum – A strategy for Calm Resistance

20 July 2015 9 comments

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eight_col_eNZign-NZ-Flag-Richard-Aslett

Richard Aslett’s “eNZign”

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When John Key referred to a referendum as “… a complete and utter waste of money because it’s just about sending a message”, he was not referring to his much-beloved pet-project, the $29 million flag referendum.

He was, in fact, deriding the $9 million asset sale referendum held two years ago, and which resulted in a decisive 67.2% of 1.3 million New Zealanders voting against the government’s asset sales programme. Key was bluntly dismissive of  the asset sales referendum;

“Overall what it basically shows, it was pretty much a political stunt.”

Charming.

Key’s $29 million dollar white-elephant project receives his personal blessing and whole-hearted endorsement;

“In the end you have to say, what price do you put on democracy where people can genuinely have their say on a matter that is actually important? … This is a cost essentially of one of the values that New Zealanders would want to test.

Yes, it’s a one-off cost, but my view would be that if the flag doesn’t change as a result of this referendum process, then it won’t be changing for a good 50 to 100 years, so this is a cost we have to bear.”

– whereas a preceding referenda on a critical economic/political policy was dismissed as irrelevent in the Prime Minister’s grand scheme of things.

Nothing better illustrates the deep contempt which John Key holds the public and democracy than his inconsistent attitudes on these two referenda.

If New Zealanders want to send our esteemed Dear Leader a definitive message, they might recall the decisive message they sent to  the National-NZ First Coalition government in 1997, where  92% rejected Winston Peters’ superannuation scheme.

I offer the following strategy for those voters who are opposed to this referendum;

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The referendum will be carried out in two parts. The first part will be a referendum held in November-December this year to determine which alternative people might prefer;

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flag referendum stage one

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This is the ballot paper to spoil by writing over it your opposition to this referendum. In a written piece entitled “Winston Flags Referendum For Protest“, fellow blogger Curwen Rolinson suggests writing “I support the current flag” on your ballot paper. Or you can create your own appropriate message.

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The second part of the referendum will be held in March next year. This will be the run-off between our  current ‘Stars’n’Jack‘, and an alternative selected from Step 1.

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flag referendum stage two

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This step must not be spoiled. A clear message can still be sent to our esteemed Dear Leader by voting for the status quo, to keep the current flag.

If the alternative is defeated, and the incumbent flag is maintained as the preferred choice, John Key will have been shown to have engaged in a vanity project, and wasting $29 million dollars of taxpayers money in the process.

By this simple strategy, we, the people,  can show the same scorn to Key’s  pet-project as he did to the asset sales referendum in 2013.

Addendum1

Alternative Option 2: If Richard Aslett’s “eNZign” design (see top of page) is selected as the alternative for the March 2016 referendum (highly, highly unlikely) – vote for it. What better “legacy” for Key’s prime ministership than something that looks like the product of an LSD-induced trip?

So not only will $29 million have been wasted, but a “trippy” flag will have been chosen that takes New Zealand back to the psychedelic 1960s.

What better way to give Key the one-fingered salute?

Addendum2

Meanwhile, John Oliver shared his brilliant insights into the flag debate;

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John oliver new zealand flag referendum

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References

Otago Daily Times: Asset sales referendum ‘waste of money’

Fairfax media: Asset sales programme to continue – Key

NZ Herald: John Key defends cost of flag referendums

NZ Govt: Flag Consideration Panel – The flag consideration process

Youtube: John Oliver – New Zealand’s New Flag

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The Pencilsword Flagpole blues

Acknowledgement: Toby Morris, ‘The Wireless

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This blogpost was first published on The Daily Blog on  13 July 2015.

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Letter to the editor – a Tale of Two Referenda

14 July 2015 1 comment

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Frank Macskasy - letters to the editor - Frankly Speaking

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from: Frank Macskasy <fmacskasy@gmail.com>
to: Listener <letters@listener.co.nz>
date: Sun, Jul 12, 2015
subject: Letter to the editor

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The Editor
The Listener

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I find it ironic that John Key has invested so much of his time, effort, and tax-payer’s money in the up-coming flag referendum.

On 29 October last year, Key defended the $29 million price tag of the referendum;

“In the end you have to say, what price do you put on democracy where people can genuinely have their say on a matter that is actually important? … This is a cost essentially of one of the values that New Zealanders would want to test.

Yes, it’s a one-off cost, but my view would be that if the flag doesn’t change as a result of this referendum process, then it won’t be changing for a good 50 to 100 years, so this is a cost we have to bear.” (NZ Herald, ‘John Key defends cost of flag referendums’)

This is is stark contrast to Key’s dismissive attitude toward the $9 million asset-sales referendum, held in September 2013, which he labelled frivolous;

“It’s a complete and utter waste of money because it’s just about sending a message.” (Otago Daily Times, ‘Asset sales referendum ‘waste of money’)

On 14 December 2014, he was even more blunt about the asset-sales referendum;

“Overall what it basically shows, it was pretty much a political stunt.” (Fairfax media, ‘Asset sales programme to continue: Key’)

Key has staked his political reputation on a referendum which seemingly few New Zealanders want, nor care about. Spending $29 million on the flag referendum will be three times what was spent deciding the future of publicly owned, multi-billion-dollar assets.

Key showed a casual, dismissive arrogance to the asset sales referendum – but now expects the public to take his own pet project seriously?!

No, Prime Minister, that is not how it works.

We will take your silly little flag referendum more seriously when you start to show respect to other public concerns.

Until then, your referendum is little more than an ego-driven joke, and I suspect most New Zealanders will be dismissive toward it.

“Political stunt”, indeed.

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-Frank Macskasy

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[address and phone number supplied]

 

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References

NZ Herald: John Key defends cost of flag referendums

Otago Daily Times: Asset sales referendum ‘waste of money’

Fairfax media: Asset sales programme to continue – Key


 

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Christchurch City Council – Having your asset-cake and eating it

28 March 2015 2 comments

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christchurch city council logo

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Prelude

On 29 January 2013, Prime Minister John Key announced that the rebuild of Christchurch would be a Herculean, multi-billion dollar task;

New Zealand also faces a domestic construction boom. That will be centred, of course, on Christchurch, where the total spend is now estimated to be around $30 billion.”

By 15 May 2014, National’s Finance Minister, Bill English delivered his sixth Budget speech to Parliament. The cost of the Christchurch re-build  had escalated by $10 billion;

The total cost of the rebuild has been estimated at $40 billion and the Government’s share will be significant.

On current estimates, the Government’s contribution to the rebuild is expected to be $15.4 billion, of which $7.3 billion will be incurred by the Earthquake Commission, net of reinsurance proceeds.

Despite central government’s massive re-build bill for Christchurch, in his Budget Conclusion, English was at pains to repeat his new mantra;

The Government’s books are on track to surplus next year and are the envy of most developed countries.”

The surplus English referred to was an Operating balance Before Gains and Losses (OBEGAL),  forecast to be a hair-thin  $86 million for 2014/15.

English’s  Budget document pointed out;

Government is still borrowing a net $78 million a week, and in dollar terms, net debt is expected to peak at $64.5 billion in 2015/16...”

Little wonder that English stated, with blinding obviousness four days earlier;

It means we will need to maintain firm expenditure control beyond our return to surplus...”

Which is why an increasingly nervous Finance Minister, conscious of spiralling re-build costs, came down hard and crushed any suggestion that taxpayer’s money be used to subsidise the proposed SkyCity convention centre;

There’s no contingency for that. If the less preferred option ended up being the option then that money would be part of the Budget process.”

Firm expenditure control in this case meant that the government-purse was firmly shut. And padlocked.

National Government’s Predictable Response

In May 2011, barely three months after Christchurch’s devastating earthquake that killed 185 people, there were already suggestions from Gerry Brownlee that the Christchurch Council would have to sell part of their community-owned assets to fund the re-build.

National’s mis-handling of the economy, with two unaffordable tax-cuts,  as well as the Global Financial Crisis and resultant recession,  had left the government’s books deep in the red.

At first, Brownlee was coy at any suggestion of asset sales;

I don’t foresee the council having to sell any assets, though in the end that will be their choice.

But in the next breath, he added;

I would suspect that Treasury have had a look at the city council’s balance sheet, given that we are going to have to take a whole lot of debt onto our [the Government’s] balance sheet.

It’s only natural we would have a look at what the council can stand [to pay].

Yes, there is provision in this legislation for Cera [Canterbury Earthquake Recovery Authority] to suggest to council that they might need to sell something.

Brownlee denied that government or Treasury had been scoping CCC assets with a view to partial (or full) privatisation;

The accusation is that Treasury have been looking at council assets with a view to what the council will sell. That is, I think, completely erroneous.

On 9 February 2012, a year after the second earthquake,  Brownlee admitted in Parliament (in response to questioning by the future mayor of Christchurch, Lianne Dalziel);

In the days leading up to that particular injudicious comment from me there were numerous discussions going on with the council—between the senior executives, the mayor, me, and the senior executives of the Canterbury Earthquake Recovery Authority—over a number of issues that we want the council to take some responsibility, alongside us, for. Although Treasury officials will have talked to the council, I am unaware of exactly what that discussion would have been about. But let me tell you that when the Government is spending $5.5 billion anywhere we expect the recipients of that to have some plan for how they will participate in what will be a very, very expensive recovery, and that plan has to be a lot better than saying “We’re just going to put up the rates, and we’re going to borrow a lot more money”.”

Brownlee would have us believe that he was “unaware of exactly what that discussion would have been about” between Treasury officials and  Christchurch council?  As Minister of Earthquake Recovery of that devastated city, that proposition is simply not credible.

Brownlee was not being truthful.

The Minister’s denial was further shown to be less than truthful with this evasive response in Parliament on 2 August 2012;

I have received advice from Treasury and the Canterbury Earthquake Recovery Authority on a range of funding options for the rebuilding of Greater Christchurch, to which the Government has committed $5.5 billion to date. Alongside the Christchurch City Council, I support the regeneration of our city, which will be enhanced by the development of the central city plan, released on Monday. I have publicly acknowledged the funding challenges for both the city council and the Government. Councillors and I have agreed to discuss, alongside our respective organisations, a sensible and achievable time line and funding programme for the delivery of the blueprint. I approach these discussions in good faith, as the thousands of city residents would expect us to do so. I intend to say no further on this matter.

The full text  of a remarkable, and somewhat ‘testy’ exchange between Minister for Canterbury Earthquake Recovery, Gerry Brownlee, and the then-Speaker of the House, Lockwood Smith, under-scored the sensitivity of any suggestion that central government was putting the “squeeze” on Christchurch to sell community-owned assets and relieve pressure on English’s struggle to balance the books.

By May 2013, all pretences that asset sales were not being discussed were firmly kicked to the side, with John Key entering the political fray (and Gerry Brownlee standing pensively and obediently in the background);

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Christchurch rebuild - Council needs to come to the party - PM

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Key was clear with Christchurch residents in his expectations;

The only other option available to it is that it doesn’t actually embark on some of the projects it might want to embark on. In the end Cantabrians will have to have a say on what they think is the right mix.

I actually personally hold the view that for Canterbury, where you love sport, happen to be pretty darn good at it, and have climatic conditions that argue that a covered stadium might make sense, then actually it could be a really sensible thing to do.

And if it was up to me I would make that choice in a heartbeat if it meant changing the mix of assets, but I understand for lots of other people they might not hold that view.

This is the chance to get it right. I just urge everyone to think that through.  There is the opportunity to have some quite fantastic facilities here.

The Government is quite happy to step up and put $15bn in, and there is a limit as to how much we can put in, and some of it must come from the council.

The threat is obvious; ‘cough up the extra cash by selling some of the family silver, or  no more rugger for you lot’!

Faced with National firmly closing off any options to meet ever-increasing re-build costs, Christchurch was faced with few alternatives and on 1 August last year the Council caved to central government pressure in the form of a report from investment bankers, Cameron Partners. As Mayor Lianne Dalziel admitted;

We’ve got nothing, there isn’t even wriggle room any more, there’s just nothing there, we’re over the line and we have to pull it back before 2017.

Creating financial certainty will attract much needed investment in the rebuild. We want to work alongside the Canterbury earthquake Recovery Authority (CERA) to scope the possibilities for a one-stop landing point for both local and foreign investors.”

Note the year Dalziel refers to: 2017. An election year.

Dalziel’s reference to “both local and foreign investors” is an oblique acknowledgement that the Christchurch City Council will have to part-privatise community assets to raise money that will not be forthcoming from Key’s government.

She was more forth-coming here, on the same day;

Releasing capital from our balance sheet alongside the other options, (including increased income, reduced operational expenditure and government assistance), is clearly one of the ways we can address the uncertainty around the city’s finances.

Dalziel also hinted at why Christchurch was forced to undertake asset sales;

The purpose of releasing capital would be to generate funds to assist in solving the identified funding shortfall; provide the level of confidence and certainty required to develop a credible long term financial strategy and get on with the rebuild of our community facilities, infrastructure and housing; allow CCC to buffer Christchurch residents and businesses from the exponential rates increases; and allow CCC to align our vision and strategic objectives for the rebuild with our asset portfolio – that is, what we own and operate.

It is simply untenable – both from a commercial perspective, as well as morally – that citizens in one city should be forced to pay for the rebuild of their infra-structure. This was a disaster not of their making.

Any suggestion that the cost should not be spread more evenly around the country would create a precedent that we are each solely responsible for any disaster that might befall our own region. Do New Zealanders really want to go down that road? They should think long and hard if that is the kind of society they want for themselves and their children.

Earthquake Recovery Minister could not endorse the Cameron Partners report fast enough, releasing this statement on the same day – 1 August;

The Cameron Partners report makes it clear some major areas of financial uncertainty are causing headaches for Christchurch City, including the cost of repairing and replacing the city’s essential horizontal infrastructure [pipes, roads, waterways].

When we signed the cost-sharing agreement with the council in June 2013 we foresaw this and undertook to do a thorough review of where the shared costs of the rebuild lay by 1 December this year.

Once we have this information we can consider if any amendments are required to the cost-sharing agreement.

Officials from CERA and the Treasury are working with the council already to ensure the review provides Christchurch City with the clarity it needs to help make some of the big decisions ahead of it.”

National had won.

Brownlee had successfully forced Christchurch Council to adopt unofficial National Party policy; that Council’s were expected to divest themselves of strategic assets if funding for extraordinary projects was required. This was the same policy that Brownlee had forced on Auckland, to fund it’s rail loop, and which he outlined on TV3’s ‘The Nation‘, on 30 June 2013;

Rachel Smalley:John Key said on Thursday that Auckland should consider selling its assets in order to meet some of these costs. Should the Council consider that?”

Gerry Brownlee: Well I think it’s one of those things that’s inevitably going to be on the table. Remember that we’ve got a programme that is now set out for the next 10 years, and as we come up to the point where you’re getting the business case together for the city rail link and that huge expense that’s involved in that, and recognise that you’ve got a 2016 Local Body Election as well, I’d be very surprised if it wasn’t something that was considered by some people.”

But more was come on 6 December 2014, Brownlee was demanding that Christchurch Council increase the level of asset sales;

So it’s a positive step but it’s not the end yet. I do have some worries that it might be a little timid and particularly if it were to lead to much higher rates there in Christchurch.

Murray Horton, from the lobby group ‘Keep Our Assets Canterbury’, was correct when he warned;

Once a chunk of ownership of those assets, the council’s assets, is gone then it won’t be long before there are calls for more to go.

Horton’s prescience was proved barely three months later.

Costs & Consequences

On 26 February, 2015, four years and four days after the city’s second quake, the Christchurch City Council voted;

“...subject to public consultation, the council will release $750m in capital through the sale or partial sale of assets the council owns through its commercial arm, Christchurch City Holdings, to help plug its $1.2 billion funding shortfall.

By the following day, Brownlee was demanding more asset sales, which he repeated more forthrightly on TVNZ’s Q+A on 

I don’t think you can put a particular price on it. What I think they need to do, and I’m sure that the council will get there. I’ve got to say the council have been edging their way to a position that I think will leave them in a good space progressively. What really is necessary is a sales process that gets you the highest possible price. If you go out and say, ‘Look, I’m just going to sell a little bit of this and a little bit of that,’ then you’re not going to get any premium on it at all. And if you’re going to sell something, you may as well get as much for it as you possibly can. That’s my real point.

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…if you look at something like the airport. It’s essentially a real estate company that just provides parking for planes. You could break it down to being that simple. It’s still going to get used. It’s still going to provide the service the city requires whoever owns it. It is partly price controlled through the Commerce Act, as is Orion. Completely price controlled. So the idea that someone else would buy it and the pricing of your electricity lines are going to become completely out of control is completely wrong. ”

The sale of community assets is a perfect fit with National’s ideological and fiscal needs;

  1. Ideologically, National is as wedded to privatisation as it ever was. It is only held back from a  more radical asset sales programme by public opinion – a point no doubt reinforced through National’s on-going secret polling.
  2. Fiscally, forcing local territorial authorities to finance infra-structure through sales of community-own assets lets central government off the hook, and gives English his desperately needed surplus.

Territorial Authorities have little control over Point 2.

With regards to Point 1, however, Territorial Authorities finding themselves under financial pressure can be more strategic when it comes to finding ways and means to navigate political pressure from the likes of right-wing governments and ministers like Gerry Brownlee.

One such mechanism is found within Christchurch City Council’s own document, “Council decision on proposed Financial Strategy“, where it states;

The sale of 14.3 % of Orion on condition that the shares are only offered to another public entity, such as another TA [Territorial Authority], or an institutional investor such as NZ Super Fund, and that any agreement would be subject to the shares returning to the CCC should the investor wish to sell down its share at a future date.

The same document suggests the sale of 34% of Lyttleton Port Company and 9% of Canterbury International Airport Ltd to “a suitable strategic partner“.

The latter measure opens the proverbial slippery slope to further down-selling of Christchurch Council’s shares in both companies. As such, it would be unacceptable to most Cantabrians (and New Zealanders, who have experienced the down-side of sales of strategic assets).

The NZ Super Fund would be an ideal partner for a Territorial Authoritory such as Christchurch Council. At present the NZSF’s investment in New Zealand amounts to only  13.8% in 2014  (down from 14.2% in 2013).

Not only would the NZSF offer an ideal means by which to keep these assets in New Zealand ownership, but would retain the profits instead of seeing them sent off-shore, worsening our Balance of Payments even further.

It would also fulfil the Super Fund’s  2009 directive from the Minister of Finance “requiring us to, while always investing in a prudent and commercial manner, identify and consider opportunities to increase the allocation to New Zealand assets in the Fund“.

Lastly, the Christchurch Council could eventually re-purchase the shares from the NZSF once the city’s re-build was essentially completed and it’s books were back to some semblance of normality.

The first option should always be that local strategic assets remain in local ownership, so that everyone in the community benefits.

In the face of intransigence from an ideologically-bound, and fiscally inept National Government, the best we can hope for is Plan B.

Plan B: transferring ownership, by temporary sale, to the New Zealand Super Fund. It ticks nearly all the boxes.

Additional – Christchurch City Asset Holdings

  • Christchurch City Holdings Ltd (CCHL) is the commercial/investment arm of the Christchurch City Council.
  • CCHL manages the Council (ratepayers’) investment – worth around $2.6 billion – in these seven fully or partly-owned council-controlled trading organisations.
  • CCHL is forecasting to paying $46 million in dividends for 2015/16 period.
  • CCHL Special dividend for 2015/16 period: $549,300,000
  • “The return on our CCHL investment from cash dividends has averaged 3 per cent in the last three years and 4 per cent in the last 10 years. When the appreciation in the capital value of its investments is taken into account, CCHL has achieved an internal rate of return over the past five years of 8.0per cent a year, or 25.9 per cent a year since its inception in 1996.” (Source)

Trading Organisations

Orion New Zealand Ltd: 89.3% shareholding

Christchurch International Airport Ltd: 75%

Lyttelton Port Company Ltd: 78.9%

Christchurch City Networks Ltd (trading as Enable Networks): 100%

Red Bus Ltd: 100%

City Care Ltd: 100%

Selwyn Plantation Board Ltd: 39.3%

[Acknowledgement Fairfax Media]

 

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References

National Party: Prime Minister’s Statement to Parliament

NZ Treasury: 2014 Budget Speech

NZ Treasury: Rebuilding Christchurch

NZ Treasury: Budget Priorities

Beehive.govt.nz: Budget will confirm track to surplus in 2014/15

Interest.co.nz: Finance Minister prefers not to spend taxpayer cash to avoid Sky City ‘eyesore’; no money in Budget 2015 for it

Fairfax media: Christchurch door open for asset sales

TV3 News: Government accounts show $18.4 billion deficit

Scoop media: Parliamentary Questions And Answers Feb 9 2012

Green Party: Eugenie Sage questions the Minister for Canterbury Earthquake Recovery on Christchurch asset sales

NZ Herald:  Christchurch rebuild – Council needs to come to the party – PM

Fairfax media: Cameron Partners Review – full report

TV One News: Christchurch facing huge financial black hole

Sharechat.co.nz: Christchurch considers selling strategic assets stake to fund rebuild

The Press: Council asset sales mooted to help raise $900m

Scoop media: Brownlee says its up to Len to sell assets for loop

Radio NZ: Asset sales plan ‘may be too timid’

The Press:  Christchurch City Council votes for $750m asset sales

The Press: Gerry Brownlee says Christchurch rate rise as ‘too much’

Scoop media: TV1 Q+A – Govt will protect identities of NZ troops – Brownlee

NZ Super Fund: 2014 Annual Report

NZ Super Fund: 2009 Ministerial Directive

Statistics NZ: Balance of Payments and International Investment Position – December 2014 quarter

Christchurch City Council: Christchurch City Long Term Plan 2015 – 2025

Christchurch City Council: Council decision on proposed Financial Strategy

Additional

Christchurch City Council: Long Term Plan consultation document adopted

Previous related blogposts

Christchurch, choice, and charter schools

Christchurch – Picking the bones clean?

The “Free Market” is a fair-weather friend


 

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This blogpost was submitted to the Christchurch City Council as a submission to the Long Term Plan, on 22 March 2015.
This blogpost was first published on The Daily Blog on 23 March 2015.

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