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Posts Tagged ‘SOE Act’

Dirty Dealings with Solid Energy

26 October 2012 15 comments

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Last year, on 19 May,  Solid Energy was one of five SOEs that National announced would be partially privatised (see: Budget 2011: Govt seeks $7 billion in asset sales). Bill English announced, with a naivetee usually reserved for wildly idealistic, wide-eyed  youth,

Well targeted investment in infrastructure helps lift productivity, which over time will mean better wages and higher living standards for New Zealand families.”

To which, as the youth of today might reply,

Yeah, whatever.”

By 29 August, this year,  as   demand from China lessened, and the price of coal dropped, Solid Energy announced plans to make 363 workers redundant.

CEO, Don Elder, said,

I am very aware of the impact these decisions will have on affected staff members and our communities, but we’ve had to make these difficult decisions to cushion the impact of the market and protect as much as we can of the long-term value of the business.”

Source

On 25 September, Key stated,

Now that the coal price is collapsing, essentially Spring Creek is not viable.

It’s never been in the position where it was going to come on to the market today.  It’s been a five-year programme, and if you ask me in three, four, five years’ time, the anwer might be different.” .

Source

Along with Maori Treaty claims over water rights, and papers being filed in the High Court on 23 October (see: Mighty River sale paused during court action) which will see a delay in removing Mighty River Power from the SOE Act, the realisation that Solid Energy was also unsaleable under current economic conditions was another unwanted ‘hiccup’ for National.

On the same day, Solid Energy anounced that redundancies would increase from 363 to 460 and staffing levels would reduce from 1,800 at the beginning of the year, to 1,360.

Christchurch was to lose half of the 313 jobs at Solid Energy’s head office – another ‘hit’ against this quake ravaged city, along with planned school closures; problems with insurance companies; and Cantabrians leaving the area.

Remember that, ostensibly, redundancies were related to international coal prices and profit losses – not the deferred partial-privatisation of the SOE.

Yet, according to Solid Energy’s own Results Announcements 2012 report,  the company’s income was actually better than the preceding year,

Good operating performance overtaken by asset write downs

• Trading performance was good in a deteriorating market with strong NZD. Underlying earnings were $99.7 million (2011: $86.2 million).
• Asset write downs of $110.6 million net of tax and other adjustments have resulted in a $40.2 million loss after tax (2011: $87.2 million).

See: Solid Energy New Zealand Ltd Results Announcement 2012

In plain english (not the mumbled  Prime Ministerial  version), Solid Energy made an after-tax profit of $99.7 million – an increase from $86.2 million in 2011.

Employing a  book-keeping, accountancy “trick”, Solid Energy  reduced their own asset values by $110.6  million. (That’s like saying your house was worth  $300,000 in 2011, but only $250,000 this year. You still have your house and you’re living in it – nothing else has changed. Only the theoretical valuation has ‘reduced’. Next year that valuation could rise back to $300,000 or even more or maybe less. That’s creative accountancy for you.)

The point is that Solid Energy’s profit rose from $86.2 million to $99.7 million.

In fact, Solid Energy’s revenue in 2012 was $978.4 million – almost a billion dollars – an 18% increase from the previous year.

The proposition that Solid Energy is more profitable than either Don Elder or National make out is born out by this interesting article,  in Taranaki’s ‘Daily News‘, on 12 October this year. It appears that Australian coal mining giant, Bathurst, is experiencing a growth in share value as it discovers greater coal reserves at its Buller project on the West Coast,

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Source

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Bathurst is proceeding with “an extensive drilling programme” – indicating that the company appears unphased by current coal prices and is investing long-term in recovering this resource.

So what to make of the planned 460 redundancies?

What to make of Bathurst’s share price rising and continuing to invest in a comprehensive drilling programme?

The only conclusion that one can arrive at is that planned redundancies are a covert operation to “maximise” Solid Energy’s value and “efficiency”. The cost of redundancies – estimated at around $10 million – will be paid by the taxpayer and not the shareholders of any future part-privatised company (see:  Foreign workers lured by ‘work for life’ among sacked miners).

Reducing staff numbers – commonly referred to as “re-structuring” – is a common technique for  companies to cut costs in an attempt to return to profitability, or to make it more attractive to potential investors or buyers.

It is interesting to note that National’s secret agenda  of “re-structuring” Solid Energy, to make the SOE viable for privatisation, is a technique quite familiar to our Prime Minister, John Key,

During Key’s brief spell for Merrill Lynch in Sydney in 2001, he helped fire 500 staff as part of savage worldwide retrenchment by the bank. In the past, Key has appeared proud of his ability to sack without feelings. He told Metro magazine: “They always called me the smiling assassin.”

These days he insists these were not cheerful sackings.

“In the end I had to carry out wider responsibilities, but I think I’m fundamentally a nice guy, but have to follow instructions,” he says. “

Source

As  Don Elder said,

I am very aware of the impact these decisions will have on affected staff members and our communities, but we’ve had to make these difficult decisions to cushion the impact of the market and protect as much as we can of the long-term value of the business.”

460 workers face the sack.

No doubt John Key is simply  “having to follow instructions“?

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Related previous blogpost

The real cause for Solid Energy mass redundancies? (5 September 2012)

Sources

Sunday Star Times: Who is John Key? (3 February 2008)

NZ Herald: Spring Creek mine work suspended (29 August 2012)

Dominion Post: Miners march on Parliament (25 September 2012)

Radio NZ: Hundreds of jobs going at Solid Energy (25 September 2012)

Daily News: Bathurst lifts Buller coal totals (12 October 2012)

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Guest Author: Citizen Meegan’s submission to Parliament – hand’s off our stuff!

Meegan Manuka (aka, Madd Hatter)

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. Kia Ora,

My name is Meegan Manuka and I am a Whanganui local here to talk to you about the purposed changes to the mixed ownership model act and the sale of our state owned assets.

On the 9th of February I attended a so called, “iwi consultation” at Whanganui racecourse.  And after seeing the drama that unfolded and learning what is being planned, I am concerned, very concerned.

Soon after I arrived at this meeting, the drama began. We had iwi met and manhandled by police and forced away from the door, locked out and prevented from entering. The curtains were then drawn to stop all inside the venue seeing what was happening.

I got up and opened the curtains to allow full view of the injustice outside. I walked to the door and asked the Maori warden guarding the door why the iwi were not allowed inside. He told me he was instructed to keep them outside because they were carrying tinorangatiratanga flags…

What happened to freedom of expression? Is this country becoming a police state? This consultation was not a true and fair representative debate. The full spectrum of iwi opinion and philosophy and the voices of those iwi wanting to enter were not heard. How can national even claim to have considered the view of iwi during this “consultation” if the iwi are not even allowed in to participate in the debate in the first place?

To further clarify my question, how can you claim to have consulted with and considered iwi views when some of the iwi were purposefully denied the right to participate and lend their voice to the consultation process? Their voices were NOT heard, their views were not considered, and they were not allowed to be a part of the consultation. This is twisted and unethical.

Anyway, I was one of the lucky ones allowed inside; maybe I look like I’m less of a threat…
Upon arrival I was given a booklet. This booklet actually. “EXTENSIONS OF THE MIXED OWNERSHIP MODEL ETC”.

After leaving the meeting I set about analysing this booklet and to say it made me angry is an understatement.

A lot of emphasis was put on section 9 of the SOE act both on the news and at the meeting.  On page 5 of this booklet it states, “Section 9 of the SOE Act provides that NOTHING IN THIS ACT shall permit the crown to act in a manner inconsistent with the principals of the treaty of waitangi…” well this sounds fine and dandy doesn’t it… until nek minute I read this… “To proceed with the mixed ownership model, the government purposes to remove the four state owned enterprises from the ambit of the state owned enterprises Act…” which means… in reality, all this section 9 stuff is just a smoke screen and yes, you have kept section 9 in the SOE act, but that is totally irrelevant because those four companies are being removed from the SOE act anyway. This is totally misleading.

Trickkky monkeyyss….

It then goes on to say on page 6 that, “no other investor will be able to hold more than ten per cent of the shares in each company which will help ensure widespread ownership.”

Sounds good, until I read page 8… “…although trustee corporations and nominee companies that hold shares on behalf of other persons may be exempt from the ten per cent limit.” Once again you tricky monkeys… why didn’t you tell us that in the first place unless you are planning something dodgy?

Now, THIS is the bit made me furious… page 8…Section 27AD… to provide a regime… wow regime is the right word isn’t it?… a regime for memorials to be placed on the titles of land that is transferred by the crown to SOE’s… THIS LAND MUST BE RESUMED BY THE CROWN IF THE WAITANGI TRIBUNAL MAKES A RECOMMENDATION FOR ITS RETURN TO MAORI OWNERSHIP…

Now, if the waitangi tribunal says give the land to Maori the crown keeps it?

I guess this might have something to do with the fact that over 7000 hectares of Tuhoe land is now listed as “no owner”…. Yeah, you heard right, 7000 HECTARES of Maori land has recently been listed as “NO OWNER…” and the owners can’t do anything about it…

We’ve seen a lot of this slight of hand politics lately and it sets a dangerous president.  Politicians need to remember who pays you… WE PAY YOU… to do what we tell you to do.

There hasn’t been enough REAL consultaion with the people. And I’m not only talking about the iwi consultation now, I’m talking in consultation in general.  As a concerned citizen I believe that this is a rouge government and is not acting in the best interests of New Zealanders.

But I guess fundamentally it’s very easy to see why.

On the first day of parliament, MP’s are sworn in. They are presented with a piece of paper by the clerk of the house which they have to parrot. It reads…

I … insert name here… solemnly sincerely and truly declare and affirm that I will be faithful and bare true allegiance to her majesty queen Elizabeth the second, her Aires and successors according to law…” what good little parrots…

Do you not realise that by swearing allegiance to the Crown you are inadvertently NOT swearing allegiance to the people of New Zealand…and are therefore not acting in our best interests… us, the people who go to work every day to pay for the millions of dollars of debt you are incurring in our names every week???

So where does that leave us, the very people who voted you in and whose taxes pay your obscene pay rises, world trips and salaries?

I’ll tell you where it leaves us, in debt… Too broke to pay for milk, can’t afford to go to a dentist…power prices going up, poisoned by polluted water and air from cancer causing fracking emissions, emissions like benzene, that are not even included in the emissions trading scheme , stuck in a never ending February 22nd, living in an unsafe green zoned house or kicked out of a safe red zoned house or fined $200,000, having our EQC claim lost for the fifth time… locked out of our work and starving for protesting about unsafe work conditions, beaten into submission by police… police who should be protecting us… while peacefully protesting the removal of our state owned home of 60 years… paying diligently towards our retirement only to find out that we are investing in a super fund that is spending our money on BOMBS and tobacco companies!!!

This is not the New Zealand I want for our kids…

We need to be world leaders and innovators for them, not sheep who bend over backwards and submit to the self-destructive patterns of other counties…. Instead we need to learn from their mistakes. We need to shift away from living on our land to living with it.

We have to think about what sort of world we are leaving behind for our children, they are 30% of our population and 100% of our future… we need to leave some for them.

I don’t know about you but I don’t want to leave them in an oily, gassy, debt-ridden, over-regulated drought of a mess that can’t be cleaned up. We need to turn this around now.

I demand a transparent honest government, one that won’t trick us and will give us the opportunity to be heard and the right to fair process.

One that doesn’t put the value of a dollar in their own wallets over the value of kiwi lives.

One that adopts new and existing, more financially viable and environmentally sustainable technology that can reduce our emmissons by up to 80% instead of relying on over century old polluting technology.

I want a government that thinks about our kids, and their future.

I motion a vote of no confidence in this rouge government.

And if National is so confident that they are doing what is right and they have the support of Kiwis, I also ask for a referendum about the sale of state owned assets.  New Zealand, Aotearoa, everyone in this room… it is time to stand up and remind them who the real bosses are.

No reira tena koutou, tena koutou, tena ra koutou katoa.

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Related Blogposts

February 7 (Part Tahi)

February 7 (Part Rua)

February 7 (Part Toru)

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Government sprung on SOE sale plan!!

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Full Story

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As well as trying to “quietly” drop all references to Treaty obligations, under Section 9 of the SOE Act 1986 – something guaranteed to buy a fight with their coalition partner, the Maori Party –  there are other  revelatory aspects  of the draft Treasury document that should  also be a matter of considerable concern.

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[1]

The Government’s mixed ownership model

Intitial public offerings (IPOs)

An initial public offering, or share float as they are often called, is a way of selling some or all of a  company to a large number of investors. Shares in the company are offered for sale to retail investors (individuals, sometimes referred to as “mums and dads”) through an advertising campaign to the public and through shareholders.Source

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[2]

Intitial public offerings (IPOs)

Once a minority shareholding in each company is sold, the government proposes that the company will be governed in the same way as other listed companies and that they will be subject to the Companies Act 1993 and other relevant legislation, the NZX listing rules and the companies’ constitutions.  The crown will not reserve any special rights  to itself, except that it is still to decide whether it will a have any special power to approve the chairman of the Board, as it has for Air New Zealand.” Source

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With regards to Paragraph 1, above, it is interesting that the Treasury report refers to “retail investors (individuals, sometimes referred to as “mums and dads”)“. In effect, it is a ‘slip’ on Treasury’s part, acknowledging the reality that “mum and dad investors” is simply propaganda “code” (newspeak) for common, garden-variety, investors.

There is nothing “mum and dad-ish” about corporate share-brokers working on behalf of investment companies.

Government uses the term “mum and dad investors” to hide the reality that shares in part-privatised SOEs will be purchased by individuals in dapper suits and silk ties, operating  out of very nice offices, on behalf of Very Big Corporate Clients.

Government myth: busted.

Paragraph 2, above, is even more insidious and refers to, “Once a minority shareholding in each company is sold, the government proposes that the company will be governed in the same way as other listed companies and that they will be subject to the Companies Act 1993 and other relevant legislation…” and furthermoremore, “The crown will not reserve any special rights  to itself…”.

In effect, once partially-privatised, the Government intends that none of  the entire State Owned Enterprise will  be governed by the State Owned Enterprises Act 1986. (Not just the privatised 49% part.)

Specifically, Section 4 of the Act,

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 Principal objective to be successful business
  • (1) The principal objective of every State enterprise shall be to operate as a successful business and, to this end, to be—

    • (a) as profitable and efficient as comparable businesses that are not owned by the Crown; and

    • (b) a good employer; and

    • (c) an organisation that exhibits a sense of social responsibility by having regard to the interests of the community in which it operates and by endeavouring to accommodate or encourage these when able to do so.

    (2) For the purposes of this section, a good employer is an employer who operates a personnel policy containing provisions generally accepted as necessary for the fair and proper treatment of employees in all aspects of their employment, including provisions requiring—

    • (a) good and safe working conditions; and

    • (b) an equal opportunities employment programme; and

    • (c) the impartial selection of suitably qualified persons for appointment; and

    • (d) opportunities for the enhancement of the abilities of individual employees.

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And most specifically, this part of  it’s Principal Objectives,

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“…an organisation that exhibits a sense of social responsibility by having regard to the interests of the community in which it operates and by endeavouring to accommodate or encourage these when able to do so.”

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Any committment to promoting clean, sustainable energy; considering the needs of the community in it’s activities; and other social responsibilities will all vanish if  the SOEs concerned are “ governed in the same way as other listed companies and that they will be subject to the Companies Act 1993 and other relevant legislation… [and] …the crown will not reserve any special rights  to itself…”

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In the case of Genesis Energy, Mighty River Power, and Meridian Energy – their sole objective will be to make greater profits for government and private share-holders.

Those profits will be generated by raising power prices.

Guess who pays those higher power prices? (Clue: look in the mirror.)

Right about now, any person reading this who voted for National last year must be entertaining serious regrets at ticking “National” for the Party Vote. Those folk who voted for National – and conversely, those who failed to go out and vote for an alternative Party opposed to asset sales – must be wondering if they will end up paying for their voting choices.

Of course they will  pay for voting National.

Every month. When their power bill comes in.

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Additional

NZ Herald: Asset sale draft plan internet blunder

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Why are Maori so upset about removing Section 9 of the SOE Act?

6 February 2012 2 comments

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Why indeed?

What is so contentious about Section 9 of the State-Owned Enterprises Act 1986, that has enraged Maori so greatly; jeopardised the Maori Party-National Coalition agreement; and threatened to spawn countless Court cases?

What sparked all this,

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And what is this “Section 9” that John Key wants removed from the SOE Act, after Meridian Energy, Mighty River Power, Genesis Energy, Solid Energy, and Air New Zealand are part-privatised?

This is Section 9,

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 Treaty of Waitangi
  • Nothing in this Act shall permit the Crown to act in a manner that is inconsistent with the principles of the Treaty of Waitangi.

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Yup. That’s it. That’s the grand total of what the government wants removed, and which has provoked – quite justifiably, in my view – considerable anger in the community.

I wonder if John Key now regrets his government’s stated intention to  remove those 24 words from the SOE Act? Has it been worth the anger that has erupted in the community?

Well, Mr Key? Has it?

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