There is no doubt, as Prime Minister John Key is fond of
pointing out, the mixed-ownership model that he and his party
are proposing for their partial sale of state assets can work
extremely well.
You only have to look as far as Air New Zealand, a successful
company majority-owned by the Government and partly in
private hands.
The problem is not with the model; it is with the targeted
assets.
At present, the Government owns 73.4% of the shares in the
national air carrier; Mr Key and the National Party would
sell down that share-holding to 51%. Would that significantly
affect the performance of the company?
Arguably, it is running pretty well now, so quite probably
not.
So why do it?
The answer seems to be to give a slice of the company to "mum
and dad" investors, a phrase that is repeated as a
parrot-like mantra, and to free up some cash.
Same goes for the state energy generators, Meridian, Mighty
River Power, Genesis and Solid Energy. The argument is not so
much about operational savings, since it is generally
acknowledged that these SOEs function towards the top end of
the efficiency scale; rather it is, again, about giving you
and me and Bobby McGee a slice of the share-owning pie.
Oh yes, and using the once-only sale dividend to invest in
the things governments already invest in - like schools and
roads and irrigation systems.
In addition to using the example of Air New Zealand to
bolster his arguments, on TV3's leaders' debate on Monday
evening, Mr Key compared the proposed partial sale to that of
Trade Me by Fairfax. But Air New Zealand and, more
especially, Trade Me, are inappropriate comparisons.
Power generators are strategic state assets guaranteed to
return consistent dividends. They deal in a currency not only
necessary to underpin economic growth in this country, but
also critical to the comfort and health of every citizen.
They are also already in the collective ownership of all New
Zealanders.
To jeopardise control of these assets - and there is no
pretending that large tranches of accumulated share-holdings,
as there will surely eventually be, won't hold considerable
sway over policy and strategic direction - would seem to be,
at best, short-sighted.
New Zealand is not oil rich; it cannot mine vast tracts of
the country for minerals without tearing its natural beauty -
already one of its greatest and most profitable assets - to
shreds. But it does have the potential to own significant
additional reservoirs of renewable generation and,
potentially, to provide cheap energy to industry and
agricultural endeavour, assisting competitive advantage in
the process.
In principle, shareholder equity may be a fine thing; but in
practice, the ultimate effect of a sell-down in shares of
state energy generators will be an upward pressure on prices.
The prices that ordinary New Zealanders already pay for their
electricity are a scandal when set against the average wage,
the old-age pension and the general standard of insulation
in, particularly, older and lower-value housing stock,
inhabited by a great many of the poorer members of our
society.
And the opportunity a partial sale of these assets will
provide for those celebrated "mum and dad" investors?
Who exactly are they? Who are all those "mum and dads" with
money to burn in their bank accounts, just waiting for an
opportunity to plunge their substantial savings into
blue-chip energy shares?
Possibly, they are a bit of a myth - if the intention is to
suggest they are widely spread across the populace.
More likely they are the same people to whom Mr Key and his
Government gave generous tax cuts; they are the people who
already live in well-insulated houses in the better suburbs;
they are the people who can afford to take an annual holiday
in the sun; they are the shareholders of a society that those
wrapped in blankets wearing doubled-up jumpers and two pairs
of socks to watch TV in the refrigerator-like climes of their
mildewy living rooms would barely recognise.
The partial sale of state energy assets will be great for
those who can afford a piece of the action. But it could also
have the unfortunate effect of bolstering a socially
corrosive trend: privileging the "haves" at the expense of
the "have-nots".
As such, it would be another nail in the coffin of a
disappearing dream - that of a society that still values some
modicum of fairness and equality.
- Simon Cunliffe is deputy editor (news) at the
Otago Daily Times.
ODT political bias?
JimmyJones, Dunedin has been a solid Labour area for so long, it is not a sign of bias by the ODT if the number of comments reflects this. Our one exception was the election where Labour put up a loyal party member who had been a reliable worker for the cause but was generally seen as not being up to promotion, definitely not up to being an effective MP. That was the time National put up Richard Walls, young, lively, quick-witted. I remember that election. Many Labour supporters could not bring themselves to vote at all. or cast their vote for the Values Party candidate, knowing in those FPP days it was effectively as wasted vote but it expressed their political leanings.
Political opinions
Simon Cunliffe is wrong to post opinions like this and expect us to believe that he is not campaigning on behalf of his cousin (MP, David Cunliffe). Also, the ODT might want us readers to think that it is politically neutral, but this is a stretch too far with the the number of pro-Labour, anti-National opinion pieces recently splattered over various parts of the ODT-Online. These have been written mainly in the name of Simon Cunliffe and Dene McKenzie and their existence, to me, indicates an organized attempt to influence public opinion. The fact that these staff opinion pieces are labelled as "opinion" means that they are less insidious than other ways that a newspaper could display political bias, but, in my view, the ODT should stick to the facts and staff opinions should be confined to the "Editorial".
The Otago Daily Times publishes a range of opinion articles and columns reflecting views from across the political spectrum. -- Online editor.
What about budgeting?
So we sell off our income-producing assets to get money to spend on non-income producers, schools and roads and irrigation schemes - all of which add value but not in the form of direct folding-money returns.
Simon Cunliffe says these are already government responsibilities, and he's not alone in thinking that is the case. So why have these brilliant managers not budgeted for them all along, instead of chucking money around like drunken sailors for rah-rah and mega-gimmicks for the rugby events? Not that the World Cup was alone in being an excuse for outbreaks of "woo-hoo, shiny things! We'll think about necessities later."
Why sell them though?
Why sell them though? If they make the government money they should stay. But the muttonheads would rather cut their profits long term.
Now that doesn't make sense in the least. Oh, they don't care about the ma 'n pa investors. They want money now. And this is the easiest way they can see to get it.
Asset sales myths and contradictions.
Simon Cunliffe thinks mum and dad investors are a myth. To him the hundreds of thousands of Kiwis who already have investments in shares (and hundreds of thousands more who have other investments and retirement savings) must all be an illusion.
Add to that the illusion of nearly two million kiwis whose Kiwisaver plans need to find somewhere to invest $20 billion in the next 9 years.
He claims goverment energy companies are at the top end of efficiency, and can provide cheap power - then contradicts that by saying power prices from government generators are so high it's a scandal.