At a post-Budget lunch in Christchurch today, English told business leaders that National would “get to grips” with its position on state asset sales in the next eight months.
He revealed the Government was conducting a stock-take of its assets and their worth and would produce an “investment statement” next year.
”It seems to me, and I have checked this, that there is a strong demand among the mums and dads for a Kiwi investment model and if we put product into the market people would buy it. Would I be right about that?”
A few hands went up in the room.
”In fact I think there would be a bigger proportion of the population than that would have a crack at it. So we will have a think about it,” English said.
So that’s what I plan to do with my tax cut: have it all price-gouged out of my pocket by whatever multi-national company English and Key sell Kiwibank to. It’s good to have a plan.
I think he is talking about floating kiwibank and letting kiwi mums and dads have first dibs at buying stock.
What a great way of:
a) getting avg joe to buy a profitable stock that they can add their savings portfolio alongside kiwisaver (or perhaps adding to it)
b) getting the govt. out of non core business
c) putting some coin in the govt. coffers
Comment by patx — May 21, 2010 @ 3:47 pm
patx: What is the obsession with getting the govt out of Kiwibank? It’s making a tidy profit, that money all goes back into the coffers… win-win isn’t it? I mean, it’s gotta be better than having the profit shipped across the ditch.
Comment by Simon Poole — May 21, 2010 @ 3:52 pm
Excellent, hopefully we’ll see a bit more action during the second term.
Comment by goonix — May 21, 2010 @ 3:52 pm
he is talking about floating kiwibank and letting kiwi mums and dads have first dibs at buying stock.
Just like Telecom and New Zealand Rail!
Comment by danylmc — May 21, 2010 @ 3:54 pm
I have no obsession so not quite sure what you mean or where you are coming from however kiwisaver has achieved what it was intended to do and that was introduce competition to the local australian dominated market place.
Given a few proviso’s to sale such as not selling to dirty aussie banks /preferably selling to a local firm, the govt. retaining a cornerstone shareholding then whats the big deal with letting NZ’rs share in the firm?
Thats gotta be better than having a firm distribute profits to govt. for redistribution to the owners (NZ’rs) via an inefficient transfer mechanism ie the state.
Comment by patx — May 21, 2010 @ 3:57 pm
What I love is the trawling for evidence (“there is strong demand … Would I be right about that?”), and then the rejection of that evidence (“In fact I think there would be a bigger proportion of the population than that would have a crack at it.”) Faith-based policy at its best.
Comment by Andrew Geddis — May 21, 2010 @ 3:57 pm
I agree Danyl, govt. has proved to be masterful at running non-core enterprises like telco’s and rail firms
Comment by patx — May 21, 2010 @ 3:59 pm
pat: I think you’ll find that Telecom was privately owned when it was run into the ground.
Comment by Simon Poole — May 21, 2010 @ 4:04 pm
At the risk of being called a socialist, what exactly is the evidence that private owners are better at running telcos and rail firms? If it is Telecom today/NZ Rail prior to renationalisation, I’m not sure the argument is that compelling!
However, what governments appear to be really crap at is negotiating the sale and repurchase of assets – we sold Telecom far too low and bought back Kiwirail far too high!
Comment by Andrew Geddis — May 21, 2010 @ 4:04 pm
Here’s a better speech from Bill English, if he wants to sell Kiwibank:
“Today I’m announcing a new policy on banking. The gov’t will consider selling off shares in Kiwibank, just as soon as all the big name Australian-owned banks have scored higher customer satisfaction ratings than Kiwibank – or locally-owned TSB. Unfortunately they never do. Over to them.”
Incentives and competition are good, right?
Comment by sammy — May 21, 2010 @ 4:05 pm
Danyl: Telecom and TransRail weren’t floated on the NZX, which appears to be what English is proposing.
Andrew: Leaving aside your own strong belief in faith-based policy (your views on electoral finance and free speech), he hardly seems to be making or even announcing policy here.
Comment by factchecker — May 21, 2010 @ 4:06 pm
Ditto TranzRail. Hard to estimate how much damage Fay and Richwhite did to our national economy by asset stripping the rail network and running it into the ground – probably in the mid ten digits.
Comment by danylmc — May 21, 2010 @ 4:06 pm
I’m not sure English pays any attention to what’s going on in the finance sector. Kiwibank/NZ Post already offer investment vehicles, with the great advantage that these aren’t subject to fluctuations in the open market, but based on the ring-fenced capital security that Kiwibank/NZ Post can provide.
Comment by dontsurf — May 21, 2010 @ 4:09 pm
Telecom and TransRail weren’t floated on the NZX, which appears to be what English is proposing.
I suspect he’ll end up floating a minority share (which is what the capital markets group advised) but in the absence of any actual policy I get to make up whatever I want.(Danyl’s Law.)
Comment by danylmc — May 21, 2010 @ 4:11 pm
So that’s what I plan to do with my tax cut: have it all price-gouged out of my pocket by whatever multi-national company English and Key sell Kiwibank to. It’s good to have a plan.
Oh come off it Danyl. When Labour and the Greens told us that a National Government would sell major public assets, they were being hysterical. When that young man secretly taped English on asset sales, that was dirty and unethical. At least that’s what our media told us.
Comment by George D — May 21, 2010 @ 4:12 pm
Oh factchecker, everyone’s policy is faith-based in the final analysis. It just isn’t a great rhetorical strategy to posit what you confidentally assume is a widely shared view, only to receive little support for it and so have to resort to a lame “well I think I’m right” claim.
Comment by Andrew Geddis — May 21, 2010 @ 4:13 pm
So the plan is that the supposed publicly owned companies are now actually becoming publicly owned? And that is bad how? Ah, no more government control.
It would be bad if they would sell it to Mum & Dad, because they already paid for it. I would just divide the shares among the taxpayers according to the percentage tax they have paid over the last 10 years or so.
Comment by Berend de Boer — May 21, 2010 @ 4:14 pm
However, what governments appear to be really crap at is negotiating the sale and repurchase of assets – we sold Telecom far too low and bought back Kiwirail far too high!
Labour should have got a fully-independent valuation and then nationalised compulsorily at that price. They were idiots not to.
Comment by George D — May 21, 2010 @ 4:14 pm
“I would just divide the shares among the taxpayers according to the percentage tax they have paid over the last 10 years or so.”
I think it is wrong to exclude the rich from sharing in this commonly owned asset …
http://www.stuff.co.nz/business/budget-2010/3712092/How-the-wealthy-dodge-tax
Comment by Andrew Geddis — May 21, 2010 @ 4:17 pm
Yeah, pre float Telecom was a beast of prodigious merit. ha ha ha.
NZ rail was flogged because among other trivial matters, NZ was bankrupt.
Given the cr@p state of world affairs lately the better the shape of the govt. balance sheet the lower the interest rates we can pay to creditors.
Kiwibank has served its purpose and should be floated for all the reasons I noted above and also to add a financial services flavour to the badly supported local bourse.
Comment by patx — May 21, 2010 @ 4:18 pm
“Labour should have got a fully-independent valuation and then nationalised compulsorily at that price. They were idiots not to.”
I hope this is a piss take…
Comment by goonix — May 21, 2010 @ 4:19 pm
“and also to add a financial services flavour to the badly supported local bourse.”
The market thinks the NZX is shit, so the govt should sacrifice state assets on it to spite them. Or something.
Comment by Pascal's bookie — May 21, 2010 @ 4:26 pm
“NZ rail was flogged because among other trivial matters, NZ was bankrupt.”
History fail. But let’s assume that’s true (which it isn’t); that NZ was genuinely bankrupt at that time. That being the case, was the only solution to sell NZ Rail significantly below value?
And as a matter of interest, what are the other “trivial matters” you’re referring to? I’m just curious as to whether you’re making up justifications as you go along…
Comment by Eddie C — May 21, 2010 @ 4:28 pm
“Kiwibank has served its purpose and should be floated for all the reasons I noted above and also to add a financial services flavour to the badly supported local bourse.”
Gosh – any other types of equities needed on the NZX, so the government can create companies to provide them? Amazing how this enterprise, which never should have been created and which was such a flagrant misuse of taxpayer money, now turns out to have been such a great idea that everyone should get to have their own direct piece of it!
Comment by Andrew Geddis — May 21, 2010 @ 4:29 pm
yes, please, do tell us all a) why NZ Rail was sold b) how close NZ was to being bankrupt.
Comment by patx — May 21, 2010 @ 4:32 pm
I am absolutely confident that the Government will rack up considerable debt in the next year or two (while blaming this on Labour – yes, beyond belief in any country but NZ), and then present this as a rationale for a fire-sale of major public assets.
Here’s what was sold before 1999. $19 billion in total. The energy assets in particular were practically given away. The same arguments were made – that these sales would be offered to Mum and Dad investors who would buy the shares. In practice they almost all went Fltecher-Challenge, CHH, Australian banks, and private equity consortiums.
Comment by George D — May 21, 2010 @ 4:35 pm
That’s your special interpretation about Kiwibank Andrew. Quite a few people thought it was a good idea, for the reasons noted above. It’s also a good reason to sell it now, for the reasons noted above. Cycles go round, they don’t have to last forever.
Comment by patx — May 21, 2010 @ 4:35 pm
patx,
In 1993 (when NZ Rail was privatised), NZ’s government debt was about 60% of GDP (see http://www.oag.govt.nz/2007/nzdmo/part2.htm). That would place us about 30th on the list of countries today – around 4% higher than the world average (see https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html). So, yes – the NZ national debt was far higher back then than it is today, but to day we were “close to being bankrupt” is probably over stretching things.
Why was NZ Rail sold? Well – there was a desire to bring government debt down. And National was ideologically opposed to nationalised industries … plus was riding the wave of privatisation from the 1980s. And I doubt anyone foresaw that the new owners would asset strip the company as thoroughly as they did, meaning the service would be so thoroughly screwed up. And concerns about global warming/carbon emissions were not on the horizon.
Oh – and Fay Richwhite paid Jim Bolger $150,000 into a Swiss Bank Account … or did I just make that up?
Comment by Andrew Geddis — May 21, 2010 @ 4:42 pm
I have heard this “mums and dads” in reality it ends up with the big boys.
Only reason banking has got allot better is because the Australians didnt have a monopoly.
National’s obssession with asset sales pisses me off, especially as selling them is likely the only fricken way we will be able to afford paying for babyboomers (main beneficiary of these tax cuts) retirement.
Whole thing is muppeted.
Comment by Jeff R — May 21, 2010 @ 4:44 pm
patx.
“Cycles go round, they don’t have to last forever.”
True that. I’m actually arguing myself into a centralist/state ownership model I don’t necessarily subscribe to. So I’m out of here.
Comment by Andrew Geddis — May 21, 2010 @ 4:45 pm
Nice apples and oranges Andrew, that tells us all nothing about the debt servicing problems we did or didnt have besides admitting we did sell NZ rail to pay down debt.
Comment by patx — May 21, 2010 @ 4:49 pm
When Labour and the Greens told us that a National Government would sell major public assets, they were being hysterical.
As far as I can recall, they WERE being hysterical because the Nats specifically said before the election that they will NOT sell state assets during their first term, even so, Key was ‘still slippery because he used to be a banker and probably has rich friends so he probably will do something bad like that!’ I forget if the taping was before or after that commitment though. In any case everyone knows that Nats want to sell some assets, it’s just a matter of when and how.
Comment by Stephen — May 21, 2010 @ 6:05 pm
Great find with the list of state assets sold there too btw.
Comment by Stephen — May 21, 2010 @ 6:06 pm
The expression “Kiwi Mums and Dads” was used in respect to the float of Auckland Airport in the late 1990s. It’s the most appalling spin meant to assuage fears that a near monopoly’s about to be flogged of to overseas interests and to indicate that instead we’re all going to get rich.
NZ Rail was sold because Hayek told Richardson that the government shouldn’t own it. That simple. Worked out well didn’t it? Ditto Air New Zealand.
Comment by Guy Smiley — May 21, 2010 @ 6:21 pm
The problem with KiwiBank (and NZ Post as well) is that they are walking talking examples of successful state owned enterprises. This is surely impossible and cannot be allowed to continue. Everyone knows that government cannot run businesses, so these obscenities must be eliminated (don’t much care how) and forgotten as quickly as possible. Then we can get back to expounding the theory without these annoying distractions.
Comment by Roger Parkinson — May 21, 2010 @ 6:35 pm
well up til nown muns and dads could invest in -
1. the share market, ha ha ha
2. finance companies, hardly a laughing matter
3. homes that are now worthless – leaky stuff, ditto
4. LAQCs
Are the winners are: those that invested on LAQCs which we are now being told is Very Bad For The Economy. As if the first three have been a brilliant sucess.
So, where does the average person put there money?
if the govt can target small time investors and get them to invest in govt businesses then it might be a goodd idea. I say might. But who would invest in KiwirRail
Comment by Neil — May 21, 2010 @ 6:40 pm
add a financial services flavour to the badly supported local bourse.
Ahhhhh hahahahahahahaha. You know that both Westpac and ANZ are on this poor local bourse right? No, you don’t.
Comment by garethw — May 21, 2010 @ 6:49 pm
2NDARY listings. ahaha ha ha.
Comment by patx — May 21, 2010 @ 7:28 pm
Simon Poole, Kiwibank has never turned a profit and will not do so for at least ten years if cut loose from the financial skirts of NZ POst which has subsidised it’s losses since inception.
You’re welcome to buy into it if you want to receive no dividends and lots of calls over the next ten years.
NZ POst itself is a dieing business in a dieing market. It has been stuffed by the internet.
Would you have bought shares in Pony Express after Ford invented the Model T?
Comment by Adolf Fiinkensein — May 21, 2010 @ 7:37 pm
Getting too worked up about ownership of enterprises is bollocks. In both political directions. The effective operation of a firm, and the benefit it brings to customers and shareholders alike, is much more closely related to a) the economic context of the sector it operates in, and b) contingent history of the firm. Ownership, either way, is much less important than lots of people seem to think. It just doesn’t matter that much.
If a firm operates in a competitive sector, then if it is remotely commpetently managed it will do well and provide a good service (Air NZ is a good example of a publicly owned service which operates in a very competitive environment and does rather well, on the whole). If a firm is operating in a monopolistic or oligopolistic environment then under government ownership it could become a bloated, inefficient monolith. But on the other hand, if it is under private sector ownership it could become a price gouging anti-competitive monolith. The sucker who has to buy services from it is likely to find it hard to tell the difference.
If the firm is privately owned, then the way to avoid it being an outrageous, rent seeking monopolist is to have really strong and effective government regulation. Which brings us straight back to square one with some interesting questions about the role of a strong government in ensuring the effective operation of markets for the greater benefit of society…
Comment by Tom — May 21, 2010 @ 7:44 pm
So the plan is that the supposed publicly owned companies are now actually becoming publicly owned?
You may want to look up and compare the meanings of the words “public” and “private.” And please don’t use your usual standard reference works by Lewis Carroll and Edward Lear for this.
I recall a similar spiel when they first offered shares in Air NZ – TV ads blathering on about our opportunity to own NZ’s airline. It brought to mind “Er, I own it now. What the govt is offering is that I will in future own less of my property or more of it depending on whether I’m willing to pay the govt or not. In what sense should I regard this as good governance?”
Comment by Psycho Milt — May 21, 2010 @ 7:52 pm
dying, adolf, it’s spelt dying
Comment by chris — May 21, 2010 @ 7:58 pm
So, Patx, the answer is “Yes, I am making it up as I go along?” Cos you kinda just repeated my questions back at me and ignored what andrew said?
Comment by Eddie C — May 21, 2010 @ 8:44 pm
Adolf:
Now I’m not a business analyst, but a quick glance at Kiwibanks annual report tells me that, yes, they did make a profit. It’s right there on page 11 (actually page 14 of their .pdf – poor formatting) of the statement.
http://www.kiwibank.co.nz/downloads/misc/general-disclosure-statement-and-annual-report.pdf
If you mean that NZ Post are subsidising Kiwibank by providing them with a whole shitload of branches on the cheap, well that’s just an enterprise using available leverage, isn’t it? Nothing stopping other businesses from getting together with a bank and opening a branch on their premises if they think it would prove favourable.
Of course, I’m sure you’ve got some brilliant rebuttal, so I’ll let you take the stage…
Comment by Simon Poole — May 21, 2010 @ 9:21 pm
Simon – kiwibank does actually rely on a guarantee of funding from NZ Post in order to meet the RBNZ’s capital adequacy requirements. Which is to say that it isn’t loss-making, but it doesn’t have to put the same resources into maintaining its capital reserves as other banks do. Of course, I don’t think this is a bad thing, but at least for the moment it is reliant to some extent on its parent (i.e. NZ Post and, ultimately, the govt).
Comment by Eddie C — May 21, 2010 @ 9:25 pm
‘NZ POst itself is a dieing business in a dieing market. It has been stuffed by the internet.’
Just how dumb are some people? Not only is it spelt dying (not dieing) but the internet has helped save NZ Post, not kill it. Heard of Trademe? How do you think all the shit that people sell gets from one person to another? Yes that’s right the matter transmitter we all own and until that is invented NZ Fucken Post.
Simple message to the National government, get your grubby little paws off Kiwibank and leave it bloody well alone, you short sighted one dimensional fools.
Comment by ieuan — May 21, 2010 @ 9:57 pm
or couriers?
Comment by patx — May 21, 2010 @ 10:13 pm
Eddie C: Cheers for the clarification. Yes, that does help somewhat, but I doubt it changes the fundamental profitability of Kiwibank.
Comment by Simon Poole — May 21, 2010 @ 10:43 pm
Where does this idea that Kiwibank has never turned a profit come from? I heard Prebble make this false claim on National Radio last year.
Kiwibank has been profitable since 2005 http://www.stuff.co.nz/business/599659
Comment by Stephen Judd — May 22, 2010 @ 7:40 am
re 49: Prebble used to tell this really good story about NZ Rail losing some farming equipment by parking it up a sideline. Farmer went looking for it and found it himself. Good story. Turned out to be untrue though. This is why government owned businesses can’t be allowed.
Comment by Roger Parkinson — May 22, 2010 @ 8:00 am
So, where does the average person put there money?
One thing Kiwisaver taught me (and presumably others) is that anyone can invest in a variety of investment vehicles through the funds that banks and fund managers offer, depending on the amount of risk you’re willing to take on. True story! Just looking outside of Kiwisaver funds at the moment as it’s probably a tad restrictive in what you’re allowed to spend the money on.
Comment by Stephen — May 22, 2010 @ 8:18 am
“Where does this idea that Kiwibank has never turned a profit come from?”
I think it comes from the suggestion that it adds some of the agency fees that used to be counted in NZ Post’s bottom line to its bottom line in order to show a profit. A quick look at their annual report shows that those making that suggestion either failed maths or like telling fibs.
Comment by Guy Smiley — May 22, 2010 @ 8:35 am
Where does this idea that Kiwibank has never turned a profit come from?
Right-wingers have this schtick in which Kiwibank isn’t profitable because it uses NZPost outlets for its branches – ie, if it provided that number of branches without NZPost, it would make a loss. Strangely enough, this logic of “if the company adopted a loss-making business model it wouldn’t be profitable” isn’t one they apply to evaluation of private-sector organisations…
Comment by Psycho Milt — May 22, 2010 @ 8:35 am
“Would you have bought shares in Pony Express after Ford invented the Model T”
A rather ignorant question..
The Pony Express ran only from 1860 – 1861, and the assets sold to Wells Fargo in 1866. It closed two days after the Transcontinental Telegraph reached Salt Lake City, connecting Nebraska and California.
Ford started production ( not invention ) of the Model T on 1st Oct 1908.
Comment by Bruce Hamilton — May 22, 2010 @ 12:31 pm
“price-gouged out of my pocket by whatever multi-national company English and Key sell Kiwibank to”
I dunno: Kiwibank are doing a great gouging job all by themselves:
Kiwibank fined over Mastercard currency fees
http://www.nzherald.co.nz/kiwibank/news/article.cfm?o_id=274&objectid=10440061
Kiwibank warned about mortgage break fee formulas
http://www.3news.co.nz/Kiwibank-HSBC-warned-about-mortgage-break-fee-formulas/tabid/421/articleID/155193/Default.aspx
Comment by Clunking Fist — May 23, 2010 @ 6:53 pm