The Dim-Post

October 31, 2011

Shell game watch

Filed under: Politics — danylmc @ 12:44 pm

Via Stuff:

National may plough back cash raised from the partial sale of assets into Kiwibank, Prime Minister John Key says.

Party leaders were addressing the Deloitte-Business NZ election conference in Wellington today.

Explaining plans to use funds raised from selling minority stakes in Meridian Energy, Genesis, Solid Energy, Mighty River Power and Air New Zealand, he told the audience the state-owned bank could benefit.

This isn’t a bad idea. Kiwibank needs a capital injection to grow its commercial business, and you can’t raise the money from the private sector. I don’t have a problem with minority sales of one type asset if it goes to fund the expansion of a second, more profitable asset. But . . .

At the party’s campaign launch in Auckland yesterday, Key announced National would spend $1 billion raised from the sale to transform schools over the next five years. The cash would be ring-fenced in a fund.

This is just the dumbest idea ever. There’s a hundred billion dollar hole in superannuation funding, Key and English have suspended contributions to the Cullen fund, and now they want to sell profitable assets and set up another fund to pay for core infrastructure spending – that they can borrow cheaply to pay for? Will any party – Mana included – propose a less credible policy than this?

But all this is beside the point. The funds from the asset sales are already in the bank. Treasury factored them into the budget and the PREFU – even though the assets haven’t even been sold yet. That’s how the government pays down the deficit so quickly. Now Key is spending that money a second time. So when he announces that he’s going to spend a billion dollars on a fund to transform schools, funded by the asset sales, what he’s actually saying is that he’s going to borrow an extra billion dollars to pay for his election promises. It’s the tax cuts scam – (‘we’re not borrowing for tax cuts, we’re borrowing for the spending from the shortfall from the tax cuts!’) all over again.

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34 Comments »

  1. Schools, hospitals, kittens, motherhood and apple pie… what kind of person worries about fancy schmany accountancy tricks when you get your local school modernised!

    Comment by MeToo — October 31, 2011 @ 12:55 pm

  2. Key commented that he wants to modernise hospitals and schools. But if he’s selling off state assets in order to do this, how are schools and hopsitals going to be modernised in the future? By seling more assets? You can’t keep selling assets to pay for the groceries.

    Comment by Ross — October 31, 2011 @ 12:56 pm

  3. I’d like to see these clowns reminded of the recent ratings downgrades they have brought on us whenever they claim economic competence or ‘credibility’.

    Comment by Sacha — October 31, 2011 @ 1:13 pm

  4. Ross, I’d hope we don’t stay in recession indefinitely, so that shouldn’t be necessary.

    Comment by Pete George — October 31, 2011 @ 1:13 pm

  5. Look for PPPs for major hospitals particularly, such as Chch.

    Kiwibank is a great example of the downsides of and for SOEs. First, it relies on political patronage for capital. If it is a truly viable business it should be able to raise that money in its own right or not get the govt to distort the market through underwriting or rule changes. Nor should the business suffer because it is not politically fashionable to invest in.

    Second, it demonstrates that SOEs are not all profits and parties – sometimes they require investment, big investment as they are often infrastructure (i’m suspicious of SOE books that they may not be setting aside enough for investment due to govt pressure to provide political profits). Wouldn’t it be nice for someone else to have to take that burden rather than you and me as taxpayers?

    Comment by insider — October 31, 2011 @ 1:35 pm

  6. This is a less than funny remake of the last time.

    Comment by Dizzy — October 31, 2011 @ 1:52 pm

  7. They’re modernising my local school with a “bring your own digital device” plan for next year. It absolves the school of the responsibility for providing the students’ IT needs. Privatisation by stealth….

    OTOH it will help with student engagement: all the kids are really really excited about being able to record their farts and play them back when they want to annoy the teacher.

    Comment by MeToo — October 31, 2011 @ 1:57 pm

  8. > Ross, I’d hope we don’t stay in recession indefinitely, so that shouldn’t be necessary.

    We don’t need to stay in recession indefinitely, Pete. We just need to have one more recession. How will we cope with the next recesssion if we’ve sold the family silver?

    John Key proves that you can make a load of money for yourself but that doesn’t mean you know much about economies and how they work.

    Comment by Ross — October 31, 2011 @ 2:36 pm

  9. “Ross, I’d hope we don’t stay in recession indefinitely”

    Pete, I’d hope that as a politician your policies aren’t based on hoping that something will come to pass. It is not the job of politicians to rely on a hope that things will happen: what is required is the formulation and execution of policies that gain popular support and that actually work. Neither of which applies to asset sales

    Comment by nommopilot — October 31, 2011 @ 2:58 pm

  10. Unfair nommopilot.

    Formulation and execution of an asset sales policy that transfers wealth from the public domain to the private will most certainly work.
    I confidently predict that a number of very wealthy people will become wealthier accordingly and judging by ther Nats popularity, the rubes will wholeheartedly support being robbed blind.

    Policy success!

    Comment by Gregor W — October 31, 2011 @ 3:09 pm

  11. I’m going to buy shares in the newly privatised former SOEs, put pressure on the boards to increases prices and reduce maintenance on infrastructure, and then after claiming increased dividends for a few years that more than offset the power price increases, I’ll be selling them on when they’re more or less at their peak and then fucking off out of the country with the profits while the former SOEs have their shit hit the hydroelectric turbine and/or wind turbine.

    I’m following the 1980s/1990s UK model for the water company privatisation, in case you’re interested.

    Comment by Dizzy — October 31, 2011 @ 3:18 pm

  12. Dizzy – you don’t have too look that far offshore.

    Though admittedly TEL was mandated to provide service to a certain level under Kiwishare and latterly the TSO, the same cost-out model worked for for years until Gattung managed to tank the SP.

    Even then, divs were astonishing.

    Comment by Gregor W — October 31, 2011 @ 3:31 pm

  13. @ Gregor W

    True that! We can’t judge whether a policy has worked unless we know what the policy goals are. Pretty sure National are yet to actually explicitly state that their goals are to rob the public and enrich their mates but I’m sure they’d still be winning the rube vote even if they did…

    Comment by nommopilot — October 31, 2011 @ 4:44 pm

  14. “National may plough back cash raised from the partial sale of assets into Kiwibank,…..”
    “may plough”????? And Key could say “We may buy every little kid a donkey.”

    Comment by ianmac — October 31, 2011 @ 5:56 pm

  15. MeeToo @ 7 “They’re modernising my local school with a “bring your own digital device” plan for next year. It absolves the school of the responsibility for providing the students’ IT needs. Privatisation by stealth….”

    Crikey, next they’ll require the children to provide their own stationery, lunch and sunsmart hat.

    Comment by Clunking Fist — October 31, 2011 @ 6:29 pm

  16. I’m going to buy shares in the newly privatised former SOEs, put pressure on the boards to increases prices and reduce maintenance on infrastructure, and then after claiming increased dividends for a few years that more than offset the power price increases, I’ll be selling them on when they’re more or less at their peak and then fucking off out of the country with the profits while the former SOEs have their shit hit the hydroelectric turbine and/or wind turbine.

    I’m following the 1980s/1990s UK model for the water company privatisation, in case you’re interested.

    Comment by Dizzy — October 31, 2011 @ 3:18 pm

    The same model that the Labour Govt. applied to the power companies already sorry pal.

    Comment by little_stevie — October 31, 2011 @ 6:33 pm

  17. Yes, little_stevie, it’s exactly the same. Except without the leprechauns running around naked in the version in your head.

    Comment by Dizzy — October 31, 2011 @ 6:41 pm

  18. That’s your wee mind, thinking about naked wee men, kinda like your wee view in the mirror eh.

    Comment by little_stevie — October 31, 2011 @ 6:49 pm

  19. Hey little_stevie, are you ever going to actually contribute, or just troll? Because if its the latter – 1995 called wanting it’s laugh back.

    Comment by Sanctuary — October 31, 2011 @ 7:16 pm

  20. But this is not even new – they said back in the Budget that asset sales would be used to pay for capital spending. It’s just that they made such a hash of explaining it the first time around, which is why even smart, otherwise well-informed people such as yourself are still under the impression that asset sales go into the operating balance (aka “the deficit”).

    Comment by Miguel Sanchez — October 31, 2011 @ 7:26 pm

  21. Contribute to the snarky “class warfare, eat the rich” type stuff rolling from the commentariat – puhrlease, it’s all so 1992.

    Comment by little_stevie — October 31, 2011 @ 7:30 pm

  22. I think I’ll just ignore you in the future.

    Comment by Sanctuary — October 31, 2011 @ 7:37 pm

  23. http://theoatmeal.com/comics/online_gaming

    Comment by Rhinocrates — October 31, 2011 @ 8:15 pm

  24. The really scary part, if you don’t mind me saying, is that you are obviously not many years out of that particular lifestyle are you.

    Comment by little_stevie — October 31, 2011 @ 8:31 pm

  25. Never in it. Bye.

    Comment by Rhinocrates — October 31, 2011 @ 8:41 pm

  26. http://theoatmeal.com/comics/christmas

    Let me guess, 40 without kids?

    Comment by little_stevie — October 31, 2011 @ 8:46 pm

  27. Sad cunt.

    Comment by Dizzy — October 31, 2011 @ 8:47 pm

  28. Meeee-yow, what a b’arch

    Comment by little_stevie — October 31, 2011 @ 9:28 pm

  29. “Kiwibank needs a capital injection to grow its commercial business, and you can’t raise the money from the private sector.”

    I don’t see why they can’t issue bonds, like any other bank. In fact, I gather there exists a report which pointed out precisely that to the government about a year and a half ago (can’t remember, but might be KPMG who did it. But never released. Perhaps someone should OIA it).

    Comment by Dr Foster — October 31, 2011 @ 9:34 pm

  30. CF @15
    Well, given it’s a primary school where the stationery bill at the start of the year comes to $37 and the sun smart hat is $10, many hundreds for the requisite device is quite a step up.

    And if the sunsmart hat gets lost during the year, or the glue sticks run out in term 4, I can afford to replace them.

    Comment by MeToo — October 31, 2011 @ 10:08 pm

  31. MeToo, a fair point. But these schools would probably provide plenty of desktop or notebook computers (although I stand to be corrected, maybe the PTA funds those out of fund raising?) but I suspect they won’t be keen to fund ipads that’ll be nicked, dropped or filled with porn as soon as the pupil gets out the gate. If the parent buys the tool, they are incentivised to trash supervise their children.

    What the fuck is wrong with books, anyway? (Apologies if the digital devices being discussed are ebooks)

    Comment by Clunking Fist — November 1, 2011 @ 1:59 pm

  32. No, CF, no notebooks provided by the school. My question to the board of trustees – one they haven’t answered to my satisfaction – is how the teacher will be able to supervise what the students are doing. At least in an IT lab you can spy on them; with BYOD and wireless, you can’t. Yet the school has a duty of care to ensure (a) the students stay on task and learn stuff – a fundamental educational responsibility I would have thought and (b) they aren’t accessing material that is inappropriate, a fundamental duty of care. But it’s trendy and the kids are enthused about it. Like I said, they see it as an extension of play. I don’t object to learning being fun, but I fail to see any substantial educational benefit in this. If it was just for enquiry learning classes (what has replaced science/social studies) I wouldn’t mind, but they are going to integrate this into all senior (primary level) classes.

    I have also asked the school what processes will be in place should someone’s device be stolen or broken. What if my child is implicated in someone else’s device being trashed? What if it was an accident (he knocked her, it fell from her hands, someone stood on it…) Am I responsbile for replacing a device worth, maybe, $700? Because I really really object to that! And it will only be a matter of time before something like that happens.

    Comment by MeToo — November 1, 2011 @ 2:35 pm

  33. In my day we didn’t have computers at school. Other schools may have, but the principal of our school was convinced that it was unnecessary because ‘the novelty would wear off’.

    Comment by Kahikatea — November 2, 2011 @ 7:33 pm

  34. Cheers MeToo. Good point re lab & supervision. But I guess many of these kids may already be sending each other photos of their privates with their phones.

    Kah, we had Radio Shack TRS80s. Two of them. In the whole school. (Ithink the school secretaryu had a computer as well). “Ample sufficient”. At my first work place, we had 1 pc to 3 staff. It got to the point where we had 5pc to 6 staff. Once they bought another couple, we could have one each on our desk (yes they had been in a special room, a bit like MeToo’s lab, until that point was reached) and suddenly productivity increased. No more twiddling thumbs waiting for a pc to come free. Our boss wondered why he hadn’t done it sooner…

    Comment by Clunking Fist — November 4, 2011 @ 1:00 pm


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