The Dim-Post

March 11, 2012

Back to basics

Filed under: Politics — danylmc @ 11:38 am

I forsook my vow not to watch Q & A this morning because I wanted to see their interview with Shearer – but I thought the real reveal came during Paul Holmes’ interview with Len Brown. Holmes pointed out that Brown demanded a 12% return from the Port, which is far higher than that of any other port in Australasia. The comparable returns are: TGA: 6.8%, LYT: 8.6%, MEL: 3.1%, SYD: 6.7%, AKL: 6%.

So he demanded to know where Brown got the figure from. Brown looked nervous and spoke very vaguely about an ‘aspirational’ figure and hedged the question, explaining that it was ‘an estimate’. So it’s not hard to draw a direct line of causation here: the Mayor demands an unrealistically high dividend from the port -> the port attempts to meet it and casualises its work-force to reduce costs -> the Mayor insists that he’s powerless to intervene.

I thought Shearer’s interview was a bit insipid – but he did say one thing that gave me a little hope about his ‘Ides of Mars’ speech this week, which was a reference to the Social Contract. Maybe I’m being wildly optimistic here, but it could be pretty smart for Shearer to go back to the very principles of left-wing political philosophy, and simply make the argument that we’re a society of people with obligations towards each other – in contrast to the right-wing view-point in which we are a competitive market-place with no responsibility to each other outside of inter-party transactions.

I’ve heard rumours that Shearer’s speech is about welfare. If you look at what’s happening in the news, the towering political issue of the moment is the labour market, and that seems like a stronger candidate. Ultimately, people care more about their own salaries, working conditions and job security than they care about the welfare system. I’ve also heard rumours that Shearer intends to signal a ‘move to the center’, viz John Key swallowing dead rats, or Blair’s fight against the left-wing of UK Labour over national ownership, to send a signal to the public that Labour is moving on.

Well, politics is all about compromise – but it’s also about timing. The Labour left is in a pretty negative place right now: this might not be the right moment for a pivot to the right.

Shearer referenced Blair in one of his early interviews, and maybe he wants to replicate Blair’s fight with the radical left, in which he won popularity with mainstream voters by forcing most of the radicals and communists out of UK Labour. But those people all left the New Zealand Labour Party decades ago.

42 Comments »

  1. ROE

    It is the Return on Equity, so the net profit is divided by total equity. The result is expressed in terms of percentage so you know what the expected rate of return on a fixed investment in a company based upon past performance is. Among all the indicators used to judge the performance of any company, ROE is perhaps the most important. It basically tells how effectively a company uses the shareholders money.

    ROE= Annual net income/average shareholders’ equity

    ROA

    This is called return on assets and here net profit is thus divided by assets. It is a measure of how efficiently a company uses its assets. It is clear that higher this ratio, the better the performance of a company as with same assets, if the company is getting better profits, obviously it is performing more efficiently. Thus if the assets remain the same, as in the case of a manufacturing company with the same plant, factory and machines, and the profits increase, it’s ROA will go up implying a much better performance. The ratio of ROA also tells how capital intensive a company is. A low ROA with huge assets indicates poor asset usage by the company.

    Difference between ROE and ROA

    One major difference between ROE and ROA is debt. If there is no debt, shareholder’s equity and total assets of the company will be same. This means that in this scenario, ROE and ROA will be equal. Now if the company decides to take a loan, ROE would become greater than ROA. A higher ROE is not always an indicator of an impressive performance of a company. In this regard, ROA is a better indicator of the financial performance of a company.

    It is prudent to have a look at both ROE as well as ROA to come to a conclusion about the financial health and performance of a company. Both provide a different perspective, but when the results of the two are combined, they provide a clear picture of the effectiveness of the management of any organization. With a high ROA and manageable debt, if ROE is also high it means that the company is generating decent profits using shareholder’s money. But if ROA is low and there is huge debt carried by the company, even a high ROE can only be a misleading figure.

    Has Len said which measurement he is referring to?

    Comment by Kevin Campbell — March 11, 2012 @ 11:52 am

  2. From the POAL annual report (to June 2011)

    Total Assets: $721.7m
    Equity: $400.9m

    Comprehensive net income: $24.08m

    ROE: 6.0%
    ROA: 3.3%

    Comment by Phil — March 11, 2012 @ 12:16 pm

  3. Another factor to bear in mind in analysing port returns is the massive increase in recent years in the value of land held by both POA and POT. IIRC both ports have been reflecting this in their books and the effect is to depress returns as a percentage, masking the underlying efficiency of their actual operations.

    O’course that might in turn suggest it would be good to move the ports rather than keep reclaiming more land to use for container storage, but I’m just an amateur, not a port director.

    I agree that Brown has a dug a pit for himself here.

    Comment by Stephen Judd — March 11, 2012 @ 12:17 pm

  4. “I forsook my vow not to watch Q & A this morning because …”

    Ah, yes … the addict always has a reason for why they’re taking just this one last hit before they kick the habit. See you next week, dope fiend.

    “Brown looked nervous and spoke very vaguely about an ‘aspirational’ figure and hedged the question, explaining that it was ‘an estimate’.”

    Today’s Sunday Star-Times has a story in its business section (not online) that claims “the secret benchmarking report which Auckland Council used to back its demand for Ports of Auckland to double its return on equity has been revealed as little more than a broker’s background report on a Singaporean company and does not even mention Ports of Auckland.” Apparently it does contain a list of ports that “have an average ROE of 13.6 per cent” … but these “appear to have little in common with Ports of Auckland.”

    Comment by Andrew Geddis — March 11, 2012 @ 1:24 pm

  5. I hope you meant his “Ides of March” speech and not “Ides of Mars” in your third paragraph.
    I would hate to think he is going to annouce that Labour’s policy will be to invade Tasmania.

    Comment by Alwyn — March 11, 2012 @ 1:59 pm

  6. >Maybe I’m being wildly optimistic here, but it could be pretty smart for Shearer to go back to the very principles of left-wing political philosophy, and simply make the argument that we’re a society of people with obligations towards each other – in contrast to the right-wing view-point in which we are a competitive market-place with no responsibility to each other outside of inter-party transactions.

    If only he would do it in practice as well as theory. I don’t really care what the deep philosophical underpinning is, so long as the outcomes are a party that actually does left-wing things. Hearing some Social Contract argument trotted out will bore me as much as it did when I was studying the idea formally, and it’s not any less prone to refutation now than when Hobbes came up with it after the English civil war, using it to justify absolute monarchy. I would rather hear what Labour’s actual policies will be.

    Comment by Ben Wilson — March 11, 2012 @ 2:14 pm

  7. ……in contrast to the right-wing view-point in which we are a competitive market-place with no responsibility to each other outside of inter-party transactions.

    If you are attempting to imply that the National Party thinks we have ‘no responsibility to each other’ then everything else you’ve written can be cast into the trash can.

    Comment by Adolf Fiinkensein — March 11, 2012 @ 3:22 pm

  8. He said right-wing, not National Party. We all know the Nats are a mix of conservatives and crony capitalists and are not pure free marketeers.

    (Nonetheless, their voter base does seem to respond to the “responsibility” message, whether it takes the form of support for lower top tax rates or beneficiary bashing.)

    Comment by MeToo — March 11, 2012 @ 3:54 pm

  9. Apparently it does contain a list of ports that “have an average ROE of 13.6 per cent” … but these “appear to have little in common with Ports of Auckland.”

    I read it. Indeed, Auckland’s port company seems to be very much less profitable than those on major trade routes, or in places with very cheap labour, or those that are also property developers. I guess property development’s got a bad rep at the moment and turning Auckland into a major trade route would pose significant physical challenges, so they’re going with “cheap labour.”

    Comment by Psycho Milt — March 11, 2012 @ 4:00 pm

  10. Now Len Brown is offering to mediate! I think he’s been shamed into it after the Anglican and Catholic bishops of Auckland both offered to mediate a resolution. Bwahahaha… shows what dithering Labour style does for ya, eh Len?😉

    As for Shearer – who cares! Unless and until he repudiates free market capitalism, he is just shilling the same trash National and Act push. So why would anyone bother…

    @ Finky – back in your trashcan, Oscar the Grouch.

    Comment by bob — March 11, 2012 @ 4:01 pm

  11. The representative of the company’s shareholders is offering to mediate? As a disinterested party, right…

    Comment by Psycho Milt — March 11, 2012 @ 4:17 pm

  12. Giovanni Tiso is doing a post-live tweeting of Shearer’s interview on the twitter machine, right now…

    https://twitter.com/#!/gtiso

    Comment by Pascal's bookie — March 11, 2012 @ 4:50 pm

  13. I think we’ll see a deaping of left-wing factionalism.

    Labour were after all falling over themselves to get photographed with Len when he was elected. At the first sign of trouble he’s a thrown to the wolves. Never mind Labour had 9 years to do something about the ports and Len can hardly be held responsible.

    Labour could have offered some historical perspective on the issue but instead scrambled to for a scapegoat.

    There is an angry left looking for enemies of the people and finding them amongst erstwhile friends.

    Comment by NeilM — March 11, 2012 @ 6:48 pm

  14. How the hell can Labour move “to the centre” to defeat National?

    They held the so called “centre” and blew it. Their voters stayed at home or the casualised
    jobs they had rather than vote Labour.

    Comment by peterlepaysan — March 11, 2012 @ 7:30 pm

  15. The last time I recall hearing a Labour politician talking about the Social Contract was in the late 1980s, when (if I remember correctly), Mike Moore used it as an argument against secondary bargaining by unions, as in “the State pays for education, health, and now family support: why do you need to be able to negotiate above award wages?”

    At the same time, top tax rates were slashed – twice.

    The outcome was a sharp rise in inequality.

    I wonder what Labour means by the Social Contract today?

    Comment by Oldie — March 11, 2012 @ 7:34 pm

  16. Mayor Brown appears to have been badly informed.

    His badly informed demand on POAL would have delighted them

    It gave them “carte blanche” in returning maximum returns to the shareholders.

    ACT and Key must be wetting themselves with laughter.

    Brown has done better than anything Banks could have done.

    Comment by peterlepaysan — March 11, 2012 @ 7:55 pm

  17. “8.He said right-wing, not National Party. We all know the Nats are a mix of conservatives and crony capitalists and are not pure free marketeers:”

    Actually you are correct, Key is a pansy socialist. (seriously)

    Comment by gn — March 11, 2012 @ 7:55 pm

  18. And to elaborate, Labour; the traditional socialist party, are just the politics of desperation and populism, – actually if they could even achieve that with a measure of principle it would an achievement.

    Comment by gn — March 11, 2012 @ 7:58 pm

  19. I’m most impressed by Shearer’s shameless populism.

    Comment by Swan — March 11, 2012 @ 8:44 pm

  20. No doubt Brown is nervous about losing votes if he appears too left wing by siding with trade unions. He’s made a mistake as most people seem to view the port authority as being heavy handed. It’s good to see Shearer and Labour having the gumption to stand by their convictions (along with Greens and Mana). It’s possible their polling shows the public support is with the workers either way it makes Brown look weak and greedy.

    Comment by Myles Thomas — March 11, 2012 @ 8:50 pm

  21. “…Key is a pansy socialist.”

    Are there other floral forms of socialism? Also, can one be a hydrangea libertarian, a chrysanthemum conservative or a trachymene populist? Maybe this is why Maggie Barry was so desperate to get into Parliament … .

    “No doubt Brown is nervous about losing votes if he appears too left wing by siding with trade unions.”

    Possibly. But also, Brown’s got a pretty big spending wish list. That money has got to come from somewhere – and raising rates that much is a non-starter, whilst central government keep shooting down his other suggestions (regional fuel tax, etc). So the Ports must have looked like a pretty pain-free way to get some extra income for the city … no doubt encouraged by port management who promised they could whip the place into shape. And once Len told the Port to double its ROE (along, it should be noted, with the rest of the council), then he’s kind of stuck with the management’s decisions on how to achieve that end … I mean, even if he could legally intervene to tell management not to casualise (which he can’t), how could he sell that step without looking like an indecisive/incompetent boob?

    Comment by Andrew Geddis — March 11, 2012 @ 9:34 pm

  22. To be fair to Len Brown, he has been caught a bit unawares by the scale of his new toy/council.

    As have all the other councilors, but because Len bought into the Executive Mayor bs, and placed himself constantly in the spotlight (talking about how *he* would sort things out, *his* plan, *his* budget, etc), he wears the bulk of the public flak.

    My point is, most mayors and councilors everywhere gad about ‘listening’ to the public, gravely listening to council staff reports, then ticking the box of whatever options staff feed them. Council staff usually make this painless by giving only one option. Seriously.

    Len got away with that crap at Manukau, where the media couldn’t be arsed scrutinising things, and which was smaller scale. But now, nominally controlling 1/3 of the nation, and right next door to most media outlets, Len and councilors are under the magnifying glass…

    Add to that the hassle of merging a bunch of councils, trying to control spendthrift policy staff, and it’s easy not to notice that the CCOs are about to go ballistic. Though a competent politician would have been watching for the CCOs – the whole point of the supercity merger – to try privatising or casualising or asset sales.

    Len’s failure was wasting time on ‘Mayor in the Chair’ crap and not watching the budget line by line…

    Comment by bob — March 12, 2012 @ 1:08 am

  23. “and simply make the argument that we’re a society of people with obligations towards each other – in contrast to the right-wing view-point in which we are a competitive market-place with no responsibility to each other outside of inter-party transactions.”

    This statement is yet another demonstration of why leftists are eternally wrong and simultaneously always such dumbfucks. They just cannot think further than their noses. They have no ability to discern the subtleties of Conservatism. And this stupidity is a lead weight that due to the undue influence leftists have over our lives, drags us in to the ditch and cripples our prosperity.

    The Conservative freely acknowledges “a responsibility to each other”. They merely disagree that government should discharge such responsibility.

    Leftists are naive and stupid fools whose idiotic belief that big government can create utopia is bringing this country and the west to a sad but obvious end. Only poverty and social destruction await us, thanks to the childish misconceptions of the idiot who writes this blog and his pathetic like thinking minions all over the globe.

    Comment by redbaiterRedbaiter — March 12, 2012 @ 7:11 am

  24. Labour people tired of labour acting like National can always shift their support to the Green Party. Maybe after the next election the Green Party could form the government with Labour as a junior partner. That seems to be where Labour is intent on going……if not 2014, then 3 years later. The trend is the thing. Sure…it could change….but it hasn’t and barring a miracle I don’t see it any time soon.

    Now….with any luck I’ve thoroughly jinxed it and Shearer’s speech will delight and amaze…..(not holding breath here, though).

    Comment by Steve (@nza1) — March 12, 2012 @ 9:26 am

  25. Ooops…someone forgot to black list redbaiter.

    Comment by Steve (@nza1) — March 12, 2012 @ 9:28 am

  26. Hi RB – awesome post. You really showed those idiot leftists! How dare the leftist group all conservatives! How dare the leftists (all of them!) make blithe and sweeping statements as to what it means to be a conservative!

    Naive and stupid indeed. All of them. There are no subtleties there at all. They’re all useless Commie scum.

    Winner!

    Comment by scaredcowTBWood — March 12, 2012 @ 9:52 am

  27. Rather puzzled by Redbaiter’s use of the Confederate battle flag. He does realise the Confederate Constitution specified that none of the Confderate States were allowed to abolish slavery, and that to uphold that `peculiar institution’, the Confederacy had strict censorship, a wide ranging spying system to suppress internal dissent, and other laws which should have RB’s conservative toes curling in horror?,

    Comment by Leopold — March 12, 2012 @ 9:54 am

  28. At the risk of encouraging more redbaiterRedbaiter fun-and-games, anyone else amused by the juxtaposition of these two statements?

    “[Leftists] have no ability to discern the subtleties of Conservatism” and “Leftists are naive and stupid fools whose idiotic belief that big government can create utopia is bringing this country and the west to a sad but obvious end.”

    Comment by Andrew Geddis — March 12, 2012 @ 10:07 am

  29. “Holmes pointed out that Brown demanded a 12% return from the Port,……. So he demanded to know where Brown got the figure from.”
    Talking about this and the whole question on Nine to Noon: Nigel Haworth, Professor of Human Resource Development at the University of Auckland and former board member of Ports of Auckland. Best coverage yet.
    [audio src="http://podcast.radionz.co.nz/ntn/ntn-20120312-0908-ports_of_auckland_dispute-048.mp3" /]

    Comment by ianmac — March 12, 2012 @ 10:44 am

  30. Agreed that the Shearer interview was a bit weaksauce. What else do you expect though? He wasn’t going to talk about policy, and the biggest question about Shearer is about what his policy vision is. To Shearer’s credit, he seems determined to shift the status quo of the Labour party. I don’t know where he’s headed, but I’m in agreement that the SQ sucks.

    Shane T is a pretty impressive addition to the show. He should push Holmes under a bus ASAP – I can’t imagine a single viewer out there in their Saturday PJs gagging for more of Holmes’ research-shy approach to current affairs. Holmes is the laziest man on TV – as shown by the debacle when he tried to talk about the Spirit Level without bothering to find out what it was about.

    Comment by Oh Busbby — March 12, 2012 @ 11:58 am

  31. “Only poverty and social destruction await us, thanks to the childish misconceptions of the idiot who writes this blog and his pathetic like thinking minions all over the globe.”

    I didn’t realise Danyl was the puppet-master of the global left wing movement. I guess you learn something new every day.

    Comment by swan — March 12, 2012 @ 12:11 pm

  32. I don’t think that National realize the obligation people have toward one another.

    That is why they cut taxes for the wealthy and cut the education and health budgets and then sell off assets so they can put money back into those things. Neither one of our two major parties sees much of a problem with white-collar crime, or workers working in bad conditions in a “tin pot” company. National has clamped down on benefits, and on state housing, and on everything that does not contribute to the bank accounts of the rich, so I feel it is fair to say that the only obligation they think they have is to advance the wealthy, whether they got that way due to merit or due to shenanigans, and to back the rich time and time again, to the detriment of everyone else, and to the eventual detriment of the rich themselves.

    Comment by Daniel Lang — March 12, 2012 @ 1:04 pm

  33. Shearer’s first big policy annoucement on the Crafar farms is interesting. He believes that this is such a huge threat to NZ’s sovereignty and econmic well-being that he has alleged those opposed to his views are unpatriotic. So such a dire problem would sugest an equally forceful response.

    But what Labour have put foward as a remedy will not guarantee that the Crafar farms would stay in NZ ownership, (even though they weren’t in the first place). There is no guarantee that under Labour they would not be sold off-shore.

    It’s much like Curran’s continued insistance that the Govt have rolling stock made in Dunedin but whenever she herself is put on the spot she cannot guarantee that Labour would do an differently.

    Line that all up with Laboiur trying to have a bob each way in the port dispute then I just see a party talking out of both sides of its mouth.

    Comment by NeilM — March 12, 2012 @ 1:30 pm

  34. “That is why they cut taxes for the wealthy and cut the education and health budgets”

    They cut the education and health budgets? Are you talking about the current administration?

    Comment by swan — March 12, 2012 @ 2:10 pm

  35. I see my assessment of Shearer’s bill was on the generous side.

    It feels to me that Labour is even now stil basing its strategy around trying to ride various waves of popular discontent without much thought going into it all because that don’t really believe what they’re saying.

    Comment by NeilM — March 12, 2012 @ 2:19 pm

  36. >It feels to me that Labour is even now stil basing its strategy around trying to ride various waves of popular discontent without much thought going into it all because that don’t really believe what they’re saying.

    It might be strategically sound, if unprincipled and likely in the short term to have a lot of casualties. If Labour hovers only a little to the left of National, it will get most of its vote growth from National, allowing coalition partners room to grow. So long as National shrinks, it doesn’t even matter if Labour just maintains, gaining Nat voters and losing traditional voters to the left. Indeed, that could be the best way to bring out of apathy the un-voters, who should by now see that voting for any one of Greens, Mana or NZ First gives them far more signaling power than voting Labour, and is unlikely to be a lost vote. The amount this bloc needs to move is really quite small, the government has a bare majority now and no viable coalition partners on the right.

    Comment by Ben Wilson — March 12, 2012 @ 3:11 pm

  37. I think that mallard and co think if we can be racists like winston we can get votes .

    Comment by graham lowe — March 12, 2012 @ 4:51 pm

  38. It might be strategically sound, if unprincipled and likely in the short term to have a lot of casualties.

    It might work for Labour especially given they should be able to rely passively on the inevitable disenchantment with the govt especially when times are tough.

    But it is not the new look Labour Shearer promised.

    And I think that basic lack of credibilty will work against them.

    If they are trying to appeal to those who want simple, immediate solutions to complex issues such as foreign investment, the ports, oil exploration etc they might not keep that support for long since their solutions consist of smoke and mirrors.

    Comment by NeilM — March 12, 2012 @ 7:11 pm

  39. “I didn’t realise Danyl was the puppet-master of the global left wing movement. I guess you learn something new every day.”

    @ swan – You didn’t think the Muppet movie was done for artistic reasons did you? ‘Am I a man or a muppet?’ was hardly veiled, dude! But thanks for outing Danyl and his new muppet army; Miss Piggy will pay a call to discuss restorative justice, muppet style…

    P.S. David Shearer – pull on his hair, and his fake skin suit comes off, to reveal…Beaker. The incomprehensible ‘meeps’ Beaker-Shearer utters are actually Labour policy.

    Comment by bob — March 12, 2012 @ 8:14 pm

  40. “it could be pretty smart for Shearer to go back to the very principles of left-wing political philosophy, and simply make the argument that we’re a society of people with obligations towards each other – in contrast to the right-wing view-point in which we are a competitive market-place with no responsibility to each other outside of inter-party transactions”

    This statement is ridiculous. The entire idea of democratic government stems from the social contract – the left and right has have different conceptions of it. This is as ridiculous a straw-man of the “right” as saying that all people on the “left” are communists – true story.

    Comment by Matt Nolan — March 13, 2012 @ 1:05 pm

  41. This statement is ridiculous. The entire idea of democratic government stems from the social contract – the left and right has have different conceptions of it. This is as ridiculous a straw-man of the “right” as saying that all people on the “left” are communists – true story.

    But – and we’re talking in generalities here – the contemporary right-wing conception of government is a night-watch state. It’s democratic, sure – but it basically just exists to ensure personal safety, enforce contracts and safeguard property rights. There’s no conception of positive liberty beyond the right to vote.

    Comment by danylmc — March 13, 2012 @ 2:59 pm

  42. But – and we’re talking in generalities here – the contemporary right-wing conception of government is a night-watch state.

    I guess it depends on which contemporary right wing conception of government you mean.

    The New Azerbaijan Party’s (ostensibly) centre-right racial nationalistic Stalinist shtick might be the exception that proves the rule, but it’s probably fair to say that that your explanation fits the evolution of anglosphere right wing ideology away from genuine social conservatism to Randian wet dream.

    Comment by Gregor W — March 13, 2012 @ 4:01 pm


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