The Dim-Post

August 27, 2013

Money comparatively well spent

Filed under: Politics — danylmc @ 12:48 pm

Stuff reports:

The three contenders for the Labour leadership have confirmed taxpayers are stumping up for the cost of them flying around the country to pitch for votes.

Labour MPs are also likely to charge their flights to the taxpayer for attending any of the 12 candidates meetings planned around the country over the next two weeks.

The three contenders – Grant Robertson, David Cunliffe and Shane Jones – confirmed they would use the travel perk to campaign over the next two weeks.

Three MPs flying around the country for two weeks might add up to, I dunno, sixty grand? Which isn’t nothing, but this weekend I read Rod Oram’s column on the spectacular disaster that was the Mighty River Power float, and the government’s attempts to avoid repeating those blunders when it sells Meridian in November. The government spent about $65 million selling MIghty River, around $30 million of which went to Goldman Sachs, Macquarie Capital and Credit Suisse for their world class expertise.

All up the investment banks managing the asset sales IPOs will earn about $100 million, and because their launch of MRP was such a catastrophe they’ve cost the New Zealand taxpayer an ‘unknown and unknowable’ amount of money in interest free loans to Meridian investors (the Greens reckon the cost is about $40 million). Flying Jones, Robertson and Cunliffe around the place seems like a better investment than just dumping skip bins filled with money over the heads of investment bankers.

82 Comments »

  1. “Over” the heads, maybe. “On” the heads, now, that could prove to be the most fruitful investment the country’s ever made.

    Comment by giovanni — August 27, 2013 @ 12:53 pm

  2. How much did Groser’s WTO bid cost? Seems like that would be a reasonable comparison.

    Comment by pete — August 27, 2013 @ 1:05 pm

  3. Fibre to the home, Rugby World Cup, Families Commission, Ministry of Womens Affairs, buy-back KiwiRail, CAGW research, I don’t mind, I have fucking shitloads of money where that tax comes from.😦
    Did they put the IPO out to tender…no?

    Having been involved with IPOs before, I am always at a loss to understand what they do to earn the money (other than the underwriting). Directors and founding shareholders shrug and say “what can you do”?

    (Giovanni “LIKE”)

    Comment by Clunking Fist — August 27, 2013 @ 1:14 pm

  4. Let’s say that each flight costs $250, on average. Auckland – Wellington – Christchurch combinations are usually cheaper, but some of the shorter domestic flights are more expensive. They’re not going grabaseat Let’s say they make a return flight every single day for the next three weeks. That’s $31500. In the context of other government spending, that’s not a lot.

    Let’s say that they would have made one third this amount of travel anyway, being busy senior Members of Parliament. We’re essentially spending $20,000 so that NZ’s second largest party can have a democratic choice of leader. We spend far more than that every time Labour or the Greens gets sustained media and Judith Collins announces a distractionary “tough on [insert hated group here]” policy to reset the dialogue. That happens about once every three weeks.

    Comment by George D — August 27, 2013 @ 1:23 pm

  5. Pete: not really. That was specificly approved by Cabinet. This is use of a Parliamenary entitlement. Its clearly within the rules, but as everyone other than a politician knows (in that there are no restrictions on the purpose of MP’s domestic travel), that doesn’t make it right.

    The unlimited domestic travel entitlement exists not just so that MPs can get from their constituencies to Wellington every week, but also so they can do their wider democratic job: investigating problems. Talking to us. Communicating policy. Its what lets them show up in Christchurch or Greymouth to show solidarity, and what lets them go to the site of a factory closure in South Auckland to say “we have a different vision for jobs”. And these are a core part of the wider democratic service we get from our MPs (and which we pay them for).

    To those going “yeah sure, but the party purpose taints it”, we don’t just get democratic service from individual MPs – we also get it from parties. The Speaker’s Directions recognise this. “Parliamentary business” includes any business “a party could be reasonably expected to carry out in its capacity as a party, and that complements the business of the House of Representatives”. Parties need leaders, just as they need policy platforms, and both complement parliamentary business. Which is why when all those National MPs descended upon Nelson two weeks ago for their party conference, no-one batted an eyelid at the fact we were paying for it.

    Comment by idiotsavant23 — August 27, 2013 @ 1:31 pm

  6. Talking to kiwis and getting some genuine economic debate going in NZ? $60k is a bargain. Compare and contrast with whatever you like!

    Comment by Rob — August 27, 2013 @ 1:33 pm

  7. Mighty River shares slump to new low:
    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11115115

    Comment by MeToo — August 27, 2013 @ 1:34 pm

  8. I’m assuming that when National last had a leadership election, their candidates also flew around the country on the taxpayer dollar, or possible just over to Langley to receive instructions?

    Comment by richdrich — August 27, 2013 @ 1:39 pm

  9. “Labour MPs spending money how they are allowed to, just like every other MP”

    Jees MSM – way to pull a story out of your collective backsides and not have the slightest concern with the fact your engaging in anal trivialities and outright smearing

    Comment by framu — August 27, 2013 @ 3:13 pm

  10. Oddly enough I’m finding Jones the more convincing.

    Robertson tied himself in knots on morning report about what he knew of the intended coup and i get the feeling that anytime soon Cunliffe will buy a mullet wig,

    Jones is what he is, the other two are trying to appear as something the aren’t.

    Comment by NeilM — August 27, 2013 @ 3:44 pm

  11. Oddly enough I’m finding Jones the more convincing.

    It’s official. You are Hooton bait.

    Comment by Gregor W — August 27, 2013 @ 3:53 pm

  12. #9 “collective backsides” and “engaging in anal trivialities”

    Let’s leave candidate sexuality out of the discussion…:-)

    Comment by PPCM — August 27, 2013 @ 4:13 pm

  13. PPCM – touche🙂

    but you missed out “smearing” – all puns are intended

    Comment by framu — August 27, 2013 @ 4:38 pm

  14. @Gregor W

    Genuine observation, not being a Jones fan i did find him the least contrived.

    And I think he has the most chance of raising Labour’s odds.

    Most likely it will be Cunliffe but that’ll be a very strange disaster waiting to happen.

    But apparently about 50 years ago he said some not stupid things to telco execs.

    Comment by NeilM — August 27, 2013 @ 5:52 pm

  15. “Genuine observation, not being a Jones fan i did find him the least contrived.” Cunliffe the most contrived by a considerable margin. Was in a group of people of mixed centre and centre left political allegiance who heard parts of Cunliffe’s “I have a dream..” moment at his launch and the universal reaction was laughter

    Comment by Tinakori — August 27, 2013 @ 6:15 pm

  16. Seeing as NeilM is just a second-rate Pete George and there’s no way he’ll be voting Labour I’m not sure why he thinks anyone cares what his opinion on who should lead the party is.

    Just running interference for his pals as usual I guess.

    Comment by Rob — August 27, 2013 @ 6:18 pm

  17. Cunliffe is a cross between Rudd and Curran but trying to sound like Obama

    Jones is a cross between Cullen and Mallard and not trying to be much else

    Robertson – nothing springs to mind.

    Comment by NeilM — August 27, 2013 @ 6:40 pm

  18. As incredibly enlightening and insightful as that was, please refrain from showering us with further backwash from your awe-inspiring knowledge faucet.

    Comment by Rob — August 27, 2013 @ 6:50 pm

  19. So $100m that’s what 1% of the value of the assets? Getting it right (or wrong) will be worth potentially far more than that.

    As for the interest free cost nonsense- the value of this will affect the sale price. They wouldn’t offer it if it wasn’t worth it in terms of the sale price. You are looking at one side of the ledger only.

    Try harder Danyl, you are now officially more of a boring shill than DPF.

    Comment by Swan — August 27, 2013 @ 7:51 pm

  20. Even the Treasury’s numbers agree that selling the assets is “getting it wrong”.

    Spending $100m to facilitate a deal where you end up with less funds than if you didn’t go ahead with it isn’t very good value for money, I’m stunned that a towering economic genius such as yourself can’t see that.

    Gotta love how the right hates interest-free loans for education but sees interest-free loans for investors as A-OK.

    Comment by Rob — August 27, 2013 @ 8:18 pm

  21. So $100m that’s what 1% of the value of the assets? Getting it right (or wrong) will be worth potentially far more than that.

    And that $100m produced a book value for the company that the market presently regards as being some 12% overvalued. Just what does “getting it wrong” look like?

    They wouldn’t offer it if it wasn’t worth it in terms of the sale price.

    They might if they thought there was a real risk that the interest in the float from individual purchasers (the mythic “mums and dads” of political discourse) is going to be so low that it would make the sale a political disaster. In other words, you’d be a bit silly to think the only concern here is “how do we get the top dollar for this asset?”

    Comment by Flashing Light — August 27, 2013 @ 8:23 pm

  22. If the shares really were 12% overvalued the government just netted something like $400m. It’s beginning to sound like money very well spent!

    Comment by Swan — August 27, 2013 @ 8:58 pm

  23. Sorry $200m

    Comment by Swan — August 27, 2013 @ 9:01 pm

  24. Except that the numbers on the sales still don’t add up.

    I’m sure you just forgot to address that though… try again?

    Comment by Rob — August 27, 2013 @ 9:07 pm

  25. Rob,

    It is about risk. Of course you expect higher returns from an income generating asset than from paying down debt – the risks are different.

    Comment by Swan — August 27, 2013 @ 9:19 pm

  26. If the shares really were 12% overvalued the government just netted something like $400m. It’s beginning to sound like money very well spent!

    Unless, of course, you are expecting to sell another 2 power companies to the same suckers in the next year. In which case, overcharging by 12% (or asking for $2.50 for shares currently trading at $2.19) on the first sale is a pretty stupid thing to do – something you’d expect your $100 m outlay on “expertise” might have avoided. Because it so burns the purchasers that in order to tempt them back, you have to do things like offer them interest-free loans to buy the shares in the next power company you’re hawking off.

    Comment by Flashing Light — August 27, 2013 @ 9:23 pm

  27. Professional investors are involved in the book build – they are not going to feel burned – they helped set the price!

    Comment by Swan — August 27, 2013 @ 9:32 pm

  28. That would be the debt that was created by the tax cuts that National enacted in their first term?

    Exactly what looming risk did the government negate by swapping half of MRP for what amounts to approximately 17 years of dividends?

    How are the government’s coffers better off by permanently cutting off 49% of future dividends, which from memory work out to an investment paying 7% p.a. for all the powerco’s combined, instead of borrowing at 4%?

    Please show your working and consider forwarding your findings to the Treasury.

    Comment by Rob — August 27, 2013 @ 9:35 pm

  29. My favourite in terms of worrying around for some bargain basement scandal is DPF’s claim that, on the one hand, he doesn’t really care where Cunliffe lives or why, but on the other hand, he really hopes someone digs into the exact timing of Cunliffe’s wife’s and children’s educational and work choices to see if his explanation for why he lives where he does is true.

    Cue, in three weeks, DPF explaining that he would never have cared about the question, but the real issue is the lying!

    Comment by Hugh — August 27, 2013 @ 10:08 pm

  30. Professional investors are involved in the book build – they are not going to feel burned – they helped set the price!

    So … now we’re selling off the power companies only to “professional investors”? I thought it was an opportunity for us all to share in the asset?

    Point being – what’s the point of this policy again?

    Comment by Flashing Light — August 27, 2013 @ 10:24 pm

  31. Goodness Hugh, you are such a cynic. DPF has always had the good of the nation at the heart of his every thought and action.

    How could you??!!??

    Comment by Lee C — August 28, 2013 @ 5:56 am

  32. So Rob,

    Presumably you would support a policy of the government borrowing up to its credit limit (say $100bn) and buying up income generating utility assets? We’d be laughing.

    Or, conversely, you must think the lenders loaning the government money at 4% must all be idiots – they can buy shares in MRP (and contact and Trustpower and many other NZ or intl utilities) and get 7% returns!

    Rob with your market beating understanding of risk you should be able to make a fortune! I’ll flick you a grand when you set up your hedge fund.

    Comment by Swan — August 28, 2013 @ 8:22 am

  33. Flashing Light,

    Deleveraging the balance sheet?

    Its the most boring anodyne government policy that actually gets talked about. Why do you even care?

    Comment by swan — August 28, 2013 @ 8:29 am

  34. Oh, I don’t know, swan. Maybe because the Government made it a flagship issue in its reelection campaign, and it’s nice to see how well it’s carrying out the process? Because it’s one thing to say that trading equity for debt makes economic sense – and it’s then another to actually carry out that conversion.

    However, if you’d care to provide me with a list of your approved policies that ought to be cared about and discussed, I’ll try and stick to those in future.

    Comment by Flashing Light — August 28, 2013 @ 9:17 am

  35. Deleveraging the balance sheet?

    What the fuck does that even mean in the context of SOE powercos, swan?
    The government is not a company and can issue sovereign debt the last time I checked.

    The selldown is a smash and grab, plain and simple.

    Comment by Gregor W — August 28, 2013 @ 10:21 am

  36. What Gio said first up! The thought of a skip full of bundles of heavy paper notes (can we have coins too?) dropping on investment bankers warms the cockles of my heart😉

    Oh, and it’s not like the MSM had anything else to report on, aye? Like Key’s refusal to rule out taking part in an illegal bombing/invasion of another nation (Syria). Can you you imagine the 1939 conversation?
    MSM: Mr Churchill, how do you answer the claim you spent 30 pounds on cigars and brandy?
    Winston C: The more pertinent question is, who will halt the annexations of Herr Hitler.
    MSM: Yes, but, the cigars, … and the brandy …

    Sure, our media are mentioning the West’s rush to (un)declare war on Syria and bomb them, but none seem keen to ask obvious follow ups, like ‘how do you reconcile your plan to attack a nation not threatening us with international law threat declares such acts illegal?’ or ‘How does bombing Syrian military units (who may or may not have chemical weapons) dispersed in urban areas protect Syrian civilians?’

    Comment by bob — August 28, 2013 @ 11:10 am

  37. oops – ‘that declares such acts illegal’.

    Comment by bob — August 28, 2013 @ 11:11 am

  38. That’s a pretty pathetic strawman Swan, I have never said anything of the sort.

    Still waiting to see how you figure that selling assets generating a 7% return in order to avoid borrowing at 4% makes sense, I’d also like to know what imminent risk to the country the power company firesale is going to avoid.

    Not that the money is even being used to pay down the debt incurred by Key & English’s economic mismanagement, it’s being handed out to farmers in Canterbury so they can increase their private fortunes while further toxifying the rivers and fund punitive drug testing regimes for beneficiaries (to name a few of the “investments” that the asset sale money is being spent on).

    Don’t even get me started on how stupid it is to hand over 49% of the control of an essential requirement for much of New Zealand’s economic activity (electricity) to a select few. This is effectively placing a choke-chain around the neck of New Zealand’s productive sector, handing the leash to a small group private interests and asking them nicely to not yank too hard.

    How on earth your miserably narrow mind can square this arrangement with your professed love of a free market and even playing field I do not know. Your ardent support for the government creating such a ridiculous imbalance of economic power simply highlights that your claimed ideology is really a woefully inadequate fig-leaf for selfishness and greed.

    But we all knew that already.

    Comment by Rob — August 28, 2013 @ 11:35 am

  39. “Still waiting to see how you figure that selling assets generating a 7% return in order to avoid borrowing at 4% makes sense”

    The government doesn’t have to borrow at 4%. It can print money if it wishes. That makes National’s decision to sell off the family silver all the more irresponsible.

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10788041

    Comment by Ross — August 28, 2013 @ 1:02 pm

  40. Rob,

    If you dont understand the basics of risk adjusted returns, I’m sorry I am not going to give you a lecture on it via a blog comment. Try google.

    Comment by swan — August 28, 2013 @ 2:14 pm

  41. Looks like I understand the concept better than you.

    This is the third time I’m asking you to define the risk to the country that has been negated this justifying the sale of the power companies and the subsequent permanent loss of income. I guess you got nothing?

    Dropping buzzwords doesn’t make you look smart, it makes you look like a fucking tool.

    Comment by Rob — August 28, 2013 @ 6:46 pm

  42. Calm down Rob. It is fairly basic stuff that the expected rate of return from equity is going to be higher than from debt because of risk.

    The risk is, obviously, that the return on the MRP assets are less than forecast.

    The other risk mitigated by deleveraging is the risk that the NZ government will become credit constrained a la Southern Europe.

    Comment by swan — August 28, 2013 @ 7:16 pm

  43. As it turns out the return on the MRP assets are actually higher than forecast, what did you think people were going to stop buying electricity all of a sudden?

    Selling 49% in MRP and forgoing the dividends has actually added an extra 120 million dollars to the annual deficit. As the Treasury predicted, the books are worse off as a result of hocking off MRP.

    There has never been any risk that the New Zealand government would have it’s borrowing ability restricted if it didn’t sell a 49% stake in the power companies. I challenge you to provide evidence to the contrary.

    Comment by Rob — August 28, 2013 @ 8:26 pm

  44. Rob

    Yeah unfortunately you can’t predict the future by looking backwards.

    Obviously it takes a few Athenian metro lines to break the camels back, Rob

    Comment by Swan — August 28, 2013 @ 8:44 pm

  45. Swanny boy, you are indeed the fool that cannot but help to prove it complete by not shutting T F up.

    Comment by frankdb — August 28, 2013 @ 9:22 pm

  46. When you’re done with Rob, you can explain how not selling off half of each publicly-owned power companies would make us just like Greece.

    Comment by Psycho Milt — August 28, 2013 @ 9:22 pm

  47. Yeah unfortunately you can’t predict the future by looking backwards.

    No. But you can confirm a prediction by looking to see how well it matches up to future events in the real world. Which is how Rob used the term … Treasury warned this might happen, but the Government decided it knew better and so chose to pursue its (ideologically preferable) policy. That’s a political call that then permits us to judge its basic competence and reliability.

    Point being … what’s the point of this policy again?

    Comment by Flashing Light — August 28, 2013 @ 10:36 pm

  48. Cracks me up how financially illiterate these financial whizzkids are.

    Maybe Swan will be back when he finds another 1st-year economics textbook to copy paragraphs from.

    Comment by Rob — August 28, 2013 @ 10:58 pm

  49. Firstly, while in general there may be a difference in return between debt & equity, that has no bearing on this specific highly particular case. Secondly, the relationship of risk to return is a highly contentious area. Thirdly, everybody and their dog knows that funding government from the sale of assets (or using them to pay down debt) or whatever is a completely ludicrous plan, and that includes arch-privatisers. The point of privatisation is to let market discipline improve things (something that can hardly happen when the government still owns 51%) not to make money for the government.

    Comment by Keir — August 29, 2013 @ 8:53 am

  50. Psycho – nice strawman

    Flashing – They sold MRP about 6 months ago so yeah not a huge amount of data when we are talking about the long term performance of a company. Given the market thinks it is worth less than what it listed for they obviously arent reading into it what you guys are. I assume y’all are piling in though.

    Rob – Looks like I won that argument. Excellent.

    Comment by swan — August 29, 2013 @ 9:05 am

  51. Given the market thinks it is worth less than what it listed for they obviously arent reading into it what you guys are.

    So does this mean that you are accepting the MRP shares were overvalued at their offer price, and that the money dumped on investment banks was largely wasted, and that danyl’s original description of the “spectacular disaster that was the Mighty River Power float” was essentially correct?

    Comment by Flashing Light — August 29, 2013 @ 9:57 am

  52. Stop trying to have it both ways flashing. There was a transaction, either the govt lost or gained based on the price paid. Not sure how getting a full price makes it a spectacular failure? I am trying to sell a second hand car. I think I might be able to get $3k for it. If I get $3400 does that make it a spectacular failure?

    Comment by swan — August 29, 2013 @ 11:14 am

  53. But MRP was not a second hand car, it was a dividend generating asset owned by the state, operating in a strategically important market. One of these things is not like the other.

    Anyway, even on its own terms, the analogy has a problem. If you’re planning to sell any more second hand cars in the near future, and the punters think you’ve been gouging them for a high price, they might reasonably be a bit wary and go elsewhere next time. Whoops!

    Comment by Dr Foster — August 29, 2013 @ 12:47 pm

  54. Also, uh, Swan, are you aware of the concept that some economic transactions increase welfare considered overall (i.e are non-zero sum) but that conversely, there are some economic transactions that decrease welfare overall (i.e are negative sum)?

    Comment by Keir — August 29, 2013 @ 12:56 pm

  55. Swan,

    If you don’t understand the basics of repeat player game theory and its application to the Government’s overall asset sales programme, I’m sorry I am not going to give you a lecture on it via a blog comment. Try google.

    Comment by Flashing Light — August 29, 2013 @ 1:08 pm

  56. The other risk mitigated by deleveraging is the risk that the NZ government will become credit constrained a la Southern Europe

    What a load of hairy Balzac. Please provide evidence form a single authority that suggests this might eventuate.

    Comment by Gregor W — August 29, 2013 @ 1:59 pm

  57. I wouldn’t hold your breath Gregor, I already asked him and he conveniently overlooked the request. Deep down I think he knows it’s bullshit as much as you do.

    I’m not sure what exactly you think you won here Swan.. seems to me like you’re just digging a deeper and deeper hole and making a total fool of yourself in the process. Nothing new here I suppose.

    Seeing as the risk of the returns from MRP decreasing are virtually nil, and the risk that the New Zealand government would be unable to borrow if it didn’t flog off half of the power companies are exactly zero then I’d love to see your little risk adjusted return calculation.

    The fact that none of the other freemarketist fanboi regulars aren’t chipping in to support you should tell you something.

    Comment by Rob — August 29, 2013 @ 3:36 pm

  58. Flashing, Dr

    Perhaps in my brevity you missed the full point of my analogy. I specifically choose $3k and $3400. I didnt say – I am trying to sell my car – I rolled it a couple of weeks ago, but have managed to beat out the dings and straighten out the chassis. There is a bit of rust too – the gearbox is being held on by a few dozen cable ties. The point being – in the case of just the small price variance, would anyone really feel ripped off? In the second case you feel ripped off. But the MRP float represents the first, not the second case.

    Rob, Gregor,

    Wikipedia lists over a hundred instances of sovereign debt crises in the last 200 years. But of course NZ is immune isn’t it? The sale or otherwise of MRP will make little difference, of course. You guys are like those who, upon seeing a thin man refuse butter on his toast, cry “A fool and a killjoy! That little slab of butter wont make him fat!”

    As for the risks to MRP. Of course nothing can touch MRP. With their aging dams in a volcanic and seismically active environment. I assume you are an dam safety expert with an intimate knowledge of Waikato River geology? What is your take on the dynamic properties of Ignimbritic cores? Of course there is no risk that resource consents will not be renewed, or that water rights will be taken, or charged for.

    No, of course everything will be fine. Just like solid energy I guess.

    Comment by swan — August 29, 2013 @ 8:08 pm

  59. Swan, Rt Hon

    I think the full point of your analogy is somewhat lost due to the fact that it doesn’t make a lot of sense and its relevance to the point at issue is not very clear. However, I guess we’ll see how much difference “the small price variance” in MRP’s offer price and current price makes once Meridian’s sale commences and we compare the demand for it vis-a-vis MRP. All I’ll say is, the fact the Govt feels the need to offer a 40% interest free loan to buy the shares does not radiate confidence.

    Comment by Flashing Light — August 29, 2013 @ 8:27 pm

  60. Wikipedia lists a lot of stuff, swan.
    But I asked a specific question.

    Comment by Gregor W — August 29, 2013 @ 8:59 pm

  61. Gregor:

    http://www.stuff.co.nz/dominion-post/news/politics/5708882/New-Zealands-credit-rating-downgraded

    Your welcome, it took me no time at all.

    Comment by swan — August 29, 2013 @ 9:21 pm

  62. Oh yes, the private investors in MRP will selflessly leap to our country’s aid when the earthquakes and volcanoes destroy the dams, just as the insurance companies have honored their contracts without delay and promptly stepped in to fund the rebuild of Christchurch. Who even knows why we bothered with the Earthquake Commission when we can rely so fully on the integrity of private enterprise.

    The plain fact is that if the generating plant is destroyed the country still needs electricity and it will be the taxpayer who has to pay for the replacement – just as it was the taxpayer who paid for the construction of the plant in the first place.

    No one asked you about other country’s historical sovereign debt crises, we want to see the evidence you have that in the right-here-and-now (that’s New Zealand Aotearoa, circa 2013 in case that has passed you by as well), the government is at risk of having it’s borrowing ability curtailed unless it sells 49% of the state-owned power generators.

    Indigenous water rights were only brought to the fore when the government announced it’s intention to offload 49% of the hydroelectric generators to private interests. Iwi have stated numerous times that they were content to let the stations use the water for the benefit of the entire country.

    Your suggestion that the government would hog-tie it’s own power generating facilities by not renewing the resource consents required to keep them operating is probably the most ridiculous thing you have said so far.

    The international coal market is well known to have cyclical booms and busts whereas demand in the domestic electricity market is somewhat static/slowly growing. You mean to say an expert energy-market analyst such as yourself isn’t aware of this? What firm do you work for again?

    Despite being well-versed in car maintenance, I don’t know what the fuck you are on about with your rambling car analogy.. the only thing that can be easily derived from that mess is that you have little comprehension with regards to the both the technical specifics and the legalities of vehicle repair and maintenance. Oh well, just another topic you haven’t the slightest clue about.

    Your posts are becoming further and further removed from reality and taking on an increasingly desperate tone, maybe it’s time you gave up?

    Comment by Rob — August 29, 2013 @ 9:38 pm

  63. With regards to your stuff.co.nz link, can you please post the one you have where it shows our credit rating has been returned to AA+ because of the government’s asset sales programme? I can’t seem to find it anywhere…

    Comment by Rob — August 29, 2013 @ 9:40 pm

  64. Did you even read that article, swan?

    Comment by Gregor W — August 29, 2013 @ 9:46 pm

  65. ‘Compared to other countries New Zealand had come through the recession reasonably well and the downgrade reflected the “unusual position” of high private and low public debt.’

    Heh.

    Comment by Rob — August 29, 2013 @ 9:56 pm

  66. Rob,

    It sounds like you have accepted there are in fact risks to MRP and to the governments ability to borrow. Great. My car analogy was a little hastily put together – it sounded good in my head I’ll have you know! The point was, noone has been ripped off by the government – we havent suddenly been told that there is a hole in the bottom of lake Taupo and there will be no water running into the Waikato in a few years, the share price has just dropped a little as often happens with share prices. Anyway we will let that lie – Flashing has suggested we leave it to the market to see if they feel burnt by our rapacious treasury. Good idea I think.

    Comment by swan — August 29, 2013 @ 9:57 pm

  67. Time to put down the pipe bro.

    Comment by Rob — August 29, 2013 @ 9:58 pm

  68. Gregor W,

    It might not have said it in the article, but an AA credit rating means that the agency thinks there is a non-zero risk of default.

    Comment by swan — August 29, 2013 @ 9:59 pm

  69. If you’d just slow down and read what I wrote you’d see that the risk to MRP from volcanoes and earthquakes are in no way negated by 49% of the company being in private hands.

    Comment by Rob — August 29, 2013 @ 10:01 pm

  70. Of course not Rob. Here are some basics on risk management. Risks can be eliminated, minimised, transferred or accepted. By selling MRP the government has transferred the risks to the new owners.

    I take it you are making an argument that the government will take it upon itself to build more generating capacity should NZ face a negative supply shock to our electricity markets? That possibility has no connection that I can see to the risks to MRP. You will have to spell that out to me.

    Comment by swan — August 29, 2013 @ 10:07 pm

  71. Swan – there is a non-zero risk of the sun failing to rise tomorrow, but I suspect Moody’s hasn’t factored that.

    Comment by Gregor W — August 29, 2013 @ 10:10 pm

  72. Oh great, you found that other textbook. Nice.

    The problem is, as I explained, that the government hasn’t transferred that risk. Can you point to the part of the MRP share offer where it states that owners of the shares are obligated to rebuild the power stations in the event of them being destroyed by a natural disaster? I’m not convinced that all those Mums & Dads have that sort of cash…

    You might have had a scrap of an argument if the profits from the sales were being set aside for the repair of energy infrastructure in the event of it being damaged in a disaster but as we all know that is not what the government has planned for the money.

    Yes, I am saying that if a natural disaster damages enough of our generating infrastructure that there is no longer enough electricity to keep the lights on in Aotearoa then the government will step in with taxpayer funds to build more generators. I wish I could say that Enron would rush to our aid but I heard that they ran into some trouble a while back…

    Comment by Rob — August 29, 2013 @ 10:23 pm

  73. Brian Bruce’s doco Mind the Gap is definitely money well spent by NZ on Air.

    Interesting to see this in the context of what Cunliffe has also been saying in his speeches. Good timing

    Comment by Alistair — August 29, 2013 @ 11:58 pm

  74. Rob,

    You are talking about a different risk, which is the risk to the wider economy of power shortages, and the governments role as builder-of-generating-capacity-of-last-resort. This is different to the risk to MRP itself.

    Comment by swan — August 30, 2013 @ 9:37 am

  75. Gosh this is quite combative and ultimately a little boring isn’t it.

    Comment by TransportationDevice A7-98.1 — August 30, 2013 @ 12:00 pm

  76. “Brian Bruce’s doco Mind the Gap is definitely money well spent by NZ on Air.”

    You communists are just so damn offensive. You want to make celluloid fantasies do it with your own damn money.

    Why the fuck not??

    FFS, ill educated narrow minded risk averse no skin in the game take take take bludgers and theives. Get some damn morality for chrissakes.

    Comment by redbaiteredbaiter — August 31, 2013 @ 12:59 am

  77. You speak of morality with that potty mouth? For shame, sir. For shame.

    Comment by Flashing Light — August 31, 2013 @ 4:25 pm

  78. I think redbaiteredbaiter’s head just exploded. What a shame.

    Comment by Guy Smiley — August 31, 2013 @ 5:22 pm

  79. Redaitedbaiter you picked up the turps instead of the meths. Moron

    Comment by Alistair — August 31, 2013 @ 8:26 pm

  80. I’m sure after a brief period of inactivity he’ll return as Redbaiteredbaiteredbaiter

    Comment by Hugh — August 31, 2013 @ 8:51 pm

  81. No, he’ll wait for 1 more comment because 5 on 1 is his favourite game. The one always wins, and the 5 get sticky.

    Comment by Ben Wilson — August 31, 2013 @ 11:48 pm

  82. I’m afraid this post lost me at ‘Comparatively’.

    Comment by Lee C — September 4, 2013 @ 6:44 am


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