I don’t know how those who were pushing property as a good thing to put your money into, even after the crash had started in 2008 and beyond, can sleep at night. I am talking about various media outlets, economists, lenders, banks and building societies, chartered surveyors, estate agents, developers, politicians. They have created misery for thousands of New Zealand residents who believed the hype unknowingly, who believed the so-called experts

John Key wants to partially sell of state assets, including Mighty River, Meridian, Genesis and Solid Energy, and part of the government's stake in Air New Zealand ('mixed model ownership', they like to call it, or 'privatisation', if you're using the accurate turn of phrase).

The government claims that the revenue from these sales will help pay down our debt, and that mum and dad investors will be able to buy shares. Great.

But this rhetoric ignores the facts, and history. Firstly, we already own our state assets. All of us.

It's naive to claim that selling them off gives us more of a stake. In fact, when Contact Energy was sold, the shares may well have started out being owned by Kiwis, but when a better price came along, who could blame them for selling them to the highest bidder.

The result is that 2/3 of Contact energy dividends, in excess of $1billion worth, are now owned offshore, by mums and dads in distant lands.

Take away the working for families tax credits and rent subsidies and house prices will fall.House prices are being held up by Govt handouts.

National’s decision to fund new infrastructure by selling state-owned assets that have returned, on average, 17.6 percent per annum over the last five years.
If you remove the impacts of the global financial crisis from the results, the average total shareholder return from state-owned assets is 21.5 percent

National have come up with the most expensive way ever devised to pay for new infrastructure, selling assets earning 18-22 percent per annum instead of raising debt that would cost 4-6 percent per annum.

A fire sale of state-owned assets will result in New Zealand being poorer and the bankers will be richer.

These asset sales will result in state-owned assets ultimately being foreign owned, because there is no mechanism to stop New Zealand investors selling to foreign interests

Sarah, if you really believe these assets can return 16% then you can relax. Proper analysis might just show you a different picture, but if they really had been returning 16%, the IPO will be priced to reflect that which would mean a real windfall for the govt.

The price we get for assets versus the cost of borrowing the same amount is a good place to inform a view as to whether we sell or hold.

The secondary market in 10-year government bonds prices them to yield 4.4 per cent. The yield on five-year government bonds is just 4 per cent. To get these asset sales, the Government will need to price the companies at price-earnings multiples of somewhere around 14 to 16 times, which implies after-tax earnings yields of 6 to 7 per cent.

In lay terms, that means the Government is proposing to sell assets producing returns of at least 6 to 7 per cent a year after tax plus growth, when it could issue debt costing just 4 to 4.4 per cent. On the face of it, this doesn't look particularly bright, does it?

But don't expect too much negative comment, because many people stand to benefit from these transactions. The management and/or directors of the privatised companies will be looking for share options that will massively reward them if the companies do well.

Investment bankers, brokers, solicitors and financial advisers will all get to clip the ticket as the initial transactions occur, and then have another go when Mum and Dad ultimately sell their shares.

Assuming total asset sales of $6 billion and a sales price implying an after-tax earnings yield of 6 per cent on the assets sold, the assets proposed to be sold will generate profits of $360 million.

The interest saved on $6 billion at 4 per cent is just $240 million, so immediately this transaction would see the Government worse off by $120 million a year if all the SOEs paid out all their profits as dividends.

Again, the economics of the sale option aren't looking all that compelling. But this analysis ignores growth. If the SOEs' profits grow at the rate of inflation plus 1 per cent, the total excess return would be the difference between the earnings yield plus growth of 4 per cent less the cost of debt, which works out to a difference of 6 per cent.

On $6 billion, this translates to $360 million a year, which at current interest rates is well above the cost of servicing the $6 billion in government borrowings. This is a simplistic analysis as it ignores risk and it's possible the Government will be able to sell the assets at lower earnings yields and thus higher prices, but don't hold your breath. Prices could equally be lower.

The other aspect of the great 2012 SOE sale bonanza is, of course, the various fees that must be deducted from what the Government gets. Investment banking and other costs including scoping studies will probably run to at least $180 million.

Seems they only plan to sell down to 50%, not sell the whole thing. And it also seems the physical assets are not going anywhere after being sold. So as long as they have learnt something from the Kiwi Rail debacle, and have a bidding system that gets us top dollar for the shares (which should be above book value if they are paying 16% return on BV, given they are low-risk cashflows) we should be better off with the partial sale.

On this one issue alone, National has lost my Vote. Its time New Zealanders told the National Party what they want, not, what National tells us what we want.

The government has no right to run three competing power companies . They need to sell them all or merge them all into one .

There are no other countries around the world where this would be the case (except possibly Singapore) .

We have a NATIONAL GVT :in for how many years? why have they not done what YOU say.A nother thee years nothing will change.

I don't have a problem with selling down assets such as Air NZ but I am really against the sell down of basic infrastructure assets such as energy. Govt Depts can't and shouldn't run commercial enterprises but theres no sound reason to reduce the State ownership of profitable concerns that the NZ public are totally dependent on.

And yes, I'm a National supporter.

State Assets- none left after a couple of terms with National in power

Hmmm......

House price growth in the next 12 months?

Cuckoo