Labour flogs dead asset-sale horse

Winston Peters: Knows how to play the game

Labour desperately needs a new issue.

Two years ago, John Key surprised the political establishment by announcing plans to sell up to 49% of five state-owned companies, dramatically contradicting year his reputation for policy timidity at the start of election year.

Following Mr Key’s script, Labour built its entire election campaign on the slogan “Stop Asset Sales.”  It achieved 27.5% of the vote, its worst result since 1928.

Since then, Labour has continued prattling on about the sales, even siding with Maori efforts to fully privatise water to stop the sale of minority stakes in dams.

Unsurprisingly, Labour has remained below 35% in the polls, bouncing up only when David Shearer has provided some bloodsport in dealing to David Cunliffe.

Now, with the share issues dominating the news, along with Mr Key’s “hands on” management of SkyCity and Warner Bros, Labour support has dropped back again, putting National in pole position for 2014 for the first time in months.

What was it Einstein said about insanity?

Charlatan Peters
Do a poll or ask people to sign a petition and most will say they oppose asset sales.  But that tells you nothing about their interest or passion.

As even the old charlatan Winston Peters has recognised, government share offers, once underway, tend to become popular.

As Treasurer in 1998, he hailed “popular capitalism” when he sold the government’s shares in Auckland Airport, attracting a record 68,000 investors through his $4 million advertising campaign fronted by Sean Fitzpatrick.

“I'm pleased that high-profile New Zealanders like [Mr] Fitzpatrick are involved in promoting the float, which shows it is a float for the people,” he declared.

Like Bill English today, Mr Peters assured us: “The purpose of this exercise is to shore up the Crown against future risk of developmental cost and free up money for other investments and interest servicing charges.”

If Mr Peters’ $4 million advertising campaign did well attracting 68,000 investors, the response for Mighty River Power is even better, with more than 35,000 kiwis pre-registering on day one, crashing the website [200,000 had pre-registered by 3.30pm Thursday - Editor].

Maths classes
What Mr Peters may recognise, but Labour does not, is that, before Mr Key suggested the share issues, most voters had never heard of Mighty River Power, Meridian Energy, Genesis or Solid Energy, much less worried about their ownership structure.

Compared with disposable incomes, the local school competently teaching maths, grandma getting her hip replacement, the cops tracking down the local crims or even keeping Asian immigrants out, whether a Waikato River dam is owned 100% or 51% by the state simply doesn’t rate.

The actual policies of those who claim to oppose share issues prove it.

Through nine years of the Helen Clark regime, when a global economic boom fuelled massive fiscal surpluses, the government bought back not a single share in Contact Energy.

Nor did Phil Goff promise to buy back shares in Contact.  Nor does Mr Shearer promise to buy back shares in the companies Mr Key plans to list.

If it is OK for national symbols such as the Clyde Dam and the Wairakei geothermal network to be 100% privately owned – and majority foreign owned – how could it possibly matter that Waikato River dams will be only 51% government owned and perhaps 20% foreign owned?

While averse to nationalisation, Labour also argues that not a single share in any of the Crown’s $50 billion of commercial companies should ever be sold – in effect freezing more than $30,000 per New Zealand household in a portfolio that is a mere legacy of the tumult of the 1980s and 90s.

Moreover, while National’s justifications for the share sales have been weak, given it is difficult to see what impact they will have on the Crown’s net worth, Labour has failed to provide any case at all about why they would be so terrible.

Alleged links between minority ownerships and retail prices are spurious, with the market structure changing not at all.

Arguments that the state must own 100% of “strategic assets” – a meaningless phrase, never defined – would suggest the government should nationalise all food production and distribution, something Labour is yet to propose.

In fact, an immovable asset producing a commodity involving no proprietary intellectual property would seem to be exactly the sort of thing where ownership is irrelevant.

Arguably most pathetic over the last two years has been Labour’s claim that “once they're gone, they're gone forever.”   It’s a slogan that is clearly absurd in physical terms, which is only true in commercial terms because of Labour’s own policy of not buying back shares, and which, in any case, is undermined by the experience of Air New Zealand and KiwiRail.

Believe it or not, though, even that idiocy has been surpassed, when Labour SOE spokesman Clayton Cosgrove crossed the line this week from energetic opposition to abject nonsense, claiming histrionically that the assets will be flogged off to foreigners after being sold at the bottom of the market.

  He knows, of course, that it is impossible for the companies to ever have anything other than minority foreign ownership.  But it is quite credible he is so out of touch that he doesn’t know the NZX20 has boomed by around 30% in the last year and that the Dow Jones index has reached an all-time high.

Green spam
Mr Peters is moving from opposing the sales to demanding a future government buy the shares back, something he will never need to be accountable for and which confirms him as a hypocrite given Auckland Airport.

The Greens are happy that their anti-asset-sale petition has won them tens of thousands of new email addresses to spam in election year.

Both are moving on to new issues.

 Only Labour appears to have nothing to offer other than flogging the asset-sale dead horse.

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17 Comments & Questions

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Matthew - great article and very well spelled out.

Labour and the greens are so twisted by their hypocrisy as to be little more than plastercine pretsils trying to twist with the next change in polital wind direction.

Thank you for summarising, highlighting and defining their blatant chameleon style policies and outright lies and deceit.

Makes one wonder how effective they might be as an opposition if they actually produced credible, viable alternatives to Nationals iniatives instead of playing the "envy/jealousy" card attempting to cut down the tall poppy they could never hope to match.

Mind you, their shilling and crocodile tears at invented non-events only highlights for the public just what kind of "leaders" they would be as the 4headed Taniwha coalition government. Zimbabwe /Mugabe would be wanting to make Harara and Wellington "sister cities" so Norman can join in solidarity with them in fiscal solutions...

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What planet are you from? There are many things I disagree about in Labour's policies but your right-wing frothings and ravings makes me wonder are you a paid for propagandist from ACT or just utterly deluded?

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Labour's lack of electoral support isn't a convincing argument in favour of asset sales. However, the poor management of past privatizations and the lack of benefit to the country from them are compelling reasons why they are (still)) so widely unpopular. The only correct claim in this article is that most politicans are shallow and opportunistic - but they they always have been.

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Poor management? Lack of benefit? Which privatisations are you refering to IJB? Can't be NZ Rail - it was costing the country plenty before sell off (and even more since it was foolishly bought back). Can't be Telecom - it used to take months to get a phone put in. Can't be Contact Energy because their power prices are generally lower than SOE's.

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You must be living in a different country (on a different planet?) - a place where Telecom's customer satisfaction levels are high, the private sector invested in, and modernized the rail infrastructure, and Contact Energy proved to be a real winner for investors. Past privatizations have really taken the country forward - yeah right!

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Now we know there are only as of this point 235 000 NZers who want to buy shares in Mighty River Power if the pre registration is anything to go by, hardly many in the scheme of things, meaning parties opposed to the sale of these assets are only going to piss off a small number of National voters, with no electoral damage... so what are they waiting for? they should say they will buy them back, collapse the sale and probably won't suffer any electoral fallout whatso ever, in fact it could be the winning move - sweet.

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Yet these 235K or so pre-registered have only had a few days to register their interest. Compared to the greens wasting month's of tax payer monies for no change in the mandate National won at last election, it certainly appears there's going to be plenty of interest... Even over subscribed interest.

...and all thanks to the great publicity the Green bogies helped with by keeping this excellent investment opportunity in the left leaning MSM.

So how many shares you buying Paul N? Or will your spite not allow you to do something sensible?

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Keep taking your sleeping pills solidarity, BTW I don't support the Greens so don't know where the Green rant came from. The sale of the electricity assets are just plain wrong and now it emerges the geniuses from MRP have wasted 250 mil in Chile, how does that help their fricking customers in New Zealand? 250 mil would have lopped a lot off family power bills, this is a sick joke supported by the PM being played by pretend business people playing with vital infrastructure and the people's money, it's a disgrace and a farce. Here's another thing asset partial or full sales aren't all wrong, the Govt doesn't need to own TVNZ, Air NZ, Kordia, even some of the airports, I'm not against the sale of those SOEs but not power, that is our only lever for world competitiveness and underpinning standard of living, you never sell those assets.

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Go look at the consumer power price history. Dropped after National reformed competition, rose when Labour reregulated.

If you want cheap power, don't let the Government own the supply. Politicians can't resist milking consumers.

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Dropped after Max Bradford's reforms? Simply put, you are either absolutely deluded or lying.

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It should be remembered that these 235K pre-registrations don't necessarily represent individual investors. Many of those pre-registering would be looking to invest on behalf of their families.

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Quite rightly so Roger. There's likely to be plenty of registrations for more than just the person registering for sure. The interest in this also from Soverign investment funds will be huge as well, as the overall risk profile of vendor, product and product market environment makes for a low risk, ethical investment for these funds looking for "ethical Soverign" investments. Kiwis will win on this on so many levels and sectors.

How many shares will Iwi buy? Or the pollies on the left? Would they feel hypocritical as they also line up to buy?

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Wow sovereign investment funds OMG let's all bow. Knowing that this company has pissed 250 mil up against the wall should ring alarm bells for all potential investors.

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Sovereign Wealth Funds will probably only buy this as part of a tracking portfolio (i.e. because it makes up part of the index). Majority Government ownership usually scares of sophisticated investors as they know that the power to meddle (particularly around election times) can makes these type of assets less than reliable.

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If my recollection of events leading up to the sale of Auckland airport is correct the NZ first party were against this deal going through and Jenny Shipley cancelled the coalition agreement between National and NZ First.

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Alan, your recollection is mistaken. Winston Peters led the sale of Auckland International Airport Ltd, including launching the prospectus. See http://www.beehive.govt.nz/release/new-zealanders-offered-guaranteed-sta...
A newspaper clipping from the time is here: http://i1.wp.com/www.whaleoil.co.nz/wp-content/uploads/2012/03/popular-c...
You may be confusing the Auckland sale, which Peters led and supported, with the Wellington Airport one, which he did not.

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@ Alan, no that was for the Wellington Airport.

NZF allowed the Auckland sale to proceed,.

It was only when the public clamour became so great that Peters was forced to retreat from the sale of Wellington Airport, that the coalition deal fell apart in Augut 1998. However, the resulting stress tore NZF apart, with Tau Henare leading a breakaway motley crew of five ex-NZF MPs to form Mauri Pacific.

Mauri Pacific vanished at the 1999 election, and only Henare returned to Parliament - as a National MP.

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