Key cooking the books on asset sales

Written By: - Date published: 11:47 am, October 30th, 2011 - 37 comments
Categories: election 2011, john key, privatisation - Tags:

National has already booked the revenue from asset sales – despite people opposing them 4 to 1. The Budget docs say capital spending will be funded from the ‘balance sheet’: ie. buying new assets like schools and hospitals with revenue from selling the power companies. Key will re-announce this today. But we don’t need to sell profitable assets to buy new ones.

So, when National announces new schools or whatever today ‘funded by asset sales’ remember that this is nothing new. It’s already in the books. And that this investment could be paid for without selling our profitable assets overseas if Key hadn’t given $2.8 billion a year of tax cuts to the rich.

And, also remember that, if National is re-elected and sells these assets, within a decade we will have lost more in foregone dividends than the sales revenue. National has not counted the loss of dividends in its budget forecasts.

Selling assets will mean we are less able to invest in new assets in the future.

Update: as expected, Key has re-accounced what is already in the Budget and given it a fancy new name.

37 comments on “Key cooking the books on asset sales ”

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  1. Lanthanide 1
    30 October 2011 at 12:00 pm

    With any luck, National will announce they’re scrapping some of their Roads of Notional Significance (or Roads of National Impotence, take your pick) because they don’t make any sense, and they’ll divert this funding to paying off debt or education/health.

    If only.

  2. Campbell Larsen 2
    30 October 2011 at 12:26 pm

    Keep an eye out for changes to tertiary education signaled by Pete g’s united follicle party too…
    My bet is on bait and switch, with the promise of lower fees for current and future uni students being used as a bribe to win the student vote funded by the reintroduction of interest on student loans.
    Of course the Nats may just let UF dangle the carrot with no intention to deliver in the hope that this will secure them the support they are so desperate for, after all policies from UF mean nothing unless supported by national – but the fact the Pete has refused to condem any moves to reintroduce interest on the loans strongly suggests that this is the direction they will try and take us.

    • millsy 2.1
      30 October 2011 at 4:48 pm

      Chopping tertiary fees without changing the tertiary education system and the way it is run is a bit silly IMO. People dont realise that the system was designed for user-pays.

      • Campbell Larsen 2.1.1
        30 October 2011 at 11:22 pm

        There is no chopping fees without increasing government subsidies. Increasing central govt funding is corporate welfare by another name without an effort to ensure that universities spend their fee revenue on research, teaching and necessary infrastructure rather than empire building and supporting the very expensive and largely unproductive upper hierarchy.
        Universities historically have served a vital function as sources of informed critique and centers of learning- we need them to be able to fulfill these functions now perhaps more than ever and yet the pressure on them to be more like businesses has never been greater.
        User pays is a bit of a misnomer – as far as I am aware universities have always received some form of subsidy for enrolled students. Let’s not forget that society benefits greatly from having an educated society and the academic voice – this is worth paying for, but the question really is – is this what we are getting from tertiary institutions today?
        I think that they can do better, but the fault lies not with academic staff but with the university management, the pursuit of measurable outputs or $$$ is undermining the quest for knowledge that has always been the primary reason for their existence.

        • Campbell Larsen 2.1.1.1
          30 October 2011 at 11:56 pm

          Oops, I fell into my own logic trap with “‘unproductive’ upper hierarchy” though hopefully my meaning is still clear.
          I attended a very interesting lecture by Steven Turner from the university of Auckland down at occupy Auckland on this topic – I will try an rustle up the content from him and will post it when I get a chance.

  3. prism 3
    30 October 2011 at 2:12 pm

    Key can’t lose with the asset sale idea. Sell off some here and now to business friends buying basic infrastructure blue chip stuff, then use the money to build more assets (business for the friends again doing the building and refurbishing), then start selling those off… to business friends. I guess there will be diminishing returns at some stage. The perpetual motion machine never got perfected did it?

    Never mind, Maui came and carved up the country then pakeha came and went to the next level at it and garnered their roast mutton and veg from doing so. Who said the Sunday roast was a thing of the past, it’s still here for some – carve it up, and hand it out – to the already well off! Ordinary people trying to live on low incomes and remain solvent can’t afford $23 upwards for a leg of lamb. It used to be $4 a kilo not long ago.

    And we can expect higher prices for all necessities and no way for aspirational people to get out from this induced poverty from the reverse Robin Hoods in the right wing and NACT – so preachy about what the country needs, with the obvious thought that the ordinary people just don’t have the intelligence or vision that they have ie listen to Ruth Richardson and Don Brash.

    • Puddleglum 3.1
      30 October 2011 at 6:03 pm

      I think it also needs to be pointed out that National plan to introduce further privatization initiatives into the sorts of assets that they claim they will be spending the windfall on.

      Schools and hospitals are the very assets that they are eyeing up for more private ‘involvement’.

  4. Someone Else 4
    30 October 2011 at 4:40 pm

    So, the Government wants to sell parts of the SOEs and keep the money aside for building hospitals, schools and transport projects? Wouldn’t ring-fencing the dividends from SOEs to be spent on those projects be more practical? Once you sell them, they’re gone!

  5. ianmac 5
    30 October 2011 at 4:44 pm

    prism” “I guess there will be diminishing returns at some stage.” I thought those ponzi schemes or whatever they used to be called, were illegal? Last one in line carries the loss. “And the Loser is ….um …. the Taxpayer!” Yay!

  6. millsy 6
    30 October 2011 at 4:47 pm

    The idea of a Future investment Fund is probably a good one in principle. But it appears that only proceeds from asset sales are going into it, and that when the fund is empty, its empty. Having the dividends from the SOE profits, as well as possibly royalties from oil, gas and mineral extraction go into, it and having it function like a sovereign wealth fund is probably a better idea.

  7. logie97 7
    30 October 2011 at 5:41 pm

    If you could just, for once, believe statements on visits from Lord Ashton (x2), Governor General debacle, Tranzrail, 1981, throat-slitting, Standard and Poors, Worth, Wong, Lee, Rena, Aldgate-Whitechapel, et cetera, then maybe you could begin to believe him on the intended disbursement of proceeds of asset sales. Pigs might fly as well. He’s had too long to think about the latest obfuscation.

    Here’s a simple solution, what about reverting the last tax cut round – that’d do the trick! And we could also continue to enjoy the dividends and annual returns from the SOEs.

  8. Ian Grant 8
    30 October 2011 at 6:06 pm

    “we are going to sell off state assets  so we can afford to pay off debt, … um I mean so we can afford to buy state assets” – John Key

  9. Ianupnorth 9
    30 October 2011 at 6:13 pm

    Next time anyone remote right says ‘but they are promising free doctor appointments out of hours for all under 6’s’ just remind them they haven’t told us exactly which bit of the health sector is to be cut to fund this, same way whanau ora is funded by removing funding for other Maori services.

  10. tc 10
    30 October 2011 at 7:49 pm

    Shonkey is as shonkey does, watch all the MSM so called experts completely miss the double count…..that’d be doing their jobs and paying attention…..yeah right.

    banker economics yet again…..wonder what bill will say if asked in light of his dodgy budget….even dodgier now.

  11. Reality Bytes 11
    30 October 2011 at 7:53 pm

    This is stupid, at the end of the day, they have expenditure and income. Their expenditure includes the entire budget. Picking a few nice sounding things like health care and education, is bs. They have income from taxes, asset sales, dividends and what-not etc, it goes into a big kitty, and it gets spent on shit the Nacts deem worthwhile.

    To argue that these asset sales are the sole reason healthcare and education will get sorted out is just smoke and mirrors.

  12. Pete 12
    30 October 2011 at 9:15 pm

    Arguably it might have been better if Clark and Cullen had had another term, then we’d be really screwed.

    It might take that for people to wake up.

    • Draco T Bastard 12.1
      30 October 2011 at 9:31 pm

      No Pete, if Clark and Cullen had had another term we’d be much better off than we are. NAct have been screwing the economy by giving our wealth to their rich mates ever since they got in power.

    • Scott 12.2
      30 October 2011 at 9:37 pm

      We woke up all right to 18 billion dollars of debt. Go on say it!
      18 billion fucking dollars. And John Key wants to have a garage sale

      • prism 12.2.1
        30 October 2011 at 11:18 pm

        Scott Looks like your pocket money will be cut for the next three….years. Of course 18 billion fucking dollars is too big for you personally to pay for, but in the context of a whole country we would be able to cope if we could just get traction. Sell some new initiatives and then make sure we get paid in full for them, not have a big percentage siphoned off through seismic-like exchange rates. What about a crawling peg?

  13. Marjorie Dawe 13
    30 October 2011 at 9:50 pm

    I was reading an article about the health camp schools being sold off and then opened again at a later date under a private ownership model. Does this mean that the nats will use the money from selling strategic assets at a firesale price to fund schools and then give the benefits of contract management of these assets to their mates as well? You could be right and how could they lose with all the bases covered for them.

  14. hoom 14
    31 October 2011 at 2:04 am

    Comes across as much more ‘economically stupid’ than borrowing to put capital into the Cullen Fund could ever be.
     
    Borrowing and selling assets to put a relatively small amount of capital into a fund to provide for what would apparently be considered normal government expenditure???
     
    What will be done with the ‘fund’ while it awaits being spent on these future projects? Term deposits? Finance company bonds?
    Ooh ooh how about we buy some nice safe shares in profitable infrastructure/utility companies? <_<
     
    $1billion set aside for schools? Isn’t the bill for just knocking down & replacing the currently leaky school buildings at least $500million anyway?

  15. James N 15
    31 October 2011 at 8:25 am

    I keep hearing that John Key is the Nat’s Biggest Asset.

    Surely it would make sense then to sell him as well?

    Or, perhaps, he’s already been sold.

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