Mighty River, Meridian, and Air New Zealand are all now trading well below their listing prices (Mighty River is down 20%!) costing ‘mum and dad investors’ tens of millions of their savings. When journalists raise that with National, Bill English’s angry response is ‘you would be complaining if they had made windfall gains too’. He’s right. And there’s the rub. The Government has conflicting interests in a share sale.
On the one hand, the Government does have a duty to be a good steward of public wealth. That should have meant not selling the assets in the first place. Secondly, it should mean getting a good price if you’re stupid enough to sell. National failed on those measures. Mighty River and Meridian both sold for significantly less than expected.
On the other hand, the Government has a fiduciary duty in dealing with its citizens, especially when they are on opposite sides of a contract. That is, they shouldn’t be out to rip us off. So, the New Zealanders who listened when ministers said that these would be great investments, an opportunity to diversify from housing and take on a stake in a solid infrastructure company, and acted as the government intended when they saw National’s $8 million ad campaign encouraging them to buy shares have a right to feel aggrieved. After all, they only did what the Government told them to do, and they’re poorer for having done it.
Doesn’t that put the Government between a rock and a hard place? Sell too cheap and be damned as privatising public wealth when the price rises; sell to expensively and be accused of tricking people out of their savings. Yeah, it kind of does. What’s the solution? How about don’t sell the bloody things?
Last night, English told Garner that the odds of selling Genesis are only 50/50. Seems even he can learn.
*If anyone tries to claim that losses in share values ‘don’t count’ until you sell the shares, you’re a fucken moron. The NZX records the change in the dollar value of shares, why wouldn’t you? Do you think changes in the value of your house ‘don’t count’ until you sell? Because the bank thinks they count. Does a business or the government ‘not count’ changes in the value of its non-cash assets and liabilities? How can you work out the economics of keeping an investment if you don’t use its current market value when making your decision?