National shafted us with the MOM privatisation

Written By: - Date published: 7:20 am, January 17th, 2019 - 318 comments
Categories: Abuse of power, assets, capitalism, climate change, Deep stuff, democracy under attack, energy, Financial markets, global warming, john key, making shit up, national, national/act government, Politics, privatisation, Privatisation, same old national, sustainability, the praiseworthy and the pitiful, you couldn't make this shit up - Tags:

Remember the great power company privatisations that happened during the past National Government? Was that the best economic decision that a New Zealand Government ever made or was it a totally retrograde step that has left and will leave us all poorer?

The results are in …

This is a rewrite of earlier posts that I have done on the subject with some up to date analysis.

In 2014 and 2015 and 2017 I did very rough and ready calculations on what the sell off of shares in Mighty River Power, Genesis, Meridian and Air New Zealand conducted in 2013 and 2014 had cost us.  The calculations are simple, add up the total dividend payments that are lost and work out the loss of capital value of the shares that were sold by comparing the sale price with the current market price.

The conclusion was that at some stage the privatisation was going to cost us more than it earned.

The current result? That the $4.7 billion that was raised by the asset sales has cost us $6.5 billion. We, as in New Zealand Inc, have lost $2.3 billion in dividend payments and the shares that were sold are now worth $4.2 billion more than when we sold them.

We should have kept the shares and banked the dividend income. We would have been much better off.

And the ongoing dividend stream will continue to be given to private entities. Things are going to get worse and worse and worse …

The results are:

  • Meridian has been the best performer and has since the MOM privatisation paid $1.1 billion in dividends to private shareholders that otherwise would have been paid to the Crown. The value of the shares sold has increased by $2.6 billion. Meridian’s share price is at the time of writing $3.575 compared to the privatisation price of $1.50.
  • Mighty River Power (now Mercury NZ Ltd) has paid to private shareholders a total of $577 million in dividends and the shares that were sold are now worth $763 million more than they were at the time of sale.
  • Genesis Energy has paid to private shareholders a total of $343 million in dividends (not including the final dividend for 2018) and the sold shares are now worth $507 million more than they were when they were sold.
  • And Air New Zealand, of which John Key is a director, has performed well with $274 million in dividends for the sold shares having been paid to private shareholders and those shares are now worth $336 million more than when they were sold.

As I said previously this may all end in tears if the stock market crashes and the sale may then look like it was a good idea.  But it does look like an unmitigated disaster.  As many of us said it would be.

The proceeds have all been spent.  So we are left with no cash, a reduced dividend flow and a bit more than half of the value of the original shares.

There has been an attempt to justify the sale process and to suggest that the companies performance has improved because of the privatisation.

There are two problems with this. Firstly at the time Treasury told the companies to have a more commercial approach. The improved financial performance may have nothing to do with the privatisation. Correlation is not causation.

Secondly Meridian in particular has been in a holding pattern with power demand being stable rather than growing. It has been concentrating on making money rather than providing new infrastructure.

Because of climate change I would prefer that the electricity generators are less profitable and more sustainable. The mixed ownership model is obsessed with financial return and does not care about extraneous matters like survival of the human race.

The results clearly show that the last Government engaged in economic sabotage of our country. Or they preferred that private shareholders were enriched at the expense of the rest of us. I can’t tell the difference …

318 comments on “National shafted us with the MOM privatisation”

  1. Nic the NZer 1

    “So we are left with no cash, a reduced dividend flow and a bit more than half of the value of the original shares.”

    Please stop implying the government can become short of cash. It literally issues its own money and this is therefore nonsense. As is always the case we must judge the governments economic performance on the basis of its impacts on the economy.

    • Rapunzel 1.1

      TBF I think that means not the original “cash” the then govt got – that’s all been spent long ago, not that the current govt has no cash just that they would have more “cash” coming in from the asset which would be a “whole” asset not ½ of one.

      • crashcart 1.1.1

        It also makes it doubly ridiculous that we would sell these assets for cash that we could print whilst still retaining control over key infrastructire.

        • Gosman 1.1.1.1

          Yes we could print the cash like Venezuela and Zimbabwe print cash. That works for them so will work for us too /sarc

          • Draco T Bastard 1.1.1.1.1

            What’s the difference between the government creating money and the private creating money?

            Oh, that’s right, the private banks then get to control the economy and make a profit from everyone through charging unpayable interest on it.

            The government creating money isn’t the problem – it’s the private banks creating money. That’s what caused the GFC after all.

            • Gosman 1.1.1.1.1.1

              The private sector doesn’t generally create runaway hyper-inflation.

              • Draco T Bastard

                Yes it does. All the time in fact. But the hyper-inflation is just sitting in house prices which the majority view as good because their own house has turned into an ATM.

                Yeah, 15% yearly increase in house prices is almost purely due to the private banks creating money. And that is hyper-inflation.

                It will bring about another crash because there’s no way we can support the level of debt that the private banks are creating.

                • Gosman

                  Housing prices are a reflection of supply not meeting demand. Are you stating that banks are lending to people above what they can afford to pay back?

                  • Draco T Bastard

                    Housing prices are a reflection of supply not meeting demand.

                    That’s only part of it.

                    https://positivemoney.org/issues/house-prices/

                    Are you stating that banks are lending to people above what they can afford to pay back?

                    They’re lending at what the country cannot afford to pay back. Of course, many are paid more than the country can afford as well.

                    It’s why we have increasing poverty.

                  • Marcus Morris

                    You are correct Gosman. But who is creating the demand and who is able to pay the hyper-inflated prices of housing. I would say that group is made up largely of wealthy immigrants and wealthy New Zealanders who are using their own capital or equity to invest (and borrow) in property rather than wealth inducing manufacturing. Unless young teachers, nurses, policemen, doctors (all vital to the infrastructure and well being of any community) have access to family wealth, they will never be able to afford homes in our larger cities – Auckland in particular. By the way, as predicted, the only winners of the partial sell-off of our state owned power companies were the “already wealthy”. Another infamous slight of hand by our two gallant knights, Sir John and Sir Bill – and they get honoured for it.

                  • bwaghorn

                    No but they are sure as fuck inflating house prices so they can fill the pockets.

                  • PB

                    Artificially low interest rates (land value being removed from CPI in 1999) has allowed banks to repeatedly lend at low rates to a small class of investors with a suitable lending profile, buying up multiple properties, drying up supply at the same time as mass immigration – including foreigners able to buy in easily on the pound, for instance; thereby driving up the price of houses and the cost of everything in our economy as average people try to stay in the hunt – unsuccessfully.
                    Sounds like hyperinflation to me.

              • KJT

                So. The runaway inflation in house prices has nothing to do with private banks, “printing money”!

                Yeah right!

                • Gosman

                  It has to do with too much demand not enough supply. As simple as that.

                  • KJT

                    And. Where would the demand be, if there was no fucking money available. Eh.

                    With no downside risk to the banks I may add.

                    In New Zealand the bank is insulated, if borrowers go underwater.

                  • Draco T Bastard

                    No it. It mostly has to do with private banks creating money to make a profit by charging interest on that money they created.

                    As the research I linked shows.

                  • Marcus Morris

                    And the luxury seaside homes being built near where I live are going to help solve the housing problem. Yeah right. They all be second-home resort houses for those I have mentioned earlier. As for your earlier repost – it is not difficult to find the ratio of rented to privately owned properties in Auckland. I will see what I can find for you.

          • Tamati Tautuhi 1.1.1.1.2

            Milton Freedman Neoliberal Economics = Flawed Ideology IMHO ?

            • Nic the NZer 1.1.1.1.2.1

              The biggest problem for Milton Friedmans economic theories is they they were widely and honestly tried. This point concerns Monetarism which means specifically an idea that restricting the availability of high powered money to the economy will also restrict creation of commercial bank money and therefore inflation. This idea categorically failed when central banks found themselves unable to restrict growth in commercial bank money despite restrictions in high powered money. This basic theory was completely without content. These days central banks operate a policy where banks can borrow as much high powered money as needed at a rate. In NZ this is called the OCR.

              His other big idea (the permanent income hypothesis) also turned out to be a crock. It turns out no, people don’t generally run up debt on the basis of future projected income in the event that they lose their job (and income).

          • gsays 1.1.1.1.3

            You are a bit remiss gosman, not mentioning the USA as a country that prints cash.
            Called quantitative easing when the ‘right’ countries do it.

    • Dave Muggs 1.2

      I feel like this commenter has never heard of inflation but whatever

      • Gosman 1.2.1

        Yes it seems left wing people keep thinking they can avoid the pitfalls of places like Venezuela and Zimbabwe but do pretty much the same thing (i.e. print cash to fund government spending). It is as if they think they have this ability to control the situation that others before them couldn’t do.

        • arkie 1.2.1.1

          The New Deal worked well. It’s as if right wing have an entirely selective memory.

          • Gosman 1.2.1.1.1

            The New Deal was not largely funded by printing money.

            • arkie 1.2.1.1.1.1

              What was it largely funded by then?

              • Gosman

                Taxes or borrowings.

                • Draco T Bastard

                  The borrowings being money created by the private banks.

                • arkie

                  Hoover’s taxes were a contribution, that’s for certain. However a government borrowing to spend is the effectively same thing as printing money; they are taking in less in taxes than they spend therefore increasing the supply of money.

                  • Gosman

                    It can be. But then having to pay back the debt tends to constrict the growth in the money supply. This does not usually work if governments print their own money to fund expenditure.

                    • arkie

                      Not if you restructure the economy like the New Deal did.
                      The New Deal was an attempt at Maynard Keynes’ macroeconomic theories. The gold standard was suspended. That meant the Federal Reserve could work with the Treasury Department to increase the money supply. They also propped up sound banks with federal loans, passed the Glass-Steagall Act which separated commercial banks and securities firms to regulate speculation, as well as passing the Securities Act which mandated businesses to publish independently audited disclosures, and created the SEC to regulate the stock market.
                      They created the Public Works Administration, a major program of public works, which organised and provided $3.3 billion in funds for the building of useful works such as government buildings, airports, hospitals, schools, roads, bridges and dams. A minimum wage and maximum hours of work were also introduced that meant that workers had the time and the money to spend in the growing economy which in turn was taxed at progressive rates to repay debts. More people were pulled out of poverty than anytime in US history thanks to highly progressive redistributive taxes, heavy regulation of speculation and borrowing by banks, as well as deficit spending for building and retaining infrastructure.

                    • arkie

                      eek. can someone please clean up my triple post

                    • Gosman

                      And yet America fell out of love with Keynesian economics for some reason.

                    • arkie

                      How’s that worked out for the majority of people in the US? Poorly.
                      When was the majority of the US prosperous? Immediately following the New Deal.

                      Neo-liberalism rejected Keynes, Neo-liberalism brought us the biggest recession since the Great depression. You’re really backing a winner here /s

                    • Gosman

                      Do you know WHY Keynesian was rejected in the US?

                    • KJT

                      Yes we do, Gosman.

                      It didn’t allow the rich to steal enough.

                    • ropata

                      The US political elite was captured by the plutocrats… revolving door between Washington and Goldman Sachs

        • Kevin 1.2.1.2

          What do you think the Fed and ECB were doing for years Gos?

          The ECB alone has printed 2.5 Trillion Euro and given it to banks to prop up their balance sheets and invest in shares etc to create an artificial feel good.

          Thats is the theft of approximately 7,500 Euro per citizen.

        • Nic the NZer 1.2.1.3

          All hyper-inflations have been caused by large supply side contractions. In Zimbabwe this was due to farm confiscations and land redistributions. In Venezuela this seems to be a large scale capital strike where importers are refusing to import and sequestering goods as a political strategy against the government. This mechanism is pretty clear in practice just by looking at the usually high inflation rates generated in countries put under a trade embargo.

          • Gosman 1.2.1.3.1

            Incorrect. Inflation was a problem in Zimbabwe prior to the fast track land reform programme. It also didn’t get out of control until well after the farming sector had declined. The biggest falls in agricultural production was between 2000 and 2005. Inflation spiked in 2007/8. The real reason for the hyperinflation is that the government used the Reserve Bank to print money to cover massive government deficits.

      • Draco T Bastard 1.2.2

        I feel that you’re an ignoramus.

        Being nice, I’ll help you fix that.

        https://theconversation.com/i-predicted-the-last-financial-crisis-now-soaring-global-debt-levels-pose-risk-of-another-84136
        https://www.forbes.com/sites/francescoppola/2017/10/31/how-bank-lending-really-creates-money-and-why-the-magic-money-tree-is-not-cost-free/#13e150d83073
        https://positivemoney.org/how-money-works/banking-101-video-course/

        BTW, have you ever considered why inflation needs to be high anyway? The RBNZ target isn’t for 0% inflation which would be the case if inflation was bad but for 2 to 3 percent.

      • Nic the NZer 1.2.3

        I have of course heard of inflation. I simply have absorbed the more sophisticated understanding that the quantity theory of money (the incorrect idea that the price level tracks the size of the money supply) is wrong and missleading. This is also true of growth of high powered money, for which it is often incorrectly argued constrains growth of bank lending. In practice however the amount of money made available by the central banks monetary policy only needs to be sufficient to facilitate interbank settlements.

        Our central bank understands and applies this, shouldn’t you?

    • Pete 1.3

      Banana Republics do the very thing you propose.
      Only you and Pauline Hanson believe printing more money works to boost an economy.

      • arkie 1.3.1

        Him, Pauline Hanson and John Maynard Keynes

      • Draco T Bastard 1.3.2

        It seems that the private banks also think that creating money without limit boosts the economy as well. After all, it’s what they always do.

      • Kevin 1.3.3

        Tell that to Mario Draghi and Janet Yellen.

        Am sure they would appreciate your input.

      • Nic the NZer 1.3.4

        Printing money doesn’t boost the economy at all. The reserve bank can order all the additional money they like and nobody will notice the difference while its sitting in the reserve bank lock up.

        On the other hand every additional dollar of government spending adds a dollar to GDP. That is the definition of GDP. Guess it depends if an increase in GDP is the same as a boost to the economy.

        • ropata 1.3.4.1

          Depends who they give the money to. Investing in physical assets like schools and infrastructure will benefit the real economy. Propping up criminal banking cartels is the worst option, the parasite is now killing the host.

          • Nic the NZer 1.3.4.1.1

            Absolutely, the effect on the economy will likely be quite different depending on where the government spends (and also how/who it taxes). But a dollar spent is still a dollar of income for the recipient and GDP is by definition a measure of that income.

            However, we should hold politicians accountable for their actions and they (parliament) set the overall budget annually. Where that budget spends is 100% a responsibility of the government, and in NZ no external party constrains parliament on its spending.

      • KJT 1.3.5

        Worked perfectly well in the 50’s, for New Zealand.

        The USA has been “printing” money hand over fist lately.

        Where is the hyperinflation.

        • ropata 1.3.5.1

          There is a huge bubble in the stock market, all the excess liquidity is being siphoned off by the insiders to their cosy tax havens, meanwhile the cost of living for ordinary Americans is inflating out of control

    • KJT 1.4

      Well. To these costs you can add the costs of all the businesses which don’t exist because of hiked up power prices. The cost of the borrowing by shareholders, mostly from offshore, which has to be repaid, the lost jobs with privatization, the children with respiratory disease because their parent couldn’t afford heating…………………….

  2. patricia bremner 2

    Mickey the sell off was a disaster. The model they came up with was shonkey from the first moment.
    We got a letter from Trust Power saying we would be responsible for the power pole and lines from the street to the house.
    That would have been fine if it had been a modern pole. It was very old and on their “to do list”….. never mind maintenance problem solved… so Trust power then let the majority of their staff of linesmen go.
    Rotorua was fortunate to have a group of savvy councillors who put up a stand and bought the electricity shares people were gifted to create a civic fund. It Rotorua Energy Charitable Trust has been a benefit, but not all councils did that.
    Later on Trust power took back the pole debacle and the company introduced lines fees along with the table of electricity charges. We still paid, just over time.
    Power bills became a lottery and a guessing game.
    Max Bradford had promised cheaper power. That soon attracted derision and disbelief but at least we were getting some benefit through the council.
    It became evident that we were getting our power from a take over crowd. They merged took over and grew into the 4th largest supplier with fingers in many unrelated pies, to where today they are involved in irrigation of land …. for farming. Guess what kind!!
    We unleashed an expensive commercial model that cares diddly squat for the environment. imo.

    • Gosman 2.1

      Why isn’t it government policy to buy back the shares then?

      • mac1 2.1.1

        At what price, considering they were sold over cheaply as the price has risen from $1.50 to $3.50 in four years?

        • Gosman 2.1.1.1

          They were sold at the price the market was willing to pay for them. That wasn’t overly cheap. The fact that they may have risen in value over the subsequent period is also not evidence of this.

          • mac1 2.1.1.1.1

            So, of what is a 133% increase in share price indicative when a 20% growth in the economy does not supply anywhere near the full answer?

          • Blazer 2.1.1.1.2

            So you do not even understand how the price is set for sharemarket floats ,as well as being completely clueless about fiscal matters and money supply.

            • Gosman 2.1.1.1.2.1

              Well my views reflect the mainstream ones (even the current left leaning government of NZ). Seems like everyone in NZ politics is an idiot except you and a few people with no power.

              • Blazer

                No,your views are your own ,seemingly based on complete ignorance.
                Maybe you should comment on things you know something about.

                • Gosman

                  Why isn’t the NZ Government buying back these shares then?

                  • gsays

                    They have bigger issues to fix of the nats making first.
                    Housing, rampant immigration, inequality….

                    • Herodotus

                      How can you trust labour to fix these issues when many were manifesting themselves under Helen Clarke’s govt.
                      House affordability was an issue in the 2008 election. We had massive immigration into auckland that was statistically offset by emigration from rural areas. Still contributed to the mess that we face now.
                      Ps how is net migration going ?? Still a net 50k+ I understand🤥

        • Gosman 2.1.1.2

          The price paid for them was what the market was willing to pay. The price now is what the market says they are worth. If you want to buy them back you pay what the market price today says they are worth not what is said it was worth 6 years ago.

      • Tamati Tautuhi 2.1.2

        Buy them back at the Issued Price seems fair to the NZ Taxpayer.

        • Gosman 2.1.2.1

          Why isn’t that government policy do you think?

          • KJT 2.1.2.1.1

            Because they would be sued under “free trade” agreements, for a start.

            • Gosman 2.1.2.1.1.1

              The government is not stopped from purchasing shares. The government as a majority shareholder has the exact same rights as a majority shareholder in any takeover situation and can force minority shareholders to sell shares to them. No FTA will dispute that.

            • Gosman 2.1.2.1.1.2

              Where do you get your information from? It is completely nonsense.

              • KJT

                NAFTA.

                “Article 1110: Expropriation and Compensation

                1. No Party may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment (“expropriation”), except:

                (a) for a public purpose;

                (b) on a non-discriminatory basis;

                (c) in accordance with due process of law and Article 1105(1); and

                (d) on payment of compensation in accordance with paragraphs 2 through 6.

                2. Compensation shall be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place (“date of expropriation”), and shall not reflect any change in value occurring because the intended expropriation had become known earlier. Valuation criteria shall include going concern value, asset value including declared tax value of tangible property, and other criteria, as appropriate, to determine fair market value.

                3. Compensation shall be paid without delay and be fully realizable.

                4. If payment is made in a G7 currency, compensation shall include interest at a commercially reasonable rate for that currency from the date of expropriation until the date of actual payment. ”

                TPPA.
                https://www.mfat.govt.nz/assets/FTAs-agreed-not-signed/Korea-FTA/KNZFTA-Annex-10-B-Expropriation.pdf

                etc.

                • Gosman

                  Yes. That is exactly as I have stated. So the government CAN re-nationalise the power companies without being taken to a tribunal.

      • soddenleaf 2.1.3

        First put a solar panel in every home… …or better relax collusive policies protecting energy incombents by stopping small communal power generators competing. I mean technology harvest the sun, where all mostly power comes from…

        Hey why not just tax them for sunlight, water evaporation by the sun, to pay for public goods. General tax,everyone pays who receives sunlight derive energy.

        • mike 2.1.3.1

          that would put a spanner in the power company profits but they will want to levy solar user for the sun light because there profit would suffer

  3. SaveNZ 3

    Stop the government selling public assets. National were terrible but Labour has has the Rogernomics legacy of doing the same and now the land swaps with Kiwibuild which effectively takes 2/3 of the state house land into private hands and generates no cash, compared to the old model of building state houses and then getting a government dividend from housing NZ in rents while providing affordable houses.

  4. Balance 4

    Please remember, Labour wrote over $1B off the sale value with their NZ Power Policy. Whether the sale was good or bad, labour should not be forgiven for what amounts to sabotage.

    • millsy 4.1

      Preventing crippling power price increases is not ‘sabotage ‘

      Worthy of note, is that since the share float, more and more people have been getting their power cut off for no payment, as prices have skyrocketed, along with rent.

    • Draco T Bastard 4.2

      The only sabotage that happened was by National who sold those shares against our will.

      To me, that amounts to theft and National should be the ones paying to return them to us.

      • Wayne 4.2.1

        Against your will, not New Zealand’s.

        You seem to have forgotten National won the 2011 election, when this was the major issue being debated in the election campaign. In short by winning, National had a democratic mandate for the MOM.

        • Gosman 4.2.1.1

          Exactly. The left conveniently forgets we are a parliamentary democracy not one driven by non binding referendum.

          • Draco T Bastard 4.2.1.1.1

            The actions of National proved that we’re not a democracy at all.

            • Gosman 4.2.1.1.1.1

              Yet people had the chance to vote them out both before they sold them (despite National campaigning on the policy) in 2011 and afterwards in 2014. Both times they were returned.

          • KJT 4.2.1.1.2

            Unfortunately.

            We give all the power to 60 odd people who are stupid, or greedy, enough to want to be politicians.

            When 80% are opposed.

            There is not a “mandate”.

            In fact the assumption that both National and Labour make, that winning an election gives them the right to be absolute dictatorships, for three years, is anti-democratic. Anything which increases democracy, such as binding referenda, are aims, of the majority of left and right voters.

        • Draco T Bastard 4.2.1.2

          Against your will, not New Zealand’s.

          Polls and referendum were against the sale that means that they were sold against the nation’s will proving, once again, that we live in a dictatorship.

          You seem to have forgotten National won the 2011 election,

          I didn’t forget.

          In short by winning, National had a democratic mandate for the MOM.

          No they didn’t as the democratic referendum proved.

          Of course, you don’t actually approve of democracy as things won’t go the way you want.

      • Herodotus 4.2.2

        As far as I am aware you were never the designated spokesperson for anyone I know. So I am unsure how you can say “sold shares against our will”
        Every govt does actions that some/many will disagree on, some even lie as to what they will do in govt, and don’t carry out the promises . The current are no different “kiwibuild max $600k, reduce immigration 🤥etc at least the last govt said in this case what they would do (and for you I accept you disagree to some degree 🤬) but they carried out what they went to the election on.
        And polls and referendum are against the smacking yet it was still passed, how about exporting of water “our govt still supports that
        And I will add THe Greens having to swallow rates as they went against their principles 😪

        • KJT 4.2.2.1

          The referendum was against the anti-smacking law as originally proposed.

          The result was much better considered and thought out legislation.

          The majority want to reduce immigration, asset sales and inequality, and respond to AGW.
          It is our elected Dictators that are dragging the chain..

  5. Gosman 5

    Government should not be in the business of owning commercial enterprises. However if you think this is such a good idea and makes sense then perhaps you can convince your Labour party colleagues to make it a policy to buy back the shares that trade openly on the sharemarket.

    • Plan B 5.1

      The power companies are not commercial enterprises, have you actually seen what they are? They are mostly a massive transformation of huge parts of New Zealand giant lakes, canals, dams covering areas larger than all of Auckland. What ever they are they are not simply commercial companies and they never were. A commercial company simply could not ever do what what was done.

    • Gabby 5.2

      Why not gozzer?

      • Gosman 5.2.1

        Because after a while people who think like the majority of people on here start to think they can interfere in the running of the business and achieve something beyond what it was originally designed to do. For example they start thinking Railways is not a transport company focusing on moving goods via the Railway network but a jobs scheme to provide work and training for unemployed people.

        • KJT 5.2.1.1

          And. What is wrong with that.

          Unlike a privatised company, who treat it as a job network for a plethora of ever multiplying, “managers”. At a much greater cost than employing a few more workers.

          • Gosman 5.2.1.1.1

            Because it leads to SOE’s becoming social agencies and losing billions of dollars instead of providing billions of dollars.

            • KJT 5.2.1.1.1.1

              The billions of dollars goes to workers/businesses in New Zealand, rather than being put into share buybacks in the USA.

              And you think that is a problem?

    • KJT 5.3

      Essential infrastructure, that is a natural monopoly, should not be privately owned. It never works.

      • Gosman 5.3.1

        Essential infrastructure is restricted to Transmission lines in the energy sector. It does not include the generation not selling of electricity. The very fact that we have a working market shows this.

        • Draco T Bastard 5.3.1.1

          We don’t have a working market in electricity. We have an artificial one that’s failing badly as it causes ever more poverty.

          Great for the new bludging shareholders though as they reap their unearned income.

        • KJT 5.3.1.2

          “Working market”. In what fantasy world is price taking by suppliers, a “working market”.

          In a “working market” the long term profit tends towards zero.

          That’s why capitalist corporations prefer to acquire tax payer started natural monopolies, rather than start their own business.

          Good rentier racket if you can get into it.

  6. Wayne 6

    Of course, over 6 years there have been substantial dividend payments and an increase in value on the NZX. In large part because the economy has grown over 20% in the last six years. If that didn’t happen no-one would buy shares at all, ever.

    Do you imagine you would want your Kiwisaver funds to make neither a capital gain or dividends?

    Even at bank rates of 3 to 4 % interest, the aggregate return would be over 20% and you would expect companies on NZX to out perform bank deposits.

    So really a nonsense argument. Basically a socialist argument that the government should own all major assets.

    • Gosman 6.1

      Agreed Wayne. Also there is no analysis of the economic benefits the country gained from the government receiving the funds from the partial sell down in shareholding of these companies.

      • One Two 6.1.1

        Benefits

        Government debt went up…

      • mickysavage 6.1.2

        Wayne.

        Do you imagine you would want your Kiwisaver funds to make neither a capital gain or dividends?

        Sure I do. But I don’t see why selling shares in our power companies has to happen for this to occur.

        Even at bank rates of 3 to 4 % interest, the aggregate return would be over 20% and you would expect companies on NZX to out perform bank deposits.

        Of course you would. But why should the Goverment miss out on this income. Are you saying the Government should intentionally impoverish itself so shareholders can bet richer?

        So really a nonsense argument. Basically a socialist argument that the government should own all major assets.

        How about not selling profitable strategic assets it already owns?

        And where are the economic benefits from the sale Wayne? Surely this is the biggest issue?

        Gosman:

        Also there is no analysis of the economic benefits the country gained from the government receiving the funds from the partial sell down in shareholding of these companies.

        Here is the info Gossie about how the proceeds were used.

        https://treasury.govt.nz/sites/default/files/2017-11/oia-20150322.pdf

        Of course we could have retained the shares and used the dividend stream to achieve the same result.

        • Gosman 6.1.2.1

          The dividend stream would not have been able to be used as quickly.

          • Shadrach 6.1.2.1.1

            The dividend stream would not have been as high, despite Mickey’s protestations.

            • mickysavage 6.1.2.1.1.1

              Why?

              Same companies, in many cases same directors.

              • shadrach

                Same companies run with private shareholders.

                • mickysavage

                  So? At the same time as the privatisations were happening Treasury told the companies to act in a more commercial manner. The increased dividend flow may have come from this simple instruction and have been totally unrelated to the privatisation.

                  • shadrach

                    So Treasury put their big boots on and told the companies to start acting differently. Why the heck weren’t they operating differently before? Because their shareholders were the government. Bring in private shareholders, who don;t need to be told such things, and profits improve.

            • Draco T Bastard 6.1.2.1.1.2

              It probably would have been.

              Wouldn’t have has so much loss to the economy though.

              That’s what all those mush higher share prices represent you know – a loss to the economy. Because that’s what profit is – a loss to the economy.

              In a perfectly competitive market (All customers knowing where the best deal is, all innovations adapted to instantly) there is no profit thus proving that profit is the dead-weight loss that competition is supposed to eliminate.

              • shadrach

                There has been no loss to the economy. The profits made still end up in the economy. The dividends paid still end up in the economy. The tax paid still ends up in the economy. Profits and dividends up. Yippee.

                “Because that’s what profit is – a loss to the economy.”
                Profits create wealth. Wealth produces tax. Profits (can) lead to more jobs. More jobs mean higher government income and lower government expenditure. Profits are a gain to the economy, not a loss. But then you never did have a solid grasp on market economics.

              • shadrach

                “That’s what all those mush higher share prices represent you know – a loss to the economy. Because that’s what profit is – a loss to the economy.”
                Profit is a gain for the economy. Profit creates spending power, which stimulates the economy and creates jobs. That profit, spending and job creation provides net revenue to the government, which in turn is spent and creates more jobs, or pays debt. Profit is reinvested in businesses and communities. These are just some of the reasons market economies survive and centrally controlled ones fail.

                • Draco T Bastard

                  Profit is a gain for the economy.

                  No it’s not as that profit had to come out of the pockets of the poor.

                  Profit creates spending power

                  No it doesn’t – it takes it away from the poor.

                  which stimulates the economy and creates jobs.

                  Doesn’t do that either. It’s community that does that. Here’s Nick Hanauer on it. And even doesn’t really get it.

                  That profit, spending and job creation provides net revenue to the government, which in turn is spent and creates more jobs, or pays debt.

                  No it doesn’t. There’s a reason why the governments have to run deficits.

                  And the government doesn’t need revenue anyway. It can, and does, create money which it can then spend into the economy. That money is what gets the economy moving.

                  Profit is reinvested in businesses and communities.

                  No it’s not. It’s reinvested in more speculation driving up prices artificially.

                  These are just some of the reasons market economies survive and centrally controlled ones fail.

                  That’s just the lie that the capitalists have been feeding us. Capitalists economies always collapse because the rich take everything for themselves.

                  Now, if we had a market economy without the capitalism it might work but I have my doubts. The market usually fails in providing what’s needed. It wasn’t the market or capitalists that provided the telecommunications or power network, or the roads, or the water treatment plants or the hospitals or many other things that we need.

                  But they sure as hell are taking them away for the profit of the few. That’s what all those higher electricity prices are about.

                  • shadrach

                    “No it’s not as that profit had to come out of the pockets of the poor.”
                    No, profit goes into the pockets of the poor, via welfare paid for out of taxes. On profits.

                    “No it doesn’t – it takes it away from the poor.”
                    No, profit provides jobs to the poor.

                    “No it doesn’t. There’s a reason why the governments have to run deficits.”
                    Governments don’t have to run deficits.

                    “And the government doesn’t need revenue anyway. It can, and does, create money which it can then spend into the economy. That money is what gets the economy moving.”
                    Are you serious? You do know the effects of such money creation, don’t you?

                    “No it’s not.”
                    Yes it is. Profits buy capital equipment, build buildings, go towards supporting community work.

                    “That’s just the lie that the capitalists have been feeding us. Capitalists economies always collapse because the rich take everything for themselves.”
                    Name a capitalist market economy that has collapsed. Name one.

                    “It wasn’t the market or capitalists that provided the telecommunications or power network, or the roads, or the water treatment plants or the hospitals or many other things that we need.”
                    Of course it was, because he government paid for these assets ultimately from taxes taken from the private sector.

                    • Draco T Bastard

                      No, profit goes into the pockets of the poor, via welfare paid for out of taxes. On profits.

                      No it doesn’t. There’s a reason why most of the rich people in NZ aren’t on the highest tax bracket.

                      No, profit provides jobs to the poor.

                      No it really doesn’t. What provides jobs for the poor is the poor being paid.

                      Governments don’t have to run deficits.

                      Yes they do. if they didn’t all the private banks would go bankrupt because all those loans that they create could never be paid back. Actually, they can’t be paid back anyway – that’s why the government has to keep bailing out the banks.

                      Are you serious? You do know the effects of such money creation, don’t you?

                      Yes I do. The economy blooms and unearned income disappears.

                      What you’re afraid of is only the result of scaremongering. The private banks create, just in NZ, billions every year. We do see runaway inflation from it as house prices inflate way beyond the CPI as the private banks like to bet on a sure thing. You cannot default on a mortgage in NZ.

                      Yes it is. Profits buy capital equipment, build buildings, go towards supporting community work.

                      They certainly could be used for that. Invariably, they aren’t as proved by the falling down power poles we have. When such shit happens you’ll note that the fix is invariably to increase prices to pay for it – not decrease profits for the bludging shareholders.

                      Name a capitalist market economy that has collapsed.

                      Really?
                      Did you miss the GFC? Were you hiding in a bunker perhaps?
                      How about the Great Depression? Must have been covered in history as it was such a significant event.
                      Or how about the 1987 crash of the NZ economy after the attack by, considering timelines, John Key and the other guy.
                      Or the Asian crash?
                      Or the long recession back in the 19th century?
                      Or ancient Rome.
                      Or ancient Greece.
                      Or Ancient Egypt.

                      One? Every single capitalist economy has collapsed.

                      In modern times they’ve been rescued by Socialism.

                      Of course it was, because he government paid for these assets ultimately from taxes taken from the private sector.

                      Nope.
                      As I say, the government doesn’t actually need the funds provided by the private sector.

                      And, more importantly, the private sector would never have provided them. The government can create money because it can command the use of a nations resources.

                      That’s why democracy is so necessary.

                      Private banks, no matter how much they’d like to, can’t actually do that.

                      The private sector can provide access to things that aren’t needed. People who want such things are willing to pay for them. What it won’t provide efficiently are those things that everyone needs. That’s why the US health system costs three time as much as any public health system.

                    • ropata

                      +1000 Draco. Banks and corporations are sociopathic by nature and the enemy of the people. They are vehicles of the 0.01% used to entrench their privilege.

                      Banks should be a public utility, and corporations should only be permitted to form for a specific purpose – and then dissolved. For profit corporations need to be outlawed as they are destroying the Earth

                    • shadrach

                      “No it doesn’t.”
                      Where does the money for welfare come from? Taxpayers.

                      “There’s a reason why most of the rich people in NZ aren’t on the highest tax bracket.”
                      There’s a reason you confuse wealth with income.

                      “No it really doesn’t. What provides jobs for the poor is the poor being paid.”
                      Paid from profits.

                      “Yes they do.”
                      No, they really don’t. The NZ Government is not currently running deficits.

                      “Yes I do. The economy blooms and unearned income disappears.”
                      Ah, no. Inflation destroys the value of both income and savings.

                      “They certainly could be used for that.”
                      And are.

                      “Really? Did you miss the GFC? Were you hiding in a bunker perhaps?”
                      No single capitalist economy collapsed during the GFC. They simply adjusted and recovered.

                      “How about the Great Depression? Must have been covered in history as it was such a significant event.”
                      No economy collapsed. They adjusted, and recovered.

                      “One? Every single capitalist economy has collapsed.”
                      No, none have. Not a single one. The Soviet Union, now that was a collapse. Along with most of Eastern Europe.

                      “In modern times they’ve been rescued by Socialism.”
                      No, not in any single example. Market economies simply adjust. Socialist economies collapse, or evolve into market economies, such as in Vietnam and China. It is market economics that is bringing people out of poverty across the planet.

                      “As I say, the government doesn’t actually need the funds provided by the private sector.”
                      It has no other source of money. The problem with socialism is that you eventually run out other peoples money.

                      You are an economic illiterate.

                    • shadrach

                      “They are vehicles of the 0.01% used to entrench their privilege.”
                      Of course, Ropata. No-one outside the 0.01% has a bank account, uses electronic banking, deposits savings, invests money, owns shares…

                      It’s hard to believe people in an educated society still believe the crap you write.

                    • ropata

                      Ofc everyone uses banks – they are a natural monopoly that should be nationalised as a public service. The Aussie parasite banks are sucking $4 billion out of NZ annually.

                      You forgot to mention that small detail

                    • shadrach

                      ” they are a natural monopoly that should be nationalised as a public service. ”

                      Banking in NZ is not a monopoly. There are currently 26 registered banks in NZ. These banks all offer competing services at varying rates. They are owned by shareholders across multiple countries, and their activities are closely monitored. Seriously is it really necessary to have to point this stuff out?

                      https://www.rbnz.govt.nz/regulation-and-supervision/banks/register

                      Oh and BTW, ever heard of the BNZ bailout?

                    • ropata

                      I know the banking industry in NZ isn’t a monopoly that’s why I said “natural monopoly” as the whole industry is bunch of colluding thieves, a parasitic vampire squid on the poor suckers who are forced to use their shitty system to survive. Do you not understand why ancient religions forbade the charging of usury? Because it winds up with one class of people enslaving the rest. And that is a recipe for social disaster. I guess you don’t give a fuck about endemic corruption and inherent instability of the criminogenic banking system. Are you John Key in drag?

                      https://www.theguardian.com/australia-news/2018/apr/27/amp-could-face-criminal-charges-for-misleading-asic-banking-inquiry-hears

                      https://www.smh.com.au/business/the-economy/we-need-an-inquiry-into-asic-it-s-an-embarrassment-20180327-p4z6ez.html

                      http://www.positivemoney.org.nz/Site/Consequences/

                      And have a look at 6.2.1.2 and 6.2.1.3 below for some examples to back up your stunning arguments against socialism

                    • shadrach

                      ” that’s why I said “natural monopoly” as the whole industry is bunch of colluding thieves, a parasitic vampire squid on the poor suckers who are forced to use their shitty system to survive. ”
                      No, not even that. As I said, there are currently 26 registered banks. That is in addition to a variety of other lending institutions, all competing for business. No-one is forced to deal with any one bank. Take a choice, there is plenty available.

              • Bazza64

                If a profit is a loss to the economy, then a loss is a gain to the economy? Your thinking is backwards.

                • Draco T Bastard

                  There’s a third option – the business runs at break even. In fact, that’;s what the actions of the free-market are supposed to bring about.

                  The market works thus:

                  If a business is making a profit more businesses will enter the industry until it isn’t
                  If a business is making a loss individual ones go under until other businesses are breaking even
                  If a business is breaking even then it stays there – no more competition will enter the market

                  This is supposed to encourage innovation which produce profits but the competitive market works to reduce profits to zero. It’s a condition of dynamic stress.

                  Part of the problem is IP which prevents competition
                  Another part is that many can’t afford to enter the market limiting competition
                  And the last part is that capitalists think that they should always get a profit and government agrees with them and so has written protection (Hence why you can’t default on a mortgage and have to jump through hoops to default on any other debt) into law for them and bails them out when they fuck up (See the govt response to the GFC)

                  • shadrach

                    The government bailed out very few companies during the GFC. Many more were allowed to collapse. As usual you’re talking nonsense.

                    • Draco T Bastard

                      No I’m not.

                      Those bludging companies that did collapse did so before the government could step in and put in place the legislation necessary to protect them.

                      That legislation should never have existed. The companies should have collapsed and people should have lost their money. That’s what the free-market is all about.

                      You’re rewriting history because your ideology failed – again – and you simply can’t accept that.

                    • shadrach

                      “Those bludging companies that did collapse did so before the government could step in and put in place the legislation necessary to protect them.”

                      What utter rubbish. The Crown Retail Deposit Guarantee operated from 2008. Multiple company collapses occurred after that, many outside the finance sector. You really do talk nonsense.

                    • ropata

                      “Multiple company collapses”

                      great defense of crapitalism right there

                    • shadrach

                      “Multiple company collapses”

                      “great defense of crapitalism right there”

                      Yes, it is one of the features of the market that not all businesses survive. As some fail, new ones arise. You see the market mirrors life, which is why it the best system we have. Unlike socialism, where entire economies collapse.

                • shadrach

                  Draco’s thinking on economics and markets is not backwards, it is all over the place!

                  • Draco T Bastard

                    And there you’re just lying.

                    My take on economics has been consistent for as long as I’ve been commenting here.

                    • shadrach

                      Your take on economics makes Venezuela look like a success story.

                    • ropata

                      CIA misinformation campaigns, false flag operations, trade blockades, have been destroying democratically elected governments in South and Central America for the last 50 years.

                      Only simpletons with a carrot up their arse blame “socialism”

                    • shadrach

                      “CIA misinformation campaigns,…”

                      Blah blah blah. The CIA don’t run Venezuela’s economy. It is socialism that is destroying Venezuela. Your excuses and continued denial of history are sad.

          • KJT 6.1.2.1.2

            The dividend stream has been a cost and brake imposed on the wider economy.

            Of course Gosman and Wayne, like most right wingers, are unable to see that a ledger has more than one side.

            Only seeing personal profit.

      • Tamati Tautuhi 6.1.3

        Government has lost the Revenue Stream and National squandered the money on Saudi Sheep Farms etc

      • lprent 6.1.4

        I would argue that I have never seen ANY benefits from the selloff except to those who who didn’t need it.

        Perhaps you should provide some evidence that there were any benefits to the country?

        As far as I can see most of the direct value was directly put into tax cuts via the consolidated fund. In other words, the shares were sold at a discounted rate to those who were affluent enough to pay for them, and then were used to give tax cuts to the affluent.

        The only nett effect that I can see is that it increased inequity in our population.

        I can’t see any evidence of an increase in productivity. Just raised power delivery prices increasing costs.

        • Gosman 6.1.4.1

          What tax cuts happened AFTER the partial sell down in state assets?

          • lprent 6.1.4.1.1

            The ones that had been announced prior and ‘covered’ with the announcement of expected revenue from anticipated sales.

            FFS: Are you so ignorant of budgetary processes that you can’t read the continued impact of tax cuts on the budget. A tax cut has a continued hole. The treasury warned about this when the tax cuts took place. There was absolutely no appreciable fiscal stimulus from the tax cuts (as everyone apart from some fiscal morons in Act anticipated)

            The fiscal hole was filled with the lag and debt until the actual amounts from selling control of commercial assets filled the hole.

            Are you really do ignorant of budgets. Perhaps you should go an learn some multi year budgeting te hniques?

            • Draco T Bastard 6.1.4.1.1.1

              Gosman, despite being an actuary (IIRC) can’t do basic accounting and lives in the magical world of Planet Key (without toilets).

    • millsy 6.2

      Well, the government should own all major assets. At least power bills wouldn’t be so high.

      • Gosman 6.2.1

        Examples in other countries do not support your view millsy

        • KJT 6.2.1.1

          Only if you never look for evidence, Gosman.

          Privatised power over the ditch isn’t doing so well, either.

          • Draco T Bastard 6.2.1.1.1

            Nor the privatised trains, nor the privatised telecommunications, nor the privatised hospitals….

            Isn’t it amazing how the right-wing seem to miss all the bloody evidence?

            • Gosman 6.2.1.1.1.1

              No comment on Eskom then Draco?

              • Draco T Bastard

                Eskom seems to have had a bad year. The corruption was caught and is now being seen to.

                Capitalism is corrupt all the time. Enron went for years before it was caught.
                Tax havens exist permanently.
                The LIBOR scandal also went for years and it was only the collapse of the global financial system, which it was partially responsible for, that the corruption was caught at all. It’s still in place and working the same as before and probably with same corruption.

                You’re talking one exception. Capitalism is, itself, corrupt.

              • MrSweetAz

                I was a supplier to Eskom in the late 90’s and early 2000’s. The demise of Eskom was entirely predictable and totally unrelated to anything other than the BEE policy. It was apparent to anyone with eyes that the cadre deployment by the ANC would in time destroy the business and so it has. This same policy has destroyed every other parastatal in South Africa as well.

        • ropata 6.2.1.2

          Postwar France:

          Between 1944 and 1946, the state took control of businesses in energy, transportation, and finance. Private coal companies were reorganized into the public mining giant Charbonnages de France; gas and electricity producers were likewise nationalized to create Électricité de France and Gaz de France. The state absorbed Air France. It nationalized the country’s eleven largest insurance companies, along with Banque de France and the four biggest commercial banks … Taken together, these measures transformed the state into a giant economic actor: in 1946, it directly controlled 98 percent of coal production, 95 percent of electricity, 58 percent of the banking sector, 38 percent of automobile production, and 15 percent of total GDP. Beginning with Jean Monnet, the first director of the General Commissariat for Planning, the government managed public enterprises and drafted five-year plans in order to shape long-term economic development.

          It was, by any measure, a great success. Nationalized industries and five-year plans may transgress the treasured tenets of neoliberal orthodoxy, but they didn’t stop France from enjoying three decades of sustained economic growth and prosperity. In the period between 1950 and the first oil shock in 1973, recalled in France today as les trente glorieuses (the “thirty glorious years”), its economy grew at the impressive clip of 5 percent a year (while United States growth averaged 3.6 percent), unemployment was virtually unknown (2 percent in France, compared to 4.6 percent in the United States), and French women and men experienced dramatic increases in their standard of living.

        • ropata 6.2.1.3

          Australia:

      • Harold 6.2.2

        Agreed, it should own all major assets, and including the most important of all, food and fuel distribution, just like what happened in the USSR. This way everyone can live within their means.

    • One Two 6.3

      the economy has grown over 20% in the last six years.

      And you have the temerity to say that others are making ‘nonsense arguments’…

      Do you have a paging system which alerts you into defensive reaction, Wayne ?

      Your responses are most often, defensive….

      • Gosman 6.3.1

        Why is that a nonsense argument?

      • Wayne 6.3.2

        One Two,

        The economy has grown around 20% in six years. That is what 2.5 to 3.5% compounding growth per annum produces.

        • One Two 6.3.2.1

          You said over 20%

          Then you said around 20%

          Now that your stated position is in decline, and when unpacked suitably to assess whatever level of massaged ‘growth’ figures actually consisted of…

          Temerity!

          You are correct on one thing, which serves only to affirm where the actual nonsense exists….no-one would buy shares at all, ever

        • Poission 6.3.2.2

          The Christchurch earthquakes are responsible for around 1.5% pa of gdp pa.
          over that period,if you include the seddon, cook strait, and kaikoura events, there is little left.

          GDP is a mirage, its a KPI an imaginary chimera .

          • Gosman 6.3.2.2.1

            Of course it is. That is why the current Government is trumpeting the current GDP figures.

          • ropata 6.3.2.2.2

            The population has grown by 500,000 as well, and people are working harder than ever. But productivity per hour worked has flatlined – because ticket clippers and rent seekers are continually inflating the cost of living – power is just one example

        • Tamati Tautuhi 6.3.2.3

          Wayne Housing Price Inflation is not growing the economy you need to educate yourself IMHO.

    • Blazer 6.4

      In New Zealand, services are the biggest sector of the economy and account for 75 percent of total GDP.

      Yes the Finance,Insurance,and Real Estate sectors have grown significantly in the last 6 years.

      Big immigration numbers and property inflation fuelled by Q.E mask a stagnation in the tradeable sector.

      The financial services sector made 100’s of millions from the part privatisation of assets the taxpayer already owned.

      The Govt should own all vital assets.

      Enron a wonderful case study in the ‘efficiency’ of private companies.

      • Gosman 6.4.1

        Enron is a wonderful case study of why the private sector works. What happened to Enron?

        • mickysavage 6.4.1.1

          You do realise that Enron engaged in all sorts of financial fraud and went broke?

          • Gosman 6.4.1.1.1

            Exactly. That is what happens when Private owned businesses do stuff like Enron did. Contrast with Eskom in South Africa. Eskom has been caught up in all sorts of corruption allegations and is losing bilions of Rands yet it is still afloat. Why is that MS?

    • mac1 6.5

      Shares sold at $1.50 would be worth $1.80 now at a 20% growth in the economy. They are actually valued at $3.50. That’s a 133% gain. To this financial illiterate that’s a pretty powerfully dividend-caused result. If the price of the shares now is so high because of dividend returns, and much less influenced by the 20% economic growth, what was the advantage to non-share holding New Zealanders when they were sold?

      How much cold, hard economic thinking, and how much pure ideology?

    • Draco T Bastard 6.6

      Do you imagine you would want your Kiwisaver funds to make neither a capital gain or dividends?

      We don’t actually need such things. In fact, such bludging is detrimental to the economy and society as it makes both unsustainable.

      Even at bank rates of 3 to 4 % interest, the aggregate return would be over 20% and you would expect companies on NZX to out perform bank deposits.

      Consider, the government could provide 0% interest loans to businesses. This would be a huge boost to businesses and the economy as it would massively decrease the drag caused by interest.

      So, why do we even bother putting up with the bludgers?

      Basically a socialist argument that the government should own all major assets.

      That’s not a nonsense argument. The government should own all natural monopolies that are essential services such as power, telecommunications and health to ensure that everyone has access to them.

      • dv 6.6.1

        Consider, the government could provide 0% interest loans to businesses. This would be a huge boost to businesses and the economy as it would massively decrease the drag caused by interest.

        Yes DTB,
        AND when the business repay the money is withdrawn from circulate. So no serious inflation effect.

        • Gosman 6.6.1.1

          Yet no country has followed this approach successfully. Go figure that one.

          • Draco T Bastard 6.6.1.1.1

            Actually, they have. They were extremely successful as well but the greedy schmucks didn’t like that because they weren’t making the profits that they thought that they deserved and persuaded government to change to the present system. The economy has been fucked ever since.

        • dv 6.6.1.2

          Banks have too much influence.

    • Ovid 6.7

      The public was very clear on its position in the 2013 asset sales referendum voting 2:1 against sales. NZ had been down that path before and when the government had built the dams and powerplants, it really should be the government that holds on to them.

      • Gosman 6.7.1

        Why?

          • Gosman 6.7.1.1.1

            Yes and the elements of the electricity sector that could be classified as natural monopolies such as Transmission ARE 100% Government owned and controlled. There is no evidence that electricity generation or the Wholesale/Retail markets are natural monopolies though.

            • arkie 6.7.1.1.1.1

              Where else would you be able to source your electricity if not from the generators? And who provided the capital for building the generators in the first place?

              • Gosman

                Many different people.

              • Gosman

                BTW your argument is like stating farming is a natural monopoly because where else would you source your farm produce from apart from farmers.

                • arkie

                  At least I have an argument. You sound like trump. ‘Many different people’ ie the Public.

                  All of the government’s energy assets originally came under the Public Works Department. The Electricity Division of the Ministry of Energy assumed responsibility for electricity generation, transmission, policy advice and regulation. Distribution and retailing was the responsibility of local electric power boards (EPBs) or municipal electricity departments (MEDs).

                  So yes, the public built them, the public ran them. Then the 4th Labour government sold them.

                  • Gosman

                    You asked who provided the capital for the power generators to be built. I gave you an answer. The capital came from many different people. Do You think the government magicked the money from out of the air? Whether that money was spent by the public sector or the private sector to build them is irrelevant.

                    • arkie

                      Taxes and borrowing.

                      By government.

                      Not by ‘Many different people’

                      You are being disingenuous because you don’t have an argument.

                    • arkie

                      Whether that money was spent by the public sector or the private sector to build them is irrelevant.

                      That the electricity industry required funding by the public sector is part of the definition of a Natural Monopoly and exactly what we were discussing.

                      You have proved that you and your arguments are irrelevant.

                    • Gosman

                      You don’t know if it required the central government to do this. All you know is the central government did do this. Regardless whether or not central government did do it or not is irrelevant to the definition of a natural monopoly.

                    • arkie

                      I guess that means I know more than you then.

                      You are dancing on semantic pinheads.

                      And you do not understand natural monopolies. Or economics. Or history.

        • KJT 6.7.1.2

          Ever heard of Democracy, Gosman?

          The majority of the public, the owners of the asses, did not want them sold.

          Because we knew full well, from past experience that we were going to get screwed twice. Once in the fire sale. And again paying for the dividends, borrowings, and excessive salaries, of the privatised companies.

          • Gosman 6.7.1.2.1

            Except everybody had an opportunity at an election to vote out the people whose main policy was the partial sell down in the shares. What did they decide to do with their vote at that election KJT?

            • Draco T Bastard 6.7.1.2.1.1

              And after the election the majority of people told National that we didn’t want our assets sold. This removed any possible mandate that National had to sell them.

              Thus National acted undemocratically and unethically.

              • Gosman

                Yet they re-elected them in 2014 so they can’t have been that annoyed at being ignored.

              • Enough is Enough

                That’s a silly argument Draco

                Labour campaigned rigorously on the sale of the power companies. Who can forget them and their little red stop signs throughout the campaign. As Labour said during the campaign, the only way to stop the sales was to vote Labour.

                Labour (and everyone who voted in that election) knew what would happen if John Key was returned.

                • Draco T Bastard

                  That’s a silly argument Draco

                  No, it’s not – unless you consider democracy ‘silly’.

                  Labour (and everyone who voted in that election) knew what would happen if John Key was returned.

                  Democracy means that parliament is responsive to the will of the public. The public voted in National but told them that they didn’t want to sell those assets.

                  National ignored that will.

                  • Enough is Enough

                    No – Parties tell the public what they will do if you vote for them

                    They said they would sell the power companies.

                    They got elected

                    They sold the power companies

                    They then got relected

                    • Draco T Bastard

                      Just because a political party got voted in with a set of policies doesn’t mean that everyone who voted for them supported all of those policies. Which means that a referendum held that shows that the majority do not want one of those polices put into practice should be listened to and that policy not put into practice.

                      That’s democracy.

                      You seem to have a problem with it.

                    • Enough is Enough

                      That’s one take on democracy but here is nothing in our constitutional arrangements that supports your argument.

      • Herodotus 6.7.2

        2:1 funny how you refer to that, as re the smacking it was 9:1 and when it was topical many were “talked down” as only 50% voted given those who were supportive of the law the justification that the majority of voters were NOT in support of he referendum, so using the same logic the vote in support of the asset sales referendum was less than 30% of potential voters
        https://en.m.wikipedia.org/wiki/2013_New_Zealand_asset_sales_referendum

        • Draco T Bastard 6.7.2.1

          https://en.wikipedia.org/wiki/2009_New_Zealand_citizens-initiated_referendum

          Should a smack as part of good parental correction be a criminal offence in New Zealand?

          As John Key, IIRC, asked ‘what referendum against the anti-smacking legislation?’

          Never mind that it was a leading question that shouldn’t have been allowed through.

          • Herodotus 6.7.2.1.1

            The referendum wording was accepted the way it was. We the public were asked to vote voted on how the phrasing was framed, be that right or wrong. Same with most/all referendums that I can recall eg 99 politicians , more fireman, tougher sentencing etc
            And as a note re assets I voted that it shouldn’t have been allowed. But sometimes we have to accept what has passed, (I accept some of my views may not be right and some are, even it not fully supported here 😜)but remember our history as a guide for the future.

            • Draco T Bastard 6.7.2.1.1.1

              We the public were asked to vote voted on how the phrasing was framed, be that right or wrong.

              Yep, we were.

              What we weren’t asked was to vote on the actual legislation.

              The referendum on selling assets was actually about selling the assets.

              Hell of a difference. So much so that the two cannot be compared. It’s the old comparing apples with oranges.

  7. Michelle 7

    Right on the button the gnats sold us out again and many NZers still remember Bradfords promises of cheaper power when are people gonna wise up and stop listening to these spinners

    • Gosman 7.1

      What has been the average price rise for electricity provided by the Electricity companies (excluding the infrastructure providers which are 100% owned and controlled by government agencies)?

      • One Two 7.1.1

        Still asking questions that you don’t actually understand , Gosman…

        You don’t even understand why +/- 100% of banks are insolvent…

        • Gosman 7.1.1.1

          Ahhh… you are one of those fractional reserve banking fellows are you? How’s the tin foil sitting on your head?

      • ropata 7.1.2

        newsroom:

        The first report of the Electricity Price Review has been released, and reveals households pay 79 percent more now than in 1990. But the report excuses electricity companies from the allegation they are “making excessive profits”.

        The price imbalance is partly the result of the evolution of what Energy Minister Megan Woods is calling a “two-tier” system. While household costs increased, electricity costs to business fell. Commercial businesses now pay 24 percent less than they did in 1990, while industrial users pay 18 percent less.

        Over 100,000 households spend more than 10 percent of their income on power, putting them in “energy hardship”.

        – stuff: Rising power prices pushing Kiwi households into power poverty
        – herald: Kiwi households paying ‘almost 80 per cent more for power today than in 1990’

        • KJT 7.1.2.1

          That was deliberate competitive behaviors by the power companies.

          Charge domestic users the costs of discounting, to attract large customers.

          One of the “costs of competition” which advocates of market fundamentalism, tend to ignore.

          • ropata 7.1.2.1.1

            presume you mean “anti-competitive behaviour” by the colluding, exploitative, grasping powercos.

            yes, and households don’t have the “power” to negotiate prices collectively that big industries do, and the commerce commission has dropped the ball

  8. Royce 8

    The very best thing for this country could do to future proof its electricity system would be to develop another 500 megawatts of Geothermal power. Geothermal has the best capacity factor of any of the different modes we use to generate power. In fact it is the best damm base load on the planet. Now we know that this would crash the market and the power generators dividends. But it would guarantee there would be power available so we can electrify our transport fleet plus it would give us certainty in dry years and it would be much lower in carbon emissions compared to gas, coal and oil. So in my opinion the government should try and do a deal with any of the generators who would be willing to bring forward one or more of the already consented projects which they have on there books. Failing that the Government could start another power company and do it themselves. Just the threat of doing might be enough to spur some action.
    I will post this link to Transpowers website which shows the current makeup of power being generated by mode in real time. I would suggest to people they should put this link on their favorites and look it several times to day. Then they will understand where I am coming from.
    https://www.transpower.co.nz/power-system-live-data

    • Gosman 8.1

      If it made commercial sense why aren’t the commercial generators doing what you suggest? The government as majority shareholder could direct them to do so.

      • Tamati Tautuhi 8.1.1

        National Government bailed out Rio Tinto and also gave them discounted electricity prices think that out logically ?

      • Draco T Bastard 8.1.2

        I don’t seem to be able to find where Royce said it made commercial sense.

        This is the problem. What makes commercial sense doesn’t actually provide what we need.

        We need renewable generation but, because it doesn’t make commercial sense, we’re not getting it.
        We need to reduce the number of farms we have but because it doesn’t make commercial sense we’re not doing so.

        See the problem with commercial sense? It’s fucken senseless.

    • Dennis Frank 8.2

      Let’s wait & see if it shows up in the bipartisan climate-change policy first. If not, there may be good reasons against that you don’t mention. I like the idea though.

      As Gosman implies, leaving national energy policy to the market is a waste of time, so would you go for a public/private partnership? Or just recycle Muldoon’s Think Big strategy? I agree the link is useful – that monitoring site is simple & well-designed.

      • Draco T Bastard 8.2.1

        IMO, Think Big was actually a good idea. I just think that Muldoon and National implemented it poorly and bankrupted us by borrowing screeds of offshore cash. Borrowings that weren’t needed if the government had simply created the money and spent it to develop and build the whole lot in-house using the nations resources.

        • Dennis Frank 8.2.1.1

          My view too. As Russel Norman, suggested, use qe to benefit the country. Not necessary, was the response. Well, it’s looking like it will be!

  9. Gosman 9

    I must commend you on this post MS. It is actually a topic of substance (although also a thinly disguised attack on the National party :-)).

    • mickysavage 9.1

      Thinly disguised??

      I think the heading might have given it away …

    • Tamati Tautuhi 9.2

      Gossie you must admit they were f….ing hopeless ?

      • Gosman 9.2.1

        Who was hopeless?

        • mac1 9.2.1.1

          You were talking, Gosman, in your first comment at #9 about the National Party- so who else could we be talking about? National fits the ‘f……ing hopeless’ bill perfectly. Are you losing the thread, old son?

          • Gosman 9.2.1.1.1

            National is no more hopeless than the current government. You just need to see the clusterf#ck of Kiwibuild to see that.

            • mac1 9.2.1.1.1.1

              Now who was it that never owned up to a housing crisis but allowed one to develop? Who was it that sold state houses rather than built them? Who was it that allowed a situation where houses were kept empty for the sole purpose of capital gains while people slept in the streets, and children did their homework at night in the car that was their accommodation?

              Gosman, don’t go near the “But they do it too” comparison argument, as National were epic failures in government.

              • Gosman

                Who was claiming Kiwibuild was going to make a big difference to the housing affordability issue?

                Who hasn’t really made much difference on any major problem the country is facing despite being in power for well over a year.

              • Enough is Enough

                What happened to the State Houses that were soled. Have they moved to Australia or are they still part of the housing stock Mac?

                • mac1

                  Enough is Enough, if you’re saying that the houses still exist, so they do -save for those sold, levelled and used as a building site for a new building. Some state houses because of the pepperpot policy of earlier governments were located in desirable locations.

                  I was limiting my comments to the topic of the post which had to do with privatisation.

                  Of course, state housing sold to developers or private landlords becomes more expensive, The people on the streets or the families living in cars were excluded from that housing as a result, or paid more than they would have to the state, if they could afford it.

                  A friend is selling his house. Some time ago, It was a state house and he refurbished it very well- I helped paint it 😉 – and now it is selling for $400,000 which is a median price here. Meanwhile, fifty or sixty people turn up for rental units hoping to get in, and skilled workers turn down jobs here because the district is hugely undersupplied with rentals and they have nowhere to live, bringing their families. I know these things as I am a member of our Council’s housing committee.

                  Privatisation made things worse, but the problem stems from government failure to react in a timely and sufficient way to our housing crisis.

                  • Brendon Harre

                    +1

                  • Gosman

                    The fact the rental market has a shortage of supply as well shows the problem is one of not enough houses being built not any issue with the market increasing prices unnecessarily.

                    • mac1

                      Gosman, I’m glad you confirmed my major point that the previous National government oversaw through nine years a failure to address meaningfully the problem of not enough houses being built.

                      A nine year problem of a three term government which will take more than year to fix.

                      Wayne above gives the figure of 20% growth in the economy over six years. Inflation has accumulated by 11.3% over six years. House prices, inflation adjusted, from 2011-2017, rose by 42.8$%. Rentals were way above inflation and wage increases.

                      Tell the homeless, the poorly housed, the renters paying way above inflation rate increases in rent, the first home buyers that the market has not increased housing prices unnecessarily.

                      Cold comfort is that, especially in the middle of a NZ summer…….

                    • ropata

                      Not shortage of supply, misallocation of supply. Ghost suburbs, empty houses abound, building industry obsessed with McMansions. More evidence that free market solutions always get fucked up by bad actors

  10. Tiger Mountain 10

    This debacle illustrates several things:
    How strong a representative of international capital ex dear leader Mr Key was, with his privatisation, running down state infrastructure, sell offs of state housing, encouraging private capital penetration of Education and other sectors, he departed only once it became clear that his NZ Tax Haven operation’s days were numbered, a humiliation too far perhaps for him, the 10,000 plus offshore Trusts registered here, melted away within months of IRD wanting more than an A4 disclaimer sheet from them.

    and…

    We live under a continuing long standing neo liberal consensus among the main Parliamentary political parties–the structural elements of Rogernomics and Ruthanasia remain intact–Reserve Bank Act, State Sector Act, free in and out flows of capital etc. which is why there is no outcry yet from the current Govt. over this.

    • Gosman 10.1

      The proceeds from the asset sales went in to State infrastructure so your post is nonsensical.

      • Tamati Tautuhi 10.1.1

        No new hospitals or schools for the extra 650,000 Asian migrants who came into Auckland though.

      • Tiger Mountain 10.1.2

        piss off Gosman

        my post #20 makes sense–you just don’t like the the anti capitalist viewpoint!

        • Bewildered 10.1.2.1

          An anti capital view point is all it’s is, severely lacking in any substance, evidence or logic, thus your view is no more than a ideological rant

    • Drowsy M. Kram 10.2

      Excellent summary TM; NZ society went rapidly skew-whiff under crooked “NZ is not a tax haven” Key and his cronies. It’s still going skew-whiff, but at least the current government is attempting to apply the breaks in some areas.

      Why was John Key singled out by Panama Papers hacker?

      Doe also said the papers demonstrated the injustices perpetrated by the industry that creates offshore companies and blamed governments for allowing offshore havens to proliferate, saying he leaked the documents “simply because I understood enough about their contents to realise the scale of the injustices they described.”

      https://en.wikipedia.org/wiki/John_Doe_(whistleblower)

  11. Brendon Harre 11

    I think the best thing the government could do for the electricity industry is to develop policies around security of supply as follows.

    My article titled -Are We There Yet? Hydrogen Trains and the End of the Carbon Era was published by Interest.co.nz on the 5th January.
    https://www.interest.co.nz/opinion/97543/brendon-harre-sees-future-%C2%A0hydrogen-trains-and-end-carbon%C2%A0era-hydrogen-powers-heavy

    It generated quite a lot of controversy and bile. Mostly criticising the second half of the paper that discussed a pumped hydro proposal -which was the least speculative part of the paper! Some of the criticising commentators were remarkably well informed, indicating they were thermal generator insiders. Some of them used attack lines very similar to a Whaleoil article aimed at Megan Woods. I robustly defended the Interest.co.nz article in the comment section. This was a pretty horrible and bruising experience. The benefit of this process though is the weak points of the argument are exposed -mainly areas that need to be better explained.

    This has allowed me to revise my paper and update my recommendations.
    View at Medium.com

    I think grid scale batteries, like pumped hydro, could be developed by a new ‘KiwiPower’ entity that provides the public good benefit of security of electricity supply. This would be an important and necessary step to achieving New Zealand’s 100% renewable electricity production by 2035 and carbon zero by 2050 goals.

  12. Ad 12

    +1000

    But its on Labours watch to fix it.

    We need a national public utities regulator.
    A major lines co just filed for bankruptcy in California: climate-accelerated wire-shorting liability generating fires wiping out whole towns.

    • Gosman 12.1

      There is already a energy sectot regulator. Why do you need another one?

      • Gosman 12.1.1

        Can’t edit above. That should read energy sector

      • Ad 12.1.2

        Lots of reasons.

        – Generators aren’t well regulated
        – Lines companies are poorly regulated despite multiple massive outages
        – Water price is completely unregulated
        – Ports and airport landing charges poorly regulated even when challenged
        – We are a small country that has become far too disaggregated with effects on our common resources that need to be reaggregated to evaluate the commercial control they jointly and severally have on our lives.
        – Most of them cannot be trusted not to act like cartels – hence the government changing the legislation on acquiring evidence
        – Massive concentration of power in the initial entrants that makes new competitors really hard to start up and compete
        – More forecast price increases for our power bills that are poorly justified if at all to the public who pay
        – Reduction of gas availability causing spikes we’re not prepared for
        – Poor accounting for climate change
        – Non-integrated Tiwai Point supply that distorts electricity market
        – Ineffective EECA
        – Remit overlaps among existing regulators
        – Not enough power and resource put in to making strong regulators such as they are
        – Low expertise in regulation in the public service outside a few total nerds

        IMHO the lot of them behave like robber barons.
        And it’s time we addressed them as robber barons like Roosevelt did.

        • Dennis Frank 12.1.2.1

          Well yeah, but?? Two regulators? Say the govt set up another to do all that fixing, then doesn’t it make the regulator we’ve got irrelevant? In which case, isn’t it best to dis-establish it? Or is it a case of them both performing useful functions? In other words, their operations would complement each other.

          • Ad 12.1.2.1.1

            yes.

            1 regular to rule them all

            and in the darkness bind them

          • Ad 12.1.2.1.2

            The California one covers electricity, natural gas, telecommunications, water, railroad, rail transit, passenger transport, and other stuff.

            http://www.cpuc.ca.gov/aboutus/

            • Dennis Frank 12.1.2.1.2.1

              Oh, I see. Amazing how a working model can demonstrate a principle, eh?
              So the thing works on the basis of adminstrative competence. A genuine professional public service operation? Worth a go, I agree. Have you lobbied the coalition for it?

      • Gabby 12.1.3

        Why not replace it with one that works gozzer.

  13. Draco T Bastard 13

    We should have kept the shares and banked the dividend income.

    That is, of course, what the majority wanted us to do. 70% in the referendum to keep them and in all the polls leading up to the sale.

    National sold them any way.

    The reason why they sold them was to turn NZers into serfs for the rich. There was no other reason.

    Selling them off did not improve the economy. To do that requires investment and the rich bludgers were never going to do that. All the money spent on investment in the power companies comes from us and our power bills minus that which is taken out for the bludgers ‘profit’.

    And, no, buying shares does not equal investment. The companies didn’t actually get the money to spend, to invest. They don’t see any money from sales of shares 99% of the time as the money goes to the previous owners (I’ll let you guess the only time when the company selling shares gets money from the sale). Buying shares in a company doesn’t mean that you’ve invested in that company – it just means that you now own some of it and are now ‘entitled’ to the produce of those who work there without any work on your part.

    Two thirds of the profit from shares comes speculating on if they go up or down. Considering the concept of ‘shorting’ people can make a profit on them going down as well. Speculation produces no value at all but a few people get very rich doing it and so we worship them.

    As I said previously this may all end in tears if the stock market crashes and the sale may then look like it was a good idea.

    If the stock market does crash the government will step in to protect the shareholders. Can’t have the power cut off now, can we?

    It has been concentrating on making money rather than providing new infrastructure.

    Why spend money when you already have a huge profit from a captive audience anyway?

    The country may need improved infrastructure but spending money to provide that will cut into profits. This is another reason why such necessary infrastructure should always be a state monopoly.

    The results clearly show that the last Government engaged in economic sabotage of our country. Or they preferred that private shareholders were enriched at the expense of the rest of us. I can’t tell the difference …

    Both are the same thing. Sabotaging the economy and NZ for the benefit of the rich.

  14. Tuppence Shrewsbury 14

    The math on this is so shakey it almost hilarious. Assuming that these companies would have performed as well under 100% government control is dubious at best.

    And meridian is now worth twice as much as it was, with the government retaining a majority shareholding. So it’s share is worth more than the whole value of the company when they sold 49%.

    Nz inc hasn’t lost anything, it’s obviously gained substantially from the increase in value across the board.

    • mickysavage 14.1

      Why shouldn’t they perform as well under 100% state ownership? After the partial privatisation they had the same staff and in most cases the same directors running the companies.

    • Draco T Bastard 14.2

      Assuming that these companies would have performed as well under 100% government control is dubious at best.

      No. The assumption that private businesses do better is the dubious assumption:

      No model of ownership (public, private, or mixed) is intrinsically more efficient than the others, but there are efficiency differences within certain service sectors and specific contexts.

      And meridian is now worth twice as much as it was

      No it’s not.

      See, I can make unsupported assertions as well.

      So it’s share is worth more than the whole value of the company when they sold 49%.

      Share price isn’t actually a valid measure of value. It’s subjective after all and often driven up by speculation.

      Nz inc hasn’t lost anything,

      Yes it has. It’s lost all the profits going to the bludging shareholders and speculators that have artificially driven up the share prices.

    • Ad 14.3

      New Zealand has lost quite a lot.
      Sure, a few local and foreign shareholders have done well. A tiny percentage of citizens.
      Now, what have we lost after the sale that we had even with full corporatisation?

      – The government has a lower debt-to-equity ratio than it would have, so it is in an overall weaker position than it would have been prior to the sale
      – The people of New Zealand can no longer lobby their politicians to hold these companies to account directly through board control and direct policy oversight.
      – There’s almost no use using Parliamentary questions to name and shame such companies, because Parliament has lost all control of them
      – There’s no ability to guide where and when such companies invest, for example ethical investment, investment in nuclear, etc. It would have been possible to direct companies to invest for example to achieve a 100% renewable generation policy target through appointing a Chair with a strong specific mandate to achieve this goal.
      – Without policy directive power over the electricity generators, the government will find it much harder to achieve its Zero Carbon goals. They are weak enough as they are: selling half the company means selling almost 100% of the policy control that they had before.
      – Without 100% control of the Board appointees, the government cannot influence the management makeup or any of its managerial policies. Goodbye gender representation, Maori representation, Treaty of Waitangi respect, necessary recognition of climate change (other than as business decisions), etc

  15. CHCOff 15

    Political economy tut tut tut forever robbing the value out of wealth.

  16. Jum 16

    ***Privateers only ever think about the business profit; they never consider the overall impacts on the people that make their profit, or lose their jobs to increase that profit, leading to health and welfare issues. When doing an exercise of what an asset in private hands is worth, then include the associated expenses that NZers have to carry, instead of the privateers that jettison them.

    Extrapolating out over the entire country and the many threads that make up a human’s life expectations, hopes and dreams are just expenses to the privateers.

    As merchants of self-interest and greed, privateers should never be allowed near a country’s assets/resources/life necessities.

    They are incapable of empathetic visionary planning. We have governments whose job it is to save us from privateers.

  17. Sabine 17

    to be honest, did anyone expect anything else?

  18. Puckish Rogue 18

    So since the Greens, NZFirst and Labour all seemed to be talking about share buy backs in opposition why aren’t they buying them back now?

    Full disclosure: I have shares in MRP and Meridian 🙂

    • Gosman 18.1

      Exactly.

      And where is the radical shake up of the energy industry they were discussing back in 2014?

    • veutoviper 18.2

      You are supposed to be working … !!! Off topic so let us know on OM how it is going.

      • Puckish Rogue 18.2.1

        Not bad, the food is really good and as inductions goes its not too painful. Back to Chch on Friday to spend a week otj then back to Trentham for more training

    • Gabby 18.3

      Robbo mightn’t be as radical as you reckon puckers.

      • Puckish Rogue 18.3.1

        Maybe the supporters on this site should be asking the question 😉

        • Dennis Frank 18.3.1.1

          Okay, here goes: where is the radical shake up of the energy industry they were discussing back in 2014? Ping! Answer appears on screen: Somewhere on the coalition agenda. 🙄

    • Graeme 18.4

      it’s probably quietly happening without anyone noticing with ACC, NZ Super fund and other quasi state entities buying shares as they come on the market. A transfer from these entities to the government at market would be trivial and hardly controversial, except for having to offer the same to other shareholders if over a threshold, which is the object of the exercise anyway. Once the government controls 75% they effectively have the company and other shareholders will have to like it or lump it.

  19. AB 19

    The purpose of the power company sales was to allow the wealthy (who could afford shares) to extract monopoly rents from the poor who couldn’t afford shares, but have no option but to consume electricity.
    It was National redistributing wealth upwards again – it’s what they do.

    • Draco T Bastard 19.1

      Bingo!

    • tc 19.2

      Concise and true. I see gossie and Wayne rostered on to put up their burnt to a crisp straw man. At one point they’re tag teaming each other.

      Profits are up also because investment is being deffered. It needs to be strengthening its network to cater for the population increase and under grounding city lines prone to storms.

      One look at annual reports will show you no such thing is occurring at the level it needs to. This is telecom take 2 where shareholders take the cream whilst NZ ends up with more run down infrastructure.

      The lines companies run by the trusts club are no better.

  20. ropata 20

    Power should not be a commercial enterprise it’s a public utility and the current model for a small country like NZ is completely idiotic. We have ticket clippers all down the chain.

    from Consumer.org.nz (Jessica Wilson)

    Successive reforms have been justified on the grounds that a market where companies vie for customers will keep down prices. But prices continue to rise. Domestic consumers, responsible for only a third of total electricity use, have shouldered the burden.

    Since 2000, electricity prices have risen by 46 percent in real terms. The most significant impact has been on low-income households which now have to spend a larger proportion of their income to keep the lights on. Last year, the lowest-income households spent 10 percent of their income on energy while the highest-income households spent one percent.

    * Despite over two decades of reform, consumers are yet to get reliable assurances that the market model is supplying electricity at a reasonable price.
    * Legislation has failed to ensure adequate price transparency, leaving regulators struggling to gauge whether prices are fair.
    * With more households struggling to pay their bills, electricity regulations need to be reviewed to protect the interests of vulnerable consumers.

    • Gosman 20.1

      Just saying it is a public utility does not make it so. Why is power any different to say food or the internet?

      • arkie 20.1.1

        Power isn’t that different from the internet. Again the investment and production of the infrastructure that is the internet was produced due to government spending. And like the electricity sector capitalists are trying to privatise as much of it as they can.

        Just saying it isn’t a public utility doesn’t make that so either.
        Why do you refuse to comprehend?

      • ropata 20.1.2

        Why did the Government build massive dams and huge distribution networks if it isn’t a public service. Idiot

        It’s a natural monopoly and especially silly for a small country like NZ to allow dozens of private companies to extract passive rental income from the people. A double insult to the retired generation who built the damn thing and now pay exorbitant power prices

  21. soddenleaf 21

    conservatism took over tv, and then radical conservatives heckled reformists off the airwaves. Thirty years on, financial collapse as the universities were stacked with yes economists, how great your free market theories are sir. And, nobody was left to tell them the economy was a giant ponsi scheme. The suppose wolves of wall street were in fact waiting in line for sheep bail outs. Not a wolf amongst them,the only wolv-ing they did was eating their own, and not when the govt could bail them out, oh no.

  22. Bazza64 22

    shame Labour & the Greens threatened to dismantle the electricity market prior to the float of Mighty River Power, this meant the share price the government got was lower than it could have been. L & G short sightedness cost the taxpayers possibly several hundred million.

  23. rod 23

    Go and have a lie down Gasbag , you must be exhausted. 72 offerings of your usual right wing bile already today. Have a toffee,

    • greywarshark 23.1

      72 eh. He definitely needs to be audited now and then. He gets ubiquitous and you lose sight of whether it is Gosman’s post or that of the TS’ers.

  24. WeTheBleeple 24

    Right man speak with forked tongue.

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