Wanna trade Solid Energy for the Kapiti Expressway?

Written By: - Date published: 11:56 am, August 24th, 2011 - 41 comments
Categories: privatisation, transport - Tags: ,

During his disastrous campaign trip to Kapiti yesterday, John Key said the Kapiti Expressway would be paid for by asset sales. Labour will do neither. National won’t release the Expressway’s benefit-cost ratio but it will cost $500m ($30K per metre). To get it, we would have to sell half of Solid Energy, which has paid us $310m of dividends in the past 5 years.

Labour’s alternative is to keep Solid Energy, and its revenue stream, in public ownership and to build a link road for a quarter of the cost of the 100m wide behemoth that National wants to build.

National’s justification for trading Solid Energy for 18km of asphalt? Well, they’re building Transmission Gully and it’s going to be four lanes, so the road it empties into should be four lanes too (yeah, that logic leads me to think every road should be four lane).  And what’s Transmission Gully’s BCR? 0.6. So, for $2 billion we’ll get a road worth $1.2 billion.

Oh and traffic is falling on Wellington region state highways, contrary to the growth assumptions that underlie even those weak the BCRs. Traffic is down 2.3% in the past year.

Is National’s logic for wasting $500m on the Expressway really that it is needed for fitting on the end of a $2 billion waste of money? They’re chasing a problem that is ceasing to exist by itself with projects that don’t add up.

On top of ignoring common sense, a 4,000 signature petition from the locals has been ignored by National while Key does the smile and wave job, which left Kapiti residents cold:

Eventually, Mr Key emerges from the train. The children break into song again – and so do the protesters. They chant slogans and wave placards protesting against the Kapiti Expressway, which will carve up small communities and force some locals out of their homes.

Local MP Nathan Guy, who has been feeling the heat of local opposition, hugs Mr Key’s shoulder. It is put to Mr Guy that the protesters are angry because they believed they had an assurance there would be only a two-lane highway.

The Otaki MP does not dispute that is what he told them. “But this is a far better offer,” he protests. “This is a four-lane road now.”

At Coastlands in Paraparaumu, known locally as God’s waiting room because of its large retiree population, Mr Key leaps behind the counter of the local McDonald’s and starts serving out burgers and chips.

Raumati pensioner Yvonne Kent, who stands in her zimmer frame as she waits for her specially bagged order, says later that she appreciates the burger – but would much rather the prime minister did something about her home help.

Her hours have been cut and she worries that she is not able to scrub the floors or clean the shower by herself.

Unsurprisingly then, she has not given the election much thought. “Mostly I’m trying to get myself sorted out. They’re taking my home care away. They did it over the phone … they don’t come down to see you or assess you.

“They’re so damn sneaky about it. I’m going to go and see the doctors and see if I can get it back.”

She wishes she had told the prime minister but admits “he took me by surprise”.

41 comments on “Wanna trade Solid Energy for the Kapiti Expressway?”

  1. vto 1

    I think these bastards are criminal. If they were going about this in a private manner they would be shoved up against the wall under the Fair Trading Act. Their aint nothing fair about this lot. All they do is lie and distort. Say one thing and do another. That is misleading and deceptive conduct in trade (politics).

    Wankers.

    And get this over on kiwiblubber today, Farrar is trying make an argument that the disclosure rules around listed companies is one reason for selling them. http://www.kiwiblog.co.nz/2011/08/an_advantage_of_listing_soes.html#comment-868336

    They are so very very very weak.

  2. Tigger 2

    I am beset with the image of sheep bleating “Four lanes good, two lanes bad”….

  3. tc 3

    Why not, we’ve already traded a democratic/open/consultative gov’t (as per their campaign in 08) for the shonkey dealing room complete with cronyism, urgency with that bypassing of select committess complete with sweetheart deals for big business mates doing it soooo tough.

    As for DPF pointing to disclosure rules they really helped Feltex/finance company investors didn’t they and told us what we needed to know about SkyCity/SkyTV/telecom activities….there’s a reson Weldon’s NZX is known internationally as a cowboy market. Full of crony cowboys and rules as easy to circumvent as horses jump fences.

  4. Bored 4

    If we really wanted to do something serious for the Kapiti Coast route we would invest in:

    * two tracks each way to Wellington and Levin.
    * local railway works to build and maintain the stock / track etc.
    * some big wind farms powering the whole thing.
    * local to the door bus services from the stations.
    * fares that are based upon being far cheaper than loaded cars.
    * a pleasant relaxed hassle free journey.

    Paying for it: take it off the roading budget for the area and recoup money from fares, also use a part of the electricity generators returns on the basis that the extra power requirements would increase those returns..

    • rosy 4.1

      Oh and traffic is falling on Wellington region state highways, contrary to the growth assumptions that underlie even those weak the BCRs. Traffic is down 2.3% in the past year.

      Interesting that the transport pdf in the link shows an increase in heavy transport, but a reduction in cars. So 4 lanes for more heavy traffic through Kapiti? Commuters have been moving to trains, the plan should be to get freight transported on trains too.

      • neoleftie 4.1.1

        heavy transport i.e truck will double over the next ten year on our roads as forecast…well was forecast, who knows now

      • AAMC 4.1.2

        And so more corporate welfare. We the tax payer, paying for infrastructure which disproportionally advantages big business. They don’t like paying tax but don’t mind the advantage the things it pays for brings them.

  5. randal 5

    the national party is looking more and more like the Hooton Party every day. We know who pays his bills and they need more of everything every day to make up for the fact they have small weenies.

    • Chris 5.1

      Wow. Seriously a small penis joke?

      • Kaplan 5.1.1

        Yeah. Penis jokes should be at least six paragraphs long.
        How about that other joke, the one that’s four lanes wide and get ready to thrust it’s way through transmission gully while spreading ROI negative.

  6. insider 6

    Why do we own a coal mining company in the first place? Do we own gold mining, or steel mining or oil mining companies too? Surely there should be a logic to what the govt owns not just own it due to historical accident forever amen.

    • lprent 6.1

      steel mining ?

      I wasn’t aware that such a thing existed. Possibly in rubbish dumps.

      As for the rest apart from possibly gold-mining, I think that we have owned them all (if you assume that you’d talking about iron ore) in the past. This was how many of those industries got started in NZ. NZ Steel and most of the new oil/gas field exploration started that way.

      As to why solid energy hasn’t been sold? Well you only have to look at the effect of selling what are effectively natural monopoly that the economy relies apon to private companies in power generation (insufficient generation growth as they pursue more profits), rail (how to run down a infrastructure resource in a decade), and telecoms (telecom screwed every business in the country for more than a decade while trying to lock out competitors).

      Coal is one of those strategic industries in that is supplies an essential resource to other industries. Selling it would be a way to allow another natural monopoly to screw prices up whilst failing to provide the development required over the long term. On the other hand, I think that selling it and putting the ETS tax up on the carbon it mines would probably be a really fast way to stop the burning of coal here. Much faster than just the ETS tax alone.

      • Tigger 6.1.1

        We own oil mining companies?

        • mattyroo 6.1.1.1

          Yes, idiot. The technical term for the extraction of oil is mining. Hence we have PMP’s issued to the company doing the extraction. PMP = Petroleum Mining Permit.

          And Prentice you’re waffle about a natural monopoly screwing prices up is the sort of tripe I would expect from an IT geek that thinks he understands economics.

          Coal is sold on the international market at the current global price, whether it is thermal coal or coking coal. NZ exports most of our coal as it is high grade coking coal and we import a lot low grade thermal coal from places like Indonesia. Or would you prefer NZ burn all of that excellent high value coal in our power stations, missing out on the revenue stream and probably forcing power prices up in the process.

          I agree with stopping the burning of coal in power stations, however, I align myself with the founders of Greenpeace and support uranium as our alternative energy source.

          • lprent 6.1.1.1.1

            You forgot the MBA, earth sciences and decades long experience of dealing with international business.

            We don’t import any coal as far as I am aware. Especially not low grade. There is more than enough mined inside NZ, and the costs are markedly lower than anything that we could buy. We spdo export some high grade coal for steel making to counties that do not have local deposits.

            The founders of greenpeace live in far more geologically stable countries than NZ (or Japan). Putting the current power generating fission reactor technologies in NZ would be an exercise in risk that only a geologically incompetent moron like yourself who is unaware of the risk levels would advocate.

            Perhaps you should actually learn something about NZ before you act the archetype of a complete aussie wanker.

            • mattyroo 6.1.1.1.1.1

              Nevermind all the insecurities in your opening paragraph, only a lefty needs to try and defend their position with academic bluster….

              Anyway, perhaps you should educate yourself prentice. In 2009, NZ imported 778million tonnes of coal. I’m unsure where it all came from, but being in the energy industry, my understanding is that most coal NZ imports is from Indonesia, which is low grade thermal coal. NZ coal is too good to burn in a power station.

              On the nuclear debate, you don’t even want to go there. My geological understanding far exceeds yours, I can guarantee you that buddy. A series 4 Nuclear reactor has inherent safety features that would automatically cool the reactor during a catastrophic event, such as the Japanese earhquake/tsunami.

              The Japanese reactor was a series 2 and should have been shutdown eons ago, and replaced with a newer design. However, you and your lefty mates have made it so hard to build a new reactor, that they were running an outdated unsafe piece of kit.

              Furthermore, the spent fuel rods should not have been at that facility, but at a secure geologically safe storage facility in the Nevada desert, where they are cooled in a controlled manner. But again, the shrill left have forced the closure of the facility.

              Once again the left have blood on their hands.

              Answer me this: How many times has the first nuclear powered submarine ever built, been refueled?

              Oh, and I’m not an aussie either…..

              • The Japanese reactor was a series 2 and should have been shutdown eons ago, and replaced with a newer design. However, you and your lefty mates have made it so hard to build a new reactor, that they were running an outdated unsafe piece of kit.

                What?

                Us lefties stopped our Japanese cuzzies from upgrading their atomic power plant(s)?!

                No way!

                Ok, who was it! Put you hands up – who stopped the Japanese from ugrading their nuke station??

                Whoever it was – you’re grounded for a week!!

                Sorry ’bout that, Mattyroo. Some of us Lefties, we just don’t know the power we exert over the governments and industries of the world…

              • Oh, and I’m not an aussie either…..

                Yeah. The Aussies asked me to tell you they’re quite happy about that as well…

              • Colonial Viper

                On the nuclear debate, you don’t even want to go there. My geological understanding far exceeds yours, I can guarantee you that buddy. A series 4 Nuclear reactor has inherent safety features that would automatically cool the reactor during a catastrophic event, such as the Japanese earhquake/tsunami.

                You’re an idiot.

                Gen IV nuclear reactors don’t even exist yet, except for in theoretical plans

                http://en.wikipedia.org/wiki/Generation_IV_reactor

                Furthermore, the spent fuel rods should not have been at that facility, but at a secure geologically safe storage facility in the Nevada desert, where they are cooled in a controlled manner. But again, the shrill left have forced the closure of the facility.

                So, you’re suggesting that Japan should have shipped that nuclear waste to the US Yucca Mountain facility, which would not have been ready in time for the March earthquake anyways, and when dry cask storage at Fukushima would have worked just as well. But wasn’t used there as much as it should have been…because of cost. Yes, TEPCO cut corners and cut costs, overstocking its spent fuel pools because of none else than MONEY.

                Conclusion: you just made up a whole lot of shit which you have no idea about. Usual Right Wing moron.

                The Japanese reactor was a series 2 and should have been shutdown eons ago, and replaced with a newer design.

                There were multiple reactors affected DUH.

                And here they are saying that there are 32 other GE reactors like the Fukushima one operating around the world.

                http://openchannel.msnbc.msn.com/_news/2011/03/13/6256121-general-electric-designed-reactors-in-fukushima-have-23-sisters-in-us

                Not shut down, not replaced, you clearly have no idea (as consistent with the above). Operators keep going with old plants because it is profitable to do so.

                No one wants the multiple billion dollar costs of new reactors when you can get regulators to extend the life of old ones. And that is exactly what has been happening.

              • rosy

                but being in the energy industry, my understanding is that most coal NZ imports is from Indonesia, which is low grade thermal coal. NZ coal is too good to burn in a power station.
                Coal was imported because NZ coal wasn’t available due to a strike, not because it’s too good to burn. According to Bloomberg

                New Zealand coal imports climbed to the highest in three years in the fourth quarter as BlueScope Steel Ltd. brought in Indonesian supplies to feed its plant during strikes at local mines.

                Imports rose to 244,000 metric tons in the three months ended Dec. 31, 36 percent more than a year earlier and the highest since the fourth quarter of 2006, the Ministry of Economic Development said today in a statement. Output in the period dropped to its lowest in almost 10 years as workers at Solid Energy New Zealand Ltd. mines went on a five-week strike, the ministry said.

                BlueScope’s Glenbrook mill, south of Auckland, is New Zealand’s largest steelmaker, with annual capacity of about 650,000 metric tons. It buys about 770,000 tons of coal annually from Solid Energy’s Rotowaro and Huntly mines under a five-year supply deal agreed in November 2008.

                Interrupted supplies from those mines forced the mill to buy Indonesian coal and threatened their long-term viability, the government-owned miner said during the November strikes.

              • locus

                NZ coal is too good to burn in a power station.

                So there was no good reason for building the coal-fired power station at Huntly then…

              • lprent

                In 2009, NZ imported 778million tonnes of coal

                You’ll need a link because that is just ridiculous bullshit.

                The only time I think that we have imported coal has been when there have been strikes at the mines, and I’m pretty sure it wasn’t for power generation – they would just shift to gas.

                …which is low grade thermal coal. NZ coal is too good to burn in a power station.

                The only large coal fired power station here is Huntly – which gets its coal from the low grade Waikato fields

                Your ideas on nuclear here are equally as fact free based on the reality of NZ’s geology and distance to ship waste (sure as hell can’t be stored here).

                Oh, and I’m not an aussie either…..

                Sydney IP number? Well I guess immigrants have picked up some of the habits…

          • Draco T Bastard 6.1.1.1.2

            Or would you prefer NZ burn all of that excellent high value coal in our power stations, missing out on the revenue stream and probably forcing power prices up in the process.

            I’d prefer it if we used it in our own steel making processes.

            No amount of money will ever be able to replace the actual resource.

          • locus 6.1.1.1.3

            @mattyroo Have a look at argusmedia.com
            Coal is traded under three different pricing regimes:
            API 2 – Rotterdam, steam coal marker
            API 4 – S. Africa Richards Bay
            API 6 – Newcastle price assessment for coal exported out of Australia

            Also all coals are different depending on what coal seam they come from. Coals are graded in terms of sulphur content and kcal ratings. Coals of different sulphur content and kcal rating command different prices. Coking coal is more than double the price of thermal / steam coal.

            Similarly there is no one crude oil price. All crude oils are different and command different prices.

            Australian THERMAL coal US$121.47 per tonne as of: Friday, August 26, 2011

            Australian COKING coal sold by Wesfarmers’ resources division for the three months to the end of June will price at $US328 a tonne at Queensland ports

  7. insider 7

    Some wrong premises there. Most of the mining industries were started by private enterprise – coal, oil, gold. The Govt got in some way after except for the iron sands (sorry about the steel reference). I’m not sure it ever got involved in gold. Kapuni and Maui were discovered by Shell/BP/Todd combinations.

    I’d hardly call coal a natural monopoly. There are plenty of private miners now and in history and there are varied deposits geographically and quality wise. We also import large amounts for electricity and milk powder, which moderates local prices.

    You say a strategic industry is one that supplies an essential resource to other industries – so plastic suppliers that supply bottlers, cable manufacturers, electronic and component manufacturers etc would be considered strategic? Seems a very broad definition to me.

    • lprent 7.1

      I’m tight for time… but.

      Kapuni and Maui were discovered by Shell/BP/Todd combinations.

      Ah no. There was a government organisation who did the preliminary work to find out that there was likely to be a field in the first place.

      Coal

      The reason that we have Solid Energy now is because when industrialization was started at the end of the 19th, there was an unwillingness to invest in those with enough capital to make them successful. In fact just like Pike River appears to have been started.

      There has never been a barrier to entry for coal, but Solid Energy and its precursors tended to develop fields that private industry did not want to invest in and were required for the rest of NZ’s infrastructure. They have almost entirely done it with internally generated funds. But after more than a century, they are by far the biggest in the area here because they have been investing in NZ rather than just taking profits. It is a investment strategy that is hard to beat.

      Coal has this major economic disadvantage that it is very bulky for its value, which means that for most types of volume coal it has to be reasonably local to its point of use. That means for the rest of NZ industry we need the stuff mined locally.

      Solid Energy is a natural monopoly because of its economic basis. It has invested in fields with slow paybacks, but which have immense multiplier effects for the rest of the economy.

      I haven’t seen any private companies around that would be willing to do that – have you? A privately owned company has no particular incentive to do anything similar. They’d rip profit by price gouging and reduce long-term investment. Eventually the company would shell out. Think about the state that NZ Rail wound up in.

      • Ari 7.1.1

        Actually I’d quite like to see Solid Energy first sold, then legislated out of existence by banning the sale or export of coal for energy. 😛

        • ropata 7.1.1.1

          We’d probably have a surplus of electricity for just that scenario if we didn’t have that ridiculous aluminium smelter in Bluff

  8. Zorr 8

    I am going to try and get my hands on it but I heard rumor that an Auckland uni economics associate professor had redone the benefit-cost calculations on the “Roads of National Significance” and found serious discrepancies that meant they didn’t even hit a null return.

    When submitted to government, this report was completely ignored and shelved with the other “put this under the rug” files.

  9. “At Coastlands in Paraparaumu, known locally as God’s waiting room because of its large retiree population, Mr Key leaps behind the counter of the local McDonald’s and starts serving out burgers and chips.”

    Which is where he belongs. After all, they seem to be the only growth-jobs around these days…

    “2700 applicants for 150 jobs”
    http://www.stuff.co.nz/business/industries/4032012/2700-applicants-for-150-jobs

    “Applicants queue for 20 jobs at new KFC store”
    http://www.stuff.co.nz/business/3994651/Applicants-queue-for-20-jobs-at-new-KFC-store

    As for the good people of Kapiti – they got the government they voted for. It’s hard for me to feel any sympathy on this issue. My thoughts are with the 140 people who lost their jobs at MAF today. Or the thousands of others who’ve been made redundant these last three years.

    My anger is directed at those individuals who blame welfare beneficiaries for the predicament they are in. The finger-pointers who blame the poorest and most vulnerable for daring to be poor and vulnerable.

    To the people of Kapiti; you helped elect this government to office. You now have a wee taste of what it feels like to be steam-rolled and to be victimised.

    Remember this on 26 November.

  10. Jenny 10


    Who would buy New Zealand’s coal industry, when currently leading New Zealand climate activists are organising to wind it down?

    Greenpeace New Zealand have committed to a campaign to prevent the opening of any new coal mines. Already they have signed up ten other environmental groups determined to see that no coal mines are ever opened in New Zealand again.

    On their track record New Zealand environmental activists have been extraordinarily successful.

    In contrast to the determination to wind this industry down and in the light of the very real and looming threat of climate change – Lynn, do you think that this sunset industry should have any sort of future in this country?

  11. mouse 11

    Dam!… if I knew the “Capital Allocation Clowns” were coming to town… I would have invited the IMF.

    But hey, they’re waiting for the after match function .

  12. Afewknowthetruth 12

    Insider.

    ‘Shell/BP/Todd combinations’

    The whole poiint about Shell, BP etc is that they were given the right to loot the commons for commercial profit, profit that largely ended up in the hands of the few who happened to have already managed to acquire more than their fair share of the common wealth.

    What is really interesting is that most oil extraction around the world is done by state-owned companies, and a significant portion of the profits go to the state -not that I am in favour of any kind of looting and burning, of course.

    Most of the arguments on TS centre around the ‘right’ of people to steal from the commons and be greedy. Some think that’s just fine; others object.

  13. Draco T Bastard 13

    John Pagani has this story:

    The National Party is now arguing we have to sell the power companies because:

    Being listed on the NZX means the companies have to be more transparent with their finances, and have obligations such as continuous disclosure.

    That’s right – listed companies always disclose perfectly; public companies never do.

    I mean – do people just walk around with their eyes shut? Saying whatever they think will work as an argument with no observation of the real actual world?

    Yep, National are putting all the delusion on the line now. Hell, apparently even some of the regular commenter’s over in the sewer are calling this type of reasoning crap.

  14. Afewknowthetruth 14

    Presumably this ‘expressway’ will be empty of motorised vehicles by around 2018, when oil depletion will have passed the critical point, and will be under water by around 2040, when positive feedbacks will have melted a large portion of the ice on Greenland and the West Antarctic icesheet.

    Great use of rapidly diminishing resources. Nice one Shonkey and cronies

  15. johnm 15

    Peak Oil and Peak other resources too means NO MORE GROWTH: that era is GONEBURGHER JOHN! Therefore!!! (Logic here) WE DON’T NEED ANY MORE MOTORWAYS,BUT…..! WE DO NEED TO HOLD ON TO IMPORTANT ASSETS OWNED BY NZ AND NOT FLOG THEM OFF TO YOUR WALL STREET MATES TO EXPLOIT NZERS AND STRIP THOSE ASSETS DOWN. EVENTUALLY JOHN WILL RETIRE TO HAWAII.

    The neoliberal privatization financialisation ideology is a proven disaster all round the World WHY DO YOU STILL PURSUE THIS RORT POSING AS AN IDEOLOGY?
    WHY DO THE NAT SHEOPLE FOLLOW HIM? BECAUSE THEY’VE GOT THEIR VENAL PETTY PAYOFF:TAX CUTS.

    ACT HAVE SUCCEEDED WE ARE PATHETIC NATION NOT OF LOYAL CITIZENS OF NZ BUT POLITICAL PUPPETS WHO ARE MERELY CONSUMERS AND TAXPAYERS. SELF INTEREST IS ALL THE WIDER COMMON GOOD DOESN’T EVEN REGISTER.

    [lprent: Don’t SHOUT continuously. It draws my attention as a moderator because it offends my eyes. I might remove the shouting once or twice, or warn, but I am just about as likely to ban the offender as causing me too much effort.

    If you want to emphasize something, then usually less is more effective. ]

    • mik e 15.1

      Solid energy posts 29% increase in profit yea lets sell our best performing assets it makes no cents . Dumb National Ignorant voters.

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