web analytics

Who really benefits from asset sales

Written By: - Date published: 4:35 pm, November 12th, 2011 - 25 comments
Categories: capitalism, privatisation - Tags: ,

Brent Sheather assesses the case for asset sales in today’s Herald. He cuts through the crap and concludes “selling the SOEs doesn’t look all that clever, particularly from the perspective of young people and those other sectors of society who won’t be able to participate in the offers in any material way. This is likely to be at least half the population.” He looks at who really benefits, and it’s the fortunate few once again.

On the economics, Sheather writes:

the Government is proposing to sell assets producing returns of at least 6 to 7 per cent a year after tax plus growth, when it could issue debt costing just 4 to 4.4 per cent. On the face of it, this doesn’t look particularly bright, does it?

On who benefits:

But don’t expect too much negative comment, because many people stand to benefit from these transactions. The management and/or directors of the privatised companies will be looking for share options that will massively reward them if the companies do well. Investment bankers, brokers, solicitors and financial advisers will all get to clip the ticket as the initial transactions occur, and then have another go when Mum and Dad ultimately sell their shares.

That’s if Mum and Dad get any to sell – and on this Sheather says:

Then there is the issue of who the assets will be sold to. I remember not being able to get anywhere near enough Auckland Airport shares for my retail clients. However, one wealthy client who also dealt with a major American stock-broking firm that didn’t even have an office in New Zealand was able to get 100,000 shares through the US firm. So not only was Auckland Airport sold cheaply but, to make matters worse, it appears overseas brokers got large allocations of stock and many New Zealand retail investors missed out.

Once again the best political reporting is buried in the back of the Business pages.

25 comments on “Who really benefits from asset sales”

  1. Draco T Bastard 1

    It’s a good article that clearly shows that selling the assets bring no benefit to the majority who presently own them but plenty of rentier returns to the minority who will end up owning them if they’re sold.

  2. Now the poll I want to see is in two parts:
    Do you belong to one of the four power company providers that National want to turn into a mixed ownership model?

    Will you switch your power company provider were National to win the election on 26 November 2011?

    Yes and yes is my answer.

    The contract I have is with the power provider owning 100% of the asset not 51% which will dwindle down to 0% ownership and lose money due to legal fees over arguing about not getting enough profit.

    Note: I did not name the power companies in the poll question.

  3. fender 3

    It’s just the 1%ers who get any advantage from asset theft. Why invest in risky shares when you can hide your gold in a stable cash cow like utilities. Just another step in their progress towards owning the world and everything taxpayers have worked to build.
    We were originally told this was nesessary to pay off debt, now we are told its to paint schools and shout farmers irrigation so they can increase damage to the environment.
    I believe these crooked “leaders” dont have NZ’s best interest at heart, but what I cant believe is so many of the population cant or wont see the damage these “leaders” are doing. It’s treason but according to polls 50% of the country are happy for treason to take place..WTF?

    • Treetop 3.1

      1) I wonder if 50% of the country are happy to see people change who their power company provider is?

      2) Has English not considered what a boycott would do when it came to a dividen payment or the power companies being less attractive due to less consumers for new share holders?

      3) Sale of high performing assets need a mandate and who you vote for should not be indicative of agreeing with the sale of high performing power company providers.

      3.1) Are Nact voters really that dumb when it comes to giving National a mandate to run the country into the ground further by selling off 49% of four power companies and shares in Air NZ?

      • Carol 3.1.1

        Actually, it looks to me like the latest polls indicate a shift towards less than 50% of people wanting asset sales. This maybe part of the reason why National’s vote share is declining, and there’s a rise in people saying they’ll vote for other small right wing parties like NZ First.

        And if National and other parties that support asset sales do get less than 50% of the votes, they surely cannot claim to have a mandate to privatise?

      • Uturn 3.1.2

        If state owned enterprises were like houses, the 50% of the nation that don’t vote National would put a caveat on them. Then you’d hear some squealing about unfairness. White Collar Bullies don’t like it when the rules they use to oppress their victims are enforced to control their greed.

      • Draco T Bastard 3.1.3

        3.1) Are Nact voters really that dumb when it comes to giving National a mandate to run the country into the ground further by selling off 49% of four power companies and shares in Air NZ?

        Act are the original party that sold state assets and they really do want to sell all the rest of them all off as well.

    • mike 3.2

      Naivety? Ignorance? Cognitive dissonance? Why is it hard to believe?

      http://en.wikipedia.org/wiki/Psychological_manipulation (worth a look)

      “George K. Simon identified the following manipulative techniques:

      Lying: It is hard to tell if somebody is lying at the time they do it although often the truth may be apparent later when it is too late. One way to minimize the chances of being lied to is to understand that some personality types (particularly psychopaths) are experts at the art of lying and cheating, doing it frequently, and often in subtle ways.

      Lying by omission: This is a very subtle form of lying by withholding a significant amount of the truth. This technique is also used in propaganda.

      Denial: Manipulator refuses to admit that he or she has done something wrong.

      Rationalization: An excuse made by the manipulator for inappropriate behavior. Rationalization is closely related to spin.

      Minimization: This is a type of denial coupled with rationalization. The manipulator asserts that his or her behavior is not as harmful or irresponsible as someone else was suggesting.”

      Politicians use all these techniques of course, but against a sociopath like Key it’s like an amateur vs a pro. Lying is a complex skill with many facets, most people don’t get that – which is very convenient for lairs. Skilled liars realize that there are three parts to a lie – the content of the lie, the liar, and the victim. And they understand implicitly the relationship between those three parts.

    • Hami Shearlie 3.3

      That’s so true Fender! WTF indeed! Some of the problem is total ignorance, e.g. the woman on “The Nation” who was going to vote Labour but then “he(JK) touched me, so now it’s National”! (I really WTFed when I saw that). And some is personal greed. Long ago a tv documentary stated if you wanted to find the perpetrator of crime or anything else, just ask yourself “who benefits” and there you will find the guilty party? Well, we don’t have to wonder about that do we? The rich friends of the Nats will be the ones buying the shares, and no doubt cabinet ministers too! So of course, OUR assets must be sold for THEM to make a tidy profit! I’ve asked myself many times who profited from Don Brash’s leaked emails? Well JK and Steven Joyce do seem to be sitting pretty since then don’t they?

    • Hami Shearlie 3.4

      Why is it that the greediest and meanest people one meets are the very wealthy? Don’t wish to generalise, it’s just what I have experienced!

      • mike 3.4.1

        Why is it that fat people are very heavy?

      • Maggie May 3.4.2

        I do think you gereralise when you speak of all wealthy people. After working a trade I always found there were two distinct groups, old money and new money.

        Old money were always excellent to work for they appreciated your efforts and were happy to pay on time.
        It was always the new money who were the least impressive in attitude, appreciation of your labour and in their willingness to pay on time.

        • Hami Shearlie

          This could be true MM! Have to ask the greedies and meanies where they got their dough next time!

        • Uturn

          I agree on the new money generalisation, but remember than old money was once new, too. The bare-faced arrogance of new money is easy to experience and reject. It usually takes more time to realise old money has had it long enough to have paid for some skeletons, literally. By then you’ve learned that the old money is human, just like anyone else, and the grey area of forgiveness and time healing all wounds comes into play. But the skeleton cannot be ignored.

          Sometimes the skeletons of old money litter continents. But the loss is so large and the betrayal so huge we redefine it as History – quaint, glorified, heroic. The memory of it enters our culture and joins our own losses and suddenly we can’t seperate the things we believe as virtuous from the lies of old money. To condemn the old money, we’d have to condemn ourselves. Round and round it goes…

  4. “And if National and other parties that support asset sales do get less than 50% of the votes, they surely cannot claim to have a mandate to privatise?”

    As long as National can form a coalition they will take this as being a mandate to privatise.

    Murky Key as he has not said a 50% figure.

  5. giovani 5

    All nationals plans are bad for everyone but the rich.

    don’t let them do it to us vote them out.

  6. logie97 6

    A few questions:
    For example,
    – When was Auckland Airport Sold?
    – Where were the politicians who are advocating the sale of the energy assets
    when previous fire-sales were happening?
    – Were any of them working in the USA?
    – Did any of them have connections with U.S. stockbrokers?
    – Is it possible to establish previous registries of shareholders in all of the previously-state owned assets?
    – Are any of them current members of parliament?
    Do we know of any prominent current or former shareholders in Tranzrail for one?

  7. Bored 7

    Asset sales reflect the total bollocks that is the NZSX…we will probably hear Shonkey and his “business” mates say that the money made by partial sale can be reinvested in productive enterprise….which begs the question: why the hell not invest directly into production?

    The answer is obvious. The money wants safe haven, no risk. As a means of raising capital and trading shares in productive assets the NZSX has been a complete farce and failure. The only way they can see to expand is by grabbing the states silver and trading it.

  8. Brent Shearer will be hanged as a class traitor by the Key-Brash government.

  9. In Vino Veritas 9

    I’m not sure I’d trust Brent Sheather with my money if this is his analysis. I have previously directed contributors on this blog to the late Roger Kerr’s series on privatisation (on his blog) and perhaps Brent should read this as well.

    • felix 9.1

      It surprises me that you think kiwis could possibly be unfamiliar with the late Roger Kerr’s views on privatisation when he did nothing but shout them from the rooftops for twenty odd years.

      Has it occurred to you that we simply don’t agree with him?

      • In Vino Veritas 9.1.1

        Felix, whether or not you “agree with him”, his financial analysis of privatisation appears to me to be accurate. If it is accurate, it debunks most of the rebuttals to privatisation that the Labour Party and Brent Sheather have put forward. This implies that the current feeling towards asset sales in NZ is driven purely because of propaganda, with the Labour Party (along with left leaning “academics”) leading the way, releasing only those arguments which appear to prove their point.

        For arguments sake, just because you didnt say, agree with Albert Einsteins views, does that mean that you wouldnt agree with his theory of relativity?

Recent Comments

Recent Posts

  • New Zealand least corrupt country in the world
    New Zealand has regained its position as the least corrupt country in the world for the second time under this Coalition Government, says Justice Minister Andrew Little. “New Zealanders can be proud that our reputation as one of the least corrupt countries in the world has been restored,” says Andrew ...
    BeehiveBy beehive.govt.nz
    19 hours ago
  • Boost for Rēkohu/Wharekauri/Chatham Islands Community Conservation
    Community conservation in Rēkohu/Wharekauri/the Chatham Islands is receiving a boost, with grants to support local projects announced today by Minister of Conservation Eugenie Sage. “Rēkohu/Wharekauri/ the Chatham Islands are home to 20 per cent of New Zealand’s threatened bird species and 11 per cent of New Zealand’s threatened plant species. ...
    BeehiveBy beehive.govt.nz
    21 hours ago
  • Rātana Pā goes high-tech with UFB
    Iwi, hapu and visitors to Rātana Pā near Whanganui now have access to ultra-fast broadband following its connection, completed in time for annual Rātana celebrations, Regional Economic Development Minister Shane Jones says. The connection and associated hardware were funded from the Provincial Growth Fund’s $21 million Marae Digital Connectivity programme, ...
    BeehiveBy beehive.govt.nz
    21 hours ago
  • Govt’s strong financial management acknowledged
    The Government’s strong financial management and plan to future proof the economy with new infrastructure investment has gained further recognition from an international ratings agency. Credit rating agency Fitch has upgraded one of its main metrics assessing the Government’s books, lifting its foreign currency AA rating outlook to ‘positive’ from ...
    BeehiveBy beehive.govt.nz
    21 hours ago
  • Boost in Whānau Ora funding to keep changing lives
    Whānau throughout New Zealand are set to benefit from an extra three million dollars that will go directly to Whānau Ora Commissioning Agencies, the Minister for Whānau Ora Peeni Henare announced today.  Including previous funding boosts, the Agencies will now receive $87 million this year between them.  In Budget 2019 ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • More people getting into work
    The December quarter benefit numbers released today show the Government’s plan to get people off the benefit and into work is starting to pay off,” Social Development Minister Carmel Sepuloni said.   “Nearly 19,000 people cancelled their benefit and went into work in the last few months of the year – ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Wairoa gets up to $6.1m to rebuild heart of CBD
    The Provincial Growth Fund (PGF) is investing up to $6.1 million to revitalise business and tourism opportunities in Wairoa, Parliamentary Under-Secretary for Regional Economic Development Fletcher Tabuteau announced today. The PGF is funding: Up to $4.8 million for the Wairoa Integrated Business and Tourism Facility Up to $960,000 for the ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Major Events support for creative and cultural events
    Creative and cultural events that highlight New Zealand’s diverse culture and build national pride are set to get a funding boost through the Major Events Fund, Economic Development Minister Phil Twyford said today. The new Creative and Cultural Events Incubator, which is funded through the Major Events Fund, will open ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Classroom internet in hundreds of schools to get a boost
    The Government has begun a massive IT upgrade to provide more seamless internet access to 200 schools around the country. Te Mana Tūhono – Technology in Schools work programme will launch with a pilot of 10 smaller state schools early this year. IT equipment that gives students access to the ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Construction workforce, apprenticeships hit record highs
    Working with industry and committing to rebuild New Zealand’s infrastructure has produced a record high number of Kiwis working in the construction industry and learning trades, says Minister for Building and Construction Jenny Salesa. New figures available today from the Ministry of Business, Innovation and Employment and the Tertiary Education ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • NZ concludes digital economy trade talks with Singapore and Chile
    A new trade agreement concluded today helps New Zealand exporters and consumers take advantage of opportunities from digital trade.    Minister for Trade and Export Growth David Parker together with Chile’s Vice Minister of Trade Rodrigo Yañez and Singapore’s Minister of Trade and Industry Chan Chun Sing, have announced conclusion of ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Provincial Growth Fund to fund Waipukurau cultural development and tourism
    The Ngā Ara Tipuna -  Waipukurau Pā Site Interpretation project will receive $2.798 million from the Provincial Growth Fund to create an authentic cultural tourism experience, Under-Secretary for Regional Economic Development Fletcher Tabuteau announced today “The project will inform visitors about the history of six pā sites in Waipukurau with a combination ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • 21 new judges boost diversity, improve access to justice
    Twenty-one new District Court judges have been appointed in a move that will improve access to justice and boost diversity on the bench. The new judges include replacements for retirements and 10 new positions. Attorney-General David Parker today announced the 14 judges who can immediately be named, with the remainder ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Puhinui to Auckland Airport in 10 minutes
    Aucklanders are another step closer to getting rapid transit to the airport, with the start of construction to upgrade State Highway 20B to the airport, Transport Minister Phil Twyford announced today. SH20B will be upgraded with additional lanes in each direction, dedicated to bus and high-occupancy vehicles between Pukaki Creek ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Advancing New Zealand’s trade agenda focus of Europe meetings
    World Trade Organisation reform, agricultural trade and a free trade agreement with the United Kingdom will be the focus of Minister for Trade and Export Growth David Parker’s visit to Europe this week. David Parker leaves on Tuesday for a series of meetings in the UK and Switzerland that aim ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Minister of Defence to visit counterparts in US and Canada
    The Minister of Defence, Ron Mark, departed today for the United States and Canada where he will meet with his counterparts.  While in Canada Minister Mark will meet with his counterpart, Minister of National Defence Harjit Sajjan.  “New Zealand and Canada are close friends, and share an instinctive like-mindedness on ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Government to deliver family carers $2000 pay rise, expand scheme to spouses this year
    The Coalition Government is delivering this year the changes to Funded Family Care the disability sector has long-asked for, says Associate Minister of Health Jenny Salesa. “Today we are announcing the details of our big changes to Funded Family Care, including an annual average pay boost of $2,246.40 for funded ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Ko te reo kua mū: Piri Sciascia
    Minister for Māori Development Nanaia Mahuta joins te ao Māori in their sorrow as they learn of the loss of one of the great orators and spokespersons of a generation – Piri Sciascia.  “The son of Pōrangahau was a staunch advocate for Māori development and served his people for over ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Minister opens new ecosanctuary at Cape Farewell
    A new ecosanctuary with a predator proof fence on Golden Bay’s Cape Farewell, which will restore a safe home for sea birds, rare native plants, giant snails, and geckos, was officially opened today by the Minister of Conservation Eugenie Sage. “There has been a fantastic community effort supported by the ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Pacific partners work together to provide additional support to Australia
    The NZDF continues to support the Australian Defence Force (ADF) as it battles fires in Victoria and New South Wales, including by transporting Republic of Fiji Military engineers from Nadi to Australia, announced Defence Minister Ron Mark. On Saturday morning a NZDF Boeing 757 will depart New Zealand to uplift ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Kaikōura $10.88 million boost in tourism & business
    The Provincial Growth Fund (PGF) is investing $10.88 million to boost business and tourism opportunities in Kaikōura, Parliamentary Undersecretary for Regional Economic Development, Fletcher Tabuteau announced today. As part of the Kaikōura Marina Development Programme, the following two projects will receive PGF funding: A $9.88 million investment to begin the ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Govt accounts in surplus, debt remains low
    The Government’s books are in good shape with the accounts in surplus and expenses close to forecast, Finance Minister Grant Robertson says. The Treasury today released the Crown accounts for the five months to November. The operating balance before gains and losses (OBEGAL) was above forecast by $0.7 billion resulting ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Auckland focus for first Police graduation of 2020
    The number of Police on the Auckland frontline is increasing with the graduation today of a special locally-trained wing of new constables. Police Minister Stuart Nash says the graduation of eighteen officers from Recruit Wing 333-5 means that more than 1900 new Police have been deployed since the Coalition Government ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Wairarapa gets $7.11m PGF water boost
    The Provincial Growth Fund is putting $7.11 million into creating a sustainable water supply for Wairarapa, Parliamentary Under-Secretary for Regional Economic Development Fletcher Tabuteau announced today. The following two projects will receive Provincial Growth Fund (PGF) funding: A $7 million investment in Wairarapa Water Limited for the pre-construction development of ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Progress with new Police station in Mahia
    Community safety and crime prevention in the East Coast community of Mahia has moved forward with the opening of a new Police station to serve the growing coastal settlement. Police Minister Stuart Nash has officially opened the new station, which was relocated almost 20 kilometres along the coast from the nearby ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Plans to protect the future of whitebaiting announced
    With several native whitebait species in decline the Minister of Conservation Eugenie Sage has today released proposals to standardise and improve management of whitebait across New Zealand. “The need for action for a healthy whitebait fishery has never been greater,” Eugenie Sage said.  “Four of the six whitebait species are ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New resource for schools to increase awareness and understanding of climate change
    A new Ministry of Education resource available for schools in 2020 will increase awareness and understanding of climate change, Education Minister Chris Hipkins said today. “The resource, Climate Change – prepare today, live well tomorrow, will help students understand the effects of climate change at a local, national and global ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Getting more out of our most productive firms
    Finance Minister Grant Robertson has approved the terms of reference for an Inquiry into the economic contribution of New Zealand's frontier firms. Frontier firms are the most productive firms in the domestic economy within their own industry. “These firms are important as they diffuse new technologies and business practices into ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • NZDF sends more support to Australia
    The New Zealand Defence Force (NZDF) is sending an Environmental Health Team, a Primary Health Care Team and a Chaplain to Australia, boosting New Zealand support for the Australian Defence Force (ADF) as it battles bush fires in Victoria and New South Wales, Defence Minister Ron Mark announced today. The ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New Zealand joins partners in calling for full investigation into air crash in Iran
    Acting Prime Minister and Minister of Foreign Affairs Rt Hon Winston Peters says that developments suggesting a surface-to-air missile is responsible for the downing of the Ukrainian International Airlines flight in Iran is disastrous news. “New Zealand offers its deepest sympathies to the families of the 176 victims. It is ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Staying connected to Australian agriculture
    Agriculture Minister, Damien O’Connor, says the Ministry for Primary Industries is continuing to stay connected to federal authorities in Australia as devastating fires affect the country.  “The Ministry is using an existing trans-Tasman forum for discussions on the agricultural impact of the fires and the future recovery phase,” says Damien ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Investment in schools – a commitment to communities
    Thousands of school-age children, their teachers and wider communities are benefiting from the Government’s multi-million dollar investment upgrading and renewing schools, Education Minister Chris Hipkins said today. “We want New Zealand to be the best place to be a child and that means learning in warm, comfortable and modern classrooms,” ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New Zealand Defence Force sends support to Australia
    Minister of Defence Ron Mark today announced New Zealand is sending three Royal New Zealand Air Force NH90 helicopters and crew, and two NZ Army Combat Engineer Sections as well as a command element to support the Australian Defence Force efforts in tackling the Australian fires.  The New Zealand Defence Force ...
    BeehiveBy beehive.govt.nz
    3 weeks ago