Granny supported little Johnny’s plan to go off to market and sell the family’s cash cow. But even she’s furious that what he’s come back with amounts to nothing more than a hill of beans. As Granny Herald notes, the Nats’ determination to push ahead with the remaining sales regardless is all about ideology, and the knowledge that they’re going to lose the next election.
National’s trying to blame it on Labour and the Greens for the Meridian sale flop, which attracted only a quarter of the expected ‘mums and dads’ (rich ‘mums and dads’ who put in $18k each). But let’s just get this straight: the decision to sell was National’s. If they don’t think they’re getting the price that they should for the sales, then they should stop them.
So, Mighty River Power has so much spare cash at the moment that it just doesn’t know what to do with it. Rather than pay out a special dividend, they’re going to buy back some shares. This, naturally, has raised eyebrows because these shares were only just sold to ‘mum and dad’. But the bigger question is: where did Mighty River get a spare $50m in the first place?
“John Key’s asset sales have descended from failure to farce” – that’s how Metiria Turei described the announcement that Mighty River Power will be buying back shares just five months after they were privatised. Clayton Cosgrove put it more bluntly: “It’s a good thing the government doesn’t own a brewery cos they couldn’t organise a pi .. a DRINK in one”.
The Board of Mighty River Power has announced that it is buying back up to 2% of its shares because this is a prudent use of capital and will be value enhancing. It is a shame that the Government was incapable of seeing this. Expect a surge in its share price to occur and I suspect that this will be beneficial for the Meridian float.
The asset sales costs just keep on rising. The tally so far is $124 million. The ‘buy now, pay later’ scheme for Meridian is going to cost $61 million. There will be tens of millions in other sales costs. Now, the Greens have calculated the lost net dividends from Meridian alone at $1.6 million per week. Makes the referendum seem like a good investment in telling Key this is not OK.
“I just utter one fear…”
Remember that?
John Key has today announced that the keep our assets referendum will be conducted by postal vote later this year. He has also announced the Christchurch East by election will occur on November 30. And National MP Chris Tremain has announced that he will not seek re election next year.
Selling Mighty River shares was bad enough: $66m taxpayer dollars spent on selling shares with a dividend yield of 6% (the total shareholder return for the Crown last year was 11%) to avoid borrowing at 4% . That’s spending money to lose money. Not crazy enough, apparently. For the Meridian sale, they’ve doubled down. The cost will be $100m and they’ll be selling shares with a dividend yield of 8%.
You will have heard of this ‘buy now, pay later’ plan that the Nats have to try to save the Meridian sale. Pay 60% of your shares’ price up front, the remaining 40% in 18 months. It’s an interest-free loan, funded by higher government borrowing. What we didn’t know is this outrageous fact: this taxpayer-funded interest-free loan will be extended to foreign banks
John Key tries to smear the winner of Labour’s democratic leadership contest as “far left”, while his government continues in its anti-democratic, plutocratic ways: sale of Meridian to avoid referendum; Joyce’s Broadband pricing “arm twisting”.
Colin James takes on Key over the asset sales referendum, savaging the economic argument for sales. Then he turns to National’s other big financial markets call – suspending contributions to the Cullen Fund James discovers its cost us a lot of money. What James doesn’t recognise is that asset sales and suspending the Cullen Fund payments were never about what’s best for NZ.
National says that $9m is too expensive for you to have your democratic say on asset sales (that’s less than the budget for Pike River re-entry, which everyone supports even though it’s unlikely to recover bodies). What National doesn’t want to you now is that they’ve spent at least $124m on the asset sales so far, and the foregone net profits from Mighty River is running at $2.3m a week.
Key’s big whine today is that the referendum on asset sales, which over 10% of Kiwis have requested as required by law, will be ‘extremely costly’ at $9m. This guy’s joking, right? Mr ‘2-billion-of-tax-cuts-in-the-middle-of-a-recession’ is whining about $9m on democracy? All up, Key’s squandered well over a hundred million on asset sales so far.
National spent $66 million selling Mighty River Power. That’s what it costs to put 750 kids all the way through school. The Greens have done the numbers on Mighty River’s profit announcement to work out the Crown would have a net $2.3 million more per week if it hadn’t sold the shares. That ongoing loss is enough to pay for the education of 18,000 kids.
If you invested in Mighty River, you’ve lost 13% of your money so far. The word is the current plunge is prices is institutions selling off in order to force the Meridian listing price lower and Mighty River has a long way to fall yet. But the lower it goes, the less likely ordinary people will be to risk their savings on another privatised power company.
We know that only 2.5% of Kiwis bought shares in Mighty River Power. English now talks of ‘tens of thousands’ buying Meridian shares. This ain’t no widespread ownership – it’s the few buying and the many losing ownership. So far, we’ve paid at least $100m for these sales. Yesterday, Key added $40m in interest-free loans to Meridian buyers.
It has been obvious that some people live in a different world than the rest of us. One where Chicago school economics, work! […]
So, Tariana Turia is finally dropping the pretense that Whanau Ora is anything but a scheme to privatise social assistance and put it in the hands of unaccountable private groups. Not content with funding family reunions and other bollocks, Turia is now handing the funding decisions to three private groups. Oh, and she doesn’t want them to be covered by the OIA.
I/S at No Right Turn on a $2 Billion Transmission Gully scam…
Our wonderful leader John Key is able to sell our assets, spend all the money and then some on his favourite projects, pay down debt and maintain our credit rating all at the one time. If you believe this there is a bridge that I would like to show you …
John Key’s u-turn on Auckland City Rail is all smoke, mirrors and sleight of hand stealth of the common good. Phil Twyford and the Auckland Transport Blog are skeptical. Funding? Roads over public transport? Asset sales?
The leaderless uprising in Brazil exposes unbearable inequalities in a dysfunctional post-growth world. Extravagant sports events and expensive stadium contrast with anti-public service austerity measures. Home building lags in Christchurch, while Key looks to asset sales to fund a stadium.
Mighty River closed at a new low of $2.36 yesterday. Here’s English on the likely take up of the sale of Meridian: “We would expect that it will give New Zealanders the opportunity to invest in a large New Zealand company, and tens of thousands of them are likely to do so.” Tens of thousands. For reference, they expected 250,000 investors in Mighty River but only 113,000 showed up.
As Naomi Klein said in the Shock Doctrine documentary, disorienting natural and economic shocks result in the wealth being shifted from “public hands” to the wealthiest. The wealth gap, and extent of poverty in NZ is increasingly & devastatingly marginalising good Kiwis. Meanwhile, Peter Jackson is flying high.
Last night The Shock Doctrine (2009) aired on Maori TV. John Key, and his cheerleaders have followed their latest series of shock-inducing attacks on democratic processes and (low income) people’s rights, with positive forecasts for our future. Meanwhile, the gap between the haves & have-nots has grown.
The myth that National sold Mighty River Power to ‘mum and dads’ is dead. New analysis shows that half the retail shares went to just 12,844 people. A tiny group of 394 people bought 10% of the retail shares. Only 13.4% of the company is owned by what you might call ‘ordinary Kiwis’ – less than the amount owned by foreign investors. But the truth is, ordinary Kiwis are the 98% who bought nothing.
Yesterday’s budget is a sop to affordable housing & aims to privatise state housing. Penny Hulse says the government’s related “housing accord” Bill is at odds with the agreement her council has not yet ratified. It overrides local democracy & endangers the AKL “agreement”. [Update] Waitakere News analysis
Hone Harawira challenged the Maori Party for its support of charter schools, at the expense of Maori and public education. He challenged Sharples to resign if today’s budget fails to adequately support kura kaupapa and the Manaaki Tauira programme.
Key and Joyce made sure Gilmore was out of the way before they announced their dubious Sky City for (more) pokies deal. The pokies system in NZ is rife with dubious goings on. It’s bad for low income families, communities and their children. [update: responses]
An article in today’s Sunday Star Times, provides evidence of an organised business in providing students with assignments for their tertiary education courses. The focus is on Chinese ethnicity. Ultimately, the blame for such rorts lies with the neoliberalisation of universities: the undermining of the critical endeavour of education.
The Nats’ spin is that ‘mums and dads’ were scared off investing in Mighty River Power by the Green-Labour NZ Power plan to reduce power prices but sophisticated buyers bought in. Look at the evidence: 80,000 of the 113,000 retail investors are new to the stockmarket and they boost stockmarket participation by 20%. Hence there were 400,000 existing Kiwi shareholders, and less than 10% of them bought in.
National admitted today that the sale of Mighty River cost around $100m, and that the paltry 2.5% of New Zealanders who bought an average of $8,000 each are not typical Kiwis. The figures themselves are shocking but the politics is really revealing. English didn’t try to avoid the unpalatable failure of asset sales, he was flippant. He is so out of touch he doesn’t see the problem.
Following the Labour and Greens’ rejection of their demand that the parties drop their NZ Power policy to lower power prices, the business elite has announced capital flight. ‘If Origin Energy loses its rentier profits, who’s next? said Phil O’Reilly, close to tears, ‘The banks? The Telecoms duopoly? The petrol companies?* The construction materials oligopoly? The ports and airports?
Yesterday, Phil O’Reilly’s Business New Zealand basically declared war on Labour and the Greens. Their ‘open letter’ demanded opposition parties to withdraw the NZ Power policy or risk a capital strike. Unprecedented in modern NZ history. It was a boots and all attempt by the capitalist elite to try to monster the Left. It proves that they think NZ Power is both practical and popular.
To say Brian Gaynor is excited about the Mighty River sale is an understatement. Of his last five Herald columns, two have been about how great it will be, and two have been about how awful NZ Power is. His other media appearances have been in a similar vein: Mighty River = good, NZ Power = bad. It’s in his financial interests that investors aren’t scared off Mighty River.
