Tagged: asset sales

Have National’s asset sales officially cost more than they’ll earn?

In a previous post at The Standard I did a wee bit of math and came to the conclusion that National has already made $5.26 billion worth of spending promises out of the Future Investment Fund, the not-actually-a-fund chunk of cash they plan to make from selling taxpayer-built infrastructure to their mates.

Things have developed.

First, there’s this post from James, noting that the sales process itself has already cost $124 million.  And this estimate from the Greens of the cost of the Government’s interest-free loans to Meridian investors.

And then there’s this acknowledgement from John Key that the original five-to-seven billion dollar estimate for the profits from the sales are pretty much shot to hell.

So now we’re left with:

  • Maybe $5 billion in income – only 2.1 billion of which has come in so far
  • $5.26 billion in promised spending
  • $124 million in process costs
  • $55 million in bribes to investors

Costs we’re still not including:

  • National’s promise to reduce our debt by $6 billion
  • Ongoing loss of profits to the Crown, as outlined in James’ post
  • The ongoing maintenance of all the projects they’re promising to fund – because shit needs to be staffed, maintained, cleaned and managed after you’ve built it or it’s a complete waste of time.

So at the most generous estimate?

We’re already in the hole for four hundred and thirty-nine million dollars.  Taking the promised spending and costs to date away from the actual funds received?

Three point three billion dollars in the red.

That’s the sound fiscal management of the National Party.

Signal boost: Signathon against asset sales

Via frogblog.  Let’s make this Citizens’ Initiated Referendum happen, people!  (Not the snappiest of catch-cries but it will do.)

Over this weekend 24-25 November, the Keep Our Assets coalition is mounting a major nationwide collection drive to reach the signature target needed to force a Citizens Initiated Referendum on the Government’s proposed state asset sales.

Why I’m not buying the Stop Asset Sales campaign

… and it ain’t because of road safety rules or the stellar work Labour’s designers did making the authorisation as small as possible while remaining vaguely legible.

It starts with a speech by David Cunliffe in November 2010:

Crucially in a capital constrained fiscal environment, we will better leverage the Crown’s balance sheet in new and innovative ways.

We can expand public-private partnerships for new transport infrastructure.  The project scale must be right and the PPP benefits must outweigh any increase in cost of capital, but that leaves plenty of scope for win-wins .

We can unleash State Owned Enterprises to create and grow new subsidiaries with private partners and shareholders, without diluting the taxpayer’s equity, or wholly or partially privatizing the SOE.

We can turn old models of Government participation in economic development on their head by using equity rather than grants; private sector exports [sic] rather than bureaucrats, and rigorous performance measures rather than public sector doubletalk.

Which with its combination of basically saying “we like the good kinds of privatisation which aren’t really privatisation but are a magical process of getting private investment in public assets without them expecting any form of stake or ownership in return” plus buying into “the public sector are fat and lazy” rhetoric plus the line that “no seriously, this is totes New and Innovative and not the same old neoliberal shit with a few sops to our remaining lefty fans” was depressing enough.

Anyhoo, the sadly-in-hiatus Marty G took to that on The Standard, got a pretty awesomely upfront response from Cunliffe, and then pointed out that PPPs are still universally shit and that expecting to get honest, balanced advice from Treasury?  Tell ‘im ‘e’s dreaming:

There’s a difference between National and Labour’s policies on SOEs and privatisation  – National: we might part sell SOEs, Labour: we might part sell new subsidiaries of SOEs as long as it doesn’t dilute equity in existing SOEs – but they look very similar to the casual observer. Especially since National could just adopt Labour’s policy, carve SOEs into ‘new subsidiaries’, and sell them off for the same result as its policy.

The notoriously ‘pro-road at any cost’ NZTA, Treasury, and MED will be chomping at the bit for sell-offs and PPPs, and providing advice that everything will be fine.

Fast-forward to recent weeks, and Labour launch a bold, certainly attention-grabbing, Stop Asset Sales campaign.  It’s probably good marketing, it’s a nice clear message, it would definitely be nice if it seemed to be part of a concerted campaign, and it’s got two major weaknesses in that the non-politically-aware demographic might just be confused, because That Nice Mr Key said they wouldn’t totally sell asset sales* while the more-politically-aware demographic look at speeches like Cunliffe’s above and wonder, “Shouldn’t those signs read “Stop Asset Sales, terms & conditions apply”?”

And then you get a snarky hater like me who first of all looks at the “donate a sign” page for the campaign and thinks “If Labour is literally spending $10 per sign and can’t even give a discount on a 10-sign donation I may not want such fiscal geniuses in charge of my country’s economy” and then sees Trevor Mallard trying to sell the line that:

Phil Goff has made it clear that No Asset sales means just that.

Which he really, really hasn’t if you’re a sarcastic wench like me.  Consider:

“My position is I don’t want to see the SOEs sold at all,” Mr Goff replied.

“I just want to consider flogging off small parts of them under a theoretically restrictive set of conditions,” he continued.

“What I am saying to you today very clearly is that Labour won’t be selling the assets that all of us as New Zealanders own now.”

“But my Finance spokesperson also says very clearly that we will consider arrangements which basically boil down to partial privatisation, giving the private sector the benefits and putting the risk onto the public sector.”

“But I have to look after the interests of all New Zealanders, both as taxpayers and consumers.”

Because you can always spot the Labour leaders by the way they categorise New Zealanders as consumers and taxpayers,** unlike the right who focus on New Zealanders’ rights as citizens … oh wait.

“As taxpayers it doesn’t make sense to us to lose control of those assets.”

“Which of course is exactly the line National is running with that whole “keeping a controlling stake” thing, but we mean, um, a different kind of not-losing-control-of-those-assets …”

“The difference is when you have sold them you have lost them and lose the dividend stream forever.”

… Unless you don’t sell them but instead allow private investment in their subsidiaries and expand public-private partnerships, right?

Goff scoffed at National’s plans to sell to “mum and dad” investors. “Mums and dads can’t even afford the power bills, let alone to buy the power companies,” he said.

Mr Goff was later observed looking puzzled and asking his political advisors, “Do you peeps think I should have maybe led with that strong, punchy mums-and-dads line instead of waffling on in terms which actually leave a lot of space for us to organise schemes and partial privatisations which the good people spending their $10 per sign will probably consider a betrayal of a rather blunt, uncompromising campaign statement?”

~

*And even lefties aren’t entirely comfortable expressing the view that everything is a lie.

**Maybe if Goff loves consumers and taxpayers so much he could set up an Association for them.