Asset Sales

Forums › Off topic › Asset Sales

1 | 2 | 3

2385 posts

Uber Geek
+1 received by user: 286
Inactive user

#587867 28-Feb-2012 15:09

mattwnz:
BraaiGuy: I too am all for asset sales, but only because I see it as a way to get us out of this financial mess.

That is just it, it won't get NZ out of any financial mess. They don't actually know how much it will make, but some estimates are around the 4 billion. That is not going to go very far, and once you have sold it, you can't sell it again. They are only selling 49% too, so will retain most of ownership.

Its going to help...
Increasing welfare/borrowing more money won't. And if we allow the debt to continue on the current path, our assets will be worth peanuts anyway

And selling 49% is not exactly selling it off.

vinnieg

2260 posts

Uber Geek

Trusted

#587874 28-Feb-2012 15:29

BraaiGuy:
mattwnz:
BraaiGuy: I too am all for asset sales, but only because I see it as a way to get us out of this financial mess.

That is just it, it won't get NZ out of any financial mess. They don't actually know how much it will make, but some estimates are around the 4 billion. That is not going to go very far, and once you have sold it, you can't sell it again. They are only selling 49% too, so will retain most of ownership.

Its going to help...
Increasing welfare/borrowing more money won't. And if we allow the debt to continue on the current path, our assets will be worth peanuts anyway

And selling 49% is not exactly selling it off.

I think Mattwnz is right, it won't help.

The tax cuts of when they first took power, put the country from surplus into deficit. Costing us 2.1 billion a year. The two major Christchurch quakes(which were unforeseeable) also don't help. I think NZ on a whole isn't economically viable. Politics don't matter, the two big parties will just switch every 6-9 years, while doing pretty much nothing, except offering carrots to the donkeys who want to accept them.

I have moved across the ditch. Now residing in Melbourne as a VOIP/Video Technical Trainer/Engineer.

mattwnz

20515 posts

Uber Geek
+1 received by user: 4795

#587886 28-Feb-2012 15:52

vinnieg:
BraaiGuy:
mattwnz:
BraaiGuy: I too am all for asset sales, but only because I see it as a way to get us out of this financial mess.

That is just it, it won't get NZ out of any financial mess. They don't actually know how much it will make, but some estimates are around the 4 billion. That is not going to go very far, and once you have sold it, you can't sell it again. They are only selling 49% too, so will retain most of ownership.

Its going to help...
Increasing welfare/borrowing more money won't. And if we allow the debt to continue on the current path, our assets will be worth peanuts anyway

And selling 49% is not exactly selling it off.

I think Mattwnz is right, it won't help.

The tax cuts of when they first took power, put the country from surplus into deficit. ?Costing us 2.1 billion a year. ?The two major Christchurch quakes(which were unforeseeable) also don't help. ?I think NZ on a whole isn't economically viable. ?Politics don't matter, the two big parties will just switch every 6-9 years, while doing pretty much nothing, except offering carrots to the donkeys who want to accept them.

One solution could be to print money and also inflate the debt away, like what they are doing in other countries. But that hurts savers, and then there is no incentive to save, and thing will just rocket in price. NZ was borrowing over a billion a month not that long ago ($300 million a week), so these asset sales may only cover 3-4 months of borrowing anyway.
I think NZ is sustainable, but our standard of living may not be, whcih is sad really, cos it will mean more people moving over to oz where the standard of living is higher.
Maybe the NZ gov should setup a mining company, and mine parts of NZ, so those profits then stay in NZ. Rather than let other mining companies come into NZ and only pay royalties.

Jaxson

8172 posts

Uber Geek
+1 received by user: 1332

Trusted

#587924 28-Feb-2012 16:58

vinnieg: Politics don't matter, the two big parties will just switch every 6-9 years, while doing pretty much nothing

That's a big +1 from me.

Skolink

1081 posts

Uber Geek
+1 received by user: 32

#587927 28-Feb-2012 17:00

mattwnz:
I think NZ is sustainable, but our standard of living may not be, whcih is sad really, cos it will mean more people moving over to oz where the standard of living is higher.
Maybe the NZ gov should setup a mining company, and mine parts of NZ, so those profits then stay in NZ. Rather than let other mining companies come into NZ and only pay royalties.

Australia's standard of living is definitely not sustainable - it is based on mineral wealth.

If National does manage to sell our power companies, I look forward to charging significant rent for our rivers on which the hydro stations sit - yeah right.
Same goes for Solid Energy, who currently pay very little to take our coal and destroy our national parks.

Ragnor

8279 posts

Uber Geek
+1 received by user: 585

Trusted

#587947 28-Feb-2012 17:37

edge:

While I usually take economists' views with a grain or two of salt, the following gives a precis of some of the relevant issues around sales (including figures on returns and opportunity costs etc). There are obviously lots more analyses around but this one is short and comprehensible!!
http://www.infometrics.co.nz/article.asp?id=5701

+1 for this.

The nationwide network/grid of power lines are a natural monopoly, we aren't selling those.

Power generation however is not a natural monopoly, there are multiple generators and private companies generating power already!

Like Zeon I don't see why the government needs to be in the business of power generation.

The far left consistently over-blows the level of the returns we are getting and ignores the cost of capital, the average returns over 10 years are ~9% not 15% with the exception of solid energy (due to the mining boom). See the infometrics article.

If you look at the future of power generation I personally think we will see a lot more micro/personal power generation through improvements in solar panels, every now and then I check if the prices and potential output you can get have gone up enough to make the investment worthwhile... it's nearly there.

Quic Broadband

Move to New Zealand's best fibre broadband service (affiliate link). Free setup code: R587125ERQ6VE. Note that to use Quic Broadband you must be comfortable with configuring your own router.

mattwnz

20515 posts

Uber Geek
+1 received by user: 4795

#587951 28-Feb-2012 17:40

Skolink:
mattwnz:
I think NZ is sustainable, but our standard of living may not be, whcih is sad really, cos it will mean more people moving over to oz where the standard of living is higher.
Maybe the NZ gov should setup a mining company, and mine parts of NZ, so those profits then stay in NZ. Rather than let other mining companies come into NZ and only pay royalties.

Australia's standard of living is definitely not sustainable - it is based on mineral wealth.

If National does manage to sell our power companies, I look forward to charging significant rent for our rivers on which the hydro stations sit - yeah right.
Same goes for Solid Energy, who currently pay very little to take our coal and destroy our national parks.

Whether it is sustainable short to medium term, would depend on how many minerals they have, and whether china will continue to buy them. Humans living on earth probably isn't sustainable long term either, due to the way we are damaging the earth and global warming.
I think Australia are also borrowing a huge amount of money these days. The problem really is china, as they are not spending enough, but instead saving and lending it to the west. But that is the global economy for you.

k14

631 posts

Ultimate Geek
+1 received by user: 94

#587956 28-Feb-2012 18:06

mattwnz: NZs power companies are largely private now, and we have are now paying more for power than other countries. WHen not that long ago we used to have the cheapest power (when it was not privatised). I do remember that they said that privatization would bring down the cost of power.

You cannot compare prices in NZ to overseas, it is wrong on so many levels. Pretty much no other country in the world has the make up of renewable/non renewable as NZ. USA, Canada, Europe, Australia have massive amounts of Coal and Nuclear of which the running costs are completely different to the NZ methods of generation, although that isn't the main reason.

In the 50s to 80s there was a massive drive for building a big oversupply of generation, paid for by taxes at the time and relatively cheap labor. That created a really big oversupply in the system and thus from ~95 (when the privatisation began) through to around 2005 the additional capacity was used up and we came to the point where demand and supply were roughly matched (depending on the rain). So in the last 5-7 years there has had to be a big emphasis on new generation and transmission being built and thus prices have had to increase to cover this. I am not saying the price rises are justified, just saying that comparing NZ prices to overseas is not the right way to look at things. Just the same as comparing broadband or mobile phone pricing is just as incorrect.

Another factor not in our favor is the fact that the population is so spread out with the major demand base being 1000km+ away from the major generation base. Transmission lines are very expensive to build and maintain, even being made more difficult by the nimby crowd. Then you take the illogical drive to have a massive amount of wind generation along with the ETS and you can see how this inflates the price even more.

IMO an idea world would have all essential services controlled and run by the government. This includes power generation and telecommunications. Currently the inefficiencies in the NZ electricity market are so frustrating but I know it will never go back to the way it used to/should be. ATM we are yet again edging towards a winter shortage and things could get really messy if we don't see some significant autumn/early winter rain in the south island.

mattwnz

20515 posts

Uber Geek
+1 received by user: 4795

#587974 28-Feb-2012 18:48

I am not disagreeing, but at the end of the day many people don't really care that much where the power comes from, just how much it costs. There is nothing wrong with nuclear as it is used worldwide, and it is relatively safe, but probably not good in an E/Q zone like NZ. NZ does need some generation up north though, as when there is huge EQ in Wellington, it possibly may knock out Haywoods, which could leave Auckland underpowered. NZ does have relatively cheap labour now, but the RMA makes it incredibly difficult and expensive to build anything new. Also all the red tape, compliance costs etc
Mobile and broadband prices were too high, and the infrastructure too slow. That is why we have had regulation, to bring us back in line with th rest of the world, and the new high speed network. However those in remote areas will not benefit as much.

numfarr

329 posts

Ultimate Geek
+1 received by user: 7

#588038 28-Feb-2012 21:28

BlueShift: Given that its too late to vote National out to avoid them flogging off various power companies at bargain basement prices, is it a feasible plan to persuade people to vote with their feet and transfer to power companies that aren't on the auction block? Make the assets a less desirable purchase, maybe they won't sell.

Since power companies are available at bargain basement prices and owning them is so excellent for the country, are you in favour of the government buying Contact Energy and Trustpower? If not, why not? You make it sound like an awesome investment opportunity.

oxnsox

1923 posts

Uber Geek
+1 received by user: 138

#588050 28-Feb-2012 21:54

sleemanj:Further more, the income from the sale of these assets is less than the income which would be achieved through keeping said assets (which of course stands to reason, otherwise, who would buy them).

We don't know what the sale price is until they're sold, so although your speculation may ring true it is speculation.

mattwnz: The problem really is china, as they are not spending enough, but instead saving and lending it to the west. But that is the global economy for you.

It's not their fault they're saving for a rainy day and taking advantage of everyone's fire-sales.
But eventually we'll all realise that there is not an inexhaustible supply of resources, which means we'll have to limit how we use them (or who uses them). Ultimately that means we have to manage the population to manage the resource..... anyone with any experience at doing that??

Dell

Shop now for Dell laptops and other devices (affiliate link).

mattwnz

20515 posts

Uber Geek
+1 received by user: 4795

#588055 28-Feb-2012 22:03

It's not their fault they're saving for a rainy day and taking advantage of everyone's?fire-sales.
But eventually we'll all realise that there is not an?inexhaustible?supply of resources, which means we'll have to limit how we use them (or who uses them). Ultimately that means we have to manage the population to manage the resource..... ?anyone with any experience at doing that??

It is if they want to participate in the global economy and free trade, as it is a two way street. The rest of the world could just stop buying from them too, and then they would have problems.

matisyahu

1639 posts

Uber Geek
+1 received by user: 355

Trusted

#588066 28-Feb-2012 22:32

The one thing people I think ignore is this: many of these businesses require re-capitalisation and quite frankly the tax payer doesn't have the funds to pay for the re-capitalisation of these businesses. The asset sales is but one of a bigger issue when it comes to long term funding - especially when you look at the recent credit downgrade of Kiwi Bank. Long term eventually working for families will have to be scrapped - it is unsustainable voter grabber when first introduced along with interest free loans after completion of study. Selling assets addresses some of the problem but the larger problems will require bolder choices which John Key seems unwilling to make.

"When the people are being beaten with a stick, they are not much happier if it is called 'the People's Stick'"

oxnsox

1923 posts

Uber Geek
+1 received by user: 138

#588074 28-Feb-2012 22:42

mattwnz:
It's not their fault they're saving for a rainy day and taking advantage of everyone's?fire-sales.
But eventually we'll all realise that there is not an?inexhaustible?supply of resources, which means we'll have to limit how we use them (or who uses them). Ultimately that means we have to manage the population to manage the resource..... ?anyone with any experience at doing that??

It is if they want to participate in the global economy and free trade, as it is a two way street. The rest of the world could just stop buying from them too, and then they would have problems.

Ahh but would they?? (the rest of the world stop buying that is).
When you can get most of what you want at a $2 price tag it's hard to convince a country to go back to the $9.99 option... Politics won't let that happen. Not yet anyway.

networkn

Networkn
32862 posts

Uber Geek
+1 received by user: 15453

ID Verified

Trusted

Lifetime subscriber

#588088 28-Feb-2012 23:20

Jaxson:
BlueShift: Given that its too late to vote National out to avoid them flogging off various power companies
It's too late to change the result, but you can't get around the fact that NZ'rs had their chance to vote against this political party and they opted not to. So whilst some, maybe even most, may be against this, no one did anything about it at election time.

I didn't like some of Nationals Policies but I don't like MOST of Labours, this was the least destructive path.

Asset sales aren't what I would prefer, but you can't get everything you want, and I don't have all the information nor does anyone except the govt, and as such I am happy to trust them.

1 | 2 | 3