Naughty Fair Go

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Geektastic

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#1564323 2-Jun-2016 15:02

JimmyH:

And why shouldn't the taxpayer expect a return on capital?

Personally, I think that a major blunder was not selling TVNZ in the 90s, before alternatives really started to bite into its market and when it was probably worth 4-5 times what it is now.

Its not clear why the taxpayer should have direct investments in commercial broadcasting at all but, if we are going to, we should at least expect a return on the investment.

Agreed. Government owned businesses tend to be poorly competitive if they are competitive at all and are tantamount to a form of stealth tax.

"Oooh - Air NZ made $X billion this year for the government!"

"Ah - so it overcharged us all by $X billion then, in effect?"

Air NZ is a very peculiar one because of the premium price they charge NZ residents for international flights. I'm sure there will be a tax that is collected here that is based on percentage of the fare or something!

frankv

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#1564346 2-Jun-2016 15:50

Geektastic:

Agreed. Government owned businesses tend to be poorly competitive if they are competitive at all and are tantamount to a form of stealth tax.

As per my previous message, I think it's silly to pay for a service through taxes, and then pay again so that the service can "return a profit". Any profit returned by a Govt-owned entity is a stealth tax.

"Oooh - Air NZ made $X billion this year for the government!"

"Ah - so it overcharged us all by $X billion then, in effect?"

Air NZ is different, in that a large chunk of its customers aren't NZ taxpayers. I'm more than happy for it to overcharge foreigners.

Air NZ is a very peculiar one because of the premium price they charge NZ residents for international flights. I'm sure there will be a tax that is collected here that is based on percentage of the fare or something!

I'm curious about this premium that Air NZ charges NZ residents. I wasn't aware of that. I'd thought that they operated in a competitive market where NZ residents (or anyone else) was free to switch to some other airline. And that consequently Air NZ fares were priced about the same as those of other airlines. Can you give examples of Air NZ fares that are higher than their competitors?

CutCutCut

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#1564347 2-Jun-2016 15:52

dc2daylight:

I can't be the only person who thought the egg used by the guys from the advertising company might have been cast from cement using a mould then painted accurately to look just like the surface texture of an egg. If it was done in two halves with an empty core, or maybe paper mache' with a mesh supportive structure then the weight could have been similar to a raw egg. In the progam segment last night the fair go crews egg was inspected for cracks, but I don't recall the fairgo crew checking the advertising crews egg. Also there was no accuracy regarding the height it was dropped from and they just used "about suzzannes height" as they put it. It was far from a scientifically repeatable test by any means.

Consumer Magazine would have done it much better.

Consumer did in fact do it, on a hard surface, the egg smashed. But they have pulled the video down now.

alasta

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#1564519 2-Jun-2016 19:47

The government should sell off TVNZ and increase Radio NZ's funding so that they can set up a proper public service television channel.

dafman

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#1564529 2-Jun-2016 20:05

Geektastic:

Agreed. Government owned businesses tend to be poorly competitive if they are competitive at all and are tantamount to a form of stealth tax.

Air. The Government sold Air NZ to private enterprise. They bankrupted it. It wouldn't be around today if the Government hadn't bought it back.

Rail. The Government sold NZ Rail to private enterprise. They ran it into the ground until it was rusting stock and worth nothing. It wouldn't be around today if the Government hadn't bought it back.

Electricity. National Government semi-privatised it circa 1987 on the promise of greater efficiency and lower costs for consumers. Ever since then, double digit price increases every year, well and truly outstripping inflation.

Competitive you say?

tdgeek

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#1564532 2-Jun-2016 20:07

CutCutCut:

dc2daylight:

I can't be the only person who thought the egg used by the guys from the advertising company might have been cast from cement using a mould then painted accurately to look just like the surface texture of an egg. If it was done in two halves with an empty core, or maybe paper mache' with a mesh supportive structure then the weight could have been similar to a raw egg. In the progam segment last night the fair go crews egg was inspected for cracks, but I don't recall the fairgo crew checking the advertising crews egg. Also there was no accuracy regarding the height it was dropped from and they just used "about suzzannes height" as they put it. It was far from a scientifically repeatable test by any means.

Consumer Magazine would have done it much better.

Consumer did in fact do it, on a hard surface, the egg smashed. But they have pulled the video down now.

Hard surface is not representative of the ad, which was on a cushion. Its an egg.It supports 3.45kg in portrait pose. If you weigh 100kg, get 30 eggs and put them in trays,

put a plank on top, they will take your weight. The egg ad was a 7kg, or was it 5kg, dropped from about 3 feet. The pillow and the cushion surround the egg, helping to spread the load, which the eggshell already does very well.

Same principle as the indian guys laying on a bed of nails. The weight is say 80kg, and there are MANY nails, each of which tales a teeny amount of weight, leaving just a wee mark. it looks harsh and amazing but its just science

tdgeek

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#1564539 2-Jun-2016 20:13

dafman:

Geektastic:

Agreed. Government owned businesses tend to be poorly competitive if they are competitive at all and are tantamount to a form of stealth tax.

Air. The Government sold Air NZ to private enterprise. They bankrupted it. It wouldn't be around today if the Government hadn't bought it back.

Rail. The Government sold NZ Rail to private enterprise. They ran it into the ground until it was rusting stock and worth nothing. It wouldn't be around today if the Government hadn't bought it back.

Electricity. National Government semi-privatised it circa 1987 on the promise of greater efficiency and lower costs for consumers. Ever since then, double digit price increases every year, well and truly outstripping inflation.

Competitive you say?

Yep, air and rail are tough. Tricity isn't, its like food, we need it. Money to be made. And it is, the price I pay includes a profit that doesn't go back to the industry infrastructure it goes back to the shareholders.

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Geektastic

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#1564667 3-Jun-2016 00:22

frankv:

Geektastic:

Agreed. Government owned businesses tend to be poorly competitive if they are competitive at all and are tantamount to a form of stealth tax.

As per my previous message, I think it's silly to pay for a service through taxes, and then pay again so that the service can "return a profit". Any profit returned by a Govt-owned entity is a stealth tax.

"Oooh - Air NZ made $X billion this year for the government!"

"Ah - so it overcharged us all by $X billion then, in effect?"

Air NZ is different, in that a large chunk of its customers aren't NZ taxpayers. I'm more than happy for it to overcharge foreigners.

Air NZ is a very peculiar one because of the premium price they charge NZ residents for international flights. I'm sure there will be a tax that is collected here that is based on percentage of the fare or something!

I'm curious about this premium that Air NZ charges NZ residents. I wasn't aware of that. I'd thought that they operated in a competitive market where NZ residents (or anyone else) was free to switch to some other airline. And that consequently Air NZ fares were priced about the same as those of other airlines. Can you give examples of Air NZ fares that are higher than their competitors?

If it was overcharging foreigners I would be delighted. However you will find that in fact it is almost always cheaper to buy seats on a flight in the UK or USA. My brother and I have often done this live on the phone - go on the relevant Air NZ websites for our respective locations (US and NZ) and book seats on the same flights. He usually gets his way cheaper than I get mine. MIL recently got flights return from UK for NZ$1600 - been a long time since you could get one from here to UK for that!

Geektastic

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#1564669 3-Jun-2016 00:28

dafman:

Geektastic:

Agreed. Government owned businesses tend to be poorly competitive if they are competitive at all and are tantamount to a form of stealth tax.

Air. The Government sold Air NZ to private enterprise. They bankrupted it. It wouldn't be around today if the Government hadn't bought it back.

Rail. The Government sold NZ Rail to private enterprise. They ran it into the ground until it was rusting stock and worth nothing. It wouldn't be around today if the Government hadn't bought it back.

Electricity. National Government semi-privatised it circa 1987 on the promise of greater efficiency and lower costs for consumers. Ever since then, double digit price increases every year, well and truly outstripping inflation.

Competitive you say?

1) It does not really matter if Air NZ was bust and disappeared. Many other airlines exist and would fly here.

2) Rail is an odd one, since we have both decrepit railways and decrepit roads.

3) This happens because we have privatised utilities without actually regulating them properly in terms of the service levels they are expected to provide and the prices they want to charge which ought to be reviewed by regulators on a 5 year cycle - and the regulators should be telling them what they can charge. The recent Chorus copper thing is a good example of how regulation should NOT be done: the regulators should have the final say, with no recourse for the companies to any form of appeal other than for points of law.

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#1564690 3-Jun-2016 06:10

dafman:

Geektastic:

Agreed. Government owned businesses tend to be poorly competitive if they are competitive at all and are tantamount to a form of stealth tax.

Air. The Government sold Air NZ to private enterprise. They bankrupted it. It wouldn't be around today if the Government hadn't bought it back.

Rail. The Government sold NZ Rail to private enterprise. They ran it into the ground until it was rusting stock and worth nothing. It wouldn't be around today if the Government hadn't bought it back.

Electricity. National Government semi-privatised it circa 1987 on the promise of greater efficiency and lower costs for consumers. Ever since then, double digit price increases every year, well and truly outstripping inflation.

Competitive you say?

Were they all bought by Donald Trump?

frankv

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#1564698 3-Jun-2016 06:49

Geektastic:

My brother and I have often done this live on the phone - go on the relevant Air NZ websites for our respective locations (US and NZ) and book seats on the same flights. He usually gets his way cheaper than I get mine.

Is it just that you're paying GST and he isn't?

SepticSceptic

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#1565221 3-Jun-2016 16:48

tdgeek:

Same principle as the indian guys laying on a bed of nails. The weight is say 80kg, and there are MANY nails, each of which tales a teeny amount of weight, leaving just a wee mark. it looks harsh and amazing but its just science

Nah, tis magical thinking, everyone knows that :-)

JimmyH

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#1565500 4-Jun-2016 09:21

dafman:

Air. The Government sold Air NZ to private enterprise. They bankrupted it. It wouldn't be around today if the Government hadn't bought it back.

Airline investments are typically dogs. The Economist estimated about two years ago that if you took airlines around the world as a whole, then between 1947 and 2009 the consolidated net profit of the sector was zero. Forget about covering their cost of capital, zero dollars! Airlines tend to go bust, whether in public or private hands, with monotonous regularity. The government has had a good run with its investment for the last couple of years, that doesn't mean it will continue.

Rail. The Government sold NZ Rail to private enterprise. They ran it into the ground until it was rusting stock and worth nothing. It wouldn't be around today if the Government hadn't bought it back.

Rail is a basket case. Tranz Rail couldn't make it work. Neither can the Government - just look at the enormous sums they have to keep tipping in each year to keep it running. The economics of rail are fundamentally broken. Nothing to do with whether it is publicly or privately owned.

Electricity. National Government semi-privatised it circa 1987 on the promise of greater efficiency and lower costs for consumers. Ever since then, double digit price increases every year, well and truly outstripping inflation.

Competitive you say?

You have no counter-factual as to what would have happened if it had stayed as the monolithic ECNZ. Power prices are now fundamentally determined by equilibrating the marginal cost of generation with (relatively inelastic) demand. And, if new lower-cost generation isn't being built then it's not a great surprise that prices rise. You seem to think that the market is somehow uncompetitive yet, relative to the ODV value of the assets, the returns to shareholders aren't actually that flash.

The acid test of whether you really think they are making excess returns because of a safe monopolistic environment is whether you are directly investing your personal savings in the shares.

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