Asset Sales

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tdgeek

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#588110 29-Feb-2012 01:22

You can only sell assets once. You can't sell your car, furniture, investments to pay for groceries.

We need to mine the minerals we have, thats also a one off thing, but a big one off thing, enough to clear our finances, THEN live within our means. You can mine and repatriate with native. But we can't do that as we are run/controlled by PC/Green politicalism. So we complain about mining, then we complain about the high cost of oil. This is a rut.

Assets we have that generate income will generate more income by the new owners, where will that profit come from?

Too much talk and no action as usual from the Govts of the day. 3 years trying to wangle past polices they sold to win an election, then blaming everything else on it.

We are a smart country, we punch above our populaton weight in rugger, Hollywood and IT/technology, we need to push massively to insulate us somewhat from the needs of modern life and the effect of overseas economics. Grow our own food/milk and pay what its worth here, not what its worth overseas (Fonterra, etc), develope renewable power for homes (solar, wind, tidal) it all helps.

I and others here have good ideas, you will also hear them at election speeches, but you won't see them anywhere, as the power makers are talking not doing.

Rant over

Byrned

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#588155 29-Feb-2012 09:03

mattwnz: 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.

Heard of Solid Energy?

But of course anyone who utters the word mining will get crucified and set upon a thousand greenies, so not much point in trying to go there.

Byrned

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#588176 29-Feb-2012 09:28

Asset sales are one of those areas that polarises people. Sadly a lot of people that comment on it though have no economic understanding of the situation.
For the record, I?m favour of asset sales, so long as the price is right and it?s not a fire sale like the 80?s. Oh, and Sir Michael Fay is not a buyer! And I believe the mixed ownership model is a good model to work on.

As for the returns provided by the current assets, that is the current return, and not the long term average return. Would you decide on what investment fund to go for based on their returns over the last year, or what they?ve returned over the last 10 years. From memory I think it was around a 6% return per annum over the last 10 years. And if you?re only reducing your share of the dividend by 49%, you still get 51% of that dividend!

Also, there are some really good examples out there of public companies which are now operated under a mixed ownership, such as Auckland Airport and Air New Zealand, where increased corporate governance has made the company more accountable to it?s shareholders, and increasing the return. Obviously they?ve also had good people running them as well. Another really good example of mixed ownership vs public ownership would Ports of Auckland vs Ports of Tauranga. One is up there with the best in the world, and we all know where the other is.

I think it?s pure scaremongering anyone that says that ?Once you?ve sold them, they?re gone?. For one, they?ll be publically listed companies, where they can be brought and sold. Companies buy back shares all the time to increase the value and strength of the company if the market dictates that.

Also the Government has signalled that the money from the sales is to be used to provide further infrastructure, where the returns are typically calculated at a much high rate than 15%. The difference is that you and I benefit directly, rather than it going into government coffers, and then being doled out to whoever. Yes, you could also borrow to fund these infrastructure programmes, but we?ve already had a ratings downgrade, and to be seen to be unwilling to make hard decisions but instead to keep on further borrowing could lead to a further downgrade, and then the cost of borrowing goes up, and then we become Greece.

So, as I saw it, New Zealand has a few options: borrow more and look to Greece for inspiration, cut spending and decrease a standard of living substantially (especially for those on low incomes) or sell some assets for some long term gain.

Kyanar

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#588202 29-Feb-2012 10:22

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.

No, because the power companies are generators. Because it's physically impossible to determine which generator was responsible for which block of power you use, you end up paying them regardless of whether you're a direct customer.

alienwithin

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#588204 29-Feb-2012 10:25

You don't mind paying more for those services then?

.

perhaps you wont pay more. We are with contact energy, they are the cheapest power company in my area. The state owned power companies are very expensive compared to contact. which is why i dont buy into the argument that opening them up to a max of 49% shares will affect the price. also the benefits will roll off in other areas with ACC and other govt areas going to invest in them. Which is far better than the current scheme where the bulk of ACC and the pension funds investments are overseas propping up foriegn businesses and governments

alienwithin

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#588212 29-Feb-2012 10:39

tdgeek: You can only sell assets once.

not true. kiwi rail ;)

point is owning 51% as Bill english has said a number of times but people don't hear, when the country is in better shape if the government of the time decides it can buy back the shares.

k14

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#588228 29-Feb-2012 10:57

Kyanar: No, because the power companies are generators. Because it's physically impossible to determine which generator was responsible for which block of power you use, you end up paying them regardless of whether you're a direct customer.

Lol, um not quite. Power companies are also retailers. Theoretically if everyone went from Meridian, Mighty River (Mercury is their retail company) and Genesis and swapped to Contact and Trustpower then it would most likely make the first three loose a fair chunk of money (again depending on south island lake levels) but it would never happen. If there started to be a mass exodus the companies people were changing to would have to raise their prices (because they don't have enough generation to ensure they don't have to buy off the wholesale spot market) and the companies people left would drop their prices. Simple supply and demand. People wouldn't be willing to pay twice their current power bill just to make a point.

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1080p

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#588261 29-Feb-2012 12:07

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.

Why aren't the companies that aren't for sale doing a Kiwibank and advertising the fact that they aren't being sold off to investors that will want a return on their money? Considering Genesis have just told me my power price is going up significantly, I'll be checking to?see who can give me a better deal, and?their asset sale status will be a factor in my calculations.?

Are they being sold at "...bargain basement prices..."? I read they would be sold at market value. There is a significant difference.

Why is it a bad thing for investors to want a return on their money? That is why they put there money there in the first place and it is exactly what the government wants when it invests in these companies as well.

Removing this country from debt is a very wise move and something I think every government should focus on and maintain. I am happy that National have finally addressed this issue despite it being difficult to solve.

networkn

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#588266 29-Feb-2012 12:21

I think National whilst not perfect have gotten a pretty bad rap for things which were largely outside of their control. Labour was at the right place at the right time for a period of it's term by comparison.

National has had to deal with some massive issues, some of them, the biggest NZ has ever faced, and it has seriously affected the countries financial well being. I think people are being pretty harsh expecting to continue with financial well being, whilst being oblivious to the completely massive hole in our financials that the CHCH Earthquake, failure of finance companies, the huge hole in ACC, the Global Financial Adjustment (as I like to call it) have created. It will take some time to climb out of this regardless of how clever they are or aren't.

No-one here has the same level of information that the people who make these decisions have, and so to some degree we need to trust our elected officials to act in our best interest. These people don't come to work to screw people over, though it can sometimes seem that way if the decision doesn't act in YOUR personal best interest.

I don't like Asset sales but I see them as a short term boost to cash on hand which is evidentially more important than a 10% return once a year.

BlueShift

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#588382 29-Feb-2012 15:47

1080p:Are they being sold at "...bargain basement prices..."? I read they would be sold at market value. There is a significant difference.

They are being sold at market value, however, as most have noticed, the market is at a very low point. If you're selling your house, and the market has dropped, and suddenly your house is worth $100K less you can either choose not to sell, and wait for the price to go up; or you can sell, and comfort yourself that at least you are buying on the same market. What National are talking about is selling (half) the house to pay off the mortgage during that low point in the market, then, when things are better, and the economy improves, buying it back (possibly) on the future, most likely higher, market.
Hence, anyone with spare cash to buy the shares is getting them at a lower price than they would have 3 years ago, and probably lower than 3 years from now. Bargain.

networkn

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#588389 29-Feb-2012 15:55

Blueshift: well when times are tough you make financial decisions which are necessary in the short term, you might go backwards for the long term good of the country. Perhaps if the factors in my prior reply hadn't occurred we wouldn't be having this discussion.

Right now we are going backwards at my house, because my wife is not working, and has no income so we can raise our family, but long term there are benefits, and she will return to work. We will never get that money back, but it's what we consider necessary for the long term benefit of our family as a whole.

gzt

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#588528 29-Feb-2012 20:02

Byrned:
mattwnz: 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.

Heard of Solid Energy?

But of course anyone who utters the word mining will get crucified and set upon a thousand greenies, so not much point in trying to go there.

Solid Energy gives a massive return to the goverment. (economic analysis link somewhere above)

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