Treasury advises against asset sales
Fri, 28 Dec 2012 6:08p.m.
By Janika ter Ellen
Treasury has warned the Government not to sell three state-owned companies next year as it's too much for the stock market.
The Government is considering selling three power companies in 2013, after it delayed the sale of Mighty River.
The Government had planned to partially sell Mighty River Power this year, but held off following the stoush with Maori over water rights.
So now it's considering a sell-off involving all three state owned power companies next year - despite Treasury advice saying they shouldn't.
“Treasury's saying don't do it, the sharemarket can't handle it - so let's heed Treasury's advice,” says Green Party co-leader Metiria Turei. “They're not a radical organisation, they're a conservative economic organisation and they're saying it's not possible.”
A newly-released Treasury report says:
"Market capacity dictates that it is only practical to complete one sale of the size of these companies per half year".
And even that timeframe makes the programme "more vulnerable to a market downturn or a dip in a company's performance".
Analysts say a tight timeframe for the sales could de-value shares.
“If there is too much supply of shares on the market the natural school of thought could be that there'll be less demand and that may put downward pressure on the price,” says Grant Collie of Forsyth Barr.
And Labour says it would disadvantage individuals wanting to invest.
“Mum and dad investors would struggle to scrape together enough money to invest in one electricity company in one year let alone invest in three of them,” says Labour spokesman Chris Hipkins. “So what this is going to do, if they force all these sales through in one year, we are going to see those shares going to corporate interests and overseas investors, not to mums and dads.”
The Government declined to comment on the Treasury advice - saying only it has a target of 85 percent New Zealand ownership at the time of sale.
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19/01/2013 4:12:01 p.m.
Robin G Willing wrote:
In order to borrow More money, The banks buy your money making assets,Once the Power companies are in private hands just set back and watch your electricity prices go up
1/01/2013 1:34:52 p.m.
Selling off our means to produce electricity for only six billion dollars is like selling off your car for just fifty bucks when you do not live on a bus route and three hours walk from work. Power companies are invaluable assets.
31/12/2012 8:29:45 p.m.
@Marcus, John Key has had a long association with Goldman Sach's a international banking firm well known for laundering money and creating tax havens for the wealthy.
John Key's boss while he worked on the foreign exchange committee of the Federal reserve of New York was Stephen Bellotti who worked directly for Goldman Sach's.
Goldman Sach's was awarded the contract to sell off New Zealands strategic assets by John Key.
That in itself is a direct conflict of interest and shows how corrupt John Key is.
Awarding the sales contract to what is basically his ex employer, a well known baking corporation responsible for the creation of some of the worlds largest tax havens.
31/12/2012 5:23:47 p.m.
Firstly the asset sales are a sham and with the govt expecting kiwis to own 85% of these companies,this realistically is not going to happen(the only reason it was capped at 10% was because kiwis started complaining about how much would fall into foreign ownership).The agenda all along was to sell off to wealthy foreign interests who will then dissect these companies into electricity and water entities.Much of NZ's water are stored in these hydro dams and it seems only logical that these foreign investors will want in return the most profits they can get from their investment.
If you believe John Key now that no-one owns the water then wait til these companies are sold off.Water is one of the most valuable commodities around and only a fool would believe that NZ er's will continue to own it.
The biggest losers in this will be those farmers who get free or cheap water for cropping and farming but thats what they've voted for so sadly it would also seem logical that more of NZ's land too will be sold off,again to foreigners.
Rescind the tax cuts National and stop the greed,NZ just simply cannot afford them.
30/12/2012 12:29:11 a.m.
Key acts like there is 6 billion sitting around tucked into mattresses and buried under the woodpile. The money that will be spent on these shares will come from a sell off of other lower returning shares..driving even more companies and therefore jobs to the wall... Any fool can see that.
29/12/2012 10:31:52 a.m.
Let's not forget that Treasury has already conceded that savings on interest payments from lower debt will be less than the foregone profits. Asset sales won't reduce debt. Asset sales won't boost the economy. Every analyses agrees that selling our strategic, income generating infrastructure will leave NZ worse off.
Not a single argument National has put forward to justify their plundering of our vital infrastructure has held up.
Only the willfully ignorant can't see that pushing ahead with this will cost National the next few elections. Hence the rush.
29/12/2012 9:46:35 a.m.
Flood the market and drive the price down for their cronies. How very National. After all, it's not as if they are selling off our vital infrastructure for the benefit of New Zealanders.
Is this an acknowledgment by the National Government that they don't have much time left to complete their agenda of selling out New Zealand?
29/12/2012 8:17:11 a.m.
We need to be rid of the even bigger problem. JK
29/12/2012 7:57:27 a.m.
Bad idea from the start and the rush to get our income earning assets sold off quickly is highlighted when the govt's own treasury dept is telling them effectively to slow down...? Another warning sign to ignore as they speed towards another mistake that this country doesn't need. Why are we selling these money earners when the country is struggling to control the deficit gap? No time to answer any pertinent questions folks, we've got SOEs to sell....its an idiotic short term way of trying to solve an ongoing long term problem, that's mired in another badly disguised ulterior agenda.
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