Yesterday, the National/Act Government announced the first state-owned company to be sold off in its asset sales programme, Mighty River Power. Today New Zealand citizens and residents could register their no-obligation interest in purchasing shares, and I did.
The Government’s legislation doesn’t limit sales of the shares to New Zealanders, but—without anything to base it on—Prime Minister John Key claims he’s “confident” they can achieve “85-90%” of the shares being sold to New Zealanders. How, exactly?! Few New Zealanders own shares as it is, and there’s no reason to think there will suddenly be more who can afford the minimum $1000 to buy these shares—in bad economic times, no less.
The government is dual listing the shares with the NZ and Australian share markets to make it easier for foreign buyers to purchase shares. That’s not the only reason that even if the government achieves its goal of NZ ownership of shares, ultimately, the shares will end up in foreign ownership.
As previous big NZ share floats have shown, after the initial hype ends, the share price will drop. Kiwis—who will have lost money on their investment in bad economic times, and many of whom will have had no experience owning shares—will then sell off the shares at a loss. So, it’s probable that in six to nine months after listing, most of the float shares—maybe even that magic number of “85-90%”—will be in the hands of foreigners.
The National/Act Government is doing this despite the fact that retaining Mighty River Power would return far more over ten years than they will get by selling it now. National/Act are doing it despite the fact that all New Zealanders already own these assets, so selling them off amounts to transferring New Zealanders’ shared national wealth to private (mostly foreign) owners.
Labour Leader David Shearer, the Leader of the Opposition, put the issue plainly:
“Currently our state assets are 100% Kiwi owned. This programme will mean New Zealanders lose their assets. Kiwis are being asked to purchase what they already own.”The problem is that the Tories fundamentally disagree with state ownership of much of anything—that's their motivation not just for asset sales, but also charter schools and privatised prisons and the so-called "public/private partnerships". All of these are about transferring taxpayer money and our national wealth to private companies and wealthy individuals—it’s all about increasing profits for the elites.
It was obvious that nothing could stop asset sales from going ahead. The referendum promoted by Labour and the Greens was always irrelevant: The National/Act government was going to sell state-owned assets no matter what. If the referendum had happened before the pre-ordained asset sales decision was announced, they would have ignored it. If the court had ruled against them, they would have legislated.
So, the shares will be sold, no matter what any of us thinks about it. I think that Kiwis who can should buy the shares and hold onto them. One day, a more sensible government may be willing to buy them back, and that’d be much easier if most shares are in Kiwi ownership. Every share Kiwis don’t buy will end up in foreign hands, and it’s in our national interest to prevent yet another power generator from falling into foreign ownership.
Even if a future government doesn’t buy them back, at least we’ll keep one power generator in New Zealand ownership. We won’t be able to keep the big investors from demanding ever-rising power prices to pay for ever higher dividends (profits) paid to their foreign bank accounts, but maybe we can slow them down a bit. With the asset sales happening no matter what, this is the only thing we can do to protect ourselves.
There is a fundamental, deep and profound difference between National/Act and Labour/Greens—asset sales is only the most obvious and well known. There's plenty more that National/Act will do to New Zealand—unless we vote to change the government. For my money, so to speak, the 2014 elections can’t come soon enough.
The title for this post comes from David Shearer on Facebook.
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