If you've been reading political commentary lately, including in the weekend papers, there's been a lot of talk of the need for asset sales. Why?
Because as we said earlier, we have a structural deficit. Which is a very bad thing because it means we are, thanks to Grant Robertson, now spending more than we earn - on the regular.
Treasury's advice for how to fix it? Asset sales.
But asset sales are politically tricky because of the hangover of the 80s. So Chris Luxon's already ruled them out. But he shouldn't have, because we actually need to do this.
Not just because we need the money, but because selling them down makes them better.
Treasury basically admitted this in a report 2 years ago. The ones we own 100 percent have “underperformed their cost of capital” with “ Revenue, earnings and dividends “ all trending “down over the past five years."
The ones we own about 51 percent of have, by contrast, outperformed their cost of capital. The last lot we sold - Mercury. Meridian Energy and Genesis- are now all worth more than they were when we sold them down.
Two of them have doubled in value, which means we still own as much as we did, and they’ve paid us billions - so it’s a no-brainer on every single level.
So the Government should be looking to sell down New Zealand Post, KiwiRail, Kiwibank, TVNZ, the list goes on.
But it’s politically tricky, and Luxon said no.
So- does this Government have the cahones to actually do what it takes to get us out of this economic mess?
Heather du Plessis-Allan is a journalist and commentator who hosts Newstalk ZB's Drive show HERE - where this article was sourced.
4 comments:
It's great our power companies are now worth so much more and return so much more money.
I wonder why so many struggle to pay their power bills? Oh yeah, that's just those poor people, why would Heather be bothered with them, as long as the profits go up.
You know the answer, Heather. Our PM has no cojones, after all he's allowing our beaches and birthright to be given away in plain sight and hasn't yet raised a single word against it. So no cojones or other observable intestinal fortitude.
What a legacy, and like that 'structural deficit' the wider public will again have to wear it.
Rather than asset sales there should be some forensic accounting and the sacking of everyone who did bad deals. The public service needs to be held publicly accountable.
Just imagine for a moment how much the Govt could save if, oh, we disbanded and eliminated ,say, half the public service. Would anyone actually notice? And all of those savings might well help the Govt to reduce our individual and company tax rates. Oh wait…you’d need some political courage to do that wouldn’t you?
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