Tuesday, 24 July 2012

I Stare Out

As if it wasn't bad enough, on principles, to be selling assets.

We have the dubious financial benefits, the fees to Regular John's mates to sell the assets and the uncertainty around iwi claims around water.

And finally, the loyalty scheme.  Treasury are reported to have estimated the cost of the loyalty scheme at $500 million, or $112 per person.  That's a subsidy from the 90% or more of citizens who won't buy shares, or can't afford to, to those who have both the means and the lack of morals desire to buy the shares.  A wealth transfer from poor to rich.  Trickle up.

Regular John doesn't know how much it will cost.


David Shearer: Did he announce the loyalty scheme to the National Party conference without being aware of the cost?
Rt Hon JOHN KEY: I announced the intention to have a loyalty scheme. I do not know the exact cost at this point, but what I do know is that there may be no cost. I was taking this morning to listen to Morning Report. On Morning Report this morning, if I can quote from a stockbroker heavily involved in the Queensland Rail float, which had the loyalty bonus, he said that the amount the Government receives for its 49 percent may actually increase, and that the incentive increase for the float from locals and paid by itself is driving up the price institutions may pay—

It was only last week National were avoiding answering hypothetical questions, on the grounds they are hypothetical, and yet today we get this tripe about "...I was talking to a stockbroker and he said there were fairies at the bottom of the garden that magically make money appear..."

Opportunity lost with the Queensland Rail reference, too.  If only Mr Shearer had had quick enough wits to ask "Has the Prime Minister seen any reports on what happened to the government that sold Queensland Rail at the next elections?"  Hint - they were annihilated.  Annihilated.  Partially because people don't like asset sales.

Rod Oram talked about loyalty schemes on the radio today.  Evidently buyers who are not eligible, and share offers that do not have a loyalty scheme have about 40% selling within a few months, and for those that are eligible that rate drops to below 10%.  After the bonus shares are issued and there is no incentive for retaining the shares, the selling rate for those who participated in the loyalty scheme is 38%.  And this shows that loyalty schemes work.  Really?  40% for the ineligible and without loyalty schemes versus 38% once the loyalty scheme expires is pretty much the same rate, in my book, and is an indicator of the same self-interested behaviour.  The best it can be said to achieve is a delay in the time taken to sell 49% of our electricity generation capacity to overseas interests.

And let's not beat about the bush - this is not really about asset sales, or paying back debt, or building new infrastructure, or mum and dad investors.  Nor are arguments about the timing of it.  This is about selling the control of our electricity generation capacity.

"Hail the dauntless pursuit of the pointless."

Verlaines - Way Out Where, 1993

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