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Standard and Poor's cuts South Canterbury's BB+ rating to 'Creditwatch negative' (Update 1)
Standard and Poor's has placed South Canterbury Finance's (SCF) already reduced BB+ credit rating on a formal review for a possible downgrade of one or more notches within three months unless it can reissue its prospectus and show its shareholder Allan Hubbard can raise fresh funds. (Adds comments from South Canterbury and Hubbard saying the delay in the prospectus was normal and Standard and Poor's concerns would be addressed soon.) "This rating action follows our concern that SCF's risk profile has increased since we lowered the ratings on the company on Aug. 13, 2009. A CreditWatch Negative listing by Standard & Poor's implies a one-in-two likelihood of the rating being lowered within the next three months," Standard and Poor's said. "Our concerns center on increasing pressure on liquidity; still-weak asset quality; and governance matters including, but not limited to, related party exposures," it said.
South Canterbury Finance told advisors on Friday it had withdrawn its prospectus while its audit for the financial year to June 30 was being completed and said it expected to produce a new prospectus once its results were out by the end of September. South Canterbury cannot raise fresh funds without a prospectus and has not been able to access funds since August 13 when it stopped allotting fresh funds to debentures. These funds are stuck in a trust. "The CreditWatch action reflects our view that, with no debenture prospectus in the public domain, SCF's funding flexibility and liquidity are undermined at the "˜BB+' rating level, at least in the short term," Standard & Poor's credit analyst Derryl D'silva said. "The ratings may be lowered by one or more notches should SCF's debenture prospectus remain out of the market on or soon after Sept. 30, 2009, or should the confluence of actual or potential liquidity concerns that affect the company cause us to consider that SCF's financial strength is no longer congruent with our "˜BB' category rating," said Mr. D'silva. "Negative ratings momentum could also occur if the company were to announce any new adverse developments that could affect its audited 2009 financial statements." Standard and Poor's said if SCF's credit profile deteriorated, evidence of Allan Hubbard's support would be required to keep the rating at "˜BB+'. "If support is not forthcoming, or is not sufficient to afford debenture- and bond-holders' confidence, it is likely the company will be immediately downgraded," it said. Meanwhile, South Canterbury issued a statement saying the delay in the audit and the new prospectus was normal and it would soon address Standard and Poor's concerns. "The Company is very determined to see the audit process completed as quickly as possible. This will enable us to be in a position to announce details of our restructuring and capital-raising plans to investors, and to address issues being raised by Standard & Poor's," Hubbard said in a statement. Here is the full S&P statement below
Standard & Poor's Ratings Services said today that it has placed its "˜BB+' long-term rating on New Zealand-based finance company, South Canterbury Finance Ltd. (SCF) on CreditWatch with negative implications. This rating action follows our concern that SCF's risk profile has increased since we lowered the ratings on the company on Aug. 13, 2009. A CreditWatch Negative listing by Standard & Poor's implies a one-in-two likelihood of the rating being lowered within the next three months. Our concerns center on increasing pressure on liquidity; still-weak asset quality; and governance matters including, but not limited to, related party exposures. Since its ratings were lowered, SCF has ceased allotting securities under its existing debenture prospectus (unrated by Standard & Poor's), provided market guidance of an increase to its unaudited net after-tax loss for fiscal 2009 to NZ$69 million, and had two of its four directors resign with pending replacements. These negative developments have occurred against a backdrop of a major restructuring and recapitalization initiative that SCF has said it will announce in coming weeks. "The CreditWatch action reflects our view that, with no debenture prospectus in the public domain, SCF's funding flexibility and liquidity are undermined at the "˜BB+' rating level, at least in the short term," Standard & Poor's credit analyst Derryl D'silva said. Technically, SCF does not have access to the new and reinvested debenture funds, which reside in a trust account. This increases pressure on SCF's funding and liquidity. Furthermore, SCF's liquidity levels are modest after the company's decision to shift its holdings of liquid assets from cash to higher-risk and higher-yield investments, and in related-party entities of uncertain credit-standing. Additionally, U.S. private placement (facility is unrated by Standard & Poor's) investors continue to review their funding support for SCF, which, if resulted in a requirement to repay the facility, has the potential to significantly exacerbate liquidity concerns and cause a downward revision of the rating by multiple notches, potentially into the "˜B' rating category. Should U.S. private placement investors continue their funding support for SCF, downward rating pressure is likely to be less severe. "The ratings may be lowered by one or more notches should SCF's debenture prospectus remain out of the market on or soon after Sept. 30, 2009, or should the confluence of actual or potential liquidity concerns that affect the company cause us to consider that SCF's financial strength is no longer congruent with our "˜BB' category rating," said Mr. D'silva. "Negative ratings momentum could also occur if the company were to announce any new adverse developments that could affect its audited 2009 financial statements." The "˜BB+' rating continues to reflect our view that SCF's primary shareholder, Mr. Allan Hubbard, will remain committed to providing timely support to SCF if required. If SCF's credit profile deteriorates, evidence of the shareholder's support would be required to keep the rating at "˜BB+'. If support is not forthcoming, or is not sufficient to afford debenture- and bond-holders confidence, it is likely the company will be immediately downgraded. The ratings could be taken off CreditWatch Negative within a matter of weeks if: · SCF is able to demonstrate its ability to re-access the debenture-investor market with no long-term negative effects impacting on its debenture profile; · Its audit and subsequent fiscal-2009 audited financial statements reveal no new material adverse findings concerning its financial strength; · It is able to source two or more highly qualified independent directors to help address weaknesses in SCF's financial strength profile and guide the company through a major restructure and recapitalization; and · More generally, Standard & Poor's gains greater confidence that the support of private placement investors and bankers as well as debenture investors will be retained. The CreditWatch could be longer lasting if Standard & Poor's has uncertainties regarding SCF's restructure and recapitalization plans after they are announced. Even so, Standard & Poor's expects the CreditWatch to be resolved in no more than 90 days. Even if SCF were able to satisfactorily address these rating pressures, at best"”after the CreditWatch is resolved"”it is likely the rating would be affirmed with a negative outlook, reflecting near-term pressures on SCF's financial profile, and medium-term uncertainty concerning restructuring and recapitalization initiatives. An alleviation of negative rating pressures is not likely until SCF can address liquidity, asset quality, and governance concerns.
Here is the full statement from South Canterbury below.
South Canterbury Finance Limited acknowledged today that rating agency Standard & Poor's had put the Company on negative credit watch. Chairman and principal shareholder Allan Hubbard says the change in status should quickly be resolved as it is a matter of timing arising principally from a delay in finalising the Company's audited accounts for the year to 30 June 2009. The Practice Review Board of the NZ Institute of Chartered Accountants has chosen this year to require a peer review of the company's auditors which has slowed the normal audit process. It is anticipated that the review and the audit will be complete by the end of September, if not before, allowing registration of a new prospectus, following which the Company will be able to allot new securities. "Since the global financial crisis, there is less tolerance shown by the rating agency over matters such as this," Mr Hubbard says. As previously announced, the Company had suspended the acceptance of subscriptions were suspended on 21 August 2009. Subscriptions received since then are being held in trust until the new prospectus is issued. The Company's trustee has been kept informed on these audit matters as well as progress regarding the restructuring and capital-raising process underway. Eligible depositors are reminded they remain covered by the Crown's retail guarantee for sums up to $1 million for investments maturing before 12 October 2010. "The Company is very determined to see the audit process completed as quickly as possible. This will enable us to be in a position to announce details of our restructuring and capital-raising plans to investors, and to address issues being raised by Standard & Poor's," says Mr Hubbard.
Its Ok, they have the
Its Ok, they have the rib spreaders out, they are going to crack the chest open and massage the heart. Apply liters of fresh blood and in most cases a full recovery follows well nearly a full recovery, that is if there is a heart. Do these guys have hearts they will be failing around inside to find there is no heart just a cavity.
if they are insolvent they
if they are insolvent they should front up and then at least the debenture holders will still be covered by the GG.no good dicking around like strategic till they have spent all the dough.
How did it ever get
How did it ever get this bad....how the hell did successive Govns allow this pile of manure to continue?
There seems to be a peculiar setup in NZ, let "buyer beware" where other countries supposedly have consumer protection, in NZ you are on your own it seems if scum buckets rip you off....and its not even once....they can reform companies, and/or come out of debt and do it again, and again...
@AS: Trouble with the GG
@AS: Trouble with the GG is those that took little risk and put their money in safe places are set to pay for those who stupidly put money into the finance companies, ie risked and lost....moral hazard and all that...
regards
<blockquote> Even if SCF were
You can't get much blunter than that. The canary looks dead, but we are still waiting for the death to be confirmed.
So who was responsible for granting the taxpayer guarantee?
I recall, back in 2004,
I recall, back in 2004, an elderly (retired) gentleman came to see me when I was an adviser for a large Risk and Investment company. He held Investment Bonds with this company, and had done so for quite a few years (he was another Adviser 's client, who had since left the industry) which were returning on average about 6% p/a from memory. He was waving a cut out newspaper ad at me - it was for Bridgecorp First Ranking Debentures. They were advertising near on 10% return (I think) and he was wanting to terminate his Investment Bonds with us and take his money to Bridgecorp. I stood to gain nothing financially from dissuading him to do so, but tried my hardest nonetheless, to no avail. I often think of him and wonder if he got out in time.
So what is it that drives people to chase the highest possible return? I remember back in those days there were so many different ads in all the papers, all advertising for new investors, all promising big returns. Well, the ads worked I guess. But who was checking up on where all those investor's deposits were actually going?
Stop the negativaty, the recession
Stop the negativaty, the recession is over.
Quickly buy yourself a dairy farm while you can still afford one, prices will go through the roof.
http://nz.biz.yahoo.com/090921/3/ep8y.html
Beggares belief they havent managed
Beggares belief they havent managed to sort out the issues standard and poors have been badgering them about for months on end. There appears to be an arrogance that they will do their own things in their own sweet time regardless.
Time to find a new CEO and wholesale change at the board as they wont grasp the fact that there is very little tolerence for finance companies. Its not the 1950s anymore and with all due respect to Mr Hubbard, who is on dialysis three times a week, it may be a very stong chairman needs brought in.
Edited by Bernard so dialysis fact could be checked
Here's more detail on Hubbard's kidney problem .
http://www.stuff.co.nz/the-press/business/christchurch-business/2820817/...
E K S Frmer I
E K S Frmer
I borrowed Selwyn's comment from another thread,I think the article you refer to is about banks.
# Selwyn Says:
September 21st, 2009 at 4:46 pm
Walter?
Just ask the 100 people how much money they think the banks made last year ($3.6B) and get that answer.
Then ask them how much they think the rest of the NZX 50 made ($2.8B).
Watch the look on their faces and you suddenly realise just how little they know about whats happen in the economy.
What you have to do first is give them a reason to want to learn and that's a mixture of a better vision for New Zealand and some scary data about what will happen if we don't do something NOW!
Read the following great quote
Read the following great quote somewhere (can't remember exactly where):
"The role of a rating agency is to go onto the field after the battle is over and shoot the wounded".
My, what a lot of
My, what a lot of dairy-related effluent here. Thanks to everyone on this site whose comments last week helped me make the right call.
@ E K S Frmer.
@ E K S Frmer. Good luck mate, your gonna need it.
Pardon my hayseed comprehension levels,
Pardon my hayseed comprehension levels, but do I take it correctly out of this SCF statement that they are effectively auditing the auditors at SCF?
Views as to whether the
Views as to whether the rescue of SCF by the government guarantee scheme will put a dint in the NZ$??? It a billion dollar plus loss on the books.........
Andy Depends on the chain
Andy
Depends on the chain reaction that gets set of, I think Hubbard has 50 mill in PGGW,who have money in NZFSU, who have been lent money by,PGC ,also NZFSU has money owed to PGGW about 20 mill. Rural portfolios have money in PGGW and NZFSU. SCF has second mortgages on Hubbards dairy empire. SFF have a lot of PGGW shares to sell as does Hubbard. If one goes they all go.
The SCF auditors are scared.
The SCF auditors are scared. If they sign off the accounts and something untowards happens to SCF with a Govt. Guarantee, they know the Treasury Dept. will come after them for compensation. This could be a large amount, enough to overwhelm the audit company.
AndrewJ: "SFF have a lot
AndrewJ: "SFF have a lot of PGGW shares to sell." Is that SFF or SCF?
No thats the shares SFF
No thats the shares SFF got in the settlement with PGGW over failure to come up with agreed money. Valuation at time was $1.28 now .70
Interesting that there has been
Interesting that there has been very little in the media about what this all could mean. Maybe they think if they don't report it, it won't come true.
I'm suprised that someone of
I'm suprised that someone of Hubbard's stature and experience got himself into this much trouble. In the end, I think he became over confident in the dairy sector and like many of us didn't anticipate the extent of the global recession in regard to it's effect on commodities. Now many of those SCF lent to , namely dairy farmers, are over extended and struggling to pay the bills.
Just goes to show you have to cut yourself alot more slack than a couple of dollars in milk solids if you are to make large commitment to dairying.
This all has a very
This all has a very Dalgety-Crown circa 1987 look about it now .... oh dear , the writing has been on the wall for a long time , and the auditors obviously cannot sign a 'going concern' statement. Is a large chunk of rural NZ set to be nationlised??
Dairy debt plumbs new depths
Dairy debt plumbs new depths
http://www.ruralnews.co.nz/Default.asp?task=article&subtask=show&item=18...
Chip I dont know much
Chip
I dont know much about dalgety-crown,can you inform me.
Hubbard appears to have been caught up in the classic lending trap and he is not alone
http://english.caijing.com.cn/2009-09-16/110251471.html
Even following small sections of
Even following small sections of the whole puzzle is difficult. AndrewJ is on the case. The rest of us would need a day to spare, and a heavy duty calculator.
Hopefully we will get half a page on this issue in The ChCh Press or ODT shortly. Those Southern Men.....
SteveL Woodford is failing to
SteveL
Woodford is failing to factor in the potential damage from falling asset values. The banks have to keep lending or farms will pour onto the market assets will collapse in value and the banks will Mark to market massive losses pay no tax for years and leave rural New Zealand in a mess. The farm loans from the bank have mainly gone towards inflating farm assets any withdrawal of funds will see one of the biggest bubbles in NZ history collapse and take NZ credit ratings with it. Any upward pressure on interest rates will exacerbate the problem. Its a lose lose scenario.
We are already facing a currency nightmare when the one hope we had of a low $ has been snatched from us by quantitative easing in the USA and the UK
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/621185...
All you need to know
All you need to know is this
plagiarized from Mr Xie
Recently,New Zealand Finance companies borrowed money and pumped it into asset markets. They essentially provided leverage for asset markets. When leverage was rising, asset inflation occurred, letting companies book profits that were many times greater than operating profits from core businesses. That gave them greater incentive to pursue asset appreciation rather than operating profitability. The Finance sector became a shadow banking system for financing asset speculation.
The rest is all down hill the specifics are not so important.
Correct AndrewJ; Woodford could be
Correct AndrewJ; Woodford could be failing to factor ........lots.
Heres is my simple spin on those numbers
Dairy borrowing at June 30 2009 of $28.6 billion
Assuming break even cashflow and capatalised debt. Interest only of course.
Simple interest.
Interest Rate 8%
My estimated dairy borrowing at June 30 2010 of $30.9b
His interest rate must be well under 2%, interesting twist of words but I reckon about $1.9b out
"If it is $28b now, my guess is it will only be $29b next year." Lincoln University economist Professor Keith Woodford believes.
Pardon me if I am wrong??!
No offence anyone.
SteveL have you heard JK
SteveL
have you heard JK Rowlings Harvard Commencement Speech
http://www.youtube.com/watch?v=nkREt4ZB-ck
Ouch! Sorry about that delet
Ouch! Sorry about that delet what you will ....
I also add that the sheep and beef increase of only 7% can largerly be attributed to a liqidation of capital stock due to drought and dairy expansion. Expect a large increase in sheep and beef borrowing as this sector recovers stock numbers on the ground.
Anyone know what the wine guys are going to tick up this year?
Horticultural borrowing up 14%....
http://www.hawkesbaytoday.co.nz/local/news/leading-bay-grower-quits/3904...
Well John Key on his
Well John Key on his way to New York, so will have to leave Bill English to sort it out.
stevel. The $28.6 billion dairy
stevel.
The $28.6 billion dairy debt at the end of June is only that for the institutions the RBNZ regularly surveys (monthly or annual). Family and other unsurveyed sources of debt exist and have at times in the past been significant. Dairy debt is now 64% of Ag debt, and that increased $1.5 billion in the 3 months to the end of July. So, by the end of September dairy debt will have increased $1 billion over June, and it would already have been $30 billion at June including unsurveyed sources.
How do these banks expect
How do these banks expect to be repaid all of this money they are lending to farms if the industry is so deeply in trouble?
Lara. I think the penny
Lara.
I think the penny has dropped for those financing NZ agriculture i.e. the debt is so excessive much of it can never be repaid - not from any realistic combination of payout and interest rates. The value of defaults is going to be very high, and good payouts or low interest rates are going to make very little difference.
Meanwhile, delusion still appears to reign at Fonterra, Treasury, MAF, SCF, PGGW, etc.
@veedub: and what about this
@veedub: and what about this housing "boom", the still semi-inflated bubble? but then I talk to most ppl and Im negative as "all I look at" is/are the problems...(its actually in my PDP)...my answer is yes to an extent I do, but once I have identified them either I solve them or push it "up" for those who can or whos job it is to make a decision on them...so the problem(s) generally never materialise...yet Im supposedto be "pro-active"....uh huh....anyway...carry on taking prozac NZ....dont worry about "bad" things they never happen...
@Lara: The agents get their commission...so they are happy....then its pointless having $ in a vault, so they have to pump it out to somewhere to get a return...I take it as a sign of deflation situation in credit...ie there is a flood of credit (hedge funds etc etc) with no one taking it up...so they are lending it anywhere they can...
@Andy H. The first of many I suspect...whats the total NZ liability? many Billions? (6?+ I forget) covering the banks made sense IMHO, in hindsight covering the financial industry as well was a mistake we the tax payer are going to get mightly hurt over I suspect (pretty much sure of). That means taxes have to rise, or the Govn will have to borrow to cover it, or both...and that points to a credit downgrade for NZ. Now if it was me instaed of Key, I'd announce tomorrow that the GG is now null and void for anyone with less than AA and take the fallout now....I dont know if that can be done legally.....but I susect otherwise "sensible" management teams in the financial sector will just declare themselves bankrupt, it avoids pain and legal liabilities on their part, and being a bunch of dodgy so and so's its going to be expected...The Govn can and should take the can for this one...successive Govn's failed to regulate properly so its coming back to haunt them...
regards
@PeterR: Wow! somewhat negative....but I
@PeterR: Wow! somewhat negative....but I do get the impression we are building up problems for the future by making the easy decisons today hoping (read gambling) the economy will pick up and take the crunch away...I suppose worst case I'd expect firesales. All this makes no sense to me, it does not seem rational, more like desperate...a collactive madness.....I read a piece on ppl getting into debt, at some point they reach a time when they realise they can never repay the debt they have...then just go mad spending....in for a penny in for a pount effect....it feels something like that....Fontera for instance....why not risk what little is left on the flip of a coin? its about bankrupt anyway....kill or cure.
regards
@Steven - renege on the
@Steven - renege on the GG? Hmmm the government solicitors would never be out of court ever again. As I posted before though there is not much they can do about it now - if they announced tomorrow that everything AA would now not be insured the following day every non AA institution would collapse. Government guarantees are meant to be seen but not used.
One positive outcome if this 'agricultural lending complex', of which SCF is a significant part, does come tumbling down - there would be a pretty severe re-rating of the NZ$.
One senses that even perma-bull Lara is beginning to understand that 'Wellington - we have a problem'. When that happens you know things are serious..........
The Institute of Chartered Accountants
The Institute of Chartered Accountants peer reviewed our company this year too. Our audit fee almost tripled as a result. And what should have taken at best 3 weeks to complete took our auditors close to 3 months. This is absurd! ICANZ have placed SCF in a perilous situation only adding to its woes. Its been the same every time. Peer review or investigation by Securities Commission ...Instruct Finance Coy to place allotted securities in trust account, notify investors and thereby Credit Rating agency...Credit Downgrade. Collapse. It's not surprising that in each of the past 3 years these failures have all occured about 3 months after year end. It's time Kiwis asked "what's going on". When you have old school like Ron Brierly coming out and describing new accunting standards as "exotic" and "exaserbating the Credit Crisis" you need to ask the question "what impact has IFRS had on the collapse" and has the Accounting Standards Board got it right? cheers
This from Moody's on the
This from Moody's on the US housing market:
Moody's: Some Home Price Won't Rebound Until 2030
Posted: September 19, 2009 at 8:07 am
Moody's (MCO) forecasts that some home prices may not return to their pre-recession levels until 2030. This means that hundreds of thousands of Americans may find it impossible to sell their houses without making payments to their banks to cover underwater home loans.
MarketWatch reports that a new Moody' housing forecasts says that "It will take more than a decade to completely recover from the 40% peak-to-trough decline in national home prices."
In many parts of the coun try, which include large states like New York and Illinois, home prices will not rebound to 2006 levels until 2018 to 2022. In the states where prices have fallen the most, particularly California and Florida, values may not rebound until 2024,
The prediction, if correct, means that Baby Boomers and even some of their older children may not be able to sell home to help finance retirements. The use of homes to get equity loans will be out of the question. Some homeowners will have to give banks money to get out from under their houses, def ault because they cannot afford to sell their homes at a loss, or stay in homes that they no longer need.
The housing crisis, it seems, still has at least fifteen years to go and for some older Americans that is a lifetime.
Douglas A. McIntyre
Taxpayer - it seems Hubbard
Taxpayer - it seems Hubbard (unsurprisingly perhaps) agees with you - he apparently is pointing the finger at the auditors this morning.
I suspect he is going to have to raid his piggy bank............
Anyone for debt. You can
Anyone for debt. You can have that with promised misery arriving soon. The latest banking media advertising fishing effort is well underway. The suckers are being landed and all will soon face Bollard's rising rates which will be chasing the market rates. This will happen because it must happen. Meanwhile the immigration property porking policy pushed by the pricks in power is well underway. This is the age old Kiwi govt way to economic and politicial salvation. Don't try to develop a balanced economy devoid of bubbles and stupidity because the options to harvest massive capital tax free gains don't exist in that environment. By all means have some inquiries and debates to keep the peasants busy arguing but DON"T stop the party.
I propose that Wally, Raf,
I propose that Wally, Raf, Steps, Matt in Auck, Rob of the North, Harriet and a few others form a political party - you guys "get" the picture and are truly on to it. I bet having your own snouts in the trough wouldn't change you either!
Yes but .. all this
Yes but .. all this debt is essentially widely distributed, so risk of default is not uniform across any particular market sector. I believe that is the reason that we have not seen a significant decline across in any particular market as yet (be it rural, commercial or residential). Do we believe what happened in the residential market will be any different to these other sectors?
As I have been reading (and learned) from many of the posters on here over the last few weeks, there are significant numbers of farmers with very little debt (or none at all). For a wholesale decline in rural (or any other market for that matter), we would have to assume that the fallout from a few would be significant enough to take out the entire market.
Sod that veedub. I'm staying
Sod that veedub. I'm staying out here where I can **** into the tent.
Wally: <blockquote> I’m staying out
Wally:
I agree you don't want to get into that tent, but I am with veedub. The only way out is for someone to set up a completely new tent.
It appears the administrators are
It appears the administrators are are messing the clients around by playing with the edit function again.
Matt S: You are right
Matt S:
You are right about the debt being widely distributed:
http://www.agprodecon.org/images/IPIMRisk/IPIMRiskFigure11.gif
but there are more than enough in trouble to deflate asset values (a required change for a viable industry):
taxpayer says: "you need to
taxpayer says: "you need to ask the question "what impact has IFRS had on the collapse" and has the Accounting Standards Board got it right?
I've wondered that many times over the 12 months. I am the accoutant for a manufacturing company which has a pretty basic balance sheet with no fancy financial arrangements. Profits have dived over the past two years since we have transitioned to IFRS. Every IFRS adjustment has been downward from simple things like additional provisions for sick leave and long service leave even though they haven't been incurred through to Mark to Market valuations of Interest Rate swaps. These effectively are deferring a considerable amount of income tax as well.
I also had to smile this morning when I received the latest NZICA journal in the mail. Pages 12 & 13 introduce four of the new memebers to the NZICA board. The fourth one is Craig Norgate.
Is the edit function not
Is the edit function not working?
Cheers, Alex
@AndrewJ thanks for the link
@AndrewJ
thanks for the link to Rowlands Commencement Speech at Harvard University. How much enjoyment and insight! (watch all 3 parts).
veedub: Much better to have
veedub: Much better to have you all here intelligently debating, throwing out anecdotes and analysis than in the quagmire of politics. This site is one of the pollies' main sources of ideas and "taking the temperature".
AndrewJ: Your earlier summary appears to suggest the dairy bubble has been inflated by the methane of leverage on several diferent layers of operation: farm, land and corporate. so what happens when she blows? Who comes in to pick up the ruins? The Chinese? Russians? The Govt, if it can afford it? Is SCF the canary for the industry? (JK Rowling's speech is brilliant _ thanks)
Taxpayer: Is bringing in Securities Commission the institute of accountants' usual mode of action if there is no peer review? Why do they institute a peer review: is it a regular thing or in response to situations?
Lara: Good luck, you're going to need it.
Alex. It tells you how
Alex.
It tells you how much time you have left to edit, but overstates that time by at least a minute, and then tells you when saving that you have exceeded your time and ignores your edit.
Wins friends every time.
This is a telling reminder
This is a telling reminder of the problems facing the UK
http://www.telegraph.co.uk/finance/economics/6216138/Markets-in-Governme...
veedub - "a few others
veedub - "a few others form a political party", see:
http://www.interest.co.nz/ratesblog/index.php/2009/09/10/rbnzs-bollard-h...
Such an idea is not without merit. Any comments on the focus/manifesto, or ideas for a name?
Cheers, Les.
You're onto it Les -
You're onto it Les - you're in the party as well! How about "Save NZ" for a name? :-) Seriously, let's have think about this.
Les Rudd. I certainly think
Les Rudd.
I certainly think it is time to start thinking about forming new political parties. I like the idea of being involved with political process - but wouldn't want to be near any political party once it got into parliament - that institution immediately corrupts them. And party members as well.
veedub : Too late ,
veedub : Too late , our Aussie banks are trademarking " Enslave NZ " . Nice try , but .
veedub, PeterR - I've already
veedub, PeterR - I've already met with people to discuss making this a reality. Whether it does or not, we shall see - it's early days. We have become fed up wasting our time lobbying the two major blocks to re-balance the economy. One hope I have is that once formed a good few influencial people will want to get involved, and, some existing MP's will also convert.
PeterR - One thing we have discussed is taking donations anonymously into a trust (we have consider one that we might be able to use) and the trustees not letting on to the party operators (polys) where the money has come from. In other words trying to ensure policy can't be bought. Policy would be formulated openly and defined, and if people want to support it, fine - but there'd be no chance of buying favour.
Cheers, Les.
Well if you do count
Well if you do count me in.. but do it before JK abolishes MMP...
Alex - edit function still
Alex - edit function still playing up. I noticed Roger T had posted and wanted to say:
Roger - nice one, ha, ha, you can be Minister for LOL.
But 'it' said I didn't have permission, and that was at about 2mins 40sec'ish. Plus I could not then make another comment until the fives mins was up.
Either you have a problem with the edit fuction, or the black helicopter is trying to doing an EW attack.
Les, veedub: I am open
Les, veedub:
I am open to being involved, but have a lot of experience at how the party political process is corrupted.
There soon develops a great push to get onto the funding gravy train from having MPs. At that point ideas and policy become entirely driven by winning votes - the process normally being controlled by marketing/spin doctors.
The party is them into selling a set of solutions (a brand) rather than evolving them. You are then defending the status quo, have stopped thinking, and are part of the problem.
There are possible ways around the problem, but not within the existing modern political party paradigm.
" Snouts in the Trough
" Snouts in the Trough " Party . We'll be brazingly upfront that we're gonna rort the system to line our own pockets . Bare-faced honesty . No recrimminations sometime down the track when it is revealed that we are a bunch of drunken , egotistical , lecherous , greedy oafs . Bing all that into the first paragraph of our manifesto , so we can focus more on the lechering , and less on the covering of our sad arses .
Matt S, PeterR - noted,
Matt S, PeterR - noted, good, and thanks for those thoughts Peter. If the rubber hits the road proper it sounds like you could make some useful inputs in the ethics, keeping it real space. Cheers, Les.
Les Rudd. Let me know
Les Rudd.
Let me know if or when you get there.
What does NZ need to
What does NZ need to be independent from?
http://www.ukip.org/
NZIP?
Peter R says: There are
Peter R says: There are possible ways around the problem, but not within the existing modern political party paradigm.
Peter I think a new party that tries to shed the negatives of the current ones might consider having a policy where MPs have a party life of just 9 years in total and only 6 years max in government. The sense of entitlement might get knocked back a bit and you will have constant renewal as you do with a board of directors.
Many of our current politicians look and act as if they are a little past their used by date and hence status quo becomes the order of the day. Bright fresh thinking is either not encouraged or not allowed.
The time limit might also get a little more urgency into the process. Months are nothing in politics but businesses (and I suspect sometimes people) die in that time as a result of slow decision making.
I like it , Les
I like it , Les : New Z.I.P. ( New Zealand Independent Party ) . That has got pizzazz : New Zip !
Les, where to from here.
Les, where to from here.
I still hold out hope that a major party will fill the common sense void but if not then what alternative is left. As I have said I am not interested in left or right dogma.
I want the right policies where ever they come from that will drive an Economic Sovereignty agenda. Enslaved New Zealand is just a fact of life but what we do about it is now the issue. Value NZ Party might work. It's says autonomy but it's also about values we have lost and want to regain. Not really strong enough. New Zealand First stole the best name and pooped on it.
Actually New ZIP might work
Actually New ZIP might work
ACTualy, aren't you suggesting reinventing
ACTualy, aren't you suggesting reinventing the wheel? Didn't Douglas and Quigley ( Left and Right) have a go at this 20 years ago?
The Aussies had a go through Don Chip's "Australian Democrats" ( L&R again) and have dissapeared into oblivion. But maybe it's time to regenerate ACT rather than start afresh? Just a thought.
Selwyn. How about taking your
Selwyn.
How about taking your idea of knocking parliamentary conceit further - shift the emphasis very firmly to party members working with the public. Rotate members into the less important (but highly perked) roles of MP for 1 year periods - the key work is still after all being done by party members working with the public and not in the debating chamber. You would need to have a long party list, and would upset MP's perceptions of themselves, but win a lot of friends out in the real world. You would expect parliamentary reform to be quickly put on the agenda, but should already be well ahead in thinking about possible changes.
The idea is more advanced and a little more complex than I suggest, but at this point I am just trying to stretch changing a paradigm a little further.
Harriet. <blockquote> ACTualy, aren’t you
Harriet.
The polar opposite. ACT provides a model of what not to do - how to take an interested membership with good intentions and fail by concentrating power in the hands of ex Labour Party hacks working to an outdated political paradigm of central control.
Harriet : ACT are stale
Harriet : ACT are stale and tired . Nowhere to hide . They need new zip !
I know, I know, PeterR
I know, I know, PeterR , Roger! But sometimes a backdoor listing can be easier than all the rigmarole invloved in a new listing. At least you get shareholder list to start off with.
Selwyn - "where to from
Selwyn - "where to from here?", see:
http://www.interest.co.nz/ratesblog/index.php/2009/09/10/rbnzs-bollard-h...
Third para from bottom of the comment. The right set of questions and information campaign would be fundamental to supporting change, either via a new party, or allowing what we have now to see how they CAN change policy, if they so wish. If they don't, move over, NZIP (or whatever) here we come. My hope is that all would see this is not a left or right issue, and so both might adopt what is developed/mandated, or close to it. Then the left and right could court us for votes with other wonderful ideas of theirs, like how many wasteful government departments they can shut down or cut-back, or how wiggley my light bulbs have to be, or how long I can be in the shower (blast, I'm giving them ideas here now - sorry.)
As for NZIP, I'd been thinking of that recently while in UK after speaking to a friend who is a member of UKIP. However, I disregarded it because UKIP is specifically about getting UK out of Europe. (And they are doing a 'Save the British Pub' campaign - so they'd get my vote, for sure.) My question was however, what do we need to get out of, independent from? (C'mon this is bread on the water ....) Anyway, another recent traveler to UK came back with the same idea and suggested NZIP, off-blog, so I thought I'd float it. (There you go JW.) The name is quite important and needs to dove-tail with the vision, etc, etc, as per past discussions and your post Selwyn on the blog linked above.
So, anyone anymore thoughts?
PS - just thought of a cracking slogan for NZIP, cop this, "Vote NZIP to get NZ out of the ...." Maybe not, will have to get it checked out by some PR folks.
Harriet back door listings come
Harriet back door listings come with dead or non performing assets, a bunch of shareholder issues and a re-branding requirement.
"¢ Act and NZ First are polluted brands (IMO) and no one has told the participants about their used by date being well and truly up.
"¢ Greens are always genuine and based on what I heard at the recent banking enquiry and the select committee in 2007 on monetary policy they actually share a lot of common ground with the views expressed here.
"¢ National has found themselves in power and are now just trying to work out what they should be doing with that opportunity. I hope they can learn quickly but after a year my patience are getting stretched!!
"¢ United Futures is ?? and Jim is The Progressive Party.
"¢ Labour is at the moment (in my mind at least) an unknown quantity. Based on what I heard at their conference they want serious changes as well and many share our collective views. The presentation I did (Grow Up To Business) really seemed to resonate. It's actually not a big step for Labour supporters to go from wanting higher wages and better social infrastructure to saying "yeah but how" and then "what's prevented it for the last 30 years even when they are in power" to "let's get in behind building a productive self determining economy"
I feel like a sellout saying this but I was really impressed with the humble approach they had and a real desire to build solid strategy. I heard a number saying "what's the point of getting into power if you don't know what to do when you get there". They are rebuilding and that's an opportunity for NZIP policies.
Few have realized just what a big step Labour has already made in offering to support CGT and ETS with National. They are actually saying the issues are bigger than party politics and we know they are right. All that said Harriet you get to ride on a big bus but not steer it. So you have to know the destination first before anyone should get on.
Thx, Selwyn. I've actually have
Thx, Selwyn. I've actually have taken the time to read you PowerPoint. New Zealand need men with your passion and belief.
Labor? Who knows. Isn't that what the wilderness is all about? Finding yourself. ( see Andrewj's link to JK Rowling - Harvard)
I've always thought that David Cunliffe was the 'man in waiting', but maybe Phil has a chance at glory here. Time will tell.
Harriet all I can say
Harriet all I can say is they have the raw talent. No idea how they will align that talent but that will be critical. I know enough about politics to know that what works in business doesn't translate to the political world.
Thanks for compliment but I am one of many thinking about how we fix this country. Ideas are cheap, it's getting them into policy and then law that matters.
Selwyn - "I feel like
Selwyn - "I feel like a sellout saying this but I was really impressed with the humble approach they had and a real desire to build solid strategy." I've met a good few NZ polys, most are nice people as individuals and passionate about their job. Humility is always attractive. However, whereas a humble young or wounded leopard might be able to change some of it's spots (graft on a few new ideas simply as components) could it change it's DNA? Strongly interwoven in Labour's DNA is a tendency for big government/state (just look over your shoulder to their 9 years in power); central planning; 'picking winners'; intervention; reduction of choice (anti-pluralism) and most importantly, an over reliance on 'Classic Economic' theory, so inappropriate to a small, open trading nation. So can they change their DNA, that is their thinking and economic development philosophy? I doubt it, and while it's pleasing you got some encouragement from them, as I look through your preso again and the ideas you listed, I summarised them in my comment here:
http://www.interest.co.nz/ratesblog/index.php/2009/09/10/rbnzs-bollard-h...
I can see how they might grasp at some that fit with shades of their DNA, for example, 1) a bias to hi-tech, 2) create national heroes of entrepreneurs (give them more support etc) and 3) encourage any possible moves in farming into higher yielding specialist products.
Looking at these in a little more detail, 1) isn't it simply about hi-value, hi-growth productive enterprise, whether it's hi-tech doesn't matter, but having it there might give a job or two to civils servants (or their nominees) to pick winners discrimating between what is hi or lo tech. I could name few firms around ChCh who I know have been dissed as lo-tech under the last Labour government and so did not receive the kind of grant support (favour) enjoyed (and wasted) by those deemed hi-tech by some whizz kid civil servants, and yet they had demonstrated hi-value, good growth and could have done more, had they been 'picked'. Or, had they simply enjoyed a level playing field in terms of the negative effects of NZ's warped taxation and monetary policy, and they'd have done even better had they been able to re-invest more of their revenue in their 'winning behaviours' - that allowed them to pay tax in the first place. (I like - Get investment flowing into productive businesses - Requires tax incentives. I hope it could be for any business, not just those deemed hi-tech?)
2) Why? Leveling the playing field in terms of the negative effects of NZ's warped taxation and monetary policy, and providing pluralistic tax incentives for investing in 'winning behaviours', should be enough support for any entrepeneur. The market would then provide the remaining support.
3) Central planning. Instead level the playing field, pluralistic tax incentives for investing in 'winning behaviours' and let ag. producers do their thing they way they know how - don't let government meddle in their business.
Which leads me to the 'I' in NZIP, that is, what do we want to be independent from? What we need to be independent from is the failing and failed economic and political ideologies that oscillate from left to right, while all the time NZ sinks - in a sea of debt and lost opportunity. At the heart of NZIP needs to be rejection of the left v. right dogma and reliance on 'Classic Economic' theories, so inappropriate to a small, open trading nation. IMO no existing party, including Labour, has the capability for the required DNA transplant to allow this happen, in a timely manner.
PeterR - Given NZIP's purpose and to avoid some of the pitfalls you point out, NZIP could be created to fulfil it's purpose and then disband after X terms in a government, or Y years after inception. That is, no career poly's trying to rack up free air travel 'rights' (it was sickening listening to that bs) and when it's all over and the change has been made and bedded in after X terms, off they pootle to the golf course, commerce of join another party, OR, maybe re-join the party they originally came from. Perhaps limiting the life of the 'thing' might help get people involved, for the right reasons, maybe a few existing poly's jumping ship - it has been known has it not.
Les - 9.16am. Some good
Les - 9.16am.
Some good stuff, but it is easier to avoid those pitfalls than you suggest if you design your party from the start around members rather than polys.
Imagine a general membership of 5,000 of which 1,000 are also party members of NZIP. The other 4,000 general members can be party members with other political parties or have no political party membership.
Assume NZIP has polys who take the opportunities the role presents and disappoint their party members. Oh dear. There are still 5,000 general members, but soon NewNZIP has 700 party members and NZIP only 300. And all it took was a better poly offer and some database changes.
A very different paradigm, and not one many existing polys would tolerate or enjoy. Tough - it is not about them but polys delivering what their members want.
Les says: Strongly interwoven in
Les says: Strongly interwoven in Labour's DNA is a tendency for big government, central planning; "˜picking winners'; intervention; reduction of choice (anti-pluralism) and most importantly, an over reliance on "˜Classic Economic' theory, so inappropriate to a small, open trading nation.
Actually Les I support intervention as in the "dollar" right now. We are watching property and FX speculators destroy our exporters, just dumb. I personally think it's impossible to address all our ideas (well what I thought where NZIP ideas) without taking a stronger hand in guiding the economy particularly in things like saving, monetary policy, using tax to stimulate good activity and discourage bad. I think that's some sort of a pick at winners. I think we agree though"¦ as you are saying don't pick winners to a granular level rather leave it at policy settings"¦yes?
Anyway I'm not here to defend Labour or its record. We all need to hear from Labour about where it thinks it's going from here.
Les when I use Hi Tech it is interchangeable with High Vale or Elaborately Transformed, so we agree on that one. What I am really saying is NOT commodity.
You seem to go on to diss Hi-Tech however and I think that's a mistake. In an energy short world weightless exports will be key for a country so far from end markets. So I still say Hi Tech has a very important place in its own right even with the associated risks.
Les said: Leveling the playing field in terms of the negative effects of NZ's warped taxation and monetary policy, and providing pluralistic tax incentives for investing in "˜winning behaviors', should be enough support for any entrepreneur. The market would then provide the remaining support.
I don't agree Les and it's too slow to have an impact on GDP growth which is the goal. We have a some strategic challenges in a small market like New Zealand where risk capital is a % of % of % of an investors' funds. Guess what that means, it's a buyer's market and the entrepreneurs go off shore for capital as they do today.
Have a look at the AIM model in UK. They use tax incentives to get money flowing into the risk end of the market and that's what we should do at some level. It is at least successful in getting the money into the market.
Lots of things have to change in this areas Les and the ones you have pointed to are among them. I claim expert knowledge in this area having done it and lived it for so many years and the challenges are serious and risk of them leaving (or not arriving is huge). When Taiwan decided to go into semiconductor manufacturing they had no background or expertise at all and they just did it and are now world leaders. We have a background understanding of entrepreneurs but we need a national strategy to make the value they create stick here.
Central Planning?? Are we better off for having privatized Telecom or worse off as a Nation? Is our Power Generation and reticulation and infrastructure better off or worse off for the SOE structure? Is the cost cheaper or more expensive that it would have been if left alone. I think we will agree on those answers so let's not get bogged down on the how but the need for the right outcomes. This is what i mean by ignore left and righ dogma.
If my goal is to build a tradable economy that bennifits New Zealanders then I don't want to have power generation assets revalued every year and then pay a new premium for that. All it does is makes sure that our cost of generation is the same as every other country in the world and we have no competitive advantage as a nation on that level. Worse the shares (post a listing) will quickly be owned off shore.
Assets that have monopolistic characteristic belong in state ownership for that reason. Theresa Gattung got her bonuses by under investing to the point National has to come along with a Broad Band promise to voters to fix it. Ironic isn't it.
My Goal is Economic Sovereignty and my desired policies will always align with that outcome weather it looks like Nat's or Labour policies. I want to privatise NZTE, but I don't see anyone lining up to list that but it could be a tender process to run it and I would line up in a heartbeat. So much potential if it was privatised.
Selwyn - this is useful,
Selwyn - this is useful, it seems to be about definitions and context difference:
"as you are saying don't pick winners to a granular level rather leave it at policy settings"¦yes?" Indeed, in my book not favouring types of firms, eg. defined hi-tech or however say, and not favouring particular sectors, as per Labour's GIF strategy which was biased toward ICT, Bio-tech and Creatives. That to me is intervention too far. Rather leave it general pluralistic policy.
"intervention as in the "dollar" - this kind of intervention is not what I was thinking of in the context of macro economic policy. To me this kind of intervention is an operational function, of RBNZ. But while we are on this subject, we'd not be needing such intervention if we were doing, from your preso:
Stop unproductive property speculation - CGT or ring fence losses against PAYE?
Adopt a monetary policy that gives stability to exporters to make long term investments - Singapore would be a good reference point
Progressively introduce compulsory superannuation - a must for regaining economic sovereignty, stimulates our flagging capital markets, lifts the value of our companies.
Vary contributions to superannuation according to inflationary conditions.
"You seem to go on to diss Hi-Tech" No, I was dissing policy and policy implementation that under-values the contribution of other types of productive enterprise and sectors that make up the wider export mix, that is, wool, wood, whey, wine, widgets, washing-machines, wirelesses, websites and Wetas. You make good points about non-property speculators subsidising property speculators, I think the same argument can be made in favour of those productive enterprises that pay tax but are not granted discretionary government support because of biased interventional policy like GIF and the implementation thereof. This is what I mean by central planning. Can Labour stop doing this?
"Have a look at the AIM model in UK. They use tax incentives...." Agree, and with your preamble, hence the proposal to tax credit 3rd party funds going into productive enterprise - which would be defined by said enterprise using the funding to support internal investment in 'winning behaviours'. (An AIM model here would be good to look at though.)
"We have a background understanding of entrepreneurs but we need a national strategy to make the value they create stick here." Hear what you say, level the playing field and do the 'winning behaviour' incentives and they'll want to stay here and grow from here. Remember what the very, very, very late introduction of the R&D tax credit encouraged, and what it's removal has discouraged... (Other countries get this to work, why couldn't we?)
"Assets that have monopolistic characteristic belong in state ownership for that reason." Agree, they just need managing well, and that could be done, even if in public ownership. This is what I meant by "over reliance on "˜Classic Economic' theory, so inappropriate to a small, open trading nation." That is, a dogmatic assertion that privatisation is the right way to run ALL such assets, services, because the likes of UK, US have done it so well - where's m' tin o' Tui gone.
NZTE, no comment.
Quoting from my book review of, The Origin of Wealth - Evolution, Complexity, and the Radical Remaking of Economics - Eric D. Beinhocker, 2006, Harvard Business School Press.
"Beinhocker rounds off the work with a final chapter called, 'Politics and Policy "“ The End of Left versus Right' that includes a very interesting section entitled 'Left-wing Utopias and Free Market Fantasies'. It's far from a promotion of Tony Blair's 'The Third Way' and therefore not simply about gravitation toward centre politics in the first world. From a complexity point of view, the critique of the left is quite obvious "“ you cannot centrally plan evolution. (Unless your name is God perhaps!) For the right, free markets are not as free, fair and efficient as theory predicts and so dogmatic assertions of 'leave it to the markets' are as flawed as central planning. Rather the role of the state is to create an institutional framework that supports the evolutionary mechanisms that underpin markets, striking a balance between cooperation and competition while best shaping their character to serve the needs of society."
Ours, NZIP's, whoever's, aim needs to be - "to create an institutional framework that supports the evolutionary mechanisms that underpin markets, striking a balance between cooperation and competition while best shaping their character to serve the needs of society."
What we have now does not, and that is not because Labour spent a lot of useful effort addressing this in their 9 years - bless em'. Likewise it doesn't look like the Nats are doing anything but maintaining the status quo - bless em'.
Full book review* available here:
http://www.mea.org.nz/document.ashx?id=637
Also includes a review of, Culture and Prosperity: the truth about markets "“ why some nations are rich but most remain poor, John Kay, 2003, Harper Business. Where NZ is likened to Argentina as a country once rich but now becoming poor.
It's not funny that, is it.
PeterR - noted, thanks for that.
* Also includes link to a video of a Royal Society lecture by Professor Paul Callaghan, of Victoria University, called 'Beyond the Farm and Theme Park'. (Worth a watch folks.)
Guys, borrowings for investment purposes
Guys, borrowings for investment purposes offer interest deductibility on equities or property. The discussion of ring fencing is attacking symptoms not causes. The distortion has its roots in the imbalance of the tax treatment on the returns, thereby biasing the investment in the first place.
If that bias is towards (what in the absence of the bias) would be poorly performing investments the economy as a whole under performs. Is anyone arguing that the NZ economy has performed say in relation to the OECD average?
If we have not performed against that benchmark, it follows that we are either stupid or inclined to stupid behaviour as a result of other biases.
We know what they, we know why change is being resisted. My fear is we either do nothing or we aim at symptoms (ring fencing) and claim it all fixed.
John - "The distortion has
John - "The distortion has its roots in the imbalance of the tax treatment on the returns, thereby biasing the investment in the first place." You are right, it's needs to be CGT (except on family homes) no half measures.
The distortion is not only
The distortion is not only in the tax treatment of the investment.
Ponder this:
The distortion in house prices, hence the inflated capital gain (which is the investment return) coupled with the easy availability of capital to initially invest (enabling the investment in the first place) stems from the banks.
A couple of stories to note:
http://www.marketwatch.com/story/hong-kong-central-banker-sounds-home-lo...
http://www.marketwatch.com/story/hong-kong-goes-into-speculative-overdri...
Hope we can count on your new party to address that cause?
Chairman - yes, to properly
Chairman - yes, to properly level the playing field (rebalance structure of the economy) we need an effective money/credit volume control of some sort as well, see my comment 3.00pm today and:
http://www.interest.co.nz/ratesblog/index.php/2009/07/16/opinion-why-the...
Changing subject, when I was in UK I recall seeing a thread where you were advocating govt. get involed in exporting, or something(?) and recall also Mark H was pushing back on that. I think I would too, if I had the time. Anyway am interested, what was it about please?
Cheers, Les.
Les – a sustainable alternative
Les "“ a sustainable alternative that will see our overall tax burden reduced while increasing market competition, investor confidence, offshore return, and so much more...
The government's ability to address our current problems is largely constrained by its shortfall in revenue, hence government needs to utilise its position to broaden its revenue streams.
Simply put, the government needs new revenue streams (preferably sourced offshore) so they don't have to tax us so hard.
Wouldn't it be great if government could become self-funded?
Moreover, not only is there a need for government to act but it also produces a prime opportunity to correct some of the economic imbalances we face.
Further government market participation is what is needed and it can produce many benefits.
Although export markets are weak, in some areas demand has increased. New and booming sectors along with new markets could be identified with the public given the opportunity to get onboard. Bulk water export is one sector that has huge potential.
Government involvement in new export ventures will help to stimulate the local economy (create new jobs etc...) improve investor confidence, market competition, and the ease to which invest, thus increasing overall accessibility to local capital, giving not only the government but also mum and dad investors the opportunity to generate an offshore return.
This new offshore return will broaden and increase the government's revenue streams while sustainably offsetting tax cuts here at home.
Furthermore, it improves our balance of payments.
Additionally, another advantage of proactive government is that we can utilise and capitalise on its overall flexibility by enhancing the structural set up and service model of the enterprise supplied. Locally, providing a public service model thereby reducing inflationary pressures and improving our overall international competitiveness. Internationally, our sights can be set on maximising gains.
While there is merit in reforming the tax system, we seem to be ignoring the obvious; it would far more effective if we also broaden the government's revenue streams as well.
Chairman - it all sounds
Chairman - it all sounds a bit too 'think big' and centrally planned for my liking. Was reading this yesterday:
Fran O'Sullivan: Pressure on Fonterra to lift its game
http://www.nzherald.co.nz/business/news/article.cfm?c_id=1501241&objecti...
"Behind scenes Cabinet ministers are scathing over the clear fact that Fonterra has not lived up to the promises made when two fiercely competing dairy companies, Kiwi Co-op and the NZ Dairy Group, were merged with the NZ Dairy Board into a mega co-op in 2001. The over-blown rhetoric (Fonterra would be NZ's Nokia, or morph into a Nestle-style food giant) has long been buried, with the claim it would grow revenue by 15 per cent annually to reach $30 billion by 2011. At best Fonterra has morphed into a 21st-century style (value-added) commodity trader - where high-value ingredients like clear proteins are sold to industry players like Nestle to use in their own branded products - on top of its traditional milk powder trade base; rather than a food giant with its own clearly defined house of brands.
Behind scenes ministers are asking the 'What if?" questions. "What if" Fonterra had achieved its promise? Would the NZ economy have slipped so far down the OECD rankings if the mega-company had performed to expectations. "How can" NZ close the gap with Australia if Fonterra (which after all was a creature of statute) is allowed to continue to choose its own destiny? And why are the meat and wool sectors are under-performing? Hard questions that need to be asked."
My view is, if govt. did the stuff the likes of NZMEA, PEC advocate to help rebalance the economy, productive enterprise and exporters could grow and thrive, and with it revenue and shrink bop - and the maybe Fonterra could be "a food giant with its own clearly defined house of brands." Then having gone, "From good to Great" (by Jim Collins) it might well morph to a Nestle or even a Nokia - you know how they started?
Along with other nice ideas like, Buy Kiwi Made, Manufacturing+ and Export Year, the last gov. conceived of another centrally planned project called the 'Hi-Growth Project':
"The Hi Growth Project 100x100 goal challenges New Zealand to build 100 technology companies in 10 years, each with at least $100 million in revenue. The government is to be applauded for setting what management guru Jim Collins calls a "big hairy audacious goal."
It's my understanding that this bhag was not fulfilled, is is not likely to be fulfilled. My view is, if govt. did the stuff the likes of NZMEA, PEC advocate to help rebalance the economy, productive enterprise and exporters could grow and thrive, and with it revenue and shrink bop - and maybe we might, "build 100 technology companies in 10 years, each with at least $100 million in revenue."
However, "if govt. did the stuff the likes of NZMEA, PEC advocate to help rebalance the economy," - who loses out?
Guess it won't be happening then, along with the benefits wider NZ needs by breaking the status quo. Nevermind, eh.
Cheers, Les.
Les - I agree, government
Les - I agree, government should help the private sector through sound economic policy and where our interests align.
Many of the problems with Fonterra are rather widespread and we can learn a lot from the mistakes made.
There is a major mismatch between the interest of those that run the company and those that own it.
Incentives are all wrong, allowing risks to be largely ignored, and like many others, the company has fallen into the debt trap.
In many cases, business models were based on unsustainable demand, which in turn was created by the global flood of easy credit. And now that it's all unwinding, many are being caught out.
New government export ventures are not only long overdue but it gives us an opportunity to help correct our past mistakes and will help set a leading example while helping to reduce our overall tax burden, stimulate the economy, increase market competition, our international competitiveness, investor confidence, and so much more...
You should give this free proposal far more consideration.
Hi folks, have been reading
Hi folks, have been reading this thread in the hope to find comment on the impact of SCF going into receivership (may of missed it if there was comments.
I understand that all debentures and listed (NZX) secured bonds will be covered if if SCF goes into receivership before October 2010 - can someone confirm?
Thanks