Prime Minister John Key is starting the new year still optimistic the Eurozone will survive its sovereign debt crisis due to actions taken by policy makers there during the Christmas period, although the process is likely to be rough and untidy.
Still-relatively buoyant Asian and Australian economies were also good news for the New Zealand economy, which had been more resilient than people had expected, going into 2012.
Meanwhile, the government would stick to its programme of selling down half shares in four energy companies, starting with Mighty River Power in the third quarter of 2012. Key said Fairfax's Trade Me share sale late last year showed there was good demand for certain equities, with markets performing reasonably well over the last few years.
Speaking on National Radio this morning, Key said he was "a little bit more optimistic than others when it comes to Europe."
"I think they will eventually get through that process. I’m not saying it won’t be rough and untidy – it certainly will – but a number of actions that they’ve taken around the Christmas period seem to have at least shown some signs that it’s working," Key said.
If the global crisis did worsen, and the government needed to act on its own budget, a reduction in the new budget spending allowance would be the first action taken. The government is hoping to get its books back to surplus in the 2014/15 year.
"From the government’s point of view, our new budget spending component is in the order of about a billion dollars on average every year for the next three years. A little less this year, next year, and a little more, the year after that. So that’s the first port of call if you really had to [act further]. But let’s cross that bridge if we come to it," Key said.
"New Zealand’s economy’s been more resilient than others have thought. We grew at 0.8% in the third quarter of 2011 and we’ve still got a relatively buoyant Asia and Australia. That’s helping us here locally, so let’s just see how things go,” he said.
The government would stick to its mixed-ownership programme for Mighty River Power, Genesis, Meridian and Solid Energy. Key said the Trade Me share sale last year, which was three times oversubscribed, showed there was demand for equities.
Even though economic conditions had been weak over the last three years, equity markets had performed "reasonably well," he said.
"We know these are good companies, and we know that there’s likely to be considerable demand from New Zealanders. We believe we’re on track in terms of that programme. The first cab off the rank will be Mighty River Power in 2012, and at this point we haven’t seen anything that would indicate we should delay that process,” Key said.
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Europe will get worse - has to, and optimism is irrelevant.
Trimming our budget will happen too, and has to. People are going to be poorer in the future, really poorer, and that should include those who are paid fron the public purse.
I don't condone the witch-hunts (like the vigilangte effort aimed at the Chch CEO) nor do I have truck with the types who blame the Govt, or any sector, for what must happen over the next decades. The inability to double indefinitely, was just that, and blame-shifting is just another form of denial.
But it's a simple thing to match public service incomes, with the tax take available. One way or another, it will happen anyway. Private folk relying on 'investments' are inevitably going to be poorer, landlords are fishing in the same pool as the taxman, the energy-supplier and the supermarket, so the rest of the BB upper-middle-class will be hollowed-out; why not Public Servants too?
"We know these are good companies, and we know that there’s likely to be considerable demand from New Zealanders. We believe we’re on track in terms of that programme. The first cab off the rank will be Mighty River Power in 2012, and at this point we haven’t seen anything that would indicate we should delay that process,” Key said.
He's a fool. The biggest of all stimulators to ANY economy is to find ways to reduce the costs of living. When people feel they have more money to spend........THEY SPEND IT
Now, let's say for instance we had a government that didn't have "conflicts of interest" in the profits drawn from power generation. Let's say we put in place legislation that allowed 'cross street generation' of power, whether corporate or at a private 'micro generation' level. A system where anyone can pump back electrons into our national grid and.................sell it to who they please.
What you have created is a mass freeing up of power generation that would drop the price per kW significantly.
It can be done...............and would lead to a massive economic boom. Everyone would be putting photovoltaic's on their roofs, companies would install waste heat generators...........
Local Councils would have to be controlled of course so as not to ruin the scheme from the introduction of new 'massive creaming off consent fee's.
Result? (or biggest hurdle) The current monopoly of power companies would see their share prices plummet and THIS is why the government will NEVER allow it. It's too damn good for ALL the country and not just a select few
Justice - he's no fool.
He's between a rock and a hard place.
Someone should point out that in terms of NZ as a whole, offloading a share of the Co's is a zero-sum game. Sure, some will get richer, at the expense of others, but the net result in energy terms is 'no change'.
Which means that in terms of any real answers, Key (and Labour by the sound of it) is bankrupt.
I see your points so..............why are they doing it?
The NZ taxpayer already own these assets, mum & dad investors don't really exist and how many would be stupid enough to purchase AGAIN a piece of real estate they already own? (plenty i'm sure)
Your 'e right, no more energy is generated by this..........but that as you know is not the aim......the aim is to pump up the price per kW of energy and make these new shareholders a profit............many of whom will be paying these new kW prices themselves THUS shooting their own foot.
The whole idea that this will boost our economy is ridiculous........and of course not the aim anyways. It's yet again another great way to make those worthless GDP figure's (which Key is really talking about in this article as "growth") look better.
The whole thing is just sad, SAD economics
S: selfish
A: acts (of)
D: desperation
I think Steven has it with the Tainter reference - logically, the incumbent leadership in a dying paradigm, have no answers except to up what they know. More Easter Island statues, more economic growth, more armies further away defending resource supplies, more slaves under control, they almost never morph.
Almost universally, they have to be moved aside, and a new wave come in. There's a blip there, in that the Bastille-chargers are never the types to manage the new order, there's always a second readjustment. I sense a groundswell of understanding of where we are going, indeed it's hard to see what else could eventuate. Sooner or later, the voter will call the tune.
" A system where anyone can pump back electrons into our national grid and.................sell it to who they please."
I was under the impression you could already do that and its not particularly difficult. What is hard is generating power at a cost that makes it worthwhile.
You can't sell it to who ever you want though...........can you? That is what is known as "cross street generation"
A company that might wish to sell it's surplus waste heat generated power to say..........a company down the road? or a local town?
The "grid" becomes an universally owned entity for which anyone can contribute electrons into for the purposes of profit. Not just forced to sell back to your current supplier.
Got it now?
"What is hard is generating power at a cost that makes it worthwhile."
Due to what? Maybe under the current legislation that makes "CSG" illegal, if what you claim is universally true then why would anyone bother 'investing' in the new government proposal? Simple: via force of monopolies , So much for "free market"
Well funnily enough Emeritus professor of economics and political science, and technology management at INSEAD where he was chair of CMER (Centre for Management of Einvironmental Resources) Robert U. Ayers makes the suggestion along with Edward H. Ayres who was the former editor of World Watch, author of God's Last Offer: Negotiating for a Sustainable Future.
They must be dreaming also
Peter Schiff:
"The child mentality of the sheeple that rely on the government to solve every problem that exists is so disturbing. Their solution to the problem of a monopoly (myth) is to use the ultimate monopoly (government) to achieve what they feel is right through force."
To stop Key selling the power companies, all Shearer needs do is threaten that Labour will control profits on electricity for private consumers. The commercials can look after themselves as they do already.
The 'threat' will spook the market. No need to carry it out.
Quite right Brushy...pulls the rug from beneath the govt....Labour promise to drive cost of power down regardless of how low the share value drops following the low low divs.
Just as they did with aia share values.
It's not nice but the argument from Labour would be an easy one to put up....lower power costs mean families can save more........and the need to save to afford the seriously unaffordable property is a clear cut consequence of 6 years of poor National et al govt...by 014 most voters will have forgotten Clark and Cullen...just distant nightmares.
As for the landlord subsidy...all Labour need do is declare an intention to switch the two billion a year subsidy from going to landlords to being used to boost the number of housing corp properties....throw in regulations stopping landlords from booting out tenants who cannot afford the full rental once the subsidy is gone...hey presto the old order collapses along with the prices of properties....and the banks can scream all the want.....voters will flock to Labour on that sound.
Did I forget GST....what a feast awaits Shearer for the taking.....gst cut to 5% on new build and reno work....to 10% on all food....raised to 25% on all luxury cars boats etc... 50% on company perks and 75% on bonuses.....
Shearer is unlikely to see the fact that the govt is exposed....that Labour have been given a winning hand if only they could stop and look...
1. Shearer takes the fleece off Key's SOE sales game by pointing to a clear plan for Labour to drive down the share price with poor divs and feed the gains into lower power prices to families on middle to lower incomes...so hang on to your power bills because you will likely receive the divs by way of rebates on your power bills!
2. Labour will rid itself of the Clark/Cullen nightmare as the remaining rubbish from the era of madness depart. ....................Shearer will become Key....hahahaha
3. Say goodbye to the landlord subsidy rort that shifts taxpayer money into landlord pockets and from there into the race to buy more renters and drive up the Auckland property bubble.
Are you not able to spot the mistake the govt has made?.....they have lost control of this rort....the wealthy landlord sector will vote National across Auckland 100%...but the Kiwi families will be feeling the pain and by 014 they will turn to vote for an end to the scam and to lower property prices. National are currently looking down the barrel of a huge defeat in 014 thanks to their landlord subsidy scam.
So there you have it...waiting for Shearer to recognise two powerful forces that will blow National out of the Beehive.
On this note there is no way I will buy the SOE shares...think where the value will go...and the divs.
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