That was from a taxi driver who recognised me from talking on TV about the NZ Maori Council claim to water.
"Do you want me to break the stupid law on financial advice" I asked. "Yes, if you know something if I'd like to know" was his natural answer.
I told him I intended to put in my $2000, because in most investment, entry price is the key and the Crown will price it at a level it expects to provide new investors with a good experience but without offering windfall gains.
After a bit of driving in silence he asked "How could it lose? Everyone says they're selling the silver".
So I gave him a bit of history conveniently not mentioned by the deceptive politicians peddling the anti-sale line. Business is risk. State assets are sometimes dogs. Sometimes the Crown has been lucky to get out at the right time.
Ordure was heaped on Bill Birch for selling the central North Island forests for nearly $2.2bn. Critics vilified him because forestry was such a sure bet.
3 years later the Chinese governmentt, Fletcher Challenge and Brierley did not think so. When their JV wound up, those canny investors (insiders in the timber industry remember) had lost more than 2/3rds of their capital, plus interest over the period. In real terms they may have retrieved less than ¼ of what they invested..
No asset is a sure bet. People who invested
No asset is a sure bet. People who investedspeculatively in oil companies banking on Peak Oil must be very disappointed new that oil shares look so floppy, quite apart from disaster losses, like those that have hit BP
The taxi driver persisted (they have lots of time listening to idiots on the radio) "Will the government could have to rescue power companies, the way it has had to rescue others? Why sell if you'll have to save them again?"
Unlikely I said, but even if they did, it would probably still be cheaper than funding the whole of some of the big commercial disasters. Better to share the loss with investors.
When Dr Cullen "rescued" Air New Zealand it was not the airline he saved. After receivership it would likely have operated under new ownership, probably the government's if it wished to pick it up. Instead he rescued the owners who would otherwise have got nothing after their mismanagement. Toll Holdings gained a similar benefit from a political desire to look like a saviour.
In rail, the airline, and
In rail, the airline, andBNZ the taxpayer probably got off more lightly because of the preceding privatisation than if the businesses had not been sold then reacquired.
Investors’ money in those businesses went west before the Crown recapitalisations. I bet that the companies would have done pretty much what they did and lost even more if they had remained under Crown ownership.
The acquisition of a network in Aus was always Air NZ’s ambition. Buying Ansett was what brought Air New Zealand down. Ansett's owners would likely have extracted more from the fumbling fingers of a wholly government owned Air NZ than they did from Brierley as owners.