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Goff flayed on Asset Sales

by Whaleoil on November 21, 2011

Listen to Leighton Smith flay Phil Goff on his asset sales lies, especially the Contact Energy lies he put about at the weekend.

Goff-Asset-Sales-Flaying by whaleoil

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  • Lindsay Addie

    Phil needs to go this store, they have something he needs urgently.

    http://dreamlivedream.files.wordpress.com/2010/05/shitcreek.jpg?w=420&h=244

  • BJ

    What can you say – he is a closed book and hopeless case and a totally lost cause. Anyone that thinks he’s got anything to contribute needs their head read!

  • Dutyfree

    National are not proposing to sell off the State assets, they are looking to sell a minority share, with restricted ownership.  The bulk of the historic returns are driven by one punt Meridian took in Australia.  Even if 40% is sold the NZ Govt will still get 60% of any dividend.  Power prices are competitive it has nothing to do with who owns it.  Goff talks BS.

  • Gazzaw

    Goff came across as an arrogant prick on the interview. Would not let Leighton Smith finish a question and just perpetually spoke over him if Smith queried any of his answers. It was quite strange at a time when the electorate and particularly undecided voters want to hear the questions that they sent in answered in a straightforward manner. I don’t thin Goff won any votes this morning. To the contrary I think. 

    • BJ

      He tries to shut whoever is going to discredit him down. He figure if he can drown the truth out there’s enough people silly enough to belief his absolute dribble. I think he might have a breakdown soon the way he’s going

      • Gazzaw

        I hadnt thought of that BJ. He is certainly a man under pressure at the moment. It was an unfortunate juxtaposition for him this morning coming so soon after MIke Hosking’s breakfast session with the PM who was quite unflappable and answered all of the questions posed to him in a straightforward and rational manner.  I have no doubt that our resident toll, Kosh will say that it was all staged but that wasnt the case.

        Rather a case of Today’s Man over Yesterday’s Man.

    • Vegas

      Actually Leighton Smith talks over the top of everyone. He loves the sound of his own voice.
      This does not mean I don’t agree with his opinions, just don’t like his delivery.

      • BJ

        Heres the thing – Goff not only talks over the top of anyone else – his main modem of delivery is talk non stop on and on and on looking at the clock for interviews to end before anyone can counter his claims or ask another question

      • Gazzaw

        He couldnt get a word in this morning for a lot of the time.

  • Sars

    I just…I…can’t…comprehend. Phil Goff knows that the proposal is only for 49% of the assets so a controlling interest in retained and 51% of the dividends will still be paid to NZ doesn’t he?
    I think it’s universally recognised that debt is the cheapest way to finance a business (or a government in this case) but it comes to a point where you are over leveraged and your debt-to-equity ratio is unsustainable. 

    It’s obvious that Phil Goff isn’t a business man and I don’t hold that against him. What I hold against him is that he purports to have all the answers in this situation when in fact it appears that he is either a. trying to scaremonger for votes or b. actually doesn’t have half a clue. What he seems to lack is the ability to link all the factors together and present a balanced, reasonable argument for his case. In this instance it doesn’t appear as though he lacks the information or facts, he just doesn’t fully comprehend what they mean so when Leighton Smith pushes him for comment on a different aspect of the conversation he is totally ill-equipped to make a rational statement. 

    In my time at University I encountered many people like this – they can have all the facts and information available but still don’t have the business acumen to use that information and conclusions drawn to evaluate a different set of facts and come to a reasonable conclusion. Don’t get me wrong, those people are bright. But as soon as we all left Uni and started out as young accountants they started to struggle because, well, life in the business world (for many young accountants at least) is shockingly different from what you learn at Uni. All the pretty graphs, charts and reports they teach you to make are still there but you actually have to know what they mean. And be able to explain that clearly and succinctly to non-business people. 

    Phil Goff’s message is lost somewhere between the interpretation stage of the problem and the explanation stage of the resolution. 

    • BJ

      Goff is  desperate and dangerous. We do not need a volatile person like him anywhere near making decisions for NZ

    • Lindsay Addie

      Goff and his mates know only too well that National aren’ t actually selling assets. The left are just being smart and playing with words to try and gain votes.

    • Agent BallSack

      Goff believes an 8 billion dollar debt is an asset. Perhaps he should try that on his bank manager one day if he ever owns or runs a business. I hope to god its not our country though.

  • Andrew McMillan

    The 17% dividend return Goff speaks of includes both cash dividends and the increment in capital value. Last year’s actual dividend yield was 5.8%, 2.6% and 8.3% for Meridian, Genesis and Mighty River respectively. On top of that, you need to take into account how the dividend yield relates to the actual after-tax profit. Meridian paid out 127.4% of it’s after-tax profit, while Genesis and Mighty River paid out 34.8% and 311.1% of their after-tax profits respectively. To bandy around the figure of 17% is quite simply, ridiculous.

    Source: http://www.odt.co.nz/news/business/184801/caution-about-asset-sale-figures

    • Agent BallSack

      We like facts! Thanks Andrew.

    • Sars

      Great info Andrew, especially compared to Phil Goff’s quoted government bond rate of 5-6% (which we all know is a cash based expense, not an incremental)

      Are these SOE’s purging retained earnings in anticipation of the proposed asset sales? Shell out your historical earnings before selling down your stake and then all that’s available to distribute to private investors are the earnings that were accumulated since the sale. 

    • kayaker

      I agree! Mallard was bandying about the 17% ‘profit’ on his live chat Q&A (online) a couple of weeks back.  Here’s the thread:

      “Me: Did you know that the state assets in question are aging and will need money spent on them. Where will that come from?

      7:42
      Trevor Mallard:
      The return on SOEs was just over 17 per cent on average over the last five years. There is plenty of profit there to be reinvested in the assets.”

      I went back to him and and pressed him on his understanding of the make-up of the 17.6% – i.e. did he not realise that the 17.6% was was made up of both return on capital value and dividends, and that only the cash from dividends can be accessed by government?  He skipped that question.

      No matter, there’s always Twitter.  A tad under pressure he tried to close it down by saying: “I got the figure from Bill English, take it up with him.”  Rich.

      • Jammy

        First of all, I’d just like to say that I am about as far removed from being a Labour fan as you can get, however, you’ve muddied the waters a bit here.  Goff’s got it all wrong, but your argument is not exactly perfect either.

        “only the cash from dividends can be accessed by the government”.  Sure, that’s right, that’s what the government can *access*.  But the most objective measure that the Government can use to evaluate the performance of SOEs is looking at return on capital employed (debt and equity) against the SOE’s own weighted average cost of capital (as if it were a operating in the private sector). 
        Anyone with a simdge of financial acument should feel sick to their stomach when we compare the SOE return against the Government bond rate.  We should be comparing the return of the company to the inherent risk involved in that investment – not the risk profile of a soveriegn government.

        The frustrating problem with these arguments is that they are completely moot points.  The electorate-at-large doesn’t give a shit how returns are calculated, any swing voters eyes glaze over as soon as you start talking about these issues because they simply don’t have the tools to understand who’s right.  Goff and Labour can spout whatever they want and as long as they are shouting as loud as Key they will seem just as credible.

        There are two facts here that Labour are getting away with that are not being adequately countered:
        1) The Government does not propose selling control – all the hysteria is around losing control of the assets;
        2) A widely neglected point is that the Government is the only entity with the ability to sell an asset at fair value and still generate revenue (taxes) from that asset.  If these assets are so good then a) the price will reflect future cash flows; and b) the Government will realise enduring returns on strong profits through tax revenue.

    • kayaker

      I agree! Mallard was bandying about the 17% ‘profit’ on his live chat Q&A (online) a couple of weeks back.  Here’s the thread:

      “Me: Did you know that the state assets in question are aging and will need money spent on them. Where will that come from?

      7:42
      Trevor Mallard:
      The return on SOEs was just over 17 per cent on average over the last five years. There is plenty of profit there to be reinvested in the assets.”

      I went back to him and and pressed him on his understanding of the make-up of the 17.6% – i.e. did he not realise that the 17.6% was was made up of both return on capital value and dividends, and that only the cash from dividends can be accessed by government?  He skipped that question.

      No matter, there’s always Twitter.  A tad under pressure he tried to close it down by saying: “I got the figure from Bill English, take it up with him.”  Rich.

  • Dave

    OLD VERSION: The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter. The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.Come winter, the ant is warm and well fed. The grasshopper has no food or shelter, so he dies out in the cold.MORAL OF THE OLD STORY:Be responsible for yourself!MODERN VERSION:The ant works hard in the withering heat and the rain all summer long, building his houseand laying up supplies for the winter. The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.Come
    winter, the shivering grasshopper calls a press conference and demands
    to know why the ant should be allowed to be warm and well fed while he
    is cold and starving. TV1,2 & 3 News, and Campbell Liveshow up to provide pictures of the shivering grasshopper next to a video of the ant in his comfortable home with a table filled with food.The country is stunned by the sharp contrast. How can this be, that in a country of such wealth, this poor grasshopper is allowed to suffer so? Sue Bradford appears on Campbell Livewith the grasshopper and everybody cries ..The
    Green Party stages a demonstration in front of the ant’s house where
    the news stations film the group singing, We shall overcome.Green Party Leader Metiriea Turei condemns the ant and blames John Key , Rob Muldoon , Roger Douglas , Capitalism and Global warming for the grasshopper’s plight. John Minto exclaims in an interview with TV News that the ant hasgotten rich off the back of the grasshopper, and both call for an immediate tax hike on the ant to make him pay his fair share. Finally to gain votes to win an election , the Government drafts the Economic Equity & Anti-Grasshopper Actretroactive to the beginning of the summer. The ant is fined for failing to consider how his hard work and preparation has affected the Grasshoppers Mana and, having nothing left to pay his retroactive taxes, his home is confiscated under the Government Land Repo Act and given to the grasshopper.The
    story ends as we see the grasshopper and his free-loading friends
    finishing up the last bits of the ant’s food while the government
    confiscated house he is in, which, as you recall, just happens to be the
    ant’s old house, crumbles around them because the grasshopper doesn’t
    maintain it. The ant has disappeared to Australia , never to be seen again.The
    grasshopper is found dead in a Drugs related incident, and the house,
    now abandoned, is taken over by a gang of Homeboy spiders who terrorize
    the once prosperous and peaceful, neighborhood. MORAL OF THE STORY: Be careful how you vote in 2011

  • nekminnit1983

    It is TERRIFYING to think that this man (Goff) could potentially become our prime minister after the election. His grasp on numbers is shocking. he is loose with the facts.

    On Q&A yesturday when asked how he got the revenue figures for his capital gains tax he said…..they were estimates as they hadnt decided who would be expected to pay it (as far as businesses go) and that an “expert panel” would decide how it works!!!

    So all their numbers are based on as yet to be determined aspects of their policy!

  • Observation

    Goff is like an insane rabid badger the way he shouts and abuses people. If someone has a different opinion to him he berates and bullies them mercilessly.

  • Anonymous

    What shits me the most is that Phil Goff thought he’d take some perceived “high ground” and called John Key a liar over the GST comment and yet this entire election campaign from Labour has centred around half truths, heresay, speculation & downright dishonesty.

    It’s the old Labour manta of “repeat a lie often enough & eventually enough people will believe it”. It grates me that so few in the MSM are prepared to call bullshit of most of this tripe Labour are putting out in the public domain.

    Phil Goff’s a shameless liar & he’d sell out his own mother for the treasury benches.

  • Roger de Laborde

    Goff comments that no businessman would dare to sell their best performing asset to improve their overall outlook.

    Does he not realise that Fairfax Media just did the exact same thing National is planning on doing, selling a minority stake in their best performing asset in order to raise funds for struggling parts of their business?

    I guess Goff really doesn’t understand business.

    http://ipo.trademe.co.nz/

  • tas

    17% is a nonsensical figure. No intelligent person should believe that number.

    Most solid investments have around 4% rate of return. If you sold shares in a stable company that were giving a 17% return, then every investor on the planet would line up to buy them. And the demand will push the share price up, which pushes the rate of return down until it reaches an equilibrium at about 4%.

    If Goff really thinks the buyers will get a 17% return, then he is as thick as granite. There is no other way to put it. The number is just so outlandish. It is like mixing up millions and billions, except it isn’t a slip of the tongue–he is repeatedly saying 17%. Last time I checked, Greek government bonds weren’t giving that rate of return!

    He is either seriously underestimating the share price of the assets or seriously overestimating the dividends. He is off by an order of magnitude.

    It is hard to estimate the rate of return on the assets, because we don’t know what the share prices will be until they are sold and we don’t know how part privatisation will affect dividends. Air NZ is the best example, because it is already in the mixed ownership model. Thus we know the share price and the dividends. The rate of return is below government bond rates–Goff is full of the proverbial.

    http://www.airnewzealand.co.nz/dividend-history
    https://www.nzx.com/markets/NZSX/securities/AIR
    http://www.interest.co.nz/charts/interest-rates/government-bond-rates

    • Gazzaw

      It woul be good to see how an “impartial” economist like Bernard Hickey analyses it this week in Pravda as I am sure that he will. The brief is probably already on its way from Mallard.

      • notavictim

        dunno if i’d call Bernard impartial.

  • Quintin Hogg

    It would be so nice if the MSM would do some detailed analysis of what Mr Goff says will be the rate of return and the other rubbish he spouts.
    But then again pigs will fly.
    It is possible that the asset sales issue will appear in the leaders debate tonight so if it does i think that Mr Key might have some fun at Mr Goff’s expense.

  • Anonymous

    I don’t mind partial sale of assets. A complete sale of assets worry me because Labour would only buy them back some time in the future at an absurd cost.

    I wonder if Key would promise not to sell the remaining 51% of any partial sales for a certain period of time.

  • kevin

    What an annoying interviewee, goff yapping funny numbers and preferring Fairfax to Consumer mag details. It’s like goff has a gun to his head.

    • Gazzaw

      That was just an insane comment by Goff stating that he preferred a media multinational over the much respected local icon, Consumer. How very, very bizarre. Didn’t do his credibility much good. Maybe Kosh has the answer.

  • kayaker

    Bravo Leighton! Someone in the media who actually gets it on this topic of partial asset sales.

  • John Q Public

    toby_toby – Key said over the weekend on (I think) Q&A the 51% is concrete position limit.