Trevor Mallard supports asset sales

Trevor Mallard has blogged that he supports asset sales:

But I still think that it is appropriate for the state owned farm developer Landcorp to get involved. They should buy, clean up and on sell the farms preferably to individuals who are currently share milking.

There you have it. The Labour party’s crippled campaign manager supports assets sales. There is really no other way to spin his statement.

Presumably Phil Goff will announce that Trevor is wrong that selling those farms to mum and dad shareholders will only result in the sale of the farms to overseas multi-nationals and so there fore Labour will oppose it.

 


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  • There is nothing new here. Mallard has always been the most sensible in Labour on asset sales and tried to promote them as SOE minister. I wrote about this in the NBR last year:

    Opening Salvo for NBR: 3 December 2010
    Exciting new developments in SOEs
    by
    Matthew Hooton

    The government has made an economic step-change one of its top priorities.
    Achieving it requires firms with the scale to carry both the risks and the costs of innovation and development, capture the benefits of that innovation, and refresh it before rivals mimic it and dilute returns.
    Such firms are thin on the ground. Our large firms tend to be producer co-ops or SOEs, our mid-sized firms subsidiaries of multi-national parents, and our New Zealand firms owner-operated micro enterprises.
    They are fine in themselves but if there is to be a bigger step-change, we need domestic firms of scale to take us along that path.
    Role of government
    The government cannot be exempt from the imperatives of the step-change. It owns a substantial number of the firms of scale in our economy, and they must be a key part of the step-change by being encouraged to expand into new areas of business that are linked to what they already do.
    The government will demand that they meet strict conditions, and their new business must have good spinoffs for communities and potentially for private firms.
    New Zealanders have agreed that we should keep state assets in public hands, but that doesn’t mean SOEs shouldn’t be put to work for us.
    They are big operations and are perfectly placed to play a key role in helping to change New Zealand into an innovative, high-wage and high-value economy.
    There are risks with allowing SOEs to diversify, and the government must not play fast and loose with taxpayer assets. It must not dictate what diversification options SOEs might explore. That is for the business planning process.
    Some warn against widening the scope of SOEs’ business given they operate under very weak capital market constraints and are not under constant threat of acquisition.
    Despite that, to ensure they remain vibrant and to extract some wider public benefit from the knowledge, motivation and energy that resides within the SOE portfolio, SOEs have been told that the government is prepared to consider proposals to broaden their scope of business and to extend the time horizon over which they seek to capture a return on investments.
    Diversification must be based on an effective use of existing core competencies. It must be into adjacent technologies, products and markets. This lowers the risks and increases the chances of effective renewal.
    New activities should have a demonstrated potential to enhance the competitive competencies of other firms and industries. They must deepen our mastery of processes that have multi-firm applicability and wider third party benefits. There must be wider spillover benefits.
    Capital raising
    Other than in very rare circumstances, the diversification should be able to be financed off existing SOE balance sheets and any revised scope of business must be accompanied by robust evaluation processes using explicit performance indicators, leading to a clear exit route for ventures that are not going anywhere.
    However, the government must be prepared to review the financial constraints that SOEs operate under in order to make approved diversification strategies viable. There must be flexibility around dividend policies and gearing.
    This government is committed to long-term ownership of crown companies, so selling off or selling down its core shareholding is not an option. However, the government has now indicated a willingness to consider new sources of private capital, as long as it doesn’t dilute its shareholding.
    This could extend to the sell-down or sell-off of discrete new investments by SOEs. SOEs will also be expected to get involved in partly-owned subsidiaries to leverage both capital and expertise.
    If we stagnate we decay. That’s true for every company and for the economy as a whole. SOEs are no exception.
    Confession
    Not a single sentence above is my own.
    With the exception of improving the grammar, and the odd tweak here and there – “step-change” for “economic transformation agenda” for example – every word is taken from Trevor Mallard’s speeches in mid-2006.
    Now, David Cunliffe has said pretty much the same thing.
    Earlier this year, Bill English called for a similar discussion, with the government now owning total assets approaching a quarter of a trillion dollars, including nearly $50 billion in SOEs, with tens of billions of new investments planned.
    If everyone from Mr Mallard to Mr Cunliffe to Mr English agrees SOEs need to become more dynamic, partly with the assistance of private capital, surely it’s time to abandon the current practice of having SOE ownership policy determined solely by the demented ravings of the Greens?
    END

  • jabba

    I can’t believe that he could say this off his own bat .. asset sales are NOW very much against Labour policy??

  • Pongo

    Nearly chocked on my cornies at the utter brilliance of the man. Major election issue is to stop asset sales and campaign manager now supports them, pray what is the difference between an airline and a dairy farm.

  • gazzaw

    So are we seeing the first visible signs of a split in Labour ranks over policy? Why is Trev no longer on the front bench? Where does Silent T fit in, after all he has been raving for months against the sale of SOEs.

  • jabba

    not only supporting asset sales but buying assets, doing them up and selling like someone buying a run down house .. brilliant

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