Sir Fresh3001 defends the Mixed Ownership Model.

“It’s not often that the partisan political attacks by my opponents on the left get to me, but the blatant series of lies and disinformation spouted by the Prime Minister on the legacy of the mixed ownership model certainly have. Mr imnofox made a speech today which attacked the 5th National Government’s partial privatisation of Meridian, Mercury (formerly Mighty River Power) and Genesis Energy - three state owned enterprises which had the government’s share reduced to 51% in 2013. The idea behind the mixed-ownership model was to raise funds to pay off debt and fund infrastructure investment, and to improve the performance of the three state owned enterprises. Independent analysis since then has proven that this second objective has been well achieved, and the TDB Advisory paper detailing as such provides the basis for many of my claims here.

“But first, I think it’s important that we examine insidious imno’s claims and deconstruct them in detail before we take a look at the specifics of the TDB paper. His first claim is that New Zealanders are worse off by $6.5 billion since the partial privatisation, due to the increase in share value and dividends paid out to private investors. His second claim is that National sold off the government’s share of the three SOEs “far too cheaply”. His third and final claim is that this partial privatisation is bringing an end to the human race through climate change, which is certainly the most ridiculous - though well within the Green Party modus operandi.

“On the first claim made by the dishonourable member, he makes an extreme leap in logic by assuming that the increase in share value and dividends returned would have remained the same had the government decided not to initiate the mixed ownership model. The TDB Advisory paper shows that as a result of partial privatisation, return on investment substantially increased and so did the performance of the three firms in question.

“On his second claim, imnofox states that the Key Government sold the three SOEs far too cheaply. On the face of it, I agree that the government’s share was sold for less than what it could have. Of course, insidious imnofox leaves out the only reason why this was the case - quite frankly disgusting political obstruction by Labour and the Green Party. Share prices dropped substantially as a result of a Labour-Green announcement that they would heavily regulate the electricity market if they were elected in 2014. This announcement, timed conveniently around the initial public offering, was little more than blatant political maneuvering to tank the price of shares to use as political ammo in future.

“I don’t think it’s worth much of my time to rebut imnofox’s third and final claim, something that’s little more than blatant scaremongering and political pandering of the worst kind. There’s no evidence behind his claim that partial privatisation has resulted in increased carbon emissions or will lead to the end of our species. Forgetful Mr Fox seems to forget that the government still controls a majority share in all three companies, notwithstanding the questionable claim that full privatisation would have resulted in the end of our species either. It’s little more than a snide attack in a long line of absurd and borderline defamatory claims made by the Green Party toward me and my party members. Alongside accusations that our centre to centre right, liberal-conservative party is actually “fascist”, the conduct of the Green Party this election has been beyond disgraceful.

“Now, as to the real success of the mixed ownership model, I will summarise a number of findings made by the TDB Advisory paper. Before and after analysis show that both Mercury and Meridian Energy improved across all earnings metrics, while in some cases Genesis worsened. However, the paper found that Genesis Energy’s earnings worsened as a result of factors outside of ownership such as the inflationary effect of the 2012 dry year. All three companies increased their dividends significantly, and lowered their debt to earnings and debt to equity ratios. Dividends increased by an average of 69 percent, the debt to earnings ratio decreased by 20 percent and the debt to equity ratio decreased by 17 percent.

“The paper finds that the mixed ownership model led to increased earnings through a more efficient use of their assets and by focusing on core business, while private gentailers only saw increased earnings in line with their asset base. These performance improvements in the three state owned enterprises occurred during a period of zero growth in demand in the electricity market, increased competition in both the generation and electricity markets, when retail electricity prices remained flat, and when the energy component of electricity prices actually fell. Business strategies in all three state owned enterprises changed following the announcement of the mixed ownership model policy, and contributed to this improvement in performance. The total annual shareholder returns for the three companies also blow private firms like Contact and Trustpower out of the water, although this is in part due to the depressed share price from the Labour-Greens policy announcement. To bring it to a conclusion, the TDB Advisory paper states: 'the great majority of empirical studies of privatisation find significant positive effects on firm performance on average and over time.' How’s that for success, imno?”