Mighty Foreign River Power

The news is full of stories about how buying shares in Mighty River Power is popular. Why wouldn’t it be if you are in line for a loyalty bonus simply for not selling straight away and saving National any embarrassment? With over $100 billion dollars sitting in term deposits it is no surprise that “the notional investor” is game for some sharemarket action after a 25% rise last year.

The objection that “we already own Mighty River Power” is obviously stupid.

If I owned Mighty River Power I have the following questions:

A) Why haven’t I been sent an annual dividend cheque?
B) Why haven’t I been sent copies of the annual report?
C) Why haven’t I been invited to the Annual General Meeting?
D) Why haven’t I been contacted and asked if I want my email address added to investor updates, as some NZX-listed companies you own shares in actually do?

You don’t own Mighty River Power. No one does. The concept of Crown ownership is essentially a mask for bureaucrats to do what they want with it. Just look at what Solid Energy executives did without going to their supervising Minister for approval – go on a spending and performance bonus bender that ran the company into the ground. If you think there is accountability for anyone in New Zealand, watch out for stories on how Solid Energy executives were forced to return their performance bonuses.

Another silly objection is that there is no guarantee that Mighty River Power will end up in foreign control. It’s like, bro, New Zealand already is under foreign control. It’s called a banking sector dominated by Australians and a dearth of NZX listings as companies get picked off by foreign firms or taken private to avoid freeriding small shareholders and the pain of continuous disclosure. The government deficit is also financed by foreigners in that without their continued support no one in New Zealand would have any money.

For any politician to open their mouth about foreign control in 2013 New Zealand is ridiculous. New Zealand, by virtue of a land speculation obsession dating back to 1870’s Auckland, has been an importer of capital. We rely on foreign capital because we spend above our means and sell everything off as soon as we can. When you worship at the altar of asset-price inflation, worrying about foreign control of important strategic assets is laughable. At least the dams can’t be shipped overseas and reassembled in an asset-stripping exercise!

The government is even running risky deficits shifting the burden of baby boomer retirement and healthcare onto my generation, and our children if we can afford to have any. Inheriting “original debt” is no way forward for any country. Economists who don’t think the trade deficit is a bad thing forget that there is a thing called risk and one day New Zealand might be seen as irresponsible and find the overseas lending spigot turned off.

If that happens, we’ll realise that state owned asset sales were just another distraction from the real problems at hand. Most New Zealanders don’t have a spare $2,000 to put into Mighty River Power even if it does turn out to be a winner. Because of the way power companies revalue their generation assets, the most likely outcome of state owned asset sales is higher electricity prices. If only we could export electricity!