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Thursday, December 15, 2011

The Ministry

Brian Fallow asks, in the NZ Herald: Does a country of 4.4 million people really need 28 ministers - 20 in Cabinet and a further eight outside?

The Westminster system demands it. The fact of MMP coalition deals - which put individual MPs and their one-man-band parties into government - only add slightly to the way the system operates. It's all based on a bare majority. The government needs that bare majority to work at each level. That begins with a need to command a majority of parliament - in this NZ parliament of 121 total that means they need 61. Then they need a majority of that majority to be sure they can exercise control in their caucus (respective caucuses) so that is 31. The offices of Speaker, Deputy Speaker and Chief Whip may be considered part of the executive as this is baubleage tied to the PM. Those three plus the 28 = 31.

While Fallow may be complaining about an executive of 28 in similar systems with larger parliaments the rule is the same so the numbers are significantly more: in Canada the Cabinet alone is 27, in the UK with a 650 member House of Commons (and an Upper House) it means there are over 100 ministers plus a multitude of other offices. In Australia there is a Cabinet of 20, 10 ministers outside and 12 parliamentary secretaries.

Considering all the various ministries, departments and agencies that NZ has 28 is about the right number of people to administer it all at the top, although Cabinet could be reduced a bit if they wanted, but as long as I have known it Cabinet has always been 20.

First item on Cabinet's agenda after being sworn in this week was to sell the state assets off:

Mighty River Power has been confirmed as the first state company that will have shares sold off under the Government's partial asset sales programme.

Having been sworn in just yesterday, Cabinet has moved fast to get the Government's "mixed-ownership model" going, with the issue a focus for Cabinet in its first meeting's agenda yesterday afternoon.

Wasting no time with their myopic, ideological (non) economic policy of privatisation. On the Beehive website it is the fourth item:

Next steps in mixed ownership programme
The Government has confirmed the next steps in its mixed ownership programme to offer New Zealanders minority shareholdings in four state-owned energy companies and Air New Zealand.

Read full release >> .Prime Minister welcomes Royal visit
Prime Minister John Key has welcomed the news of a planned visit to New Zealand by the Prince of Wales and the Duchess of Cornwall next year.

Read full release >> .Minister visits Nelson in wake of floods
Civil Defence Minister, Chris Tremain, together with Nelson MP, Nick Smith, is this morning visiting Nelson in response to the floods that hit the region over the last 24 hours.

Read full release >> .New National-led Administration announced
Prime Minister John Key today announced the incoming National-led Government’s new Ministry.

So: government announced, civil defence emergency, Royal visit scheduled, sell off state assets - in that order.

"Next steps in mixed ownership programme", or to unpick the euphemisms: 'How quick can we sell off the most profitable asset the government has? Answer:

Cabinet has agreed that Mighty River Power should be the first company prepared for an initial public offering (IPO), most likely in the third quarter of 2012, subject to market conditions, Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall said today.
“Our advice is that Mighty River Power is ready to go to the market."

An immediate start then.

This time next year those wealthy enough to be in the top tax bracket will have used the tax cuts they got from National last term to buy Mighty River shares and will be banking the dividends - and looking forward to pressuring power prices ever higher to maintain those dividends - and they will claim this is 'productivity' and 'adding value'. The few who benefit - National's perennial supporters - will be well pleased. The other 99% paying the power bills with no shareholding in the electricity infrastructure to compensate them for rising prices will be unpleased; some who have not grasped the ramifications of 'mixed-ownership' and voted National anyway, may turn resentful.

The ministers reiterated the Government has made three clear promises to New Zealanders about mixed ownership companies:

•The Government will retain at least 51 per cent control.
•New Zealanders will be at the front of the queue for shares and ministers expect New Zealand ownership will be around 85-90 per cent.
•No shareholder other than the Government will be able to own more than about 10 per cent.

So the likes of Beijing-controlled Chinese front companies, Canadian pension funds and Ausralian infrastructure corporates who will buy-in are limited to one-tenth each. So five of these may end up controlling the 49% in the end instead of just one. Hmmm, yeah. Not much of a guarantee, especially given the cross-shareholdings many have. The Nats, as I understand it, have let Peter Dunne claim credit for supposedly establishing this limit, such as it is.

How much do you expect from the Mighty River Power share sale?
We’ve said we expect between $5 billion and $7 billion over three to five years across the whole mixed ownership programme. In terms of Mighty River Power, we want to get a good deal for New Zealand investors – and for New Zealand taxpayers – and that depends on advisors completing work in the New Year, once they are appointed.

Raising $5-7b isn't that much when the government's annual spending is about $75b.

As for other agenda items for Cabinet, I note the Gnome of Thorndon is pushing his Tory mates to stack the Supreme Court with right wing conservatives. Poor arguments all round for criticising the Chief Justice.


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