Simplicity's Sam Stubbs is launching NZX-listed InfraKiwi to buy water plants, roads, lines networks, buses, ports & airports; He sees it building up into NZ's "biggest and most boring company."
this sounds like the most marvellous idea I’ve ever heard! Let’s go for it! Let’s publicise it widely and all good kiwis could invest five bucks and we could be away – thank you so much for allowing Sam to speak to us!
Yes I agree it can be a problem eg "our" gentailers but I get the sense that there will be restraints built in to the model that Sam is describing here. Indeed, he specifically says "you’re not trying to basically maximize return because these are community assets, they’re sensitive assets."
I guess that's where it's worthwhile looking into the governance and constitution of Infra Kiwi. I don't think we have anything to compare it too but I imagine the setup of it would make it very hard to dismantle. I like the idea of getting iwi investment for the same reason I liked the 3 waters proposal. Long term thinkers with a vision far greater than our or even our children's lifetimes.
The status quo is not fit for purpose. Red-tinged governments invest in public infrastructure and then blue-tinged ones sell it off, citing the need to bring in foreign owners with more capital (and/or lower taxes). The infrastructure is then asset-stripped for profit or any profit made simply disappears offshore while the asset deteriorates. It is then bought back, refurbished or replaced by the next red-tinged government. Rinse and repeat.
I'm sure there is no perfect system but I imagine the one we're discussing will have been put together with a clear understanding of the frustration many of us have with how things have worked over the last few decades. It simply hasn't worked for most people and is the classical privatize the profits/socialize the losses model.
The government builds it, Infrakiwi will buy it. But what if it ends up with massive cost over-runs? What will the sale price be? Does the government make a big loss on sale which means that loss is actually retained as borrowing? And if it is sold at cost are we going to see, say a hospital, charging rent at twice the rate of other hospitals?
Stop and ask yourself: - if so-and-so is such a great idea why hasn't private enterprise gone and built it anyway? Where's that waterfront stadium in Auckland?
Like Steve Cox, I'm asking myself some questions about this. Do we want our public assets like schools, hospitals and roads in private ownership? Even if it is initially benign in the sense that the InfraKiwi fund is in for the long haul with low expectations of dividends (a low-return private equity fund?), what happens in the longer run? Will InfraKiwi never sell any of its assets? Surely it will want to restructure its portfolio from time to time. What protections are there to the public if an asset is indeed sold? What protections are there against it being sold to an owner who demands higher returns and lower maintenance expenditure, leading to a deteriorating public service and pressure for (higher) user charges? If InfraKiwi is listed, though it may remain in local ownership, what prevents it changing its policies to increase returns - perhaps in the face of demands by shareholders? I like a lot of what Simplicity is doing - declaration of interest: I am an investor in its funds - but I think this needs more scrutiny.
The same can be said by changing governments. Ie Current government canceling the inter Island ferries. Policies can change but I trust NZ ownership over off shore ie Australia owning banks & rorting NZers.
Some assets have quite rightly remained in government ownership for generations. There is no guarantee of that for a private owner. There have been deep regrets after many privatisations and commercialisations by government.
I prefer local ownership too, but it doesn't solve all problems.
💯✔️ Many things start off fine with the high ideals of the instigators, investors, basic infrastructure of the enterprise being admirable & of good intent, but down the line it all morphs & gets taken over by those with either hidden agendas or blatant desires for power & $$ - prime example X-crement (🐦) Hard to see how it can be future proofed when politicians have the power to change laws 🤷 However, balance that against the CURRENT good, and 🤔
As a Kiwi Saver Saver-er it sounds really cool in concept. Would there be an option where one, chooses what proportion of their Kiwi Saver goes into what/which investments?
Sam is doing a great service trying to tackle real need in the community with his initiatives. I applaud him for that. However, these discussions perpetuate the myth that the Govt is like a household, which we should be attacking at every opportunity. NZ doesn't require local or overseas investors to allow us to fund infrastructure from the public purse.
According to the Reserve Bank's own documentation, the NZ Govt spends/creates new money when it initiates daily spending. The operational sequence is: Govt Spends, then Taxes And issues Bonds (STAB). Therefore the Govt via the RBNZ has unlimited capacity to spend/create New Zealand dollars. The Govt literally cannot run out of NZ dollars. This isn't an ideology, this is the operational reality right now!
InfraKiwi solves a problem that only exists because economists and politicians continue the false narrative that the Govt faces household-like budget constraints. In reality, the constraint is political choice, not financial capacity.
Making infrastructure more expensive by inserting a dividend-extracting private layer between the public and assets seems counterproductive when the Govt is already self-financing. The Govt should be paying for this, with the Kiwisaver funds purchasing the bonds issued (for liquidity management) after the deficit spending.
The real questions should be: Do we have the real resources (workers, materials, capacity) to build this infrastructure? And should this infrastructure be publicly owned or transferred to private shareholders?
Listening to the clip while I scan your text...
is this as close as we could get to a Perfect Solution? Bloody good idea, yeah?
Sounds excellent!
Pure genius right there
Kudos, Sam! Keeping our money working at home and not requiring overseas investment to (buy) bail us out - is BLOODY BRILLIANT!
this sounds like the most marvellous idea I’ve ever heard! Let’s go for it! Let’s publicise it widely and all good kiwis could invest five bucks and we could be away – thank you so much for allowing Sam to speak to us!
💯💯💯💯💯 sign me up Sam. Use all my KiwiSaver money. 💰
The most exciting line in the transcript was this one: ‘It’s sort of like public ownership.’
Add in the rider that it should also be free from interference from ideologically-blinkered politicians and the good news just gets better.
Hi Neil. What about ideologically-blinkered senior management? We want a higher dividend, therefore increase the rent. The taxpayer will pay.
Yes I agree it can be a problem eg "our" gentailers but I get the sense that there will be restraints built in to the model that Sam is describing here. Indeed, he specifically says "you’re not trying to basically maximize return because these are community assets, they’re sensitive assets."
And when Sam moves on, and his successors change the rules?
I guess that's where it's worthwhile looking into the governance and constitution of Infra Kiwi. I don't think we have anything to compare it too but I imagine the setup of it would make it very hard to dismantle. I like the idea of getting iwi investment for the same reason I liked the 3 waters proposal. Long term thinkers with a vision far greater than our or even our children's lifetimes.
The status quo is not fit for purpose. Red-tinged governments invest in public infrastructure and then blue-tinged ones sell it off, citing the need to bring in foreign owners with more capital (and/or lower taxes). The infrastructure is then asset-stripped for profit or any profit made simply disappears offshore while the asset deteriorates. It is then bought back, refurbished or replaced by the next red-tinged government. Rinse and repeat.
I'm sure there is no perfect system but I imagine the one we're discussing will have been put together with a clear understanding of the frustration many of us have with how things have worked over the last few decades. It simply hasn't worked for most people and is the classical privatize the profits/socialize the losses model.
" 'It's sort of like public ownership' "
BULLSHIT
it is private ownership
who would the board members be ?
how much would the ceo's total annual remuneration be ?
how many employees would there be, total ?
etc
full details please
Finally! Yes, can we get back to owning our own stuff without worrying there's going to be a political/ideological sell off.
The government builds it, Infrakiwi will buy it. But what if it ends up with massive cost over-runs? What will the sale price be? Does the government make a big loss on sale which means that loss is actually retained as borrowing? And if it is sold at cost are we going to see, say a hospital, charging rent at twice the rate of other hospitals?
Stop and ask yourself: - if so-and-so is such a great idea why hasn't private enterprise gone and built it anyway? Where's that waterfront stadium in Auckland?
Sort of like Infratil but with a public conscience
Like Steve Cox, I'm asking myself some questions about this. Do we want our public assets like schools, hospitals and roads in private ownership? Even if it is initially benign in the sense that the InfraKiwi fund is in for the long haul with low expectations of dividends (a low-return private equity fund?), what happens in the longer run? Will InfraKiwi never sell any of its assets? Surely it will want to restructure its portfolio from time to time. What protections are there to the public if an asset is indeed sold? What protections are there against it being sold to an owner who demands higher returns and lower maintenance expenditure, leading to a deteriorating public service and pressure for (higher) user charges? If InfraKiwi is listed, though it may remain in local ownership, what prevents it changing its policies to increase returns - perhaps in the face of demands by shareholders? I like a lot of what Simplicity is doing - declaration of interest: I am an investor in its funds - but I think this needs more scrutiny.
The same can be said by changing governments. Ie Current government canceling the inter Island ferries. Policies can change but I trust NZ ownership over off shore ie Australia owning banks & rorting NZers.
Some assets have quite rightly remained in government ownership for generations. There is no guarantee of that for a private owner. There have been deep regrets after many privatisations and commercialisations by government.
I prefer local ownership too, but it doesn't solve all problems.
💯✔️ Many things start off fine with the high ideals of the instigators, investors, basic infrastructure of the enterprise being admirable & of good intent, but down the line it all morphs & gets taken over by those with either hidden agendas or blatant desires for power & $$ - prime example X-crement (🐦) Hard to see how it can be future proofed when politicians have the power to change laws 🤷 However, balance that against the CURRENT good, and 🤔
You have to wonder if this is a good idea for Kiwisaver why it isn’t also sensible for the NZ super fund?
As a Kiwi Saver Saver-er it sounds really cool in concept. Would there be an option where one, chooses what proportion of their Kiwi Saver goes into what/which investments?
It is absolutely essential that ALL water supply is publicly owned.
also, ALL current water bottling businesses in NZ must become publicly owned.
water belongs to ALL New Zealanders and greedy grubby private ownership must be prevented, and that which already exists must become publicly owned.
look at the catastrophic disaster/disastrous catastrophe of electricity supply in New Zealand.
this must be prevented for water !!!!
Sam is doing a great service trying to tackle real need in the community with his initiatives. I applaud him for that. However, these discussions perpetuate the myth that the Govt is like a household, which we should be attacking at every opportunity. NZ doesn't require local or overseas investors to allow us to fund infrastructure from the public purse.
According to the Reserve Bank's own documentation, the NZ Govt spends/creates new money when it initiates daily spending. The operational sequence is: Govt Spends, then Taxes And issues Bonds (STAB). Therefore the Govt via the RBNZ has unlimited capacity to spend/create New Zealand dollars. The Govt literally cannot run out of NZ dollars. This isn't an ideology, this is the operational reality right now!
InfraKiwi solves a problem that only exists because economists and politicians continue the false narrative that the Govt faces household-like budget constraints. In reality, the constraint is political choice, not financial capacity.
Making infrastructure more expensive by inserting a dividend-extracting private layer between the public and assets seems counterproductive when the Govt is already self-financing. The Govt should be paying for this, with the Kiwisaver funds purchasing the bonds issued (for liquidity management) after the deficit spending.
The real questions should be: Do we have the real resources (workers, materials, capacity) to build this infrastructure? And should this infrastructure be publicly owned or transferred to private shareholders?
Flashing lights front and back surrounded by l.e.d. strips for this post!
ALL water infrastructure must be publicly owned.
ALL current water bottlers must become publicly owned.
water is NOT for privatisation !!!!