Monday, April 22, 2013

Oh dear

It looks like the Labour-Green electricity-market policy has successfully sabotaged the Mighty River power privatisation:

Investors who have already paid for Mighty River Power shares may be given the opportunity to claim their money back following the opposition's radical policy proposing to overhaul the electricity industry.

Treasury officials are currently considering whether the Labour/Greens proposals would warrant the issue of a supplementary disclosure statement, a spokeswoman confirmed this afternoon.

Such a statement is required if any ''significant adverse developments'' occurs between a share offer opening, and the beginning of the bookbuild process, according to the Mighty River Power prospectus.

In the event that such a statement is made, applicants who have signed up for shares can withdraw, with those who have already paid claiming their money back.

The Government and Mighty River would also be forced to publish the warnings in newspapers and on the share offer website.

This would be absolutely humiliating for the government, and there's now no chance that they'll get the sort of money they were hoping for from their privatisation program. The only reason their cronies are interested in buying electricity is the excess profits / oligopoly rents. Take away the ability to price-gouge, and its no longer nearly so attractive. If this sale isn't cancelled, then the next ones surely will be.

As for the business community's squealing, they need to get over themselves. We live in a democracy, and that means that policy can change. As Bernard Hickey pointed out yesterday, the only reason people were willing to tolerate electricity-company price gouging was because the vast majority of the money went to the government, and hence back to them as schools and hospitals. But once it is redirected into private pockets, then that reason simply disappears. Who wants to pay more for power simply so fat-cats can have bigger yachts and another holiday home in Hawaii? Put like that, I doubt even National party supporters would support it.