All the parties have reasons to feel satisifed with the first state asset float. But why is it OK to intervene to boost the markets, but not to boost families?
It hasn't been a great week for political parties and their predictive powers. The Greens and Labour had 100,000 invalid signatures in their petition to force a referendum on asset sales, meaning only 292,000 have signed on; and National could muster only 113,000 individual buyers in Mighty River Power, having just weeks ago crowed about the 440,000 who registered and how it was more than those who had signed the petition.
Both sides had expected more than they were able to deliver.
After the petition fell 16,500 short of its required number – and be in no doubt, the petition organisers wanted the kudos of getting the numbers first time and will be disappointed to have failed – John Key was quick to mock. He said a petition where one in four signatories were invalid wasn't much a of a petition and should be withdrawn.
What does that say about an IPO where only one in for of those who pre-registered actually handed over their money? National can be relieved the Clerk of the House doesn't have to sift through the Mighty River Power pre-registrations to see how many of those were invalid investors.
Beyond the political point-scoring, the facts are rather kinder to both sides, however. National will be disappointed it couldn't muster more investor interest, but it has attracted new investors to the market, it's achieved a solid price and made sure, crucially, that 86.5 percent of shares will be in New Zealand hands (51 percent of that owned by the government). It has hit its marks.
Meanwhile the Greens and Labour have done better than most of our citizen initiated referenda on their first go round and it's hard to imagine they won't be able to muster the extra signatures required. They will get their referendum.
But two points underlying this debate need a bit more discussion.
First, National has been quick to blame Labour and the Greens for the share price being $2.50, rather than the $2.70 or thereabouts it might have hoped for. There has been talk of economic sabotage. But imagine if they had not announced their policy before the float. Imagine if they had waited and announced it early next year, perhaps after even Meridian and Genesis had been sold. That would have been hugely irresponsible and investors would have been furious to have bought shares unawares of such a massive potential risk. Really, what else were they to do?
Yes, there was a political advantage in the timing of the announcement, but it was also the only responsible thing those parties could do. Indeed, you could argue they took a hit to announce when they did, giving National an excuse for a lower share price when concern around Tiwai Pt, for example, was already putting the jitters amongst some investors. It also allows National to bag the left as poor financial managers – a line that will be key to their 2014 campaign.
Second, this week the food-in-schools campaign has been in the news. It's the sort of programme National is quick to oppose on ideological grounds. The government should not intervene, it says. It's the parents' responsibility, it says, and it's unhelpful to change the incentives. Families should care for their own, not rely on government.
Yet when it comes to the partial sale of state assets, one of the key lines used is that it will help boost the NZX. Our capital markets are weak, National says, and need a boost.
But why is it OK to intervene in markets, but not in families? Why did Steven Joyce announce $4 million to help business promotion at the America's Cup this week, while his party refuses to help struggling families eat better?
Surely if National is true to its principles, our capital markets should be able to stand on their own, as the market dictates. It's surely up to the business community to provide IPOs and entrepreneurs to offer investors new opportunities, not for the government to prop up our capital markets or do the heavy lifting on the market's behalf. In other words, isn't this share float, in part, simply a form of market welfare?