McBride puts his stamp on Fonterra’s capital restructuring proposals

The big  dairy  co-op  Fonterra  has  moved to make  its  capital  restructuring  proposals  more  palatable  to  its  10,000  farmer-shareholders as  it  seeks to  slash  the  drastic entry  cost  to  become a  new  supplier.

Faced  with  a  future where  total milk production  is  flattening, Fonterra  needs    more  flexibility in    its  capital rules, the  most  burdensome of which has been the compulsory requirement to invest huge sums of capital just to supply.

The  revisions now   being  put  forward bear   the  stamp   of  chairman Peter  McBride, who  in an earlier role  successfully carried  the  kiwifruit  growers in   Zespri through   a  similar  capital  restructure.

McBride, after  taking  the chair at  Fonterra,  soon realised  the need for  change in the one-size-fits-all compulsory capital structure  requiring all shareholders to hold shares on a 1:1 basis. It  has become a  key factor in farmers deciding to leave.

Working  over   feedback  since  the first reform proposals were  outlined in  May,  Fonterra’s  board found several  themes emerging,  and   now sees  the need to  re-shape  several of  them. One of  the  main  worries revealed  in  the  initial  consultation related  to  the farmer-only market and its impact on the share price.

Changes being considered to the preferred option initially put forward  include adjusting the proposed minimum shareholding requirement for farmers and enabling share milkers and contract milkers to own shares.

A minimum shareholding requirement of 33% of milk supply, or one share per 3kg/MS, could be required. The preferred option had previously been 25%.

The entry timeframe for farmers to join the co-op could be extended from five to six years, while current shareholders would be given more time to exit – up to between 10 and 15 years from five years. Continue reading “McBride puts his stamp on Fonterra’s capital restructuring proposals”

Govt to contribute $600,000 to recovery from weekend storms in South Island – Pacific businesses will be given $2 million

On the home front, the Government has pitched in $600,000 to help the recovery  for people affected by the weekend’s violent weather and welcomed the New Zealand Nurses Organisation’s decision to take the Government’s improved pay offer to members and to lift strike notices.

Internationally, the PM has had a chat with President Biden and chaired an APEC leaders’ meeting on Covid-19 and conference.

And her government is providing $2 million (more than has been committed so far for the relief of weekend weather victims) to help Pacific businesses.

At the weekend we expanded on the PM’s chat with Biden (see HERE).

Now, at Point of Order,  we are braced for this week’s news from the Beehive. Continue reading “Govt to contribute $600,000 to recovery from weekend storms in South Island – Pacific businesses will be given $2 million”

PM’s foreign affairs speech – fortifying what Mahuta said – resonates strongly with the Biden Administration

 It has taken nearly nine months but finally the government has spelled out its foreign policy, much to the relief of neighbours, allies and friends.  Speeches by both Foreign Minister Nanaia Mahuta and now Prime Minister Ardern have been followed closely in many capitals.

It’s no coincidence that President Joe Biden called PM Ardern this week. 

Ostensibly, the call preceded the PM’s Zoom meeting with APEC leaders.  The real reason seems to be that – at last – Washington DC has heard the policy, in person, from NZ ministers.

According to Washington and Wellington the call went well and was cordial. Continue reading “PM’s foreign affairs speech – fortifying what Mahuta said – resonates strongly with the Biden Administration”

Rising prices raise the prospect of householders bringing Ardern down from the clouds of adoration

The Labour  government has  floated  skyward on  a  cloud of public  adoration  for  many months  now and,  given the  conviction of  those  who  believe Jacinda Ardern  can  do  no wrong,  may  do so   for  as  long again.

On  the other  hand, harsh  realities  may  be  hitting  home,  at least  in  some  households.

This  week  Statistics  NZ  reported consumer prices rose a massive 1.3% (quarter on quarter) in the June quarter.  This was stronger than the  expectation of a 0.9% lift (3.0% year on year).

Annual CPI inflation rose to 3.3%, breaking through the top of the Reserve  Banks target band, and a post-2008 high.

ANZ  Bank  economists  had  one  word  for that:  “Monstrous”. Continue reading “Rising prices raise the prospect of householders bringing Ardern down from the clouds of adoration”

First came the $2.5bn water package (or bribe?) and then the govt gets behind mayors on employment task force

The government is getting in behind local government leaders, not only to win hearts and minds on the Three Waters reform programme but also in  encouraging job schemes.

Yesterday it announced a $2.5 billion package (critics call it a bribe) to support local government transition through the reforms to New Zealand’s drinking water, wastewater and stormwater services.  Point of Order has looked at this here.

Today the government has signed a new memorandum of understanding with the Mayors Taskforce for Jobs, intended to strengthen the partnership to get more young people into work.

Tourism Minister Stuart Nash meanwhile was announcing that five South Island areas have been prioritised in the latest round of decisions from a tourism fund that is supporting infrastructure projects from Cape Reinga to Stewart Island and the Chathams.

Details of 57 nationwide projects to receive support from the fund  have been released.

Nash explained that the Tourism Infrastructure Fund supports local communities under pressure from tourism, especially those with small ratepayer bases Continue reading “First came the $2.5bn water package (or bribe?) and then the govt gets behind mayors on employment task force”

Eroad is on the right track – but NZ needs many more such companies to make up for the regulatory drag on dairying

According  to   Fonterra  executive  Marc  Rivers, NZ  has  reached  “peak milk”  and  is entering the  era  of “flat milk”.

It’s  a  warning  particularly  apposite  as  farmers  throughout  the  country  mount  a  protest against a  government  that  has  saddled them with unnecessary regulation  and other burdens as  they work  at producing  the exports  which  are NZ’s  mainstay.

The  broader  question  is   where NZ can turn to  lift or  even maintain  current living standards.

Some  would see   a  salvation  in  the  hi-tech  sector.  Companies  like  Xero, founded  in 2006   by Rod  Drury,  have shown  the  way. It  surpassed  more  than  1m global  customers  in 2017, employs  more than  3000  people,  and  is  a  leading  company  on the  Australian  stock exchange.

Remarkable  tech  companies listed on  the NZX include  Pushpay,  Serko, Gentrack, Enprise, Vista, Smartpay. Continue reading “Eroad is on the right track – but NZ needs many more such companies to make up for the regulatory drag on dairying”

How Ngai Tahu will be flush with governance powers under water reforms – but not in all parts of the South Island

Journalists hastened to work out what’s up for grabs in various bits of the country after the PM announced a $2.5 billion package for New Zealand’s 67 councils, if they opted in to the government’s water reforms.

This (we were reminded) follows $761m being given to councils for water infrastructure upgrades in July last year.

The media didn’t devote too much energy to examining how and/or why the boundary lines will be fixed when the responsibility for drinking water, wastewater, and storm water infrastructure is shifted from councils to four regional entities or the governance implications of having Three Waters boundaries aligned with tribal boundaries.

For example (as you will find towards the end of this Stuff report):

Under the proposed water reforms, Blenheim and Richmond could be lumped in with a largely North Island water entity covering from Wellington to Gisborne, while Seddon and Murchison could be tied in with the rest of the South Island.

Six elected members would represent 21 South Island councils in an arms-length governance role. Up to six others would have a governance role to represent mana whenua.

This regional entity would  cover the majority of the South Island except for parts of Marlborough, Tasman and Nelson.

Cabinet papers showed Marlborough and Tasman could be split between two water entities to align with iwi boundaries.

Like most of the South Island, Seddon and Murchison were part of Ngāi Tahu’s takiwā (territory), so had been added to Entity ‘D’ with other cities in the takiwā, such as Christchurch.

The rest of Marlborough and Tasman had been included in Entity ‘C’, along with Nelson, Wellington, Havelock North, Hawke’s Bay and Gisborne.

This suggests Ngai Tahu won’t get a governance grip on the whole of the South Island’s water-system infrastructure and its management,

It will do nicely, thank you, nevertheless.

These details call for an adjustment of the numbers in a press statement from Hobson’s Choice a few weeks ago (which news media did not publish and which Scoop and Voxy did not post):

  • One lot of co-governors would represent Ngai Tahu, a tribal business entity that claims the affiliation of 68,000 people,
  • The other lot would represent 23 councils which “may represent 750,000 people”.

Point of Order suggested another measure of the governance power being given without a blush or much explanation to southern Maori – bring 2018 census figures into the reckoning.  These show Maori comprise 110,301 (10%) of a total South Island population of 1,104,531.

While Stuff (and other media) have shied from too closely examining or explaining the muscle Maori tribes might flex under Three Waters governance arrangements, it does say some elected members from both the city and rural districts have raised concerns about the lack of control locals would have over the proposed new South Island entity.

Auckland mayor Phil Goff’s objections fundamentally are matters of ownership, control, governance and accountability.

Another critical question for ratepayers is the extent to which hefty rates increases being considered by several councils – largely to pay for neglected water-system infrastructure – can be modified.

Ardern said $500m of the package – which National Party leader Judith Collins and others called a bribe to buy compliance from local governments – would directly help councils during the transition phase of the reforms. The rest would ensure councils were better off financially once water infrastructure was taken off their books.

Savings to ratepayers are a critical consideration in favour of the reforms.  Local Government Minister Nanaia Mahuta says these would amount to thousands of dollars a year and ensure the estimated $120 to $185 billion in investment needed in water services over the next 30 years goes ahead.

According to news reports Point of Order checked this morning –

  • Christchurch has been offered $122.4 million from the $2bn fund while Selwyn and Waimakariri councils would get $22m each.

But Christchurch councillor Sam MacDonald said $122m was “pretty cheeky” when the council would hand over billions of water assets in the reforms.

  • Marlborough, Nelson and Tasman councils have been offered a combined $66.2 million.
  • Auckland Council would receive almost $509 million under the proposal.

Auckland Mayor Phil Goff remains unconvinced. He said:

“The issue at stake here is about responsiveness and accountability to the people of Auckland through their elected representatives,” he said.

“We have real concerns about the governance structure proposed by the Government, which would remove mechanisms currently in place to ensure that Watercare is accountable to Aucklanders.”

Goff insists the council should be able to determine board directors and the strategic direction of the new water authority through a statement of intent.

He reportedly said the Government’s model would effectively remove Auckland Council’s control and influence over about 28 per cent of Auckland’s assets and 25 per cent of its expenditure.

“This risks creating a new water entity that is unresponsive to the communities it serves, and removes our ability to ensure that Aucklanders’ needs are put first,” Goff said.

But the PM says overhauling our drinking, waste and stormwater services will benefit all New Zealand communities, no matter where they are in the country.

Govt invites ideas on freshwater farm plans but irked cockies are unlikely to cancel their protest plans

One ministerial announcement which invites farmers and growers to engage in consultations on fresh water matters seems to have been issued a tad late to mollify angry farmers.  It coincided with news that a farmer group is planning a protest against what it describes as unworkable government regulations and interference in farmers’ lives – and interference in the work of the country’s biggest export sector.

Another announcement reflected concerns in the Beehive to mollify stressed operators in the tourism industry, no longer the country’s biggest earner of overseas revenue since it was crippled by the closing of borders to deal with the Covid-19 pandemic.

The Beehive policy-makers have figured they can’t do much to compensate flagging businesses for the billions of dollars lost when overseas visitors stopped coming here – but hey.

There IS something a “be kind” government can do.  It can chip in $4.5 million to give them peace of mind – of sorts – by dealing with their mental wellbeing. Continue reading “Govt invites ideas on freshwater farm plans but irked cockies are unlikely to cancel their protest plans”

NZ public service reform for the UK?

It’s not unusual for governments to decide the solution to their frustrations is to tweak the machinery of government.  Nor for senior public servants to channel those ambitions to safety.

But things look more serious in the UK.  A sequence of reports from high-powered ‘independent’ commissions and well-connected think tanks are floating proposals which bear more than a resemblance to the state sector reforms implemented in New Zealand at the end of last century.

For one of the key players, the seeds of change were planted back in 2010. Back then, Michael Gove (now the Minister for the Cabinet Office) was put in charge of education.  He coined the term ‘the Blob’ to describe the coalition of resistant civil servants and external ideologists who opposed his proposals to change the school system.  And helping him on the Blob job was Dominic Cummings – PM Boris Johnson’s erstwhile chief strategist.

Continue reading “NZ public service reform for the UK?”

Over $1bn is invested in renewable energy but meanwhile NZ must import coal to generate electricity

Two   of  the  Labour  government’s  major  policies are  to reduce  carbon  emissions  in the  battle against  climate change, and  to   produce 100% of  NZ’s  energy from renewable sources.

So   are those  policies   going?

Reports  this week make  it  clear:  poorly.

So  badly,  indeed, that  Energy  Minister Megan  Woods  could be  living  in  la-la  land.

This  was  her  response  to RNZ’s finding  that in the same year  the government declared a climate emergency, imports of an especially dirty type of coal from Indonesia topped a million tonnes for the first time since 2006:

“This government is not been [sic] satisfied with this reliance on fossil fuels and last year we backed up our goal to have a fully renewable electricity grid with a $30m investigation into solving the dry year problem.

“The NZ Battery project is investigating the country’s potential for pumped hydro, as well as comparator technologies, and is progressing well but will take time.” Continue reading “Over $1bn is invested in renewable energy but meanwhile NZ must import coal to generate electricity”