The crisis we are facing is a crisis of the system of production and reproduction that has dominated the earth for 150 years.
That system demands that commodities be produced and sold for a profit. If that profit cannot be guaranteed the system will stop producing until a new balance is created.
That balance can only be achieved at the expense of working people and the planet. In New Zealand that will mean hundreds of thousands of jobs gone and millions across the globe. The 1% who own the means of production are also demanding the shredding of environmental controls to free up business, including in agriculture.
According to the chairman of the board of SkyCity Rob Campbell, it is his “Fiduciary duty” to sack people.
His company refused the 12-week subsidy for salaried staff so they could do it immediately rather than wait.
Over 2019 he presided over a share buyback process to reward shareholders directly. These practices used to be treated as illegal share manipulation. Hundreds of millions of dollars were drained from the accounts and given to shareholders directly. These reserves could have been used to help the company during this crisis.
Fletcher Building also did a $300 million share buyback in 2019 and after enriching themselves in this manner demanded workers have pay cuts of up to 70%.
In the US share buybacks have been worth trillions of dollars over the last decade at the same time as corporate debt doubled to $10 trillion. Debt has actually been used for 30% of the share buybacks in a display of criminal greed and recklessness!
As the Harvard Business Reviews noted on January 7 this year in an article headed “Why stock buybacks are bad for the economy“:
When companies do these buybacks, they deprive themselves of the liquidity that might help them cope when sales and profits decline in an economic downturn. Making matters worse, the proportion of buybacks funded by corporate bonds reached as high as 30% in both 2016 and 2017, according to JPMorgan Chase. The International Monetary Fund’s Global Financial Stability Report, issued in October, highlights “debt-funded payouts” as a form of financial risk-taking by U.S. companies that “can considerably weaken a firm’s credit quality.”
It is almost as if this class of super-rich owners has deliberately enriched themselves in ways that ensured they got as much as possible out of the firms they were managing as possible before the next crisis hit.
Those companies are now weaker and more debt-ridden than they would have been without this enrichment.
It is highly probable that the will have to recuse companies like Fletcher Building before this crisis is over to prevent its collapse. If this is done the shareholders should be expropriated with no compensation and the company repurposed to be a Ministry of Works for the 21st century run by the government and the workers to rebuild New Zealand.
We need to follow Germany to order all companies that take public funding to give shares to Government for payment of funds given them by Government to save their companies.
Yes , – why are we the odd man out on these sorts of things?
Why are we always the dumb-arses?
Don’t forget Mike, that SkyCity also invested in online casinos, so when they say they are making no money… they are lying.
Can’t we talk a out this first I mean I’m left wing but Fletchers? Why not break them up into distribution, retail and commercial or perhaps buy a controlling stack. I’m just concerned that we buy businesses at a premium (or God forbid not at all) and then some one comes along and sells them for a dollar. And Fletchers would be a prime take over opportunity.
A valid point and concern !
We don’t need Fletchers and a big (tarnished) name to build stuff.
After the 2nd world war NZ managed to build the state houses with our own materials and local labour. Nicky Hager built his own house and we would be better off, if people were allowed self determination to look after ourselves without it now being a crime.
Now we need to pay a fortune to build us a leaky or failing house or apartment, signed off by council and any compensation going to lawyers …. not actually helping anybodies lives or giving people a place to live.
Now under a failed strategy Kiwibuild gives 1/3 state land away for free, 1/3 bought up by anybody who is a resident here and 1/3 is the new state house just to replace the old state house (less all the land for building more housing now privatised under the system). Another issue, our current building styles mean the new state house might not be fit for purpose in 10 years….
Natz gave the state houses away for a song….. paying millions in ‘consultancy fees’ to mates,
Now taxpayers pay billions to buy or rent them back again, house the hundreds of thousands of increasing amounts of people on low wages and benefits who need them and spend a fortune on private companies to rehabilitate people in NZ, who if they had had a change of a decent childhood, decent job and a supportive government, they would never have needed huge government support in the first place. It’s crazy!
Taxes are diverted from public health into the above routs!
An alarming statistic.
NZ now has less hospital beds per capita than they did in 2013.
What has happened to NZ in the last 6 years I wonder?
I guess if you added the 4 million tourists into the mix then the hospital beds are even more woeful.
I think that a company, if it wished to reduced its employed capital, should be required, first of all, to reduce its debt rather than buy back its own shares; then, once debt free, it should arrange for a capital repayment to all shareholders proportional to the numbers of shares held by each.
It should be noted that reductions in debt also benefit shareholders.
Great post , Mr Treen, – I also like CLEANGREEN’S perspective…. why in this country are we always behind the 8 Ball?
Is it because that we were the guinea pigs for the neo liberal experiment , and more importantly , seen as the junior partner in the 5 eyes agreement ( that got too wealthy in the late 1960’s ) and needed to be kept in check so as to not get too uppity?
I, however , am of the conviction that if any large company gets too shitfaced, too brazenly out of line with the public good, too powerful and that holds a govt to ransom,… that they are given several warnings , and if unheeded, given Hobsons choice,…
A legal mechanism such as in Germany as mentioned by CLEANGREEN would suffice to make them pull their heads in…esp if they are wrecking the environment or harming the welfare of the public or their workers , – to which they owe obligations to all three category’s if they want to operate here …and in the case of foreign owners of large concerns, I advocate they be given more punitive and severe direct action…
” CLEAN UP YOU ACT AND DESIST OR WE WILL NATIONALIZE YOUR BUSINESS PRONTO ”.
Such a government I would admire and respect greatly.
Yes , you can have your private enterprise and run a profit, – but WITHIN regulations that monitor your company’s effects on people and the environment. But if you even start to look like your fucking over our people or environment, – out the back door you go!
This country did perfectly fine pre 1984 without you. You are expendable. You do not influence our elected government to NOT be the guardians and protectors of the best interests of this nations peoples.
If I had my way, ALL former Utility’s would be bought back, shares delivered to govt and the NZ public with a caveat that any shares that the public wish to sell are recouped only by the govt so that Utility remains firmly in the public of NZ’s possession. And it would be locked into legislation.
As for large scale private NZ corporate’s , – if they held key aspects that are deemed essential services, govt would have FIRST OPTION to buy shares if that company experienced difficulty’s. When the problem is rectified, – the same as above would apply.
Because only a government can back and guarantee, ensure and sustain essential services and Utility’s during times of crisis. The caveat to ALL this , is that a govt retains 55-60% of shares.
Chris Trotter did an excellent article on how China very cleverly re-nationalized its essential utility’s and brought them back under state control by passing legislation that required a certain percentage of their officials were to be included on the board of directors, and over time, by increments, legislated to increase that number,… it was not long before the piratical capitalists that had bled China dry for decades were sent packing.
If anyone, Chris or Martyn can find that link to that article I’d appreciate it !
I’m no communist, – in fact I favour a Keynesian mixed economic model, but when it comes to essentials such as electricity, water , public transport and the like , or large scale beneficial industry’s such as timber production ( think Kinlieth Forrest )- or ANY other former asset generations of taxpayers slugged their guts out to develop, – that should stay firmly in the hands of the public via our govt.
The obscenity of former NZ owned banks – ( isn’t it that 5 out of our 6 major banks are now owned by the bloody Aussie?- who was the moronic shit for brains that enabled that ?!!?),- that are now Australian owned boasting of a 6 billion dollar extraction from NZ in a year galls me entirely. How much could that have been put towards a housing rebuild in this country? Complete with employing Kiwi – as private contractors to build em? And timber to be supplied in bulk by the once proudly owned Kiwi Kinlieth timber company??
Who the fuck did this to all of us?
Of course we know the answer, eh Roger.
You complete treasonous fucker.
Good ideas there Mike
Dunno about Fletchers, but TV3 has just announced re-‘National’ising Paul Henry and bringing him back for a four nights a week talk show. I thought they were running out of money! Paul is not cheap!
Or has that right-wing manipulator from Hawkes Bay (name escapes me) fronted up with the idea and the money?
And maybe it spells ‘time’ for wilting breakfast resident TV3 Nat drummers Garner and Richardson – here’s hoping!
Must be election year!
Recruitment ‘on hold’, haha:
https://www.fbcareers.com/
Would Phil Twyford run the company any better, I wonder?
He did not get Kiwi Build very far, I remember.
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