Wednesday, October 22, 2008

Clark and Key stick beaks into private company

Yes it's Contact Energy. It is increasing its directors' fees. It is nobody else's business, it is a private company in a competitive market. If you don't like it, sell the shares or don't buy its electricity.

Clark, the interfering harpie that she is said "This is absolutely extraordinary when the ordinary consumer is extorted over power bills".

How Helen?

Who forces anyone to buy Contact Energy's products?

If you think the ordinary consumer is extorted over power bills, does that include the three power companies your government owns and extracts dividends from?

How about this rudeness? To get paid NZ$250,000 as directors is "many more times than people earn in a hard-working job". Really? Well I earn more than that Helen (albeit in the UK) and I'm hard working, in fact people on high incomes more often than not are.

John Key was more mild mannered but still said "All New Zealanders are being asked to tighten their belts because of economic conditions and I would have thought the directors of Contact would have taken that on board, especially given the price increases that are flowing through to consumers".

No John. All New Zealanders are NOT being asked to tighten their belts. Who is asking them? The Great Leader isn't.

The right response is simple: "Contact Energy is a privately owned company, it can choose how it remunerates directors, managers and staff, and what it charges consumers. Shareholders who disagree can vote at the AGM or sell. Customers who disagree can choose a different power company. It is not for the government to hold a view of what private companies legally do in a competitive open market, especially one when the government owns that company's biggest competitors!"

Only Libertarianz seems to think so.

2 comments:

Ruth said...

The response you write would be correct if the electricity market was truly de-regulated and free. It is not.

Most NZers are hurting and *do* have to tighten their belts, and this remuneration is rightfully seen as obscene when you look at the value the directors create.

As you probably know one can follow various directors 'careers' around the place here in NZ and watch as they literally destory shareholder value. Take Hugh Fletcher as an example.

Madeleine said...

It is pure and simple rich-envy.

I don't begrudge them their pay-rises, I wouldn't mind a pay-rise of that magnitude myself.

I don't like the fact that my power bill will go up as a result of their decision but the only thing that occured to me to consider was whether I would switch companies or not to get my bill down because, like many households, we are feeling the pinch.

I was horrified when I heard all the calls for political interference over it because like you said, it is a private company and it can do what it wants. I am a consumer so I can do what I want. That is where it should end.