Alpine shares may not be best option – economist
A leading economist says Timaru District Holdings needs to get ‘‘the best bang for its buck’’ and shares in Alpine Energy might not be the best option.
Former ANZ chief economist Cameron Bagrie was in town yesterday to talk to interest groups about current economic trends.
Bagrie told Stuff the district council’s holdings company could be holding too much of its investment in Alpine.
‘‘When you look at the situation with lines companies, there are 29 of them across the country. I wonder whether it’s an industry that could become consolidated. They’re also heavily regulated.’’
Bagrie said Alpine Energy’s return to TDHL could be an issue.
‘‘You’ve got to manage all these risks. Alpine Energy represents 60 per cent of TDHL’s assets . . . what’s the return coming out of Alpine Energy, 4 per cent? I can get 3.5 per cent by just shoving $5000 in a bank for 270 days.’’
He said Timaru should look to unlock some of the opportunities from areas such as the port, which is jointly owned by TDHL and Port of Tauranga.
‘‘You could look at some strategic investments in property at the port. Reinvesting gives you options. You don’t want to be constrained.’’
Bagrie said many councils were up against their debt limits.
‘‘Putting up rates carries a bit of political uncertainty, and by and large, the public is against council amalgamations. So you’re often left with very few options.
‘‘The other option is reinvesting. I do not like the term selling assets. It’s about giving yourself flexibility.’’
Foreign investment should not be viewed as a scary option either, Bagrie said.
‘‘New Zealand has got a shortage of domestic savings, so we are reliant on foreign capital. If a foreigner comes down here, and buys a local asset, there are very strict rules around the transaction. We’re not giving stuff away for free, we’re actually making it pretty tough.’’
Bagrie said all regional economies needed to plan for growth, particularly those which had low unemployment.
‘‘When you see a region such as South Canterbury have an unemployment rate of 2.5 per cent, that’s a problem, but it’s a nice problem to have.’’
‘‘I do not like the term selling assets. It’s about giving yourself flexibility.’’ Cameron Bagrie