Treasury

"Tisch was disciplined in his approach to interest rates and the economy: these were investment variables he could analyze and adjust to. In the beginning of 1994, for example, when the Dow Jones Indus- trial Average was flirting with the 4000 level, Tisch was selling stocks and bonds and moving money into cash equivalents—short-term Treasury debt."

"In a talk in Reykjavik in October 2011, the chief economist at Citigroup, Willem H. Buiter, likened the talent pool in Iceland to that which could be found in a mid-sized city such as Coventry in England. The nation couldn’t therefore logically expect to provide good people for the Treasury, the Central Bank, the FSA, the courts, the parliament, the Foreign Office or the business sector. Buiter told his stunned audience that he had never witnessed such collective stupidity in any developed country as was so dominant in Iceland during the last fifteen years before the crash of 2008. Strong words indeed, but he had a good point."

"The new Forestry Corporation was originally going to start functioning in September 1986, but it was held up by parallel work being done in other parts of the public service. The ideas in Gibbs’ model of a state-owned enterprise, operating under the Companies Act with staff who weren’t civil servants, fed into work also under way at the Treasury, led by Rob Cameron, Graham Scott and other officers, and at the State Services Commission, particularly after Roderick Deane took over as chairman on 1 April 1986.[42](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-42) It made sense to handle the state’s other commercial activities — such as electricity, Telecom and State Coal — in the same way.[43](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477308-556173400-43) Complicated legislative changes were required, which set back the new dawn until 1 April 1987."

"The combination of Roger Douglas and the Treasury at that moment was brilliant. He wouldn’t have been purist if left to his own devices, and they wouldn’t have had much influence on their own. Then he reached out to serious businessmen to help sort out the problems like the state-owned enterprises; the sorts of roles that had traditionally been given to party hacks. It was a very exciting time for people interested in New Zealand and Roger executed many far-reaching and important reforms. The man deserves a bloody great statue; aside from Ruth Richardson, no other figure in recent New Zealand politics comes within a bull’s roar of him. Margaret Thatcher dragged England out of its socialist impasse and is now voted the most important British leader since the war. It is very slack that Roger and Ruth are not given the same regard in New Zealand."

"It was all a matter of opinion. Since few forests were sold in New Zealand there was no real market for them, so it was all about academic theory of what discount rate to use. This hinged on assumptions about future prices. Fletchers were masters at arguing for a low discount rate, which gave them high valuations for their forests. When inflation was running at 18 per cent, they were discounting at 6 per cent, which I thought was bullshit; but it allowed them to generate profits by revaluing their forests upward each year. Treasury played this low discount rate game, with their consultant coming up with the theory that the world was running out of trees, justifying high valuations. But the reality is that the world is smothered in forests and there’s no shortage of pulp timber; it grows like weed. Time has proven we were right; they thought the forests were worth $5 billion and we offered them $2 billion. I’d be surprised if they were worth that 20 years later. They had no great value; there was a doubling of supply coming up; they were planted without rhyme or reason, with no proven market and heaps of competition. The whole exercise had been crazy."

"*It was supposed to be a clean auction — the highest bidder wins, simple. This was really important, because so many of the other privatisations had proved dirty, with the government negotiating afterwards. Treasury had assured us it would be clean this time. Richard Prebble, the SOE minister, was not supposed to get involved personally. But Preb being Preb, he set out to tweak our noses for some more. We were called down to the SOE offices to find the Treasury guys with Prebble, who told us that despite the fact we were the highest bidder with no conditions they wanted more. In the circumstances it was my job to do the beating up. I abused him for half an hour — telling him he was a unconscionable crook trying to change the deal, New Zealand’s reputation would be damaged by this double dealing approach, it was entirely unprofessional. The Treasury* *guys sat there squirming. After this I said we’ll talk to America and see.* *We rang up the two companies to tell them about this outrageous turn of events, that the government was cheating on what was supposed to be a clean auction. Everyone was bloody angry. The chairman of one of the companies had a former US Secretary of Defence with him, who immediately said that he would bomb the bastards for less than that. It was immoral conduct. We quoted all this back to Prebble, with some embellishment. So it went back and forth along these lines late into the night. In the end we worked out a deal: we’d give him $4.25 billion but defer the payment. The interest saved equalled the increase in price. It was a clean wash, but Prebble could show off a better price to his cabinet.*[18](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-18)"

"Gibbs had kept in touch with Roger Douglas since his exit from politics at the end of 1990. In 1992 he encouraged the former finance minister to write a book which tested his understanding that most of the money governments took in taxes was simply recycled back to the middle classes through the superannuation, education and health systems. The churning cost a lot but didn’t achieve much redistribution of income from rich to poor. Rodney Hide was dragooned to help with the book in the early months of 1993. Richard Prebble, who remained the Labour MP for Auckland Central until the 1993 election, helpfully asked a series of questions in the House. Treasury’s answers provided much of the research for Douglas’ book.[15](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477309-807254973-15)"