Michael
Pascoe writes:

When is a $7 billion drop in the value of
an asset not a $7 billion drop in the value of an asset? When it was just an
accounting assumption in the first place. That’s the entirely reasonable line being
taken by Finance Minister Nick Minchin about the plunging price of Telstra and
what the government hopes to get for T3.

Yesterday’s Treasury forecasts dropped the
previous price the government would receive for Telstra from $5.25 a share to
$4.13 – which is still a lot more than the stock market presently thinks it’s
worth. It’s a quick and easy way to cut $7 billion from your book.

As a spokesman for Minchin is quoted in the
AFR today as saying: “We’ve never had a target price for T3 and
we still don’t. Just as $5.25 was not a target price, nor is $4.13. It’s an
accounting assumption.”

Which is all quite reasonable, except that
the Government wasn’t talking that way when it was doing deals on how it would
divvy up the loot to get T3 approved.

Dollar Sweetie was putting it just a little
differently
yesterday, according to the SMH: “That is a
far more realistic price than $5.25 in the current climate,” Mr Costello
said. “Some people will say that is still above market but the Government
has decided to take a 90-day average, as we do in relation to a number of other
assumptions.”

So Pete’s
assumptions are more than just accounting assumptions, they’re 90-day averages.

Whatever the
fiddling figures might be, the pressure increases on both the Future Fund and
Telstra boards.

For the former,
it looks like they’re going to have to cop a lot of Telstra shares to manage,
but they’ve been told they will be passive investors which makes it a little
hard to maximise the investment.

For the latter, all
Telstra shareholders from Dollar Sweetie down will be demanding performance
rather than fighting words. The board is responsible for the cowboy management
team. It will soon be time to count the size of the herd.

Peter Fray

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