Anna Bligh came to the Mossman Shire Hall on Sunday for a community barbecue “come and have a chat, share your views and ideas about our plans for the Queensland of tomorrow over lunch and a cup of tea”. She would have needed her trademark hard hat for this one as the locals are as mad as hell over the fact that their views and ideas have been totally ignored up until now over the forced amalgamation of the former Douglas Shire with Cairns. “Hear us or Fear us” is their motto.

Meanwhile the LNP and Greens have promised to de-amalgamate the Shire — the LNP says they’ll even pay for it — in the event the Bligh Government gets rolled. Local opinion is they’d vote for a cane toad if it meant getting the Shire back. Meanwhile the Qld Minister for Local Government, Warren Pitt has called the locals “delusional” in thinking de-amalgamation is an option. So much for “the Queensland of tomorrow!!” That kind of rhetoric has only ratcheted up the mood that THE END IS NIGH — FOR BLIGH.

The Age: How to perfect the art of customer service and grow a business. Listen and obtain feedback from readers on your product. Solution: Close your Reader Services department. Increase reader satisfaction. Solution: Slash page numbers and copies. Sell more copies of your paper. Solution: Close your major retail outlet. Increase subscriptions and circulation. Solution: Reduce your sales employees by 30%. Improve customer service. Solution: Close down your switchboard after 8.30pm, on weekends and re-route calls to Sydney. Increase youth readership. Solution: Close your education unit. Create a happy workplace. Solution: Sack 100 staff, close the canteen, prevent night-shift employees’ access to food or drink, give big cash bonuses to the CEO, frog-march sacked employees out of the building. Last one out turn out the lights.

Now that we’ve all managed to get our heads around Short Selling and CDO/CDSs the next big thing that should be on ASICs to do list is to tackle the whole seedy area of UNDERWRITING of DIVIDENDS. The warning signals are flashing again. NAB the other day announced that they will not need to undertake a capital raising and they have underwritten their next two dividends at current levels — at first glance these two pieces of information seem unrelated and both positive.

Well it would appear that a dividend is no longer just a dividend (i.e. a distribution of profits to shareholders). It is a form of capital raising (since it now apparently needs to be underwritten). The devil is in the DRP, where stock gets issued in lieu of the cash dividend. They’re effectively exists a ready market in Insto world for converting DRP issued units into (capital) cash that gets back to the companies. Win-win again for the business’s clever financial wizardry since they get to maintain their dividend while getting a capital raising free gratis off the back of it.

It all seems to be too good to be true and as we know it is since it’s the poor shareholder who loose out again due to this value eroding exercise. Any business in the current market who is underwriting dividends is effectively taking future wealth from the shareholders to pay for the current dividend. If a company can’t afford the dividend then they shouldn’t pay it. It’s about time that we had some real transparency into the amount of Dividend underwriting and borrowing to pay for dividends (e.g. TLS) that is going on in the markets so that we can understand what the financial wizards are up to now!

After all the talk about Kerry Armstrong and Coca-Cola, she does it again in the Good Weekend of this Saturday 25th October. Is it provocation or stupidity?

Peter Fray

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