It seems more than a little coincidental that the National/ACT/Maori Party government have started talking about privatisation in the same week that they announced changes to the Overseas Investment Act to make it easier for foreign investors to buy strategically important NZ assets. The government seems to be following the Roger Douglas mantra of “never waste a good crisis”.
National went to great lengths prior to the election last year to convince New Zealanders that if they elected a John Key government nothing much would change, except of course they would get big fat tax cuts, a promise they clearly had no intention of keeping. It was already becoming clear at the time that the economic going was getting worse, but Bill English continued to insist that large tax cuts could be afforded without any cuts in government spending. He even kept saying things like “New Zealand doesn’t have a debt problem, we have a growth problem”. How quickly he changed his tune once comfortably ensconced on the Treasury benches.
In the past few weeks the government have sent out stalking horses such as the PM’s close confidant Mark Weldon and Treasury Secretary John Whitehead to start re-invigorating the privatisation agenda. It’s now highly likely key strategic assets like Auckland International Airport will end up in the hands of foreign investors, but the even bigger risk ahead is that we could see our electricity infrastructure follow it.
If the government is looking for privatisation targets, the four biggest State Owned Enterprises will be at the top of the list. They are the 3 big electricity generators and NZ Post/Kiwibank. Over the next year to 18 months, we can expect the government to do all it can to undermine public confidence in those companies in an attempt to strengthen their case for hocking them off. The real question is will they have the guts to go to the people at the next election with a transparent privatisation agenda, or will they break their promise before then and start hocking off the family silverware to overseas investors before ordinary Kiwis have a chance to have their say?
You guys really need to get this straight, John didn’t say anything about privatisation and was talking about better allocation of funds (which you probably support just as much as National, for certain values of “better”) and continuing the routine practice of contracting out work when there’s no point employing permanent staff for it.
Ari – how could you sell something without privatising it? The eact quote from Key: “I’ve never said I’m philosophically opposed to the sale of state assets in some form, and I’ve never said that that is off the agenda forever…”
I think both Rahm Emmanuel and Hilary Clinton used the ‘don’t waste a good crisis’ phrase before Douglas! It fact I think it goes back to Machiavelli.
Would it be bad if the electricity companies are sold off? From what I can tell, it’s not like we seem to exert a lot of control over them at the moment – isn’t that supposed to be the benefit of state ownership?
It’s impossible for Auckland Airport to be sold. That’s right, impossible.
@ Chris – isn’t that funny – that quote is word for word the message that Bill English toured in 1999 in his Regional Development tour. He was asked (three times) before we actually got an answer from him – and that was it.
There were two SOA’s at the time that were rumoured to be ‘on the block’ at the beginning of that election year the Nats were saying they weren’t selling any more.
“Well, we’re not saying that we’re opposed to the sale of SOA’s, at this time there are not plans immediately – but we’re not saying that will be the case forever” He went on:
“In these economic times someone would have to have very deep pockets to keep some of our state assets (he specifically mentioned the forests)running he then went on to refer to the Student Loan debt as an asset” He used the sale of NZ rail as an example (look what happened to that). I never forgot it – because I wrote it down at the time.
Wouldn’t it be nice to actually have a debate about the merits of this issue than all taking of ideological positions and discussing he said/she said stuff. I am amazed at Hipkins’ capacity to talk from his larynx instead of his brain.
Dimmocrazy – you somewhat undermine your argument for a debate about the merits of the issue by then attacking me rather than the argument I have put forward.
This will be an example where National goes back on their election year promise – no sale of State Assets.
I do think that SoEs should be more “commercial” in their operation, but think that they should still remain under government hands.
NZPost/Kiwibank is a very good example (in my opinion) whereby an SoE has actually worked well.
Kyle – I agree Kiwibank/NZ Post has worked well as an SOE. It’s a great example of why private ownership isn’t necessary to get an efficient business operating. Contrast that with TranzRail, which was privately owned, and it’s easy to see private ownership isn’t always the best option.
Chris Hipkins says:
July 27, 2009 at 12:49 pm
Dimmocrazy – you somewhat undermine your argument for a debate about the merits of the issue by then attacking me rather than the argument I have put forward.
LOL – this from the guy who worked in the Beehive when Helen Clark was PM
That depends entirely on the SoE. Due to the nature of power and the need for it to be low priced it’s highly unlikely that it ever would make a profit even with improved efficiencies.