Phil Goff said yesterday at Labour’s big rally that we had “Six days to save our assets” – now we have 5.
There’s a great letter to the editor in this week’s Listener (not online) by Tim Hazeldine, Auckland University’s Professor of Economics that succinctly puts National’s case for Asset Sales in the bin. I’d like to quote it in full:
Your editorial puff for the proposed asset sales (November 19) reveals absolutely zero understanding of why the policy is so deeply unpopular with the public – and with many economists and business commentators.
These are not financial investments to be sold off to adjust an over-reliance on energy assets in the Government’s “portfolio”. They are genuine strategic assets, held by the Crown – as in Australia and many other countries – to safeguard the future availability and affordability of one of our most fundamental social and economic needs: cheap, reliable electric power.
They are well run as SOEs, so there is no privatisation premium to be extracted. They are in a mature steady industry and do not face difficulties raising funds for needed investments, as you claim with no supporting evidence.
Other projects, such as agriculture infrastructure investments, are not tied to the asset sales, as you assert. There is no link at all. Good projects can always be funded – if not, they aren’t good projects.
The Government faces a huge conflict of interest as both privatiser and regulator. We can use the Listener as an example here. You rather coyly note “in the interests of full transparency”, that this magazine is a privatised former state-owned asset.
When the Listener was state-owned, its biggest commercial asset by far – its cash cow – was the state-sanctioned monopoly on the printing in advance of radio and television programming. If the Government wanted to maximise revenues from privatisation, it would have sold the mag with that monopoly in place. Wisely, it didn’t.
The electricity generation sector is one enormous cash cow, ready for milking. Even – perhaps, especially – with partial privatisation the conflict between private profit and public interest in pricing would be acute. The Government has not even sketched how it proposes to deal with this problem, if at all.
Basically, privatisation of SOEs is the answer to a problem that doesn’t exist.
Professor of Economics, University of Auckland
There are so many arguments against asset sales:
Kiwirail, Air New Zealand – we’ve seen the likelihood of asset-stripping to our country’s disadvantage. Telecom – we see the lack of investment in broadband until they can force the Government into a handout. Bank of New Zealand – we see the vast profits extracted from this country, leaving us all poorer. Contact Energy – we see that, and the start of the higher power prices that we will all suffer more of when all the companies are (part-) privatised.
New Zealand: you have 5 days to save your assets from a path of no return.