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Privatisation: The facts

Written By: - Date published: 11:20 am, May 27th, 2010 - 88 comments
Categories: assets, privatisation - Tags:

Bunji’s post yesterday on the pro-privatisation myths was great. I thought I would follow up with some facts on privatisation.

Fact 1) We – the ‘mums and dads’, the brothers and sisters, even the aunts and uncles – already own Kiwibank and other public assets. We directly benefit from them from their dividends. The SOEs will pay $3.3 billion in dividends into the Crown’s accounts over the next five years. That money pays for things we all enjoy – schools, nurses, roads, Working for Families and Bill English’s mortgage. If these assets are privatised (even partially), every dollar of dividend that goes to a private owner would be one that isn’t going to pay for public services.

Fact 2) ‘Mums and dads’ don’t end up owning privatised assets. Companies provide a break down of their shareholders by number of shares owned. In every case, privatised former public assets are mostly owned by large, nearly always foreign, companies. Here’s the portion of shareholders with 0-10,000 shares in former public assets:

Auckland Airport: 9.95% Forestry Cutting Rights: 0%
Vector: 6.55% New Zealand Rail: 0%
Telecom: 4.51% NZ Timberlands: 0%
BNZ: 0.6% State Insurance: 0%
Synfuels stocks and current assets: 0% Post Bank: 0%
Export Guarantee Office: 0% New Zealand Steel: 0%
Government Supply Brokerage Corp: 0% Petrocorp: 0%
Housing Corporation Mortgages: 0% DFC: 0%
Taranaki Petroleum Mining Licences: 0% Shipping Corp: 0%
Wrightsons Rights: 0% Rural Bank: 0%
Government Printing Office: 0% GCS Limited: 0%
Wellington international Airport Limited: 0% Communicate NZ: 0%
Forestry Corporation of New Zealand Ltd: 0% Tourist Hotel Corp: 0%
NZ Liquid Fuel Investment: 0% VTNZ: 0%
Capital Properties New Zealand Limited: 0% Maui Gas: 0%
Works and Development Services Corporation (NZ) Limited: 0%
Fletcher Challenge Limited Ordinary Division and Forest Division Shares: 0%

Uh, huh. So, not a lot of ‘mum and dad’ ownership, huh? Not even among the ones for which there were public offerings.

Fact 3) Privatisation harms markets. Look at the awful mess that the electricity sector has got in since partial privatisation and corporatisation. Look at rail, telecommunications, the banks after BNZ was privatised and before Kiwibank.

A publicly-owned player can reignite competition by taking on an oligarchy, as with banking. Kiwibank’s influence has brought down fees and it leads the market on interest rates. As Bright Red noted yesterday:

Kiwibank operates a low fees, low rates, low profit model to keep the others honest. What’s the first thing that a private investor would want out of an investment in Kiwibank? Higher profits. Same with a lot of other SOEs. Do you think that money would come out of thin air? No. It would come out of your pocket as a customer.

Fact 4) Privatisation leads to asset-stripping. Private buyers, especially those that buy pieces of national infrastructure (airports, ports, Telecom, power companies), know that the government can’t afford to let the infrastructure fail because of the wider economic benefits that would be lost. What’s the logical, profit-maximising thing to do in that situation? Asset-strip – up prices, take dividends as big as possible, let the infrastructure detiroate and wait for the government to step in to save the infrastructure either with a buy back or some kind of bail out (like the government’s broadband plan).

Fact 5) We also get a bad deal on SOE sales. Almost invariably, the buyers have made massive profits (the asset-stripping helps). We would be better off keeping the profit stream rather than getting too little cash from selling out. If people are so keen to buy, why the hell would we be so keen to sell? We’re not up to our eyeballs in debt, and that would be the only time to sell assets that are contributing so much value to the government and the wider economy.

Fact 6) Kiwibank doesn’t need to be partially sold to get money for expansion. The cheapest source of capital is the government. For a tenth of what it is borrowing to give tax cuts to the wealthiest Kiwis, it can borrow the capital at sovereign rates (or Kiwibank can retain its profits and not pay out a dividend, which amount to the same thing).

There is no economic logic to selling SOEs. This ‘mum and dad’ stuff is just feel-good fluff to disguise the real agenda – taking quality companies that have been built up by taxpayers over the generations and selling them off cheap to the capitalist class so they can make a quick buck

88 comments on “Privatisation: The facts”

  1. Clarke 1

    Just to make the point, here’s a list of the top 10 shareholding mums and dads in Telecom, according to the Companies Office:

    Total Number of shares 1,916,860,491

    Number of Shares 299,853,426
    Shareholder(s) ANZ Nominees Limited Po Box 1492, Wellington

    Number of Shares 246,850,902
    Shareholder(s) 402062 – NATIONAL NOMINEES LIMITED 125 QUEEN STREET, LEVEL 2, BNZ TOWER, AUCKLAND, NZ

    Number of Shares 188,027,402
    Shareholder(s) 303826 – HSBC NOMINEES (NEW ZEALAND) LIMITED Level 9, One Queen Street, Auckland 1

    Number of Shares 166,273,016
    Shareholder(s) National Nominees Limited (Australia) Po Box 1406m, Melbourne 3001, Australia

    Number of Shares 159,700,393
    Shareholder(s) HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED Hsbc Centre, Level 16, 580 George Street, Sydney, Australia

    Number of Shares 141,901,728
    Shareholder(s) JP Morgan Nominees Australia Limited Locked Bag 7, Royal Exchange, Nsw, Australia

    Number of Shares 61,146,471
    Shareholder(s) 303826 – HSBC NOMINEES (NEW ZEALAND) LIMITED Level 9, One Queen Street, Auckland 1

    Number of Shares 44,383,915
    Shareholder(s) ANZ NOMINEES LIMITED Level 25 530 Collins Street, Melbourne Vic, Australia

    Number of Shares 43,227,291
    Shareholder(s) 256875 – CITIBANK NOMINEES (NEW ZEALAND) LIMITED 11TH FLOOR, CITIBANK CENTRE, 23 CUSTOMS STREET EAST, AUCKLAND

    Number of Shares 41,957,746
    Shareholder(s) ACCIDENT COMPENSATION CORPORATION Bnz Tower, 125 Queens Street, Auckland

  2. insider 2

    Your list above ignores thtat many mums and dads have their savings in pension funds whihc invest on their behalf.

    I’d say the awful mess in the electricity sector is as much down to the meddling of politicians – remember the govt and community trusts owns by far the majority of the industry.

    Do we really get a bad deal on privatisations? Can we blame others for our govt’s ignorance. It’s not as if they don’t get sophisticated advice. Maybe it’s more that govt doesn’t run things well so the price reflects that historic performance and private operators can get more out of the businesses. Nothing sinister or unfair, just the dynamics of it.

    “Kiwibank’s influence has brought down fees and it leads the market on interest rates”

    First evidence of that? Headline rates can be misleading and there has been an awful lot of other things going on in the market apart from KB. It may be true or it may not…

    Second KB was talking only about floating rates. Most people have had fixed rate mortgages and KB’s story is not quite so rosey there

    “For a tenth of what it is borrowing to give tax cuts to the wealthiest Kiwis, it can borrow the capital at sovereign rates (or Kiwibank can retain its profits and not pay out a dividend, which amount to the same thing).”

    So the state is subsidising competition. How is that good? How will that affect institutions like PSIS, TSB, SBS, Credit Unions? Seems a bit unfair to me.

    • Draco T Bastard 2.1

      Maybe it’s more that govt doesn’t run things well so the price reflects that historic performance and private operators can get more out of the businesses.

      AirNZ, privatised, ran at a massive loss, asset stripped etc, government bails it out, takes ownership and AirNZ is now making a profit.

      Reality disagrees with you.

      How is that good?

      It’s decreasing the deadweight loss of profit.

      • insider 2.1.1

        Like most airlines Air NZ has ups and downs. It definitely had bad results under govt ownership in the 70s/80 and made hundreds of millions in the 90s when private. So reality seems in dischord with you too. Wasnpt it’s failure from being the victim of a monumentally bad investment aided by Australian two facedness?

        And yes it may be making a profit now but could that be because it doesn’t carry the burden of the government’s $750m bail out debt. How much of that debt has been repaid? I’m sure lots of businesses would do well with free money.

        And asset stripped seems to be the “slur du jour”, what assets did it strip? Ansett? It’s expansions into Asia or the US? Or do you mean the more recent asset stripping of engineering jobs to China? Or the 5% staff cuts last year that helped it achieve a profit?

    • Clarke 2.2

      Your list above ignores thtat many mums and dads have their savings in pension funds whihc invest on their behalf.

      What an utterly specious argument. As Marty pointed out in the post, all those mums and dads already own Kiwibank via the government, so selling it to the same sorts of people who are the majority owners of Telecom will simply take the wealth that belongs to all New Zealanders at the moment and concentrate it in the hands of the 2% of the population who can afford a private pension plan with JP Morgan Australia.

      “Kiwibank’s influence has brought down fees and it leads the market on interest rates’

      First evidence of that? Headline rates can be misleading and there has been an awful lot of other things going on in the market apart from KB. It may be true or it may not

      I presume Econ101 was a fail for you, then. Basic neo-liberal economic theory – which you Righties are meant to subscribe to – says that adding more participants to a market will result in greater competition which will bring prices down. When you and your mates glibly use phrases like “the disciplines of the market”, this is what you’re actually talking about. Or are the benefits of competition not part of the right-wing ideology any more?

      So the state is subsidising competition. How is that good? How will that affect institutions like PSIS, TSB, SBS, Credit Unions? Seems a bit unfair to me.

      The National Party is already heavily distorting markets by using taxpayer funds to insulate businesses from the effects of their emissions through the ETS – Rio Tinto will be on the receiving end of more than $14 million in subsidies. The whole purpose of a National government is to funnel public largesse to a small number of private sector donors companies.

      So I guess we should assume that some subsidies are bad (Kiwibak, Kiwirail) while others are good (Rio Tinto, every dairy farmer in the country who dumps cowshit in our rivers) ….

      • insider 2.2.1

        “so selling it to the same sorts of people who are the majority owners of Telecom will simply take the wealth that belongs to all New Zealanders at the moment and concentrate it in the hands of the 2% of the population who can afford a private pension plan with JP Morgan Australia.”

        You’ve never heard of Kiwisaver or company pension plans? Point was his review of current shareholdings ignored the potential beneficiaries of funds managers.

        “I presume Econ101 was a fail for you, then. Basic neo-liberal economic theory which you Righties are meant to subscribe to says that adding more participants to a market will result in greater competition which will bring prices down”

        In which case you will be able to quickly and clearly demonstrate the KB effect then.

        You can assume all you want. You seem quite creative in developing imaginary scenarios and atrtibuting imaginary positions and arguments that you can rebut. So continue on, it should be fun to watch you chasing your tail.

        • Clarke 2.2.1.1

          You’ve never heard of Kiwisaver or company pension plans?

          The difference between you and me is that I fact-chcek. If you’d bothered doing the same, you’d never have made the assertions about Kiwisaver, at it would be apparent from the most cursory checkof the IRD list that HSBC, JP Morgan and Chase are not Kiwisaver providers. The only way that any New Zealander will have any beneficial interest in Telecom via the nominee companies listed is if they happen to be part of a Kiwisaver fund that just happens to use one of the nominee companies for its “international funds” portfolio … and is then violating its own usage guidelines by investing back in NZ companies. I posit that this is a vanishingly small number of people, which for all practical purposes approaches zero.

          In which case you will be able to quickly and clearly demonstrate the KB effect then.

          Sure – how about looking at Porter’s five forces analysis as it applies to the banking sector, which seems immediately relevant to Kiwibank in the theoretical sense. In the more practical sense, David Tripe from Massey University conducted a review of competition and contestability in the NZ banking sector which seems immediately relevant.

          Of course, you could have found this or a whole bunch of other equally relevant studies through some judicious Googling, but I guess that would be asking a bit much. Fundamentally, it’s not the fact that you’re putting up half-baked ideas and outdated right-wing ideology that’s irritating me … it’s that you’re lazy.

          • clandestino 2.2.1.1.1

            Nice clarke, you just comprehensively exposed most righties for what they are: ignorant and living in a dreamland where the only rule is effort=reward. The actual workings of the market elude most of them completely. For example in this bank oligopoly where “if there was a market for a new bank then it would attract investment”…um no, the barriers to entry are far too high, the government is the only actor capable of the required investment. Same with rail, air, most public transport, energy. Look at the US and it’s failing infrastructure for examples of how private corporations really asset strip utilities.

            • insider 2.2.1.1.1.1

              Yay! High Five guys! YOu must have missed htat he referred to papers that either didn’t look at KB or were just theoritcal. Where is the evidence of the KB effect?

              “For example in this bank oligopoly where “if there was a market for a new bank then it would attract investment’ um no, the barriers to entry are far too high, ”

              utter tripe (no pun). Do you know how many providers of financial services there are in NZ?

              • Clarke

                Do you know how many providers of financial services there are in NZ?

                See, that’s what I’m talking about. It’s an idiotic question from someone too lazy to do the basic research necessary to support their argument … although I’m stretching the definition of “argument” here, given that your unsubstantiated outbursts clearly lack the intellectual rigor to qualify.

                If you’ve got an actual point to make – although it isn’t evident so far – I suggest you take the effort to do the research, find some substantiation, and post the links. After all, we have a specific word that describes your particular brand of content-free counter-factual mouth-breathing opinion – it’s called trolling.

          • insider 2.2.1.1.2

            We were discussing the list of privatisations in the post and the number of mum and dad investors in general. Suddenly you are just interested in Telecom alone. Sorry if I didn’t follow your twists and turns.

            The point still stands that the many ways mum and dads can have an interest in a company have been ignored in the original post. You’ve focussed on Telecom not me.

            And I may well be lazy but at least I had the energy to read beyond the titles in your link and notice the smith tripe paper covers a period from 1996 to 1999 and was written in 2001. Tell me when did KB come into existence again and how is the paper ‘immediately relevant’?

            I qutie understand the theory but even the NZRB said that since KB came into existence the market has performed differently from theory would predict. http://www.rbnz.govt.nz/research/bulletin/2002_2006/2003jun66_2rodgers.pdf

            So maybe you need to get more exercise

            • Clarke 2.2.1.1.2.1

              We were discussing the list of privatisations in the post and the number of mum and dad investors in general. Suddenly you are just interested in Telecom alone. Sorry if I didn’t follow your twists and turns.

              My mistake – I’ll use simpler words and less logic next time if you promise to make the effort to keep up with the big kids.

              And I may well be lazy

              My point exactly …. although based on the evidence in this thread, I wouldn’t have used the qualifiers “may well be”.

              I qutie understand the theory …

              Actually I don’t think you do in the slightest. Remember, you were the one who said that you doubted the effect Kiwibank was having on competition in the interest rate market (albeit you didn’t use the big words), yet you’ve not provided a single piece of independent substantiation for your view. What we know is that mainstream economic theory predicts that a new entrant into a market will increase competition and that prices will fall as a result. I’ve provided links to the mechanisms that underly the theory, and an example of how these mechanisms are evidenced in the NZ banking market.

              In response, the best you can come up with is a 2002 RBNZ discussion paper that primarily addresses the stability and health of the NZ banking system, with only an oblique reference to Kiwibank.

              If you can provide a cogent explanation of why competition works to drive down prices in other free markets around the world – including in the banking sector – yet for some magical reason it doesn’t work in the NZ market, then I’m all ears. However actual facts and independent substantiation will be required.

  3. randal 3

    the Labour party must keep asking the gnats why they are selling kiwibank in parliament and and any and all other forums.
    The questioning must be persistent and not allowed to fall away as some other illusory topic surfaces.
    Just one question will do for them if it is asked often enough.

  4. deemac 4

    in the UK the sell-off of utilities has led to Eau de France (EDF) owning many British utilities. They use the UK profits to subsidise much cheaper power etc bills in France! There may be some alternate reality where this makes sense, but not here.

    • insider 4.1

      Electricite de France I think you mean. AFAIK power prices have long been subsidised in France.

  5. BLiP 5

    Privatisation has failed. There can be no doubt that any promised savings in either cash or efficiency or equity were chimeras put up by the overseas big business beneficiaries of the programs (of which Labour is as much to blame as National Ltd). Most of the cats are out of the bag now but lets look at an alternative for the banking industry – lets give the foreign-owned banks five years to close shop and fuck off.

    • just saying 5.1

      Now that’s a policy I’d march in the streets for.

      If New Zealand is suffering because New Zealanders mostly spend their savings (should they be lucky enough to have any), on real estate, how much are these bank taking out of our economy? Someone was saying that about 70 percent of an average mortgage is interest. Seventy percent of most NZanders’ investment capital staying in NZ would make a huge difference to the economy.

  6. Tigger 6

    If I was National I would ‘let slip’ I was thinking about selling off Kiwibank. I’d concentrate all the public’s ire on that. I’d allow them to expend copious amounts of energy in stopping the sale. Then I wouldn’t sell it. But I would sell off a load of other assets which weren’t as passionately defended and which I had been working on selling off while everyone was worrying about Kiwibank.

    These posts on privatisation are great.

  7. Nick C 7

    Who said this in 2006:

    “Something that we could do and something that I’m quite keen on is that as the SOEs develop the new businesses, especially those that are done in partnership with people in the private sector, we could well have floats of the subsidiaries so that they could be listed on the Stock Exchange, that could help give a bit of depth to our capital markets and get some transparency around those companies, and I think that would help.”

    • Clarke 7.1

      It’s a Trevor Mallard quote. You’ll note that he’s in opposition now – a fate likely to befall any other politician with a similarly stupid agenda.

      • Nick C 7.1.1

        I dont think there is much correlation between that stance and Labours defeat in 2008.

        What it does say is that any reasonable person should support this move. Labour are only opposing it in opposition for populist reasons (which is also the only reason National didnt run it as policy in 2008)

        • felix 7.1.1.1

          When you say “for populist reasons” do you mean “most people don’t want them to do it”?

          If so, who is “any reasonable person”?

          • Nick C 7.1.1.1.1

            Its true that the New Zealand public generally has an aversion to anything which can be labeled ‘privitisation’ (which is why authors on this site use the label so much). That doesnt mean its a bad thing. I’d say that relativly centrist politicians constitute reasonable people. In this case Mallard supported partial floating of assets when he was a minister and had actual responsibilities. But now hes in opposition he will say whatever the polls respond to.

            I think its fair to say that just because the majority of the public oppose something doesnt mean it cant be a good idea in some cases. I.e. Id say if you did a poll the majority of the public would still support legal smacking. I bet you wouldnt like that.

            I think the problem is that there has never been a substantial debate on privitisation. The forth labour government did it without consulting the electorate which has had ongoing affects. Hopefully the 2011 election campaign will be an oppourtunity for that debate.

            • BLiP 7.1.1.1.1.1

              I think the my problem is that there has never been a substantial the right have never won a single debate on privitisation.

              FIFY

              • Anita

                Are you sure? It seems to me that the right has, in fact, won the debate on almost every past privatisation in NZ. Looking at the list in the original post, I would argue they have totally won the debate on the Tourist Hotel Corp, NZ Steel, State Insurance, and Government Computing Services to name only a few.

              • Draco T Bastard

                Looking at the list in the original post, I would argue they have totally won the debate on the Tourist Hotel Corp, NZ Steel, State Insurance, and Government Computing Services to name only a few.

                Not really. All that those prove is that those SOEs did need to be restructured but it doesn’t prove that selling them off was. Keeping them in public ownership with the profits going directly back to the public would have been better for the country as a whole rather than having that capital going overseas and benefiting a few people.

                • Anita

                  Hm… we might be talking past each other.

                  I think they won the debate because if I asked a good cross section of NZ “Should the government own State Insurance?” or “… a bunch of hotels for tourists” or “… a big computer services company?” I reckon I’d get a huge majority of people saying “No, what on earth would we want them to do that for?!”

                  I’m not saying what I think was the best outcome, I’m saying I think the pro-privatisation lobby won the debate.

                  • BLiP

                    I’m not saying what I think was the best outcome, I’m saying I think the pro-privatisation lobby won the debate election.

                    Buy, yeah, you’re right in the literal sense. What we need is a proper debate with evidence, history and everything.

                    EDIT: Ooops – as the ubiquitous Dr Felix points out below.

            • felix 7.1.1.1.1.2

              Nick I agree, a proper open public debate on these issues is required.

              In contrast to the time of the 4th Labour govt we now have 20 years of solid evidence on which to base arguments one way or the other so there can be no hiding behind religious belief on the matter.

              Out of curiosity, what do you mean “anything that can be labelled as privatisation”?

              Do you mean “privatisation”?

              • Nick C

                @Felix: I mean things like opening up the workers account of ACC to competition. That in no way involves selling any state owned assets or even giving up government control of anything. It simply changes the law to allow a new form of contract to occur between a firm who require insurance and an insurance company.

                I think overwellmingly the evidence shows that the situation works the best when share floats in SOEs occur. Most people agree that Air NZ has been a success story in that regard.

                Compare that to when these organisations were government departments and half the country was employed to sit on their hands all day, supposedly ‘working’ for them.

                • lprent

                  Most people agree that Air NZ has been a success story in that regard.

                  It doesn’t have a natural monopoly.

                  • insider

                    Tell that to the people on regional air links. They are regulalrly complaining about fare levels.

                    • lprent

                      I’ll rephrase that..

                      It doesn’t have a natural monopoly on most routes. But where it does, it does what every monopoly does – it charges like a wounded bull and engages in anti-competitive practices to discourage competition.

                • Bright Red

                  Air NZ had to be bailed out after an unsuccessful privatisation. The govt owns most of it now, but not because it was a partial float but because we bought it back.

                  As for the myth that public assets were full of people not doing any work, you’ve just got to look at what happened to GDP and wages after the neoliberal revolution. It was a disaster.

                • RedLogix

                  The classic question arising from this debate, posed as I recall by Arnold Nordmeyer to some students was…”should the State own corner dairies?” In other words, how should we determine whether an enterprise should be public or private. I’ve long proposed that the answer is clear if you ask the right questions.

                  The first and biggest one is, “What happens if it fails?”. (Failure could either be operational or commercial.) If the answer is…the taxpayer/public have to bail it out…then it should be owned by the public.

                  If it sort of passes that question, the next one is, “Does this business make money at the expense of other people’s misery?”. If so then you have to be very cautious about a profit motive that creates incentives to increase this misery in one way or another. This tends to capture prisons and the likes of health insurance.

                  And finally you might ask, “Does this enterprise speak to something important to people in a way that really cannot and should not be measured in terms of profit or loss?”. This captures things like biodiversity conservation, or cultural expressions such as the arts, theatre or orchestras.

                  • Quoth the Raven

                    The first and biggest one is, “What happens if it fails?’. (Failure could either be operational or commercial.) If the answer is the taxpayer/public have to bail it out then it should be owned by the public.

                    The state should let them fail. There ought to be no bail outs. Just because some corporatist state has decided to bail out a business doesn’t mean that it ought to have been done.

                    If it sort of passes that question, the next one is, “Does this business make money at the expense of other people’s misery?’. If so then you have to be very cautious about a profit motive that creates incentives to increase this misery in one way or another. This tends to capture prisons and the likes of health insurance.

                    Here you are conflating private with for profit. There is nothing about private ownership that entails it is for profit. In the case of private prisons you need look no further than the state. Harsher sentences and new laws are enacted by the state not by some nominally private enterprise acting for the state (in fact Labour and National have been doing quite well on that front without private prisons). If you are arguing that state is open to the kind of perverse lobbying that has operated in the US than what you are saying is the state is open to the same kind of incentives that private entities are. Which is absolutely true. That’s applying public choice theory to the state and I would encourage you to dig down that rabbit hole.

                    And finally you might ask, “Does this enterprise speak to something important to people in a way that really cannot and should not be measured in terms of profit or loss?’. This captures things like biodiversity conservation, or cultural expressions such as the arts, theatre or orchestras.

                    The state doesn’t own the arts it funds them nor does the state own biodiveristy. The work of people like nobel prize winner Elinor Ostrom has shown that common ownership of natural resources can be well managed and that government regulation or ownership is not needed to manage the commons. Here’s another example Commons forests outperforming state-controlled forests:

                    In the first study of its kind, Chhatre and Arun Agrawal of the University of Michigan in Ann Arbor compared forest ownership with data on carbon sequestration, which is estimated from the size and number of trees in a forest. Hectare-for-hectare, they found that tropical forest under local management stored more carbon than government-owned forests. There are exceptions, says Chhatre, “but our findings show that we can increase carbon sequestration simply by transferring ownership of forests from governments to communities”.

                    One reason may be that locals protect forests best if they own them, because they have a long-term interest in ensuring the forests’ survival. While governments, whatever their intentions, usually license destructive logging, or preside over a free-for-all in which everyone grabs what they can because nobody believes the forest will last.

                    The authors suggest that locals would also make a better job of managing common pastures, coastal fisheries and water supplies. They argue that their findings contradict a long-standing environmental idea, called the “tragedy of the commons”, which says that natural resources left to communal control get trashed. In fact, says Agrawal, “communities are perfectly capable of managing their resources sustainably”.

                    I’ve long proposed that the answer is clear if you ask the right questions.

                    See I don’t believe the answer is clear. Things are never as simple as statists may want us to believe.

                    • RedLogix

                      See I don’t believe the answer is clear.

                      Of course you don’t. I would expect for one instant that you would find anything clear because you are living in a paradigm bearing little relationship to the one the rest of us occupy. It’s rather like a Western trained homeopath trying to discuss health with a Chinese health practioner whose thinking is rooted in the 5 Element model of medicine.

                      Only with a lot of patience and goodwill are they likely to make sense of what each other is saying.

                      The state should let them fail. There ought to be no bail outs.

                      So if your local water supplier goes bankrupt, it should be shut down? What you think “ought to be” and political reality is likely quite different. Everyone is bitter about how the big banks were bailed out last year, but the actual consequences of not doing so were unsupportable.

                      Here you are conflating private with for profit. There is nothing about private ownership that entails it is for profit.

                      The problem with private monopolies is not that they are monopolies, but that they lack public accountability. As much as the trend towards harsher penalities is deplorable and counterproductive, it was the voters who have put their hands up for it.

                      Try, as an individual, holding a private corporation, answerable only in law to it’s shareholders…to account for it’s ethical standards. Only the state has the power to do that.

                      by transferring ownership of forests from governments to communities’.

                      That’s merely an argument for localisation, not privatisation for corporate profit.

                    • Quoth the Raven

                      The problem here is much like your medicine example. You wish to look at the current state-corporate system that we have and from it denounce private enterprise and the operations of the market.

                      So if your local water supplier goes bankrupt, it should be shut down? What you think “ought to be’ and political reality is likely quite different. Everyone is bitter about how the big banks were bailed out last year, but the actual consequences of not doing so were unsupportable.

                      I don’t have a local water supplier I have a well. However let’s run with your example, if a private business did happen to supply water to a community and it went bankrupt does this mean the water supply shuts down as you assert? No. It’s as Nick C said the business goes into receivership and someone else takes over. My personal preference would be for the community to run their own water supply, but that’s just me.

                      That’s merely an argument for localisation, not privatisation for corporate profit.

                      Here you are with your conflations. If public property is returned to the commons that is precisely privatization. Privatization can take any number of forms your insistence on just one is only to stultify the discussion on privatization. Privatisation could mean a return to commons, worker ownership or a consumer cooperative.

                      The problem with private monopolies is not that they are monopolies, but that they lack public accountability. As much as the trend towards harsher penalities is deplorable and counterproductive, it was the voters who have put their hands up for it.

                      Try, as an individual, holding a private corporation, answerable only in law to it’s shareholders to account for it’s ethical standards. Only the state has the power to do that.

                      People can hold private organisations to ethical standards Any cursory glance at history would show this. What about holding the state to ethical standards? How about non-aggression for starters.

                    • Puddleglum

                      Hi QTR,

                      You seem to have a different understanding of the notion of ‘private’ from me. Yours may well be the textbook version (I don’t know), but I don’t see it that way. For me, ‘private’ is not a synonym for ‘non-state owned/controlled’ as it seems to be for you. I use the social science definition of ‘privatisation’ (e.g., of religion) which concerns the reduction and devolving of social phenomena and processes to the individual (e.g., the reformation ‘privatised’ religion because each individual was said to have a personal relationship with God which, ultimately, only they could judge the value of).

                      For me, privatised ownership is to be contrasted with communal ownership. Here’s an example: Companies have shares. Whichever individual ‘owns’ the shares can trade them (usually). They can sell them, buy them, etc. and whatever they have is their own ‘private (i.e., individual) property’ – no matter how many individuals own shares. And, each individual can sell shares and reap their benefit at any time without consulting anyone else.

                      By contrast, communal or collective ownership is just that: The collective ‘owns’ the enterprise. If an individual leaves the collective they cannot sell their ‘share’ in it – they simply forgo their ability to be supported by the collectively owned assets. (In much the same way, an individual could leave a hunter-gatherer community but would not take with them some notional ‘share’ of the community’s assets.)

                      Here’s another example: Modern ‘vote-based’ democracies (i.e., one person, one vote within the nation state or some other, usually geographic-based, institution for ensuring some individuals will dominate others) are ‘privatised’ versions of collective decision making. Like Thatcher, they assume that a collective decision is nothing but the sum total of individual decisions. By contrast, thoroughly collective decision making tends to involve extensive and protracted discussion and, eventually, some resolving onto one particular course of action for the group. It is the norm in ‘traditional’, ‘indigenous’, ‘tribal’ or ‘hunter-gatherer’ societies.

                      Our privatised approach to decision making (what we call modern, liberal, representative democracies) leads to the kind of competitive and rather aggressive atmosphere so typical of the ‘political’ sphere. In effect, modern democracies have embraced Classical Liberal individualism and have, therefore, eliminated even the possibility, for most people, of understanding what actual collective decision making involves (decisions by the collective, for the collective, of the collective).

                      Some people even assume – laughably – that if the notion of the sovereign individual were to disappear somehow it could only be replaced by tyrrany of the collective. Tyrannies and dictatorships are products of individualism, not collectivism (e.g., Napoleon, Hitler, Stalin, Mao, most US Presidents, the Ancient Greek city states – that gave us the term ‘tyrant’, – etc.).

                      That assumption demonstrates a lack of both imagination and knowledge of how most communal societies (i.e., most human societies) have operated through evolutionary history.

                  • Nick C

                    Thank you for a relativly considered contribution redlogix. By the way most of the left wing authors and commentators write on this blog you would think they do support the government owning corner dairies.

                    Electricity companies dont seem to fit either of those three

                    Do you support the privitisation of electricity companies currently owned by the state?

                    • Clarke

                      Electricity companies dont seem to fit either of those three

                      That’s arguing to the point of perversity. The question of what happens when a major electricity company fails is obvious – the power goes off. And more Folole Muliaga’s die. And then the government steps in to get the lights back on because having its citizens die and the economy grind to a halt due to mismanagement in the private sector is simply unacceptable.

        • Clarke 7.1.1.2

          What it does say is that any reasonable person should support this move.

          What, a couple of politicians say similar (but not identical) things a few years apart, and suddenly “any reasonable person” should support this nonsense? Is that the best you’ve got?

          If you’re not going to use actual rational argument, perhaps laced with some actual facts, then you might as well appeal to the Invisible Sky Fairy for support – “What it does say is that any reasonable person should support this move because that’s what the voices in my head told me.”

          Try harder.

          • BLiP 7.1.1.2.1

            What it does say is that any reasonable person should support this move.

            Them damned true Scotsmen at it again.

          • Nick C 7.1.1.2.2

            Simply not true. If an electricity company fails financially it would never mean that power is suddenly cut. The company would go into recievership. There would be no dire consequences

            As for it failing in terms of providing power, surely you know that the company which cut her power, mercury energy, was an SOE! Furthermore there are plenty of companies where, if they suddenly decided no longer to provide services people would suffer. I think fontera is one, as if fontera suddenly shut down we wouldnt have milk or dairy products for a while. Nationalise fontera?

            • RedLogix 7.1.1.2.2.1

              surely you know that the company which cut her power, mercury energy, was an SOE!

              And it got a public roasting for it. Ultimately as an SOE it was compelled to alter it’s policies and procedures to ensure such that kind of tragedy was much less likely to occur.

              You asked if I thought electricity companies should be public or private. My answer comes in two parts.

              As an technical type of person I perceive the electricity system as a single engineering entity. There are many more opportunities to optimise the efficiency of the system if it is operated as a single entity than split up into pointlessly competing segments as it is now.

              And secondly, the technical argument that a competive market yields a large total welfare than a monopoly provider breaks down for industries such as this one where there are very high fixed costs and relatively low marginal ones. A detailed paper is here.

    • felix 7.2

      Mallard.

      In this article Gordon Campbell references the quote and also the follow up from Espiner 2 years later, along with exploring many of the issues surrounding privatisation.

      If you’re interested.

    • Bright Red 7.3

      Well, I guess if Mallard said something 4 years ago about subsidaries of SOEs then we may as well sell the lot of them and anyone who opposes is a hypocrite.

      dork.

      • lprent 7.3.1

        …Mallard said something 4 years ago…

        Precisely. Trevor doesn’t speak for me in the same way that I don’t speak for him.

        The problem is that every privatisation that has gone through in NZ has essentially done it by stealth. It wasn’t fore-shadowed by specifics in an election campaign. The pros and cons were never debated. It was done using the closed door, no consultation with the wider community techniques pioneered by Rodger Douglas and continued now by Act (look at the super-shitty for an example of the technique), and National (look at the ACC in the late 90’s).

        Labour damn-well learnt their lesson. National seems to be getting the point slowly. Act are just idiot conservatives who will keep repeating the same old mistakes.

        Parliament isn’t fully pre-eminent – the political reaction can turf as well as support. Before you privatise, there has to be a widespread acceptance not only amongst your own supporters but also amongst those opposing you – otherwise you will be voted out and tossed in the wilderness for a decade.

        The problem is that there have been quite a few workable privatisations where the operators weren’t natural monopolies (Government Print for instance). However in every case where there has been a natural monopoly, the consumers (and voters) have been royally fleeced for decades. That is the reason why those organisations were created as state enterprises in the first place.

  8. Andrew 8

    That list is very misleading Marty. Hand picking figures to make sensationalist headlines once again.

    Most ‘mum and dad’ investors don’t invest in the share market on their own, they lack the understanding and the confidence to do so. Rather, most invest through managed/pension funds that are managed on their behalf by companies and banks such as the many nominee accounts that Clark so helpfully produced above. If you could provide figures on what percentage of the share ownership of said companies was in nominee accounts and then those accounts broken down into packets of shares under 10k, then i think you would get your answer of how much of these shares are owned by ‘mum and dad’ investors.

    would be a crap load more than what you claim I’d be guessing.

    • Bright Red 8.1

      So, your argument is some ‘mums and dads’ might own parts of some of these privatised SOEs via managed funds. Whereas all Kiwis own the remaining SOEs via the goverment.

      Your way is better, how?

      • Andrew 8.1.1

        That wasn’t my argument at all. My argument, once again, is about Marty’s use of misleading figures. He is stating that hardly any mum and dad investors own shares in our companies, and i’m saying that i would be willing to bet that there is a vastly higher amount of small kiwi investors that own shares in those companies.

        But to address your comment, i don’t think it’s a bad thing at all if majority ownership is held by the government with legislation enforced so that majority ownership must be kept by the crown. We have a savings and investment problem in this country that favours housing over everything else. We need to make the share market more attractive for NZ’ers to invest in. Solid returns in other investments would make housing less attractive and maybe make it more affordable for the average kiwi to own a house.

        unfortunately tho, i think the horse has well and truly bolted on that one.

        • lprent 8.1.1.1

          …i think the horse has well and truly bolted on that one.

          I’d tend to agree. The local stock market is far too incestuous, the available advice seems to be driven more by broker commissions than realism, and it is generally perceived to be a pretty unreliable place to invest money. It is slowly getting better, but the reputation acquired in the 80’s will take a generation or two to get rid of.

          It isn’t that we need more stocks to invest in – that isn’t the root of the problem. The local stock market still has a horrendously bad reputation especially amongst the older groups of investors. Many older people with money to invest will just about look at any other alternative first – which of course is why so many got burned in the finance firms.

        • Draco T Bastard 8.1.1.2

          But having the ability for people to invest in what they already own won’t actually increase the rate of investment in non-productive assets. In fact, I’d say it would decrease it.

          What would happen is that the government would decrease the peoples investment by X which shortfall would then have to be made up from the sale of shares. As the business is government backed it would be seen as “safe” resulting in a shift of investment from the private, but risky, investments. With limited shares and lots of people willing to buy share price would go up so the amount of capital shifted in that direction would be greater than amount reduced by the government. Now, this appears to be good but the value of the shares hasn’t actually changed – they’re still only worth X. All we’ve seen is speculation and the price of those shares must fall again and will likely drop to less than initial offering value.

          So, we have flight of capital from some of the market into speculative bidding in “safe” government backed stocks followed by the normal crash which may actually result in the collapse of the SOE which will, of course, result in another government bailout. You want solid returns in other investments then you need to find a way to make those other investments solid rather than putting even more of the taxpayers wealth on the line.

    • Anita 8.2

      Andrew,

      Can you please explain to me what you mean by “mum and dad investors”, I don’t think it literally means investors who are parents, and I suspect there is a whole bunch of implicit judgments bundled into the concept

      • ianmac 8.2.1

        Too right Anita. The term Mum and Dads suggests sitting around the kitchen table and figuring out if they have enough change left after buying fish and chips to buy a few shares.
        It would more likely be those discussing shares as they drive their BMW down to the docks where their 12 metre yacht has been rolled out and provisioned for another 4 day weekend supping champagne.

        • Andrew 8.2.1.1

          hey, i didnt make the term up … look at how many mum and dad’s as you speak of lost money when the finance companies collapsed. most of those were the kitchen table sitting types and not the BMW types that you refer to. These are the types of people i am referring to, those that are trying to invest for their retirement.

      • Andrew 8.2.2

        Hi Anita, i’m using the term ‘mum and dad’ investors because that has been the term batted about in reference to people that may have a chance to invest in KiwiBank.

        The term is rather loose as it could literally mean anybody. But to me, I take it to mean any small time investor that is investing in the share market or part thereof as a savings scheme. What it doesn’t mean is large institutional investors or professional hedge fund traders. Although a lot of these ‘evil types’ are actually investing on behalf of other people who i just mentioned earlier.

        It definitely does not mean the evil US based mega-corp that is buying up all the competition :)

        • Pascal's bookie 8.2.2.1

          Surely unit trusts and the like count as ‘large institutional investors’?

          When xyz fund management co. grabs a big old chunk of abc.corp, it’s the large institution xyz that votes at the agm, or does xyz get in touch with all the investors in it’s funds and find out how to cast the votes?

    • Zaphod Beeblebrox 8.3

      Funny, Bill never mentioned that when promoting selling off parts of Kiwibank. So we let Pension Funds, Hedge Funds and Managed funds buy into Kiwibank and set their directors up as Kiwibank directors? That might be good since it will help the mums and dads (whoever they are).

      • Andrew 8.3.1

        I don’t think nominee accounts of managed funds have voting rights and hence would not be able to set their directors up as Kiwibank directors. I would like to be corrected if i am wrong tho.

    • Clarke 8.4

      I guess the names of the nominee companies – a whole bunch of which include the word “Australia” in them, and which are directed to Australian addresses – didn’t trigger the thought that even if they were pension funds, they weren’t funds that benefited New Zealanders?

      • Andrew 8.4.1

        True, but lots of kiwis live and work in Aussie. There are also likely to be people that invest in a managed fund that is managed by an Australian entity.

        Anyway it’s a bit of a red herring as it’s demand and performance that drives the shares value, if we have money coming to the country from Aussie to buy shares then so what? Eventually they will be sold and some one else can buy them.

        You can’t shut off investment to the rest of the world just because they are not based in NZ. We are way to small to have an effective investment market if only kiwi’s were allowed buy shares in kiwi companies.

        • felix 8.4.1.1

          “True, but lots of kiwis live and work in Aussie. “

          HAHAHAHAHAHAHA!!!!!

          Brilliant, Andrew. We don’t have to worry whether a policy benefits Kiwis in NZ cos there’s plenty of Kiwis all over the world!

          Any policy detrimental to NZ can be characterised as advantageous to overseas Kiwis!!

          That’s just so teh awesome. I want to marry you.

          • Andrew 8.4.1.1.1

            your such a cock felix

            i was using that as an alternative as to why there were Australian nominee accounts in the list as one of the possible reasons. Yes there are loads of kiwis in aussie, the same as there are loads of kiwis in england and all over the world. and actually a shit load of aussies move here every year as well. doesnt mean they have to stop investing in the sharemarket. argue my points rather than pick one line out of 50 that provides you with some comic relief you pedantic prick.

            • felix 8.4.1.1.1.1

              You’re too kind.

              p.s say something worth arguing and I’ll see if I can stop laughing at you for long enough to reply.

              • Andrew

                ditto

                • felix

                  Except that you’re not laughing and I am.

                  I’m just going to paste Clarke’s question here so you can remember where you were before you got all angry:

                  I guess the names of the nominee companies a whole bunch of which include the word “Australia’ in them, and which are directed to Australian addresses didn’t trigger the thought that even if they were pension funds, they weren’t funds that benefited New Zealanders?

                  There you go, now try again.

                  Be serious this time.

                  • Andrew

                    Every time i see you comment with some quick witted reply thinking your all that i laugh my ass off at how someone can take themselves so seriously. & I’m not angry, but your still a prick.

                    There is no issue about Australian nominee accounts owning shares in NZ companies, and there is nothing to say that some of which are not benefiting New Zealanders. NZ’ers can invest in Australian managed funds if they like. Australians can invest in NZ managed funds if they like. I’m not saying that that’s what happens as a general rule, but they can.

                    Still way off my original topic that was having a go at Marty’s statement:

                    “Uh, huh. So, not a lot of ‘mum and dad’ ownership, huh? Not even among the ones for which there were public offerings.”

                    I was saying that it was impossible to tell as most investors don’t hold the share certificate, they are bought through a managed fund so wont fall into the 1 – 10k shares figure Marty was using.

        • Clarke 8.4.1.2

          True, but lots of kiwis live and work in Aussie.

          That’s such a monumentally stupid comment that I won’t even bother with a reply. Only, what Felix said.

          If we have money coming to the country from Aussie to buy shares then so what?

          It never fails to amaze me how little you people seem to know about how the economy actually works. For the record, the issue is that while money for shares will flow into New Zealand, the money paid in dividends will flow out of New Zealand, which becomes a deadweight drag on other economic activity. And just as an added benefit, the influx of cash required for the share purchases will cause Australians to buy NZ dollars, which will drive the currency higher, which will put pressure on the export sector. But I guess you’d already thought of that, right?

          • Andrew 8.4.1.2.1

            sorry, i’m not an economist so couldn’t even begin to argue. Though i’m sure currency fluctuations are a little more complicated than share market trades.

  9. Irascible 9

    “Mum & Dad investors” are a mythical class of people who existed only in the journalists’ minds to describe those who were hurt through failed businesses during the depression… it is short hand for those whose funds were invested for them by those who ultimately leapt from tall buildings when the US stock market collapsed.
    It was Mum & Dad who ended up on the dole queues being blamed for that state of the economy because they weren’t working by those hold still held the cheque books with money held outside of the wreckage created by the speculator class.

  10. SPC 10

    They can improve the financial lot of the SOE’s by allowing them to issue new capital this applies in the case of KiwIbank in particular. That might increase the value of the government held original share but there would have to be cost-benefit on a case by case basis to see whether the return to government in terms of regular income or asset value would actually increase. And the comparison would be to increasing sovereign debt to do the same at a better return to government.

    They can gurantee the local ownership of any issued shares by making them shares only Kiwis can own and requiring a fixed period (like PIE) before they can be sold to other Kiwis.

    We are capital starved now in terms of funding our economy foreign loans for our mortgages, lack of access to finance for business (limiting funding business to the level of home values keeps our companies small), inadequate base R and D and lack of an efficient R and D tax credit system, lack of venture capital etc so its mistaken to sell public assets in this context.

    It’s also unwise to reduce the value of your assets while increasing borrowing it only adds to the cost of debt and makes further borrowing more difficult placing the government in on-going budget finance difficulties whenever there was an economic downturn.

    So all in all, the best option is to assess the relative merit of further sovereign debt vs issuing shares – but to restrain the extent of the later while local savings are low. Compulsory KiwiSaver at the 2% level would help.

  11. Roger 11

    Whether “mum & dad” investors are given exclusive access and can hold shares newly offered by SOE’s is not entirely relevant. The shares offered have to provide a real possibility that the shares can appreciate in value and offer dividends that exceed the returns of just putting the money into a savings account or other safer investment than shares.
    Even “mum & dad” investors therefore represent a stakeholder in private business that challenges the ability of a public entity to promote optimal social outcomes. “Mum & dad” investors will still prevent Kiwibank from continuing to effectively keep the Australian banks honest. With infrastructure services the outcomes can be considerably more damaging.

    • SPC 11.1

      Generally shares appreciate in value – do more than provide security against inflation, this as part of economic growth. As interest returns are taxed – despite some of the taxable income being only inflation proofing of the saving, shares will out-perform savings over the long term.

      So if the SOE is able to continue to be profitable it will out-perform savings deposits.

      But yes, shareholders have an interest to declare and it won’t be keeping the Oz banks honest or encouraging energy efficiency with incentives to insulate the home or use more efficient heating (they will ask for goivernment subsidy instead as Toll did).

  12. Lazy Susan 12

    The Big 5 banks loathe Kiwibank. Does anyone remember all the bluster prior to it’s establishment: “It would be a drain on the government coffers”, “Too risky for the government to be involved in banking” etc. etc. With all the fear that was spun it was sure to be a succes and has been.

    Now Kiwibank apparently needs a tiny amount of capital. Immediateley a partial float is suggested. What a dumb arse proposition – as Marty G has suggested the cheapest way of getting this capital is through the government, at sovereign rates. That way Kiwi gets cheap capital without relinquishing any control.

    Please do not swallow this crap about “Mum & Dad” investors. I believe the long game here is for NActs buddies in the Aussie banks to get control and remove this troublesome little competitor. This is not about expanding the bank it’s about removing it.

    By the way does anyone know how National voted when bills were passed to set-up of Kiwibank.? Would be interested to know

    • Lew 12.1

      Don’t forget “nationalistic jingoistic xenophobic propaganda advertising campaign”.

      L

  13. For actual facts about privatisation look here.

    • BLiP 13.1

      . . . or here – “failed monetarist economic theory 101”

      • Paul Walker 13.1.1

        Actually monetarism has nothing to do with privatisation. For a start it is about macroeconomcs not micro.

        • BLiP 13.1.1.1

          Its the cauldron in which the monetarist economists mix their potions imbibed full moon nights when they feverishly chant praise to the mighty Market Mammon. A practise first begun at the Chicago School Of Witchcraft and faithfully carried out today by their bewildered minions.

          • Paul Walker 13.1.1.1.1

            Like I said: Actually monetarism has nothing to do with privatisation. Also there are few true monetarists around today.

  14. James 14

    When people bag the market they are actually just bagging people,including themselves, choosing values with coercion absent…..sadly something we currently DON”T have.

    When they bag privitisation they are really bagging the return of something to the people.The private sector is us, the people,including all the leftys.The public sector is not the people…its the state.

    • Carol 14.1

      Huh? James, that pivate sector only includes the ‘us’ who have enough disposable income to have a pretty free choice of how they spend it, and to be part of an interest group that has the wealth to make an impact on the stats for spending choices. The less well off have the “coercive” effect on their choices of not enough money. And issues that fall outside the realm of economic activity will be pushed into the background. In contrast a state run on egalitarian, social justice principles will aim to enable the WHOLE population to be able to participate in the society, to have their voices heard, and needs taken into consideration.

      eg, if the schools and public libraries, health system etc are privatised, many people will have little access to a good education, knowledge, computers, socil and economic participation via the internet, and good health care etc etc. Their choice of jobs will continue to dwindle, leaving an increasingly elite bunch of consumers able to “vote” with their dollars for consmer goods and services, and the rest left to fend for themselves, their voices going unheard – except maybe in the crime, homelessness and health statistcs.

      Meanwhile some social issues of importance will take a back seat because they are not part of the consumer market place. And minorities will being increasingly marginalised (the disabled, anyone outside the heteroromative sex-gender system) because they don’t have a critical mass to make an impact on consumer choices…. oh, and yes, as women on average have less money than men, any issues of specific importance to women (abortion, rape, sexual consent-issues, child custody etc etc) will be trumped by the male-owned dollar.

      anti-spam word – hes

  15. Of course one privatisation option is to give the shares to all citizens (all ages, so children get them too), yet many on the left oppose that too. It means genuine public ownership, but I suspect the concern is that the vast majority of the public would rather sell such shares and use the proceeds to pay down mortgage, buy a new car, go on holiday or make their own investments, rather than hang onto the “assets” the left would prefer politicians are entrusted with using the proceeds from.

    The real truth is that privatisation can done well or done badly, depending on your values. State ownership similarly so. State ownership of NZ Post hasn’t seriously harmed its performance, largely because it has been hands off – although NZ Post easily has lacked capital to expand. State ownership of NZ Railways was long a disaster, as it was regularly bailed out by taxpayers and at variously times either grossly overinvested in some assets and neglected others (classic example is track was overmaintained for years to its original standard, but not enough was done to increase axle loadings on major routes, or lower tunnels, or increase speeds to compete with road transport because it had a monopoly till 1983. Similarly, the ferries became a cash cow that milked users of it like any private sector monopoly and cross subsidised many other operations). Privatised Workscorp has never looked back, and is now operating as Opus in multiple markets in the Asia/Pacific, privatised Air NZ lost out because the Australian government reneged on its word to allow it to enter the Aussie domestic market on its terms, so it took the only option offered – buy Ansett. It desperately needed new capital, the last Labour government denied the board’s proposal for Singapore Airlines to buy 49% of the airline because it wanted it to consider Qantas’s offer (deliberately put forward because Qantas knew Air NZ/Ansett was desperate and Qantas was terrified of the competition from a Singapore Airlines backed Air NZ/Ansett). Renationalised Air NZ has done well, although it is a shadow of its former self having barely the shell of a long haul network, and even then almost entirely on routes it monopolises or dominates (Auckland-London being the exception, and the most volatile route of them all).

    So there are examples all over the place. DFC was sold in the nick of time, since it went bankrupt shortly afterwards, meaning the government did better than had it held onto it. Contact probably went a little cheap because it was assumed the other electricity SOEs would have been sold shortly thereafter.

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    Labour’s housing spokesperson Phil Twyford has called on the Government to rethink its controversial Special Housing Area in Māngere. Auckland Council is today meeting to discuss the development which borders the Otuataua Stonefield Historic Reserve. This project is to get… ...
    6 days ago
  • Figures suggest National deliberately excluded farming
    Figures showing the dairy industry would be categorised as high risk if there were a further five severe injuries within a year, strongly suggests National designed its flawed system to deliberately exclude farming, Labour’s spokesperson for Labour Issues Iain Lees-Galloway… ...
    6 days ago
  • Bleak report on the state of our children
    A damning conclusion by the Children’s Commissioner today that ‘we don’t know if children are better off as a result of state intervention, but the indications are not good’ should make fixing CYFs a top priority for this Government, says… ...
    6 days ago
  • Dodgy data used to justify axing KiwiSaver kickstart
    National’s agenda to run down KiwiSaver has become even clearer from a scathing critique of the Government’s justification for axing the $1000 kickstart, says Labour’s Finance spokesperson Grant Robertson. “Since National came to power they have not only continually undermined… ...
    6 days ago
  • Unsecure website risks Ashley MoBIEson hack
    Experts have raised security concerns that vulnerabilities in MoBIE’s half million-dollar website could lead to a possible Ashley Maddison-style hack, says Labour’s Economic Development spokesperson David Clark. “The real issue here is not what data is immediately available, but what… ...
    1 week ago
  • Democracy still the loser in Canterbury
    The Government has demonstrated once again how arrogant and out of touch it is in denying Cantabrians the same democratic rights as the rest of the country, says Labour’s Environment spokesperson Megan Woods.  “The Environment Canterbury Bill which has been… ...
    1 week ago
  • Waiver cost still a mystery
    The Government still has no idea what it’s going to cost community and voluntary groups to get a waiver from the fees police will charge to carry out checks on their staff and volunteers, says Labour’s Community and Voluntary spokesperson… ...
    1 week ago
  • China exports fall 27 per cent in a year
    Exports to China have fallen by 27 per cent over the last 12 months - showing that the looming economic slowdown should have been expected by the Government, says Labour’s Economic Development Spokesperson David Clark. “The Chinese economic slowdown should… ...
    1 week ago
  • National should support all families for 26 weeks
    Families with multiple babies, and those born prematurely or with disabilities, are the winners from moves to extend paid parental leave to 26 weeks but the Government must give all babies the same head start in life, Labour’s spokesperson for… ...
    1 week ago
  • National’s health and safety shambles puts school camps at risk
    Reports that schools are considering scrapping student camps and tearing out playgrounds highlights just how badly National has managed its health and safety reforms, Labour’s Education spokesperson Chris Hipkins says. “Schools have been left completely in the dark about the… ...
    1 week ago
  • National’s asset stripping agenda hits schools
    National’s fire-sale of school houses and land is short-sighted, mean-spirited, and will have huge unintended consequences that we will pay for in years to come, Labour’s Education spokesperson Chris Hipkins says. Documents obtained by Labour show the Ministry of Education… ...
    1 week ago
  • Takahe massacre supposed to get all New Zealanders involved in conservation
    The Minister’s claim that a  botched cull of one of New Zealand’s rarest birds was a way of getting all New Zealanders involved in conservation is offensive and ludicrous, Labour’s conservation spokesperson Ruth Dyson says.  “An email from Minister Maggie… ...
    1 week ago
  • Serco circus rolls on with revelations of fight club practice
    Further revelations that a Serco prison guard was coaching inmates on fight club techniques confirms a fully independent inquiry needs to take place, says Labour’s Corrections spokesperson Kelvin Davis. “The Minister’s statement today that a guard was coaching sparring techniques… ...
    1 week ago
  • Government targets put ahead of students’ education
    The Government must urgently reassess the way it sets NCEA targets after a new report found they are forcing schools to “credit farm” and are undermining the qualification, Labour’s Education spokesperson Chris Hipkins says. “A PPTA report released today says… ...
    1 week ago
  • ER patients in corridors as health cuts bite
    Patients are being forced to wait for hours on beds in corridors as cash strapped hospitals struggle to keep up with budget cuts, says Labour’s Health spokesperson Annette King. “People coming to the emergency room and being forced to wait… ...
    1 week ago
  • Not too late to fix Health and Safety for New Zealand’s workers
    The Government and its minor party supporters are showing an arrogant disregard for workers’ lives by not agreeing to a cross-party solution to the botched Health and Safety bill, Opposition leader Andrew Little says. “Yesterday I wrote to the Prime… ...
    1 week ago
  • Speech to the New Zealand Council of Infrastructure Development
    Tēnā Kotou Katoa. Thank you so much for having me along to speak today. Can I begin by acknowledging John Rae, the President, and Stephen Selwood, the chief executive of the Council for Infrastructure Development. ...
    1 week ago
  • Reserve Bank points finger at Govt inaction
    In scathing criticism of the Government’s inaction, the Reserve Bank says Auckland housing supply is growing nowhere near fast enough to make a dent the housing shortage, Labour’s Housing spokesperson Phil Twyford says. Reserve Bank deputy governor Grant Spencer today… ...
    1 week ago
  • Chickens come home to roost on climate change
    The Government’s gutting of the Emissions Trading Scheme has caused foresters to leave and emissions to rise, says Labour’s Climate Change spokesperson Megan Woods. “The release of the Environmental Protection Agency’s Facts and Figures Report for 2014 on the ETS… ...
    1 week ago
  • Website adds to long list of big spends at MBIE
    The Ministry of Business, Innovation and Employment’s $560,000 outlay on its new website is further evidence of excessive spending by Steven Joyce on his pet project super ministry, Labour’s Economic Development spokesperson David Clark says.  “Hot on the heels of… ...
    1 week ago
  • Brownlee warned over EQC repairs but ignored them
    Gerry Brownlee was warned that EQC’s underfloor repairs weren’t being done properly by industry experts, the cross party working group and in public but he arrogantly ignored them all, says Labour’s Earthquake Commission spokesperson Clayton Cosgrove.  “Today’s apology and commitment… ...
    1 week ago
  • Serco wants in on state house sell off
    The Government must keep scandal plagued outsourcing company Serco away from our state housing after their disastrous record running Mt Eden prison, Labour’s Housing spokesperson Phil Twyford says. "Today it has emerged that at the same time Serco was under… ...
    2 weeks ago
  • Come clean on Pasifika education centre
    Minister Peseta Sam Lotu-Iinga needs to come clean and tell the Pasifika communities if he’s working to save the Pasifika Education Centre or shut it down, Labour’s Pasifika spokesperson Su’a William Sio says.  “I’m gutted the Pasifika Education Centre funding… ...
    2 weeks ago
  • Time for NZTA to work on alternatives to flyover
    The High Court decision rejecting the New Zealand Transport Agency’s attempts to build the Basin Reserve flyover must now mean that NZTA finally works with the community on other options for transport solutions in Wellington, Grant Robertson and Annette King… ...
    2 weeks ago
  • Shiny new system leads to record truancy
    Record high truancy rates shows the Government’s much-vaunted new attendance system is an abysmal failure, Labour’s Education spokesperson Chris Hipkins says. “Data released today shows truancy rates have spiked more than 15 per cent in 2014 and are now at… ...
    2 weeks ago
  • Woodhouse wrong about quarries
      The Minister for Workplace Relations and Safety Michael Woodhouse was wrong yesterday when he said limestone quarries were covered by the farcical Health and Safety legislation, says Labour’s Associate Labour spokesperson Sue Moroney.  “He said he ‘understood’ limestone quarries… ...
    2 weeks ago
  • Taxpayers money spent on culling one of our rarest birds
    It beggars belief that four endangered takahe were killed by incompetent cullers contracted to the Department of Conservation and the Minister must explain this wanton destruction, says Conservation spokesperson Ruth Dyson. “It must not be forgotten that there are only… ...
    2 weeks ago
  • Housing NZ must immediately move family
    Housing New Zealand must immediately move a Glen Innes family whose son contracted serious and potentially fatal health problems from the appalling condition of their state house, Labour’s Housing spokesperson Phil Twyford says. “Te Ao Marama Wensor and community workers… ...
    2 weeks ago
  • No understanding of the value of overseas investment
     The Government has now admitted it has absolutely no idea of the actual value of foreign investment in New Zealand, says Labour’s Land Information spokesperson Stuart Nash.  “It is crucial that the Government starts to understand just what this overseas… ...
    2 weeks ago
  • Another bridges bribe from Simon Bridges
    Simon Bridges is embroiled in another bridges-for-votes controversy after admitting funding for a replacement bridge in Queenstown is “very much about… the 2017 election”, Labour’s Transport spokesperson Phil Twyford says. “The Transport Minister is today reported as telling Queenstown locals… ...
    2 weeks ago
  • Saudi tender process reeks of SkyCity approach
    The tender process for the $6m investment in a Saudi sheep farm reeks like the SkyCity convention centre deal and once again contravenes the government’s own procurement rules, says Labour’s Export Growth and Trade spokesperson David Parker. “The $6m contract… ...
    2 weeks ago
  • Maori Party should stand up for workers
    The Government’s proposed Health and Safety Reform Bill does not go far enough to protect those in specific industries with the highest rates of workplace deaths, says Maori Development Spokesperson Nanaia Mahuta. “We are told that Maori workers are more… ...
    2 weeks ago
  • Minister must explain budget blowout
    Māori Development Minister Te Ururoa Flavell must explain a budget blow out at Te Puni Kokiri, after the organisation spent more than 2.5 million dollars over their budget for contractors, says Labour’s Associate Māori Development spokesperson Peeni Henare.  “For the… ...
    2 weeks ago
  • Successful effort to raise the issue of GE trees in proposed standard
    Many thousands of people submitted on the proposed National Environmental Standard –  Plantation Forestry (NES-PF).  A vast majority of the public submissions were particularly focussed on the NES having included GE trees in its mandate. People want these provisions removed,… ...
    GreensBy Steffan Browning MP
    2 weeks ago
  • Fair Share Friday – Thoughts and Reflections
    As part of our Fair Share  campaign, Green MPs have been doing a series of visits to community groups across the country to have conversations about inequality in New Zealand and what communities are experiencing on the ground. I visited… ...
    GreensBy Denise Roche MP
    2 weeks ago

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