Dancing on a head of a pin on asset sales

Written By: - Date published: 8:36 am, June 5th, 2010 - 59 comments
Categories: capitalism, election 2011, national, privatisation - Tags: ,

On Wednesday, Jim Anderton asked John Key about two times when he explicitly ruled out ever selling Kiwibank and asked him how that meshed with his promise not to sell assets in the first term, with the clear implication that they will sell them in a second term (if they get one). Yesterday, Labour followed up with half a dozen more examples stretching over two years of Key explicitly ruling out selling Kiwibank.

So, once Kiwibank was definitely off the selling table forever, now it’s only definitely off for another year or so. A major reversal of past policy and a clear signal that the Nats are planning to sell it, eventually but not now.

After banging their heads together for a while, Key spinmeisters have come up with a little semantic trick to align the two positions: Kiwibank will never be sold, unless Key changes his mind.

In other words: I will never break my promise to you, unless I decide I want to.

Now, in all fairness, Key has said he will campaign on the issue at the next election if they decide to go ahead with sales. Probably. The term ‘seeking a mandate’ is a funny one. Doubtless, National will argue they have been mandated to allow mining on some areas of Schedule 4 land, for example.

Actually, I think what we’ll see is sales that aren’t sales. There’s more than one way to skin the public assets cat.

The government could require SOEs to issue non-voting shares or bonds and pay the proceeds to the crown. Or SOEs could be forced to parcel their assets into subsidiary companies that will then be sold. The ownership of the asset would stay with the crown but the ownership of the profit stream would go to the private buyers (mums and dads like Michael and Sarah Fay). Effectively, we’re left owning an empty shell but the Nats would argue they haven’t actually sold the ownership of the company so it isn’t an asset sale.

Expect more dancing on a head of a pin on this issue. National really, really wants to sell assets – it’ll be worth a fortune to their rich mates who can’t seem to generate any success on their own without a government hand out. But the public is firmly against asset sales. It would be an election losing campaign issue. So, National will play a game of ambiguous promises and confusing financial moves to sell without appearing to sell.

59 comments on “Dancing on a head of a pin on asset sales ”

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  1. Lazy Susan 1
    5 June 2010 at 8:51 am

    Agreed Marty G. National’s contortions around asset sales are extrordinary.

    Breaking News – Key’s flipped, or flopped, or fudged, or dodged on Kiwibank again. Now it’s no sale of Kiwibank “under my leadership”

    I’ve posted about this in Open Mike

  2. Jim Nald 2
    5 June 2010 at 8:58 am

    Yippee, now my wonderful National Party can claim to be aspirationally ambitiously ambiguous.

  3. Geo 3
    5 June 2010 at 9:08 am

    The real question is ,does J Key know something we don’t??
    Is there going to be a leadership change?

    “Prime Minister John Key has changed his position on the sale of Kiwibank and now says there will be no sale or part sale while he is Prime Minister.”

    capture:changed

    • Lazy Susan 3.1
      5 June 2010 at 9:17 am

      I don’t think so before the next election but this is a strong signal he will go if Nats win a second term.

      • Lanthanide 3.1.1
        5 June 2010 at 9:47 am

        Which is especially crazy as Key was one of the main reasons they won the last election with as many seats as they did.

        That’s quite a bait and switch, unless of course they “seek a mandate” to change leadership in the election, too.

        • Lazy Susan 3.1.1.1
          5 June 2010 at 10:17 am

          That’s why he would stay to fight the 2011 election.

          No need to “seek a mandate’ to change leadership though – Key would hang on for 6-9months then just say something like “my work is done… time to move on… allow fresh blood to come through .. bullsit..bullshit” and quietly go.

          • Lanthanide 3.1.1.1.1
            5 June 2010 at 11:25 am

            Yes, but my point is that that the electorate would not be very impressed, I don’t think.

            *Especially* if the purpose of such a leadership change is to allow asset sales and superannuation changes that they had ruled out under Key. If you choose between Labour who won’t sell assets, or National with Key who won’t sell assets, and after you vote in National they get rid of Key and sell assets, you’ll be really pissed off, I would think.

            • Lazy Susan 3.1.1.1.1.1
              5 June 2010 at 12:38 pm

              Hi Lanthanide. My point is that if National were to win a second term what would be more important to them?

              (i) Selling assets, reducing taxes for the wealthy and running down and/or privatising the public sector i.e. neo-liberal ideology

              or

              (ii) Getting a third term (highly unlikely anyway)

              I would suggest the former and that all this is part of a long game.

              • Lanthanide …
                5 June 2010 at 12:44 pm

                Or, alternatively, they hang around for the 2nd term, get a 3rd term, and at that point Key resigns.

                But yes, it seems we both agree that doing such a change would gaurantee they’d lose the next election (and Labour would campaign to re-nationalise any assets sold without compensation to the buyers, as a result of National’s duplicitous bait-and-switch?) and IMO I just don’t think they would do that, whereas you think they would.

              • seth …
                6 June 2010 at 8:26 pm

                Reducing taxes for the wealthy? Ummmm…..why can’t you just say reducing taxes? Bitter much?

            • the pinkpostman 3.1.1.1.1.2
              6 June 2010 at 12:48 pm

              Too bloody late after they have won .
              As discussed yesterday . Never ever trust the political Right.
              Tories are a devious lot , this with their close connection to Crosby/Textor and their bankers and big business friend make National a very dangerous and sneaky lot.
              As have said many times why ordinary working people vote for them I just cannot understand.Having said that ,the fact that they do shows just how clever and devious they are,

      • Jenny 3.1.2
        5 June 2010 at 11:20 am

        Hi Susan, Remembering that once Bill English was leader of the National Party I went to wikipedia to find out the reason for his demotion.

        This is what was revealed:

        In October 2001 English replaced Shipley as head of the National Party and thus as Leader of the Opposition…..
        In the 2002 elections, National suffered its worst electoral defeat ever, gaining barely more than twenty percent of the vote…..
        By late 2003, however, National’s performance in opinion polls remained poor. The party had briefly increased its popularity in the year following the election, but by October its support had fallen to levels only slightly better than what it achieved in the last ballot….

        It seems that no matter how much this immoral thug is admired inside the National Party, The National Party under his leadership is apparently unelectable.

        This was shown when as National Party leader at the nadir of his unpopularity, Bill English entered a charity boxing match to try and raise his profile. His boxing opponent, actor Ted Clarke delighted in giving English a sound thrashing. That Clarke’s delight was shared by the general public was not lost on the National Party.

        • Lazy Susan 3.1.2.1
          6 June 2010 at 1:17 pm

          Thanks Jenny.

          I agree that the National Party is unelectable with English as their leader. We know that, the National Party knows that and so does English. That’s why (as I posted on Open Mike yesterday) he would be their man to step into Key’s shoes and do the dirty work.

          IMO he’s driven by ideology alone, with no regard for the electorate or what makes good policy for NZ.

  4. Uroskin 4
    5 June 2010 at 9:14 am

    I always wondered who these fay, rich and white mums & dads were.

  5. Jim Nald 5
    5 June 2010 at 9:16 am

    As I posted elsewhere this morning:

    I’m not selling my mother .. while I call myself her son.

  6. john 6
    5 June 2010 at 10:51 am

    Private Investor money all round the World is in trouble with economic collapse and has had to be bailed out by the taxes of hardworking people plus the cutback in social services just to keep the Wealth Worship compound interest fiesta for the Rich to keep going. These rich want to make money from unproductive speculation and money for old rope interest, they do not invest all that money in productive enterprise which has high risk such as starting up manufacture of an alternative energy industry. Answer cannibilize for profits the Public Sector by Privatization making it into a for the rich money fiesta instead of a social asset for all Kiwis. We are already extremely divided in terms of wealth and income differences,This Act National Government want to continue the process of turning us into a feudalistic society of rich barons and poor serfs working for minimal wages and next to none social wage. Someone at the last Act Conference put forward the idea of privatizing hospitals! All this neo-liberal rubbish ideology originated in the USA which is in the most awful mess with 40,000,000 Americans on food stamps and whole States bankrupt and huge unemployment while being ministered to as they’re chucked out of their homes by Oprah who is a Billionaire twice over!!! Is that the type of society we want? Well you voted it in last election!

  7. tsmithfield 7
    5 June 2010 at 11:34 am

    So, where exactly have National actually SAID they are going to sell anything?

    Key has said that he is keen for the Cullen Fund to invest more of its funds in NZ. So, if the Cullen Fund were to purchase shares in Kiwibank, would that qualify as “selling” Kiwibank?

    • Marty G 7.1
      5 June 2010 at 11:47 am

      they haven’t said they won’t sell assets despite being repeatedly asked. It’s pretty clear what they want to do.

      “if the Cullen Fund were to purchase shares in Kiwibank, would that qualify as “selling’ Kiwibank?”

      Yup. because the Cullen Fund is due to start selling down its assets in 2030. Anyway, if it wasn’t privatisation, what would be the difference from keeping it where it is now?

      • Emp 7.1.1
        5 June 2010 at 12:00 pm

        You’re so dishonest Marty. Key has repeatedly said there are no plans to sell any state assets, and if National makes any plans to do so National will go to the electorate with those plans.

        What a stupid campaign you’re running. What’s even more stupid is that as a labour party hack you’re ignoring that Goff was a senior minister in a labour government that sold more state assets than all other governments combined, and they did so WITHOUT AN ELECTORAL MANDATE.

        Key’s word is trusted which is why he’s the most popular prime minister ever. Goff isn’t, which is why he’s the least popular opposition leader ever.

        • Marty G 7.1.1.1
          5 June 2010 at 12:04 pm

          No. Key has repeatedly said they will not sell assets in the first term. There’s only one logical way to read that: they want to sell assets in the second term.

          It’s not my job to defend Goff and I’m more interested in today and the future than 20 odd years ago.

          • Emp 7.1.1.1.1
            5 June 2010 at 12:10 pm

            Marty if you want to play that game then Goff won’t reduce GST because he hasn’t said he will, only they will “consider it”, won’t reverse the tax cuts because they haven’t made firm commitments, won’t change ACC back to the shambles it was in 18 months ago etc etc. How dishonest is that, to go around the country saying “axe the tax” when you have no intention of doing it.

            Government priorities change over time. It’s the responsibility of political parties to adjust to the changing economic environment and seek mandates for their changes. That’s what key will do. Refreshing from Goff and Labour that just went ahead and did it anyway.

            • Marty G 7.1.1.1.1.1
              5 June 2010 at 12:22 pm

              The ‘not in the first term’ line clearly means ‘in the second term’. your cliched newbie attempt at trying to run distraction doesn’t change that.

              National is planning asset sales, that’s what this post is about. Come out and say whether you support asset sales or not, rather than trying to distract from the issue.

              • Emp …
                5 June 2010 at 12:32 pm

                Bullshit marty. You can’t say National is planning asset sales any more than I can say Goff is planning no tax changes. Your repeated campaign just makes you look like a stupid hack. Give your readers credit for not being stupid.

                I think some assets should be sold if the electorate is told up front what assets will be sold and the benefits laid out for voters to decide. I don’t support governments being silent and doing it anyway without an electoral mandate. Goff didn’t have a mandate in the 4th labour government but he championed it anyway. That’s why goff has no credibility but key does.

                • Marty G …
                  5 June 2010 at 12:38 pm

                  i don’t support the 4th labour or 1990s national asset sales either. and there is no economic case for privatisation

                  • Emp …
                    5 June 2010 at 12:42 pm

                    Tell that to most economists marty. What sweeping bullshit you talk. “No economic case for privatisation”.

                    For a guy who believes government should run up debt to gamble on banking operations you really have no idea of economics.

                    • Marty G …
                      5 June 2010 at 12:47 pm

                      yes, i do. and i’ve seen plenty of arguments for selling that will enrich the wealthy and foreigners but none that will boost economic growth

                    • Emp …
                      5 June 2010 at 12:57 pm

                      That’s because you always conventiently ignore any evidence that doesn’t support your partisan opinion. That makes you a partisan hack.

                      Go and read more. There’s plenty of evidence that says state asset sales improve the performance of those assets and therefore economic growth. In fact the large body of evidence overwhelmingly supports this position. It is as overwhelming as the scientific opinion on man made climate change.

                      Yes you can dispute that asset sales benefit the country but carrying on with your partisan bullshit that the economics doesn’t support asset sales makes you look as stupid and irrational as the folk who say climate change isn’t happening.

                    • lprent []
                      5 June 2010 at 1:17 pm

                      There’s plenty of evidence that says state asset sales improve the performance of those assets and therefore economic growth.

                      Where? You’re asserting that you can point to such evidence – I bet you’re just fetching the claim from your navel lint.

                      As far as I can see almost everything shows that there are few benefits to the public from privatizing natural monopolies, and a whole pile of downsides to the public who originally owned those assets. Sure it may be useful in the short-term to initial shareholders as they flick the asset to suckers. The buyers usually seem to get screwed as well if they hold those shares for too long as the assets are stripped.

                      Cite something or brand yourself as a simple bullshit artist who really doesn’t have any idea what you are talking about – which is what you appear to be.

                    • kelsey []
                      5 June 2010 at 3:18 pm

                      Probably the only thing that Jim Anderton’s said that I agree with is that the only thing worse than a state monopoly is a private monopoly.

                      Despite everything, there’s a lot the left and right can agree on – where there isn’t a market, privatisation isn’t a great idea. It wouldn’t make sense, for example, to privatise the police.

                      However the notion that the only difference between a state owned organisation and a private one is the profits the private one needs is false. The difference which seems to be ignored by Marty and others is that of behaviour. State owned organizations are significantly constrained in their behaviour which leads to less dynaminism and matching of services to demand. This is where private organizations can do better. As a silly example, do you really think your local coffee shop would do better as a KiwiCoffee-government-owned enterprise?

                      What if it’s a company with exporting ambitions, and wants to borrow capital to set up foreign operations? Is that a sensible use of tax payer funds if they compete with, say, health and education? Does it make sense to increase taxes on everybody, or let those with surplus cash fund these expansions (i.e., they can invest, rather than forcing middle NZ with debts to invest)

                      If you don’t, then the question becomes where do we draw the line between what would benefit from being state owned and what would not.

                      Kiwibank would seem a good candidate since it operates in a competitive environment with other private players. The reality though is that the goverment has over 50b of assets in the form of companies. So to a large extent the debate is a bit irrelevant – the focus for the government has to be on making the performance of these organizations get up to speed. The government claims to have most of its efforts in this arena, despite the fact that if successful they would in fact undermine a lot of the supposed motivation to float said assets.

                    • Marty G …
                      5 June 2010 at 1:15 pm

                      Emp. you’re a guest here. Watch your manners.

                      You don’t know how much I’ve read on this topic or how I’ve read it. It is my opinion that none of the economic evidence supports privatisation. No-one has made a case that NZ would be better off with more asset sales.

                      You can see my reasoning in any number of posts on this site under the category ‘privatisation’

                      You can judge what I write and offer your opinions on it. And you’re welcome to, as long as you don’t act rudely.

                    • Akldnut …
                      5 June 2010 at 9:30 pm

                      Emp
                      There’s plenty of evidence that says state asset sales improve the performance of those assets and therefore economic growth.

                      Yep classic examples would be a Tranzrail, BNZ, Telecom, Forestries……..

                      Can you actually name any that have improved our economic growth more than putting profits into multinational bank accounts?

                      Serious question BTW

                • the pinkpostman …
                  6 June 2010 at 1:19 pm

                  The bullshit is yours Emp.!
                  Key has said many times that he will not sell Kiwi Bank “This term”(sic,) as Marty says there is only one way to interpret that “he wants to sell it next term The Nats have hinted at other SOE sales .including State TV, radio , the Concert programme is in grave danger of being sold of to advertising companies. ACC that’s a certainty ( Lord bloody Michael Ashcroft my bet to buy) .
                  I could go on .The fact is privatization is in the DNA of the Nats and thats what they want to do.
                  Of course one could ask how anyone can believe Ky at any time ,when he cant even tell the truth about his winery ownership.

        • r0b 7.1.1.2
          5 June 2010 at 2:42 pm

          Key’s word is trusted

          Wrong, just ask Tuhoe.

          which is why he’s the most popular prime minister ever.

          Wrong, when did he top Clark’s 59%?

      • tsmithfield 7.1.2
        5 June 2010 at 1:22 pm

        “they haven’t said they won’t sell assets despite being repeatedly asked. It’s pretty clear what they want to do.”

        I haven’t said I won’t murder a hundred children sleeping in their beds tonight. That means I’m going to, right?

        • Marty G 7.1.2.1
          5 June 2010 at 1:34 pm

          If you were asked if you intended to break up with your partner or sell your car and you said ‘not now’ then the reasonable conclusion is you will eventually.

          • tsmithfield 7.1.2.1.1
            5 June 2010 at 3:03 pm

            No, thats not a conclsion, Marty. Its a possibility. One of many. I might eventually decide not to sell my car, but overhaul it instead, or go to relationship counselling rather than break up with my partner.

            “not now” does not imply an inevitable course of action will eventually occur.

            What you are doing is mounting a strawman argument with no foundation whatsoever. Why not wait until the Nats say what they actually intend to do before launching into a half-baked attack.

            • Marty G 7.1.2.1.1.1
              5 June 2010 at 4:48 pm

              keep telling yourself that, ts.

              interesting how you’re so desperate to believe that the nats aren’t for pro-privatisation. I assume you’ll be joining me in strongly opposing the privatisation that they will put forward.

              • tsmithfield …
                5 June 2010 at 5:46 pm

                I actually think they probably are favourably considering privatisation of some things. However, I’ll reserve my position on whether I think the Nat’s plans are a good idea or not until I have actually seen something concrete from them. I think it would be a good idea if you did the same rather than constructing strawman arguments based on the worst possible incarnation of privatisation that you can imagine.

                For the record, I am not actually in favour of privatising every state asset. There are certain things I think are better in public ownership. The power network would be an example of something I think should never have been privatised.

                • Marty G …
                  5 June 2010 at 5:54 pm

                  my assumptions are based on what happens in real privatisations, not a worse case scenario.

                • felix …
                  6 June 2010 at 4:07 pm

                  Shorter tknorris:

                  “The Nats haven’t said they want to privatise. Therefore I don’t support privatisation.

                  However I believe they will announce their intention to privatise at some point. At that point I will support privatisation.”

                  You really are a sad little weed.

  8. Ed 8
    5 June 2010 at 11:42 am

    Selling assets is, at least currently, politically unacceptable – the excesses of the ‘within living memory’ real life examples are too numerous, but we some seem to think w cannot learn from our mistakes. Outsourcing is of course quite OK. It’s a well established way to access specialist leadership and expertise without the costs of trying to develop that expertise yourself. That expertise does not of course come without a small market premium however – who could begrudge paying the market price for those skills and that knowledge. In some cases, the government has spent a lot of money in the past developing infrastructure; and there may be capital costs that have been incurred in the past, and may be in the future. Rather than burdening government finances with the costs of raising further capital for maintaining a facility, the private market can supply that with a lot less fuss – and again there may be a small margin for that skill and expertise that we are buying in, but who would begrudge that. So we can have an outsourcing contract that provides better service (private contractor is have to be more efficient; as they need to survive and grow a competitive market – but some commentators do seem to be confused about what they are more efficient at doing). If the total cost to government is less than they were previously paying (including capital charges for infrastructure), isn’t that a win win for everyone?

    To give a good example, our government must be spending a bundle in the new prison on Auckland. Lets suppose the total capital costs are the equivalent of $x million a year, and the costs of running the current prison are $y per year. If we could persuade a private company to manage the new prison for say 80% of $(x+y) per year, that would be a huge saving, wouldn’t it? And if we can get such a good deal, it only seems reasonable to give a long term contract of say 25 years. By then the prison may need to be refurbished, but that is something our government can do as efficiently as the private sector, so having the government come back in at that stage seems only fair, and in the best interests of us all.

    You just know a public private partnership can give the best of both sides contributing to take our nation . . .

    • Marty G 8.1
      5 June 2010 at 11:52 am

      why can the private provider provide the same service for 80% of the price while making a profit? If it has ways of saving money, the public system can do them too with no profit on top

      • Ed 8.1.1
        5 June 2010 at 12:19 pm

        Sounds too good to be true? Shame on you to have so little faith in private companies. Its all in the negotitations, MartyG. Compare the income equivalent of the capital costs of building the new prison (equivalent to the interest plus capital repayment costs if it was all financed from borrowings), plus the costs of running the current prison (which is known to be inefficient) with the running costs alone of a new prison (yes you would include an adjustment if the new prison was ‘larger’, but that’s a minor detail . . .) . Would you find 90% to be more believable? Comparing apples with pears you can make the numbers sound really really good. Perhaps I could convince you that if the private contractor raises the capital (at higher costs than the government) that it is reasonable to keep all the assets and liabilities off the government balance sheet . . .

        • Marty G 8.1.1.1
          5 June 2010 at 12:32 pm

          I’m not arguing with your made up numbers.

          “Compare the income equivalent of the capital costs of building the new prison (equivalent to the interest plus capital repayment costs if it was all financed from borrowings), plus the costs of running the current prison (which is known to be inefficient) with the running costs alone of a new prison…. Perhaps I could convince you that if the private contractor raises the capital (at higher costs than the government) that it is reasonable to keep all the assets and liabilities off the government balance sheet .

          The government wants a prison built and run. All the capital and operational costs of that must ultimately fall on the government. It’s just a matter of when it pays and to whom.

          So, can outsourcing the operations to the private sector save money?

          No, it shouldn’t. Any money savings that the private sector government can make the government can make too – there’s no such thing as private sector magic that means they can save where the government can’t. Plus the private sector needs to make a profit.

      • seth 8.1.2
        6 June 2010 at 8:34 pm

        You’ve obviously never worked in a government department Marty……. having experienced it during the peak years of the previous Labour government, it was a complete and utter joke the amount of money being pissed away……

        Thats how you provide 80% cost for the SAME services when privatisating, as well as turning a tidy profit.

  9. randal 9
    5 June 2010 at 11:53 am

    the government must stay on national. it is not the nineties where the whole kit and kaboodle was given away because no one could see into their machinations and more importantly publish them.
    now with the net they are open to supervision and the opposition must oppose.

  10. richgraham 10
    5 June 2010 at 12:29 pm

    Thee is an extensivee article in the NZ herald Business section today about Kiwibank, in which the reasons for all of this political shilly-shallying over Kiwibank are identified. Why don’t you all go and read that article “why Kiwibank is hungry for capital” chaps/chappesses (the author is Mr Gaynor), and get your feet back on the ground.
    This blog entry by Marty and many the comments in it, to me typify why the left continues to lose ground in NZ, and will end up being unelectable for aeons.
    Come on Labour wake up !

    • Marty G 10.1
      5 June 2010 at 12:35 pm

      no-one’s arguing that Kiwibank doesn’t need more capital. it’s a question of how it gets it. the cheapest way is by holding on to its profits for a while, not paying dividends to the govt – that’s effectively borrowing at sovereign rates

      • Fisiani 10.1.1
        5 June 2010 at 1:20 pm

        The cheapest way for Kiwibank to get more capital is to break it’s contract with the Government. The best way for Kiwibank to get more capital is to have it raised by NZ investors. The best way to have NZ investors is to offer them share options. Offering them share options is not selling Kiwibank. If it owned in whole or in majority by the Government then it is not sold.

        • Marty G 10.1.1.1
          5 June 2010 at 1:37 pm

          do you know what a share option is? at some point, they mature.

          What contract with the government are you talking about?

          Any investor or lender demands a rate of return that varies with, among other things, who they are lending to. the lowest rate of return is always on sovereign lending, much lower than the rate of return private investors via the stockmarket demand.

        • Lazy Susan 10.1.1.2
          5 June 2010 at 1:55 pm

          And so pass ownership from all Kiwis to a few and ultimately to the competition i.e. Australian banks. I usually respect Gaynor’s ideas but this one’s dumb.

          It’s fraught with regularatory difficulties and has the additional overheads of a share float and being a public listed company. In addition, as Marty G has pointed out, it’s unnecessary to raise the very small amount of capital required.

          Interesting how National is now interested in growing the bank they never wanted started!

  11. BLiP 11
    5 June 2010 at 1:46 pm

    Great post MaryG. This privatisation-by-stealth program by National Ltdâ„¢ is evident in the way it has gone about selling Auckland – set up a committee of cronies, load the body with huge debt ($200m+ already) and leave whatever comes behind with the TINA argument to sell off vast chunks. Meanwhile, in Christchurch, National Ltdâ„¢ hasn’t even bothered to pantomime democracy and has effectively removed any obstacle to the privatisation of regional assets. The other tactic in play is the privatisation by a thousand cuts vis-a-vis Whanau Ora, ACC and now WINZ.

  12. Nick C 12
    5 June 2010 at 7:20 pm

    “National really, really wants to sell assets it’ll be worth a fortune to their rich mates who can’t seem to generate any success on their own without a government hand out.”

    Actually what was worth a fortune to the rich was Labours buyback of kiwirail. Deal of the century.

  13. Jenny 13
    6 June 2010 at 4:56 am

    Most businesses make a surplus, often called profit. Who gets this surplus and what they do with it depends on who owns the business.

    For instance Telecom which makes an annual profit approaching $1 billion
    to do with as they wish.

    Whatever that is, it is not for increasing infrastructure, that’s for sure.

    That’s being left to the taxpayer.

    The role out of broadband in this country, which Telecom refuses to invest in and which the lack of is widely acknowledged as a crimp on economic growth, is having to be paid for by the taxpayer at a cost of, according to last month’s budget of $248 million over 4 years.

    How can this be considered better for the country?

    What else could Telecom’s almost $1 billion surplus have been used for, if it was controlled by the public sector.

    The 2010 budget reveals that the taxpayer pays $4.2 billion for tertiary education. Tertiary education is a public good providing the highly skilled people needed to maintain a modern economy. Yet universities up and down the country are having to put caps on student enrollment, not because these students are not qualified to go to university but because the universities are facing a short fall in funding for the demand they face.

    Without the benefit of higher education according to the universities, due to the recession most of these young people will go straight on the dole.

    Not only will this be a tragic waste of human resources it will act as a further brake on the economy.

    How can this be considered better for the country?

    Tertiary Education Minister Steven Joyce has admitted:

    Enrolments were naturally higher during a recession, “but the reality is that that is all the funding we have”.

    In response to this lack of ‘funding’, Steven Joyce’s government is determined to cut government income further with privatisations, which allied with tax cuts will lessen the government funding not only of education but health care and other social provisions. This is all in line with the blindly political, (and self serving), neo-liberal mantra about the need for smaller government provision, and that private provision is better. (Returning huge surpluses and profits to their mates is never mentioned, and if it is, only as a happy side effect of privatisation.)

    If we were able to take the $248 million needed for broadband roll out from Telecom’s profits, this would still leave more than enough to fund a place in university for everyone qualified and willing and able to enter higher education.

    Thousands of extra highly qualified graduates could make the difference between a successful economy and a failing one.

    But oh no, the private interests of Telecom come first.

    And so it will be with any other privatised state assets.

  15. Jenny 15
    6 June 2010 at 10:23 am

    While these parasites are living it up.
    A week after the robber budget, the Sunday Star Times goes all apocalyptic warning for the rest of us:

    Brace yourselves – the four horsemen of a grim winter of rising bills are on their way

  16. Adrian 16
    6 June 2010 at 10:48 am

    Is’nt that the point Kelsey, state orgs are constrained in their behaviour so that they don’t regularly fall over because of personal issues, such as greed,disinterest or incompetence of owners or managers. They have to answer to a fairly tough board.. Cabinet usually, who mostly have an eye on the next election.

  17. Jum 17
    6 June 2010 at 1:19 pm

    What was all that about this morning on the business section of The Nation with the guy espousing a Kiwibank cooperative? That’s still a slippery slope; look at the dairy cooperative shareholders with all the pressure of getting capital from the market place and in danger of losing their control over their own businesses.

    Let’s do what Sam suggested; government could issue the amount needed to bring Kiwibank up to par with their rural lending expansion – about two days worth of government spend according to him.

    The garbage this government is spreading is untrue; there is a great future for Kiwibank as long as it stays in New Zealanders’ control under government/public ownership. This government’s backers’ greed is showing and their plan is to cut out competition which leaves money in New Zealand and not in Australia, or elsewhere.

    The liar Jkeyll will sell our bank because that is what he has been instructed to do. Pesky Kiwis mustn’t be allowed to stand in the way of market forces and conservative, authoritarian world government by the stateless, immoral and unethical moneymen.

    The heathens are at the gate and they wear armani.

  18. felix 18
    6 June 2010 at 4:14 pm

    Interesting reading the comments from Ed, emp, and others on this topic.

    It’s like we’re supposed to pretend that the 80s and 90s never happened and we have no real world experience of privatisation in this country, and their ideas are new, bold, brave and untested.

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