English – sell dams to buy prisons

Written By: - Date published: 6:37 am, June 9th, 2011 - 54 comments
Categories: bill english, david cunliffe, prisons, privatisation - Tags:

So, that’s National’s great big plan: get rid of our electricity assets and use the cash to build more prisons. Not much of a brighter future there. National still hasn’t come up with a convincing reason why we would sell highly profitable monopolistic companies. Instead, we’ve seen a series of weak excuses. Now, English has revealed the truth.

English looked very uncomfortable in the House yesterday.

Hon David Cunliffe: Why is he promoting a policy that he described today at the Finance and Expenditure Committee as “selling hydro dams to buy prisons”, when the return on those hydro dams averaged 17 percent in the last 5 years and he himself calls prisons a moral and fiscal failure?

Hon BILL ENGLISH: There seems to be some confusion about the return on State-owned enterprises. A figure of $700 million of dividends has been quoted, which is not, in fact, correct. That actually exceeds the Crown’s dividends from all sources—State-owned enterprises, Crown entities, and Crown research institutes. The true figure for dividends from State-owned enterprises is probably about $350 million, and the member might find that that changes his calculations.

Typical English, this. He avoids re-confirming what he said and pedantically argues over a minor point in an attempt to distract, while not denying the quote. Well, we’re not distracted because English has let the plan slip.

In National’s vision of the future, our assets are owned by foreign companies and the government focuses on ‘law and order’ to keep the population in line. English is simply making it happen.

We need a government whose ambition for New Zealand is set a lot higher than this.

54 comments on “English – sell dams to buy prisons”

  1. tc 1

    Blinglish and Sideshows dealing room caucus are presiding willingly over the largest wealth shift ever in such a short period, in a recession they’ve kept going by not stimulating the economy.

    Add in asset sales, dodgy deals and bailouts, urgency measures like ECAN and some of the worst ministers to ever attempt to run their portfolios and the scene is set for us to drop off the radar of developed nations into a developing one…..bravo NACT.

    • Draco T Bastard 1.1

      We’ve been heading that way for some time (Since 1984) so we can’t just blame this present NAct government. We could do better, be sustainable and give everyone a good living standard but the capitalist paradigm prevents that.

  2. Colonial Viper 2

    We need a government whose ambition for New Zealand is set a lot higher than this.

    Yeah come on NZ, the National Party of Aspiration is aspirational for themselves not for you or your children. Figure it out, get out and vote November!

    What does English care, all his kids are heading overseas anyways, like those of so many New Zealanders nowadays.

  3. vto 3

    Draco posted this yesterday, which should go on some opposition party billboard about asset sales…

    “Having taught the starving man to fish, the wise man sadly watches, as he sells off his fishing rod.”

  4. queenstfarmer 4

    When did the Govt suggest they were “getting rid of” electricity assets? Do you mean they will float minority stakes, which (obviously…) means the Govt will be the majority owner, and control the company?

    • Colonial Viper 4.1

      Oh quite right our energy assets will still be here mate, just Chinese owned, shipping valuable profits offshore to them.

      You are a naive little unit to believe that Meridian etc aren’t going to be completely sold off too. How many times do English and Key have to lie to you before you will get that they can’t be trusted with election promises?

      • Jag 4.1.1

        How does selling a “minority interest” result in an asset becoming “Chinese owned”???

        May I suggest you have at a minimum severe comprehension deficiencies and perhaps a drizzling of xenophobia…

        • Ari 4.1.1.1

          There’s two good replies here. The first is that the minority interest is really just a thin end of the wedge. We’ve seen this with many of the other government policies that suddenly became incredibly right-wing when they had a good emergency to ditch the restraint for. It’s unlikely that if the current government is re-elected, they’d stick with just selling off the minority interest that they promised not to exceed.

          The second is that even if they don’t become owned by foreign investors, we’ll still be shipping away dividends without any real re-investment in New Zealand, and it’s a continually increasing problem that we’re becoming a rent nation because of how open our investment laws are. I don’t mind even relatively important assets being at least partially owned by foreign interests, if they have sufficient incentive to reinvest in New Zealand instead of just shipping all the profits overseas.

      • Jag 4.1.2

        How does selling a “minority interest” result in an asset becoming “Chinese owned”???

        May I suggest you have at a minimum severe comprehension deficiencies and perhaps a drizzling of xenophobia…

    • Blighty 4.2

      would the govt still own the shares of the electricity assets National wants to sell or wouldn’t it?

      Of course not. Therefore, it wants to sell electricity assets. Whether it’s part of a company (for now) or the whole, it’s getting rid of some of the interest it holds in electricity companies.

      • queenstfarmer 4.2.1

        The Govt would own 51%. That is my understanding of the proposal (pending a mandate), but happy to be corrected.

        • Draco T Bastard 4.2.1.1

          That’s the stated plan but consider how many promises that this government have broken and how often they’ve lied and you’ll realise that this just another lie. They will sell off the whole lot because that’s what they want to do and, due to the laws protecting minor share owners, we will still lose control of the assets completely anyway.

    • Lanthanide 4.3

      Someone recently brought up an example of how the government’s 74% ownership of Air NZ means squat. The below is my hazy memory of the comment, but the gist of it should be correct.
       
      Back in 2007 or 2008 or so, I think it was, under Labour, Air NZ was shutting down some of it’s servicing contracts with engineers in Christchurch. The union urged the government to use their majority stake to overturn the decision. The government declined, on the basis that they were beholden to commercial interests and could be sued.
       
      And that’s with a 74% shareholding and a Labour government.

  5. Blighty 5

    and, hey, those prisons will be making profits for foreign private prison companies. Everyone’s a winner. Except for New Zealand.

    • Colonial Viper 5.1

      No doubt queenstfarmer will think that its fine if we sell only half our children to foreign ownership. Well, maybe not half, just 49% of them. After all, we’d still retain “majority” control lol

      Stupid Righties determined to make the country poorer so a few of their mates (who don’t give a shit about them anyway) can profit.

      • Jagilby 5.1.1

        How does selling a “minority interest” result in an asset becoming “Chinese owned”???

        May I suggest you have at a minimum a severe comprehension deficiency and perhaps a drizzling of xenophobia…

        • Blighty 5.1.1.1

          currently, the govt owns 74% of AirNZ but it exercises no control over the company’s direction. That is left to the other investors, Singapore Air mostly, who have a disproportionate number of seats on the board. Thus, the majority ownership is with the govt but control sits largely offshore.

          That’s the model that National says it wants to imitate for the power companies.

        • Deadly_NZ 5.1.1.2

          Because the Chinese have had Talks with Blinglish, and have publicly stated that they have 6 BILLION dollars to spend. So xenophobia??? I don’t think so.

          http://www.peopleforum.cn/viewthread.php?tid=98923

          • Lanthanide 5.1.1.2.1

            Actually I don’t think they’ve “publicly stated” that at all. As far as I’m aware, it’s a rumour.

            It’s probably true, but that’s not the same as “publicly stated”.

        • Colonial Viper 5.1.1.3

          Ohhhhhh because selling a half stake in your house to someone else doesn’t make you a tenant in your own home, right?

          LOL

          • queenstfarmer 5.1.1.3.1

            Correct, it doesn’t.

            • Draco T Bastard 5.1.1.3.1.1

              Actually, in this case, it does.

            • fraser 5.1.1.3.1.2

              tell that to the minority shareholder in your house and see how far you get

              • queenstfarmer

                You’d get pretty far, actually. Joint owners of undivided property, regardless of the percentage of ownership, have full rights to be in a house along with the other co-owners.

                As for minority floats of SOEs, your point is well made – the Govt will remain the majority shareholder and therefore have control of the companies.

                • fraser

                  “have full rights” – exactly – they still want their cut dont they?

                  and where your atittude to your house may not be totally about the profit – theirs will be.

                  Plus spare the “therefore have control of the companies” angle. History (as outlined in this thread) has shown that when this is elevated to government level a maniority shareholder still wields more power than the state due to profit demands (which the state cannnot deny them) and board structure

                  • queenstfarmer

                    The example given above was about Labour kowtowing to a minority shareholder, when it held 70+%. Perhaps the ministers at the time had no experience in finance? I don’t know. But it certainly is extraordinary and perhaps suggests that this Govt, if it goes ahead with minority stakes, should ensure constitutional / shareholder provisions to protect a future Govt from its own ineptness in financial matters.

                    On a related point, shareholders don’t get profits, they get dividends if and when declared by the company (which they also pay tax on, unlike interest cheques written to offshore Govt lenders).

                    • Colonial Viper

                      they get dividends if and when declared by the company (which they also pay tax on, unlike interest cheques written to offshore Govt lenders).

                      Who needs the tax on a stream of money when already own the entire stream of money in the first place?

                      Stupid economically illiterate Right Wionger. Where are your kids going to live once the country has been sold out to the Chinese? Or don’t you give a fuck?

                    • fraser

                      yeah dividend – fair call there. But it still mean $$ coming out doesnt it.

                      “should ensure constitutional / shareholder provisions to protect a future Govt from its own ineptness in financial matters ”

                      sounds like a good idea – wanna place a bet on how likely that is (and even if they did it, how beneficial it would be to the taxpayer) – with either labour or national at the helm?

                      Im no economist or corporate lawyer – but if a company posts a profit, it would follow that the shareholders will come seeking their dividend – and want a pretty good reason why they cant have all or part of it.

      • jackal 5.1.2

        That’s similar to National MP Tau Henare saying recently on twitter that it’s OK to have 20% of New Zealand children living in poverty because the other 80% aren’t. He doesn’t think the Government should do anything about it.

        • North 5.1.2.1

          You listen to Tau do you ?……….hardly ever hear his name up here (except from out of his own fat mouth).

          He’s regarded as a noisy, silly, sideshow sort of fulla. You don’t take seriously a word he says. You just put up with him. You keep the poor zero-mana fulla in the fold because without that what would he have ? Apart from the fat salary he patently doesn’t earn.

          The prevailing attitude is – “He’s a bloody egg but he’s OK……”

          • Ari 5.1.2.1.1

            Just because you’re ignoring him doesn’t mean everyone else is. If you don’t support his words you should stand up and say so instead of griping that he doesn’t follow through, because those words will certainly be appealing to some people.

    • queenstfarmer 5.2

      NZ wins too, because private operators would pay tax on those profits, plus wages and tax on jobs, etc.

      You need to compare that with borrowing money offshore, then writing massive interest cheques to foreign bankers, who we can’t even tax.

      Not saying private prisons are the way to go (I don’t know enought about it) but there should be a fair discussion on it.

      • Lanthanide 5.2.1

        On that basis, we should simply contract out our entire government to overseas companies, because they would pay tax on profits, plus wages and tax on jobs, etc.

        • queenstfarmer 5.2.1.1

          I hope not. My view is that everything needs to be weighed up. Ideological policy (i.e. without assessing the merits) to sell all assets is as bad as ideological policy never to sell any assets.

          • Colonial Viper 5.2.1.1.1

            Yes, let’s rationally and calmly assess the pros and cons of ripping your neighbour off or of profiteering from someone else’s misery.

            Another dumb unprincipled right wing comment.

            You can assess costs and benefits, but the real question around asset sales is not just what are the costs and benefits but also to whom.

          • Ari 5.2.1.1.2

            We wouldn’t really need to be borrowing very much right now if we reversed the tax cuts the Nats introduced for their mates, and honestly, you expect to either have to borrow or dip into surpluses to fund a government in a recession, that’s just sound economic practice.

            You should consider that your opposition to borrowing at all is just as ideological as you’re claiming opposition to asset sales is. Personally, I can think of some situations in which certain assets would be fine to sell, but we’re not in any of those situations right now, especially as most of them involve the government providing a service that a local private sector is already competing with, which is usually a bad model for an SOE, as they function much better at being the benevolent monopoly when a monopoly is necessary.

      • Blighty 5.2.2

        “private operators would pay tax on those profits, plus wages and tax on jobs”

        um, so do public operators, old boy.

        you’re quite right that we should compare the cost of borrowing against other decisions. Let’s do that:

        borrowing as a sovereign country is the cheapest borrowing around.
        Any private buyer of our assets or private prison operator has to borrow at a higher rate, so their return on capital needs to be higher than the Crown’s.
        Therefore, the price any buyer of a state asset will be willing to pay reflects a higher rate of return (ie lower sale price) than the Crown can afford at its borrowing rate.
        Likewise, having a private prison operator is essentially like borrowing the cost of the prison operations from that private company and their rate of return is akin to the interest. Obviously, that rate has to be higher than the Crown’s borrowing rate.

        So, basic economics tells us that when you’re paying a private company’s profit it’s always going to be a worse deal than interest on government debt.

        Finally, lets compare another government decision to the cost of debt.

        National’s 2010 tax swticheroo is not fiscally neutral. It will cost $1 billion over four years. What’s the interest bill on that? Something like $30 million a year. What’s the benefit to the economy of giving Key and his mates hundreds of dollars a week in tax cuts? Nothing that anyone has proven.

        • queenstfarmer 5.2.2.1

          “private operators would pay tax on those profits, plus wages and tax on jobs”

          um, so do public operators, old boy.

          Only if they are run as companies / SOEs, which state prisons aren’t (and I reiterate I don’t know whether it’s a good idea to do so).

          borrowing as a sovereign country is the cheapest borrowing around.

          Ireland, Greece and Portugal may beg to differ.

          So, basic economics tells us that when you’re paying a private company’s profit it’s always going to be a worse deal than interest on government debt.

          This is a rerun of the discussion the other day. I would disagree. But if, as you say, it’s “basic economics”, could you provide a citation? In particular, for the always part.

          • Draco T Bastard 5.2.2.1.1

            Only if they are run as companies / SOEs, which state prisons aren’t

            All employees pay tax so we won’t be losing that bit and the tax the companies would pay will be less than the profit that they take from us. Face it – privatising state assets is, altogether, bad for us.

            (and I reiterate I don’t know whether it’s a good idea to do so).

            Generally speaking, privatised prisons cost more and are less effective (meaning have more recividism) than stat owned prisons. In fact, the company that this government contracted for our prison, Serco, is one of the worst in the world.

            Ireland, Greece and Portugal may beg to differ.

            Once you’re in debt as deep as they are then the costs go way up you stop borrowing and should also default on the debt you do have as there’s no way you can pay it.

            This is a rerun of the discussion the other day. I would disagree.

            An appeal to authority and an admission that you’re stupid (Can’t actually frame an argument against what was said but disagrees with it anyway).

            • queenstfarmer 5.2.2.1.1.1

              You’re right in your first point about the wages part, my bad.

              • Draco T Bastard

                Right on the rest of it as well – especially the bit about you being stupid.

          • Colonial Viper 5.2.2.1.2

            Ireland, Greece and Portugal may beg to differ.

            Meh, even countries can be bankrupted, and it happens when they sell out to foreigners and foreign banks.

      • Akldnut 5.2.3

        Not saying private prisons are the way to go (I don’t know enought about it) but there should be a fair discussion on it.

        In going with their regular modus operandi, the only discussion/s will be:
        1. Submissions put before a select commitee.
        2. Everyone and everthing being totaly ignored.
        3. Then the rightwing mantra will be slammed through under Urgency.

  6. Sanctuary 6

    Now we understand why the way democracy in South America is. Right wing government privatises everything and creates a rentier economy for a tiny but immensely rich and powerful absentee landlord class made up entirely of Pinochet-fascists. Fascists clothe themselves in neo-liberalism and conflate free markets with freedom. Peasants finally have had enough and elect a socialist government that actually plans to do something about inequality and massive expropriation of the nation’s wealth to offshore interests. Fascist elite (with U.S. backing) engineers a military coup to “save the nation from communism”. After decades of such brutal repression by the elite, a Hugo Chavez emerges.

  7. Tom Gould 7

    The story is even more venal than suggested. They sell the electricity companies to their mates, then use the money to build prisons they then lease back to their mates to run as businesses, on long and generous contracts. And as we can see from the dairy sector, the operators hide the real profits and pay little or no tax. So average folks pay more for their power bills, and more tax to run the prisons, and to make up for the taxless corporates. Great deal, if you can swing it.

  8. ianmac 8

    John Key and his wife are Dad and Mum. They have heaps of dough.
    The Power companies will be sold.
    Therfore which Mum and Dad will be able to buy the shares?

  9. tc 9

    Reminds me of graffiti that was around in muldoons day ‘jail, where the big criminals send the little criminals’

  10. prism 10

    In apartheid there used to be two entrances – for white and black. Our country under a NACT government is planning a construction of the country with three doors, one for the wealthy, NZ and overseas investors and profit-takers. One for the average person scrabbling to stay in a job, putting up with hours of expected, unpaid overtime, of harrassment that must be borne to keep the job, of falling safety standards or concern for the wellbeing of employees. Then a third door, at the back of the building, for people who can’t command a permanent living wage, who work for wages hardly sufficient for survival and join other non-earners who receive assistance beneath a level that allows happy participation in society. People needing help slip in through the narrow gap quietly and meekly to supplicate for assistance from pinch-mouthed welfare inquisitors who are gatekeepers and screen every detail of the lives of of people needing welfare help. It’s already like this actually, it will just be further set in concrete.

    And the self-satisfied, smug well-off, will look down their individualistic noses with superior dissatisfaction at the poor type of people in the lower class. They will feel no connection to them through society, or humanity, or compunction to understand how life has been tilted against others, to share the country’s good with all the public. So 18th-19th century. Just what most of the colonists were trying to escape when they came to NZ. Is NZ going to stay on this merry-go-round that is revealed as being a vicious circle bringing us back to the past?

    • Treetop 10.1

      Prism when I saw the title of the post and read your comment I can now see why English will need to build more prisons.

      More prisons will be required because there is going to be a lot more hardship in NZ as less people will be able to obtain a welfare benefit and sadly an option will be to steal or commit other crime just to survive.

      Watch the crime stats and I doubt there will be crime stats for those who could not obtain a welfare benefit who went on to commit crime just to survive, who assaulted due to pressure and frustration and who took up alcohol and drug use just to blot out being refused a welfare benefit. I really hope that child abuse and neglect does not increase due to parents not coping or being forced into unsuitable work or remaining in a relationship where an income is derived from the abuser.

  11. johnm 11

    The OLD BILL SHUFFLE again! + The Prime Hypnotist-God help us!

  12. randal 12

    how much did they pay deloittes for that little bitty piece of social cost benefit analysis or did it spring fully formed from the fuitcakes at the BRT and hooton got the contract to make it official policy.

  13. Maybe Nutional should get all the prisoners to do some work in the Red Zone because nobody else is doing a fucking thing!
    Have another pint Gerry and give Bob Each Way a kiss. Grab a jack hammer English you wimpish tosser.
    RIP Christchurch. Blame the DAM POLLIES!!

  14. KJT 14

    Selling a compliant, cheap and cowed working population to overseas interests. They will pay more to the sellers for workers who are suitably afraid of asking for any human rights.

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