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Nats back down from ACC privatisation why not asset sales?

Written By: - Date published: 10:56 am, March 16th, 2012 - 16 comments
Categories: ACC, national, privatisation - Tags:

National has backed down from privatising ACC’s work account. To make it work, they were going to have to pump up ACC levies and make it pay a dividend to the Crown to make prices high enough for the private sector to compete. It’s a sign of how weak the government is that they couldn’t push this through. Problem is, the same logic applies to asset sales.

ACC works because – thanks to the fact it doesn’t operate for a profit and that it is ultimately backed by the Crown whose cost of capital is only 4% – it can undercut any private provider and still provide comprehensive coverage. National was going to have to artifically inflate ACC levies to let the private sector compete, costing all of us. And the Nats realised we wouldn’t like that:

“The political bottom line is it wasn’t going to be possible to introduce competition on a basis that was level playing field between private sector and public without substantial increases in premiums or levies, particularly for small and medium employers,” a well-placed source told the Herald.

Likewise, the Crown can make a profit on owning energy companies at lower prices than private investors can. Contact Energy’s CEO says private investors shouldn’t put money in energy companies – they’re returning 6% while the cost of private borrowing is 8%. He says prices need to go up to make it worthwhile for private players. But the Crown’s cost of capital is 4%. It’s making a profit now. Even Key used to admit that. And those profits stay in NZ and pay for our schools and hospitals.

So, asset sales, like privatising ACC, will mean prices have to go up so private investors can make a profit.

If it’s politically untenable for ACC, it’s untenable for power companies.

Word is, a lot of National MPs are saying that too. MPs who know that if National keeps hemorrhaging votes over asset sales, they’ll be looking for new job in less than 3 years.

Their problem and, more importantly, the problem for the country is that National’s leadership has wed itself completely to asset sales. They know it will cost them the election but they can’t let go. It’s not even about needing the sales money to keep up 30% of GDP net debt or that initial sugar rush to, barely, make it back into surplus in 2014/15.

The stupidity of ACC privatisation is the same as the stupidity of asset sales. But ACC privatisation, they can drop that in a pinch – it’s only really Aussie insurers who would get to feast off that. But there’s big money in snapping up our power companies for the domestic elites who back National. They can’t give that up, no matter the political cost. This is what winning power was all about – getting their hands on the assets so they could sell them to their elite class.

16 comments on “Nats back down from ACC privatisation why not asset sales?”

  1. Bill 1

    The two are not the same thing. If ACC had been privatised, private entities simply couldn’t have made money. And that’s not the case with asset sales.

  2. vto 2

    ha ha, the case for privatising acc had not been made.

    The case for selling these assets has not been made.

    The case for selling land to foreigners has not been made.

    The nats are bleeding left, right and centre.

    I guess that is what happens when your arguments simply don’t stack up, or rather, you have no brains.

    • Matt 2.1

      “I guess that is what happens when your arguments simply don’t stack up, or rather, you have no brains.”

      And don’t forget no soul.

  3. Roger 3

    “If it’s politically untenable for ACC, it’s untenable for power companies.”

    Economically untenable also if prices will go up in both cases. Strange considering that the private sector is supposed to be more efficient and the free market plus competition is supposed to bring the best outcomes. I’m feeling glad that atleast these tories seem to have some semblance of intelligence or conscience.

  4. Pascal's bookie 4

    NBR has a wrinkle on the ACC story today, saying that Judith Collins is ‘livid’ with Nick Smith for lowering ACC levies before the election.

    Not because the levies are now too low of course, but because if he hadn’t lowered them then it might have been possible to make their damn fool scheme work.

    • Lanthanide 4.1

      Yes, that was my feeling on the face of it, too. Why announce you’re dropping levies if you might have to raise them back up again to allow competition?

      The 2.04% rate probably wouldn’t have been too far off what was required; maybe just a bump up to 2.30% or so. But now that it’s back down at 1.70%, it’d be too transparent to be tenable.

  5. Lanthanide 5

    The current ACC earner’s rate of 2.04% is dropping down to 1.70% on April 1st. This isn’t on the IRD website but I managed to find it buried in a PDF on the ACC website. This is a 17% drop if you want to easily see how much extra you’ll have in your pocket from April.

    The pdf had an interesting graph, showing the rate. It was pretty flat until 2009/2010 when it went up a bit, and then went up to the current 2-2.04% in 2010/2011 and 2011/2012. “Coincidentally” the same time that National got elected.

  6. Matt 6

    Good, fuck these kooks and their crackpot schemes to undermine Kiwi institutions that actually work pretty well. Whether it was an epiphany or simply a realization that it wasn’t going to happen without the pitchforks coming out, I’ll take it. Now, on to asset sales.

  7. mikesh 7

    Contact’s CEO says that the cost of borrowing is 8% for privately owned power companies. However, would companies with 51% government ownership still have to pay 8%, or would they be able to obtain funds at 4% like a fully government owned company

  8. Rosemary 8

    Relieved to see the covertly toxic Pete George seems to have finally slung his hook and skunked back to be near others of his ilk. Could always tell his attempts to come across on this site as a moderate were disingenuous. It’s always the dishonest who’re the most dangerous. Get a glimpse of his true colours here:

    http://www.whaleoil.co.nz/2012/03/hipkins-rate-the-leaders-speeches/

    • I still don’t understand how anyone who claims to be centrist could even wade into that despicable blog. Kiwiblog comments are bad enough as is, and I rarely visit, but Slater’s blog is lightweight and full of personal attacks.

      • Rosemary 8.1.1

        It’s worse than that. You could call almost all of what Slater says is misinformation, manufactured from nothing, lies, hypocritical (accepting of course most of it is created by others and handed to him to as the mouthpiece because it’d be too controversial coming from the Nactoids directly, but that’s another story). But when you stand back, perhaps putting all of these things together, it’s clearly sinister, perhaps close to evil because it’s creating hatred in people towards others. You only need to have a quick look at some of the comments there to see how hateful people are, and it’s all in honour and great deference to the mighty “Cam”. His following is scarily cult-like, which he calls his “army”. His followers are scared to disagree with him and those who may wish to from time-to-time, barring of course the one or two regular dissenters, apologise in advance for doing so. This happens on Odgers’ site, too. It’s of course sickening to see, but it’s also incredibly dangerous. Slater, and Odgers also, promote as okay people displaying deep disdain for others that contributes to the increasingly uncaring society we’ve become. Indeed, Slater and Odgers are products of that society, but they also help to perpetuate it. It wouldn’t be hard, given some of the comments on either of their sites but especially Slater’s, to imagine someone taking what they say so literally that they go out and do something really silly. Then, of course, the two pure, blameless holier than thou hatred generating tag-team would sit back and say “it wasn’t our fault”. It’d be interesting to know what unfortunate events in the lives made them like this.

        • felix 8.1.1.1

          “You only need to have a quick look at some of the comments there to see how hateful people are, and it’s all in honour and great deference to the mighty “Cam”. His following is scarily cult-like, which he calls his “army”. “

          Yeah, you get that when you’re a deluded narcissist and you write 90% of the comments yourself.

  9. burt 9

    Nats back down from ACC privatisation.

    So would I if I were in their sensitive client files.

  10. Privatisation off the agenda because the ‘financial elite’ cant make lots of untaxed profit,in the
    meantime acc has been turning down worthwhile credible cases by jumping on degenerative
    changes in the body,a rort of the acc system by the nats,acc used to work so well,until the nats got control of it.
    Just come to light the ‘release of sensitive files’ remember the media release this bad,bad
    person ‘demanded’ 2yrs of benefit for acc files to be handed back and not go to the media,
    turns out that was all a big ‘con’ for the public,the herald on sunday released the womans
    name and the ‘true’ facts, Boag, the nat go to along with the woman,had a meeting with acc,and it was the acc who was bribing the person with the files, can anything that the nats tell us be believed, not on your nelly,this is a great example of how the nats try to ‘hoodwink’ the people
    of nz.spin,spin,lies and more lies,credibility,my dear people, ‘i dont give a damn’ (nat party.)

  11. Rosemary 11

    ACC were making nasty decisions to kick people of while we had a Labour government, also. Labour is not a friend of the poor any longer. We must not forget that. When they become the government again, whenever that might be, we cannot ease up simply because they’re not the Nactoids, like we did between 1999 and 2008 in the misguided belief that they were our friends. They’re not, and we cannot pretend that they are, ever again.

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