Nats eye up Chch assets for sale

Written By: - Date published: 12:51 pm, May 10th, 2012 - 5 comments
Categories: disaster, privatisation - Tags:

Remember when John Key said that rebuilding Christchurch wasn’t just that city’s challenge, it was New Zealand’s challenge? Yeah, well, now Gerry Brownlee and Bill English are pressuring the council to sell off its assets to pay for the rebuild. Green figures show the madness of that. This is a 20-year rebuild. The dividends over that period are more valuable than one-off sale revenue.

Brownlee sought a list of what Christchurch City Council owns and told it that: “Council must play a full role in the recovery by contributing as much funding as is financially sustainable without necessarily using rates as the sole or main financial variable”- ie.sell your assets. The Council has said no but, under the Brownlee Enabling Act also known as CERA, Brownlee has the power to sell the assets for them if they won’t.

Meanwhile, English is talking up the government’s massively unpopular asset sales programme as a model for Christchurch:

Dr Russel Norman: Is he aware that the Christchurch City Council is under pressure to sell the city’s assets to pay for the rebuilding of Christchurch, and does he think it is fair to ask a city that has been recently devastated by two earthquakes to sell its assets, rather than the Government raising a national temporary earthquake levy?

Hon BILL ENGLISH: That is really a matter for the city council. It has got financial obligations it needs to meet and choices about how to do it. I might say that New Zealand, as a whole, is in this situation, where meeting the cost of, among other things, the earthquake means that we are trying to avoid high levels of debt. We are actually looking at partial sales of some Government assets, which would help us through a difficult situation.

Of course, selling assets to meet rebuild costs makes no economic sense. The Greens’ numbers show that the Crown got $7.4 billion when BNZ, Telecom, and Contact were sold but they have paid out $21 billion since privatisation. Even accounting for inflation and including finance costs, it is undoubted that the government is worse off for these sales (not to mention that the government has had to repeatedly intervene in each of the banking, telco, and electricity sectors because of asset-stripping and high prices).

The lesson is pretty simple: in the long-run, the cost of privatisation always outweighs the gain.

Does it make sense for Christchurch to now sell off its assets, or would it be smarter to keep the assets and their revenue to help fund the rebuild and council services in the future?

The truth is that the right will seek any excuse to push for asset sales. The right see the purpose of capital as

5 comments on “Nats eye up Chch assets for sale”

  1. Draco T Bastard 1

    I might say that New Zealand, as a whole, is in this situation, where meeting the cost of, among other things, the earthquake means that we are trying to avoid high levels of debt.

    Considering the levels of debt that he’s built up since becoming minister if finance and the cuts to government revenue that he’s instituted that is obviously a lie.

    We are actually looking at partial sales of some Government assets, which would help us through a difficult situation.

    No they won’t, they’ll put us more in debt to the tune of $100m/year and that’s going on the figure he supplied.

    The Greens’ numbers show that the Crown got $7.4 billion when BNZ, Telecom, and Contact were sold but they have paid out $21 billion since privatisation.

    And now we’re having to pay out even more to get the telecommunications network updated. The privatisation of Telecom is proof positive of the dead weight loss of private profit.

  2. Dr Terry 2

    I wonder now how pleased Christchurch residents are with themselves for virtually installing this Government? Just so long as this unfortunate city is in process of reconstruction, National will not mind slow progress, for Christchurch they will use as an excuse for indebtedness just as long as possible (at least to the end of this term).
    I am not certain that masses of New Zealanders are genuinely concerned about the asset sales, or the polls would read much differently. (One hates having to acknowledge this!)

    • Jim Nald 2.1

      Christchurch earthquake and slow rebuild – National’s convenient excuse.

  3. vto 3

    Well there are another couple of ways …

    Don’t build the stuff. For example, the proposed bloody convention centre is 3x the size of the current one (only 10 years old). Something like $200million for a brand new one against, I think about, $30-40million to repair the existing one. Bloody convention centres.

    New stadiums. See above re convention centres and their need. Professional sport should be paying for it anyway.

    Bus stop. The giant bus interchange thingy does not need to be super duper. Just build one on level ground and put some weather shelters around. Forget the gold plating ffs. And it’s not as if there is the past problem of nowhere to put it.

    Infrastructure. I know there are new and cheaper ways being considered.

    People must realise that the numbers floated by the Council is chocka to the top with near every conceivable wish-list item.

    We just don’t need them all. But what we do need is someone to stand up for us via our local representatives (Council) and tell Brownlee to shove off. Call his bluff on his CERA powers. Parker is useless.

  4. jacqui 4

    I couldn’t agree more with you VTO.
    You have to wonder who would come to a convention in Christchurch now. Why not spend the insurance money prudently and make a multifunctional town hall/convention centre for starters?
    We have ‘world class’ aspirations for the rebuild with a population of less than 400,000 people. Who are we kidding?
    We simply cannot afford it.

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