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Nats’ ideology: outsourcing NZ

Written By: - Date published: 9:54 am, December 15th, 2010 - 29 comments
Categories: assets, business, capitalism, prisons, privatisation, public transport - Tags: , ,

3 under the radar stories yesterday. All linked by ideology.

Kiwirail to buy 300 wagons from China because its cheaper than building them here. It’s not allowed to consider the wider economic gains.

Collins outsources her newest prison to a multi-national, Serco, with a history of prisoner abuse.

English wants more ‘value’ from public assets. Value for whom? The likes of Serco?

29 comments on “Nats’ ideology: outsourcing NZ ”

  1. Tigger 1

    Asset sales. We’re being softened up to believe we ‘need’ them in order to balance the books. Of course, this leaves aside the issue that the tax cuts earlier this year are unaffordable – they won’t come off the table but instead asset sales will be fed to us as a way to make cash.

    Not ‘sold’ of course, just 49%-ed, so effectively they’re still ‘ours’.

    And NZ will swallow it. I swear, I haven’t felt this unpatriotic since…well the 1990s.

    • bbfloyd 1.1

      you’re not alone in feeling unpatriotic tigger… i havn’t heard so much negative, and frankly, quite violently angry talk around the traps for years..

      • Tigger 1.1.1

        That’s how they want us to feel – if we’re not on board then we’re Un-Kiwi. It’s the Bush playbook…

  2. john 2

    We’ll end up a Corporatised shell like the U$ run by the rich for the rich looking up to twice over billionaires like Oprah while ordinary people get poorer and poorer and stupider and stupider:they did vote this mob in!

  3. Bored 3

    This is the area of economics that the Labour party could actually make the most mileage out of presented in the correct emotive terms and imagery. Who (amongst us old enough) can recall the emotional appeal Muldoons “dancing Cossacks” and “reds under the bed” adverts had on the electorate in 1975? They vilified the left by making these terms and images synonymous with communists and union activists, something very visible at the time.

    Today the visible baddies are fat cat financiers, corporate salaried fat cats, polluting farmers, parking building companies and meter men who work for private companies, overseas investors forcing us to pay too high a charge for telephony, the buggers who have taken our cash and gone bust (but hidden their cut) etc etc. I know it is nasty but it may be time to re run the adverts updated. And talk the language, paint the venality of the bastards as it really is.

    More importantly it also positions the left economically as an alternative as it paints privatisers as part of the current corporate fat cat crew. To privatise is to give in to these selfish anti social nasties.

  4. jcuknz 4

    My thoughts on getting quotes is it gives one the opportunity to get the best deal and this is not always the cheapest which those with a narrow outlook on life seem to think is the prime reason for accepting a quote. As a Dunedinite, though with no connection to Hillside apart from an mild interest in railway full size and models, it seems rather foolish that our previous Councils, city and regioinal, blew their doh on a stadium which has ended up being worse than what they had, and still have, and originally justified because ‘The Brook’ was too small for some World Cup match. So we now have two stadiums available for one or two matches, neither being the ‘final’, just run-up sops to the local football union.

    If the council was not so strapped for cash as it is now because of the $350million committed to the stadium they could have let it be known to Kiwirail that any shortfall [ or overfall? ] of the local quote would likely be met by the council for the good of the city.

    So we are left with no increase of jobs for the good of the city economy, two stadiums, which nobody can afford to use because of the incredible running costs.

    The RWNJ’s and the LWNJ’s are running rampant it seems to me with stupidity apart from Clare Curran and a few like her.

    • Bored 4.1

      You know the RWNJ version. So for the LWNJ version (in line perhaps with Adam Smith and other classical economists)…rent taking. When an enterprise is a necessary part of the infrastructure for the delivery of services to the economy and the people it becomes a drag upon the rest of the economy. Particularly so if rentier behavoir becomes evident in the case of monopolies, cartels etc. In which case the enterprise has outlived its usefulness as a private venture and should be regulated or nationalised.

      What does that mean for outsourcing the purchase of goods and services offshore, and return on public assets? Obviously the accounting for non visible costs is the issue. For example, a company in NZ misses out to a Chinese company for a train order, what is the cost to NZ of lost revenue off shore, interest paid on debt, cost of unemployment benefits etc? Losely speaking who funds the invisible transfer costs that the whole economy has to pick up? What is the concurrent gain to be made from this purchase that might also be invisible and can be off set again costs? how does this reflect on the actual value for money from state enterprises?

      None of the questions give obvious answers but what I can tell you is that any current analysis is absent, we are being driven by ideology and recieved wisdom. Doubt is required.

      • Roger 4.1.1

        Not only that but the lost benefit of extra income for those workers which leads to greater consumption and investment locally. The extra money pumped into the economy will have a multiplier effect. The extra turnover will indirectly create more jobs in private business. How much of the money will come back in income tax and GST? Almost 1/5th immediately plus the extra GST from added consumption by the initial workers, and a higher corporate tax take from increased business turnover. Because of the multiplier effect of money the same money being spent multiple times allows for tax collection at multiple sources. It really is a no brainer. I guess that is how the previous Labour government spent their way out of debt and this National government is just robbing the government to give money to their friends.

    • Swampy 4.2

      Caurran is politically naive. The kiwi Rail SOE cannot make a decision like that and the goverment cannot meddle in the running of the SOE.

      And the council would be totally on the wrong foot to get into the business of subsidising an SOE to help the m win contracts as they are a central government agency.

      Before the last election. Mallard and Cullen said they were going to find out if locomtives could be built in NZ. That of couse is all they could do. They couldn’t make NZR give the contract to Hutt or Hillside. But it got them a few votes just by pretending

      Curran I think actually does know that neither the government nor the other MPS can influence Kiwirail to choose their own workshops to build the wagons or units or locos. But the fact is that the shops will get the overhaul contracts for them so they actually do benefit from it after all.

  5. Deadly_NZ 5

    Has anyone thought that maybe, the chinese firm that won the contract has ties to Sammy and Pansy??? Now wouldn’t that put the cat among the pidgeons????

  6. jimmy 6

    Ive never heard of Serco before until I read this post at about 11:50 this morning. Flicked on the midday news and bobs your uncle there was a prison transfer wagon with Serco on the side. They have a distinct Umbrella Corporation (of Resident Evil) sort of vibe to them thats for sure.

  7. Swampy 7

    Kiwirail is an SOE
    It is not the role of an SOE to consider wider economic gain. That is the government’s role, along with the politics. Kiwi rail has acted correctly. They are set up to avoid political meddling by the government and that is how it should be.

    • felix 7.1

      In the current context you’re right, the responsibility lies with the govt.

      It appears that they have no interest in the wider economic gains to NZ.

      • Swampy 7.1.1

        Kiwirail obviously believes that some of the contracts they have awarded are of greater benefit to their overall operation. See comment below

    • Colonial Viper 7.2

      They are set up to avoid political meddling by the government and that is how it should be.

      nah, its the end of the neo-liberal model mate.

      Its all hands on from here in.

      The private sector would love to get on with enriching themselves in an unbridled environment. But its govt’s role to ensure that the broadest society benefits from economic activity and that means providing very clear steers.

      The realisation is clear: narrow private sector self interest != common societal good

      • Swampy 7.2.1

        Yes its all hands on to Labour nudge nudge wink wink here’s another backhander to our loyal union supporters.

        How do you suppose that Nurses get a 32% pay rise in an election year which Annette King gave them as Minister of Health. Simple, she just got a vote of increased funding from her colleagues to do it. There’s always plenty of money for political favours. So there would be I expect, contracts for the railway workers staffed by the loyal members of a Labour affiliate union. In real life it’s called corruption and it’s what they do in tinpot countries. Fancy living in a banana republic?

        • Colonial Viper 7.2.1.1

          Fancy living in a banana republic?

          $1.77B for SCF bond holders
          $90M in tax breaks for half billionaire Jackson
          Wong gone but still only done $500 wrong
          Govt has an unfunded 5 year $12B debt hole = the tax cuts given to the rich

          So we’re already there. You ask me how does it feel? It frakin sucks.

          How do you suppose that Nurses get a 32% pay rise in an election year which Annette King gave them as Minister of Health.

          Yeah I agree that was a good payrise.

          But consider the context: almost any registered nurse can head over the ditch today and get a 30-50% pay rise without even asking for it.

        • Maynard J 7.2.1.2

          Swampy, you can still put out tenders, but allow them to include wider benefits to New Zealand.

          There’s your wee straw-problem solved.

          • Swampy 7.2.1.2.1

            It is still within the SOE’s jurisdiction to choose the options they want and whether this includes or does not include local content. They chose in this case on more than just the cost of the contract.

    • Marty G 7.3

      “It is not the role of an SOE to consider wider economic gain.”

      But why shouldn’t the govt require an SOE to consider wider economic gain, just as it does of NZTA? They’re different types of government body but they’re all owned by the New Zealand population and should be acting to maximise our interests.

      • Colonial Viper 7.3.1

        should be acting to maximise our interests.

        Yes acting to maximise our collective interests, and the value of our shared citizenry.

        • Swampy 7.3.1.1

          The collective interests of the trade union movement and Labour party affiliates is not of concern to me.

      • Swampy 7.3.2

        There is a lot of room for interpretation of what those interests might be.

        The items cited by Kiwirail which are of benefit to them are:
        * Lower cost of the items
        * Shorter delivery timeframe

        Kiwirail clearly believes that in the short term awarding this contract overseas will have a greater economic benefit to the entire organisation rather than just one part of it. They will look at local assembly of wagons for future contracts.

        Kiwirail has also categorically ruled out local assembly or manufacture of locomotives in the foreseeable future. They believe the cost-capability gap is substantial and not able to be closed realistically.

        It should be pointed out that these arguments have happened up and down the country for at least the last 40 years that I know of. There is nothing new in any of them.

        I do not see the value of turning the railways back into a Railways Department type of operation run as a political kingdom by direct government involvement. It will never happen. Giving Kiwirail the freedom to make their own decisions without political interference is part of the future of the rail system in this country.

        • Bright Red 7.3.2.1

          But Kiwirail is part of the government. Shouldn’t it at least consider the impact of the government’s books as a whole when making decisions?

          What’s the point in making a little more profit to be paid in dividends to the government if the decisions it took to make that extra profit cost the government more in lost tax revenue etc?

  8. Clare Curran 8

    @Swampy If the Govt chose to it could have a policy requiring its SOEs to consider the local economic value of the work being done here. Labour is considering such a policy. Making available the contents of the contract discussions after the deal is done is another way to ensure transparency in decision-making. Instead we have to “believe” Jim Quinn and Kiwirail when they say that the CNR tender was 25% less than the Hillside tender.
    Knowing what I do about the tender process for the Auckland EMUs (electrification of Auckland rail) I don’t have a lot of confidence in Kiwirail\’s tendering processes. And neither should you.

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