National came to power promising to close the wage gap with Australia. Not only have they failed to fulfill that promise but Bill English now portrays it as a good thing. His appearance on Q+A yesterday only confirms how out of touch National is: determined to sell our assets for no good reason, against our will, and happy with our low wages.
Here’s Guyon Espiner taking English to task:
GUYON Let’s talk about the logic of moving those assets on in terms of the ones that you actually want to sell. In 2010, you got $831 million in dividends from the state-owned enterprises and Air New Zealand. Now, $802 million, almost all of that, came from the five companies that you want to sell. I mean, aren’t you killing the goose that laid the golden egg here?
BILL Well, under the model the government has proposed, we would be maintaining at least 51% ownership in those companies, so we still have a right to the dividends that would come from it.
GUYON Well, half the dividends, presumably.
BILL Well, the dividends that come to our 51% share, that’s right. Half the dividends. And we believe in the long run we’re going to get better performance and more value out of those companies by having the opportunity for Kiwis to buy a share in it, get better performance from the market pressure that would be on them.
GUYON But is that true? Your own Treasury says, and I quote, in the paper that you requested on this issue, ‘There is no clear evidence to suggest that financial performance of the SOE companies is better or worse than private-sector comparables.’ It says, ‘There’s little evidence to suggest that privatisation would significantly improve the financial performance of many of the SOE companies.’
BILL Well, we simply don’t agree necessarily with Treasury on that, and we have a number of—
GUYON But Treasury aren’t exactly left-wing sort of hand-wringers on this, are they?
BILL Well, they’ve had no experience of these kind of asset sales now for 10 or 15 years, so it’s not something they’ve dealt with.
GUYON Where are you taking advice from? Is it just you and a few other Cabinet ministers? I mean, if Treasury don’t even believe, and they say there will be ‘modest economic gains’, where has your evidence come from?
BILL Well, we are of the view that the model, like Air New Zealand, has worked very well – mixed ownership where a combination of market pressure, an arm’s-length relationship with government has allowed that company to go through considerable changes and achieve what’s very difficult to achieve anywhere in the world, and that is be a successful regional airline. So we’re more convinced than Treasury that we’ll get better performance out of those companies, but we have other objectives as well, which are to provide some kind of investment opportunities that New Zealanders think would be useful for them, particularly longer term solid investments after all the negative experiences that they’ve had.
In conclusion: English wants to trade our dividends in the future for cash up front. He and a few buddies reckon that getting the private sector in will make the SOEs more competitive but even Treasury thinks that’s just more billshit.
GUYON Can I talk about the real economy for people? They see the cost of living keep going up. They see wages really not— if not quite keeping pace with that, certainly not outstripping it much. I mean, you said at the weekend to the Australia New Zealand Leadership Forum that one of our advantages over Australia was that our wages were 30% cheaper. I mean, is that an advantage now?
BILL Well, it’s a way of competing, isn’t it? I mean, if we want to grow this economy, we need the capital – more capital per worker – and we’re competing for people as well.
GUYON So it’s part of our strategy to have wages 30% below Australia?
BILL Well, they are, and we need to get on with competing for Australia. So if you take an area like tourism, we are competing with Australia. We’re trying to get Australians here instead of spending their tourist dollar in Australia.
GUYON But is it a good thing?
BILL Well, it is a good thing if we can attract the capital, and the fact is Australians— Australian companies should be looking at bringing activities to New Zealand because we are so much more competitive than most of the Australian economy.
GUYON So let’s get this straight – it’s a good thing for New Zealand that our wages are 30% below Australia?
BILL No, it’s not a good thing, but it is a fact. We want to close that gap up, and one way to close that gap up is to compete, just like our sports teams are doing. This weekend we’ve had rugby league, netball, basketball teams, and rugby teams out there competing with Australia. That’s lifting the standard. They’re closing up the gap.
GUYON But you said it was an advantage, Minister.
BILL Well, at the moment, if I go to Australia and talk to Australians, I want to put to them a positive case for investment in New Zealand, because while we are saving more, we’re not saving more fast enough to get the capital that we need to close the gap with Australia. So Australia already has 40 billion of investment in New Zealand. If we could attract more Australian companies, activities here, that would help us create the jobs and lift incomes.
GUYON The last headline I saw said Australian had dropped its unemployment rate to 4.9%, added 37,800 jobs. Unemployment here pushing 7%, wages 30% higher over there – why wouldn’t you go?
BILL Well, some people will, and that’s fine, but why would we sit round being mesmerised by the fact that some Kiwis go to Australia? We’ve got a long-term plan to lift the performance of this economy, because we need higher incomes and we need more jobs.
Uh, huh. Wasn’t making middle-class women afraid their kids would emigrate to Australia central to National’s 2008 election campaign? You know, John Key standing in an empty stadium? Now, emigration is rising but it doesn’t matter and the low wages that are driving people away are a good thing. What a joke.