web analytics

Participate: Stop Asset Sales and Welfare Reform

Written By: - Date published: 11:02 am, March 30th, 2012 - 54 comments
Categories: democratic participation, privatisation, welfare - Tags:

Friday 13th (April) – a scary day as submissions close on 2 major government bills.

Firstly: the Mixed Ownership Model Bill. If we want to stop Asset Sales, as many submissions as possible would be a good start.  So click on the link to submit.

Some points you may wish to make in your submission:

  • A majority of New Zealanders oppose the partial privatisation of New Zealand’s best state-owned assets;
  • It makes no fiscal sense to sell assets earning 18% (capital appreciation and dividends) to pay down debt costing 4%;
  • Treasury’s 2012 Budget Policy Statement says that in 2016 the lost dividends from privatisation are $94m greater than the savings in reduced interest payments;
  • It is unfair to sell assets that currently belong to all New Zealanders to a small minority who will be able to afford to buy shares;
  • Partial privatisation is an inevitable prelude to foreign ownership of a large chunk of our energy companies. That will mean high power prices, dividends flowing overseas, and fewer jobs;
  • Individual energy assets, like Manapouri power station, can be sold off under the legislation into full foreign ownership and control;
  • The renewable energy sector is growing rapidly internationally. We own the companies that have the critical mass, the expertise, and the capital to take advantage of that growth and create tens of thousands of good green jobs here in New Zealand. Privatisation will end that opportunity.
  • Selling the assets is a form of intergenerational theft. One generation will sell the assets that past generations have built up and future generations will not have the fruits of that.
  • Power cuts are more common with private energy companies – they are more concerned with profit than continual energy supply.
  • Greenhouse gas emissions are likely to rise – privatised companies are incentivised to try and increase our energy use (and their profits). Which will hardly help us keep our commitments.
  • Water ownership is in dispute – Maori are filing for customary rights to water. Mighty River may not have full rights to the Waikato River.
  • Privatisation will not solve our economic problems.

Secondly: the Social Security (Youth Support and Work Focus) Amendment Bill.

This is the bill that has mothers of one-year-olds forced out into paid work. With 150,000 jobless, this is hardly the right time for this bill, and a serious incursion into how people wish to raise their children.

It will also have third party providers profiting off unemployment misery.

So make sure you have your say on both bills.

54 comments on “Participate: Stop Asset Sales and Welfare Reform ”

  1. Don’t forget the asset sales march in a month’s time too.
    http://www.facebook.com/events/334873306563769/

  2. How can we take this Government down and get a new Election.
    The media are trying hard but need more support.
    Is this the way to go about it ?

    • shreddakj 2.1

      I think a huge march against one of their main policies will help materialise the distaste a lot of the public are feeling. Help spread the word and get people to come along to the march.

  3. thanks for this ben, good post
    just one point though, it’s welfare destruction, not “welfare reform”.
    no point in helping their cause by adopting their issue framing 

  4. Reagan Cline 4

    Ben, “a majority of New Zealanders oppose” – not such a persuasive argument when a majority of New Zealanders have not read the Bill
    The purpose is not just to pay debt off, proceeds are also to go towards health, education and transport infrastructure.
    Treasuries prediction is just that, a prediction – a lot can happen in 4 years – including benefits from redployment of capital from the partial sale of the “assets”.
    “Foreign” ownership – subject to NZ law and not desirous (lets assume) of damaging profit potential by alienating the local consumers and voters.
    Privatisation might enhance the growth of the renewable energy sector – any evidence to the contrary Ben ?
    Future generations will have the benefits of partial privatisation in the returns they receive from retirement funds investing in the enterprises and from the Future Investment Fund.
    “Greenhouse gas emissions are likely to rise” – why ?
    The doubt about Mighty River having “full rights to the Waikato River” is a risk to whoever owns the enterprise – state and other shareholders.
    “Privatisation will not solve our economic problems” – probably not because they derive from our modern way of life and our beliefs, which are detrimental to many and to the environment (a false but useful concept – try imagining youself separate from an environment).
    The New Zealand Labor Party needs to put together and publicise a programme based on something other than “an individual’s right to prosper at the expense of others”.

    • McFlock 4.1

      Reading so much drivel, it hurts.
         
      Pretty much every statement was bullshit, and it’s “Labour”, not “Labor”. 
      The funniest bit was talking about how new owners wouldn’t want to crap in the NZ market. The fact is some lambs are shorn over the long term, others go the the works for short term profit. Like Tranzrail.
           
      The government shears over the long term. If the investors are large retirement funds wanting good returns, they’ll extract as much profit as possible over the short term, then go somewhere else. Thus running down enterprises that, until this bill goes though, future generations already own. And now Treasury might be under-predicting the economic outlook resulting from National party policy? Normally they overpredict the nats, and substantially underestimate the benefits of NZ government policies.
       

    • Nick 4.2

      Reagan, you are a bollock brained git!!!! A born to rule fuckwit. Your compassion levels are zero minus. I hate sharing my community with your type of organism.

      [lprent: I’m having problems detecting a point in there. Read the policy about pointless abuse and warnings. ]

  5. fender 5

    I support these measures fully and will be doing my bit, but (and I hate to sound pessimistic) this Nact dictatorship have shown time and again they are too pig-headed to take notice of ANYBODY, and I suspect that even if 4 million submissions against their plans were recieved nothing would change their tunnel vision thinking. Hope I’m wrong though, so come on folks, make submissions and hit the streets in an effort to bring this madness to an end.

  6. Reagan Cline 6

    Nick, many people believe we are all born to rule (it is fundamental to Judeo-Christian belief if I have undersood Genesis correctly). I wish you felt more relaxed about sharing your community with my type of organism (we are very very closely related after all – as organisms go).

    • McFlock 6.1

      I wish you’d actually demonstrated that you do have capacity for compassion, rather than defending (and thus confirming) your arrogance and “born to rule” mentality. 
           

  7. Reagan Cline 7

    McFlock – listen to soothing music – it is freely available. An obsolete rolling stock and lines, signalling, staffing etc system in a country that relies on roading to move freight is a very different proposition to Hydroelectric Power stations – your comparison does not stack up. How arrogant of you to persume to speak for future generations ! Are you a seer as well as an expert on pronunciation ? As I understand it, the government looks to Treasury for predictions rather than Treasury tayloring its advice to suit the governmant.

    • McFlock 7.1

      I merely pointed out that your supposed advantage of selling the family silver “Future generations will have the benefits of partial privatisation in the returns they receive from retirement funds investing in the enterprises and from the Future Investment Fund.” is redundant, because future generations already have the benefits of owning those assets. 
        
      You accuse me of pretending to be a seer, yet you made the initial assumption that foreign owners would not wish to damage the profit potential of the asset by alienating “consumers and voters”. Bullshit. If they see more profit in slaughtering the sheep, they’ll slaughter it. Capital doesn’t care who it alienates, if the money is right.
         
      And aren’t we supposed to be on something like 4% growth at the moment? Yeah, right. And all through Lab5 Treasury predicted lower growth than actually occurred. I’m sure they’re not biased, it just seems to happen that way (actually, the more likely explanation is that National and Treasury both work to the same neolib textbook in which economics is more a religion than a reflection of reality).

      • Draco T Bastard 7.1.1

        And aren’t we supposed to be on something like 4% growth at the moment? Yeah, right. And all through Lab5 Treasury predicted lower growth than actually occurred. I’m sure they’re not biased…

        No, they’re not biased. They just have a delusional theory that supports NACT policies to base their prediction upon and so when NACT are in government their predictions shoot upwards and are wrong and when Labour is in government their predictions go downward and are wrong. They, of course, fail to see this rather obvious correlation.

    • McFlock 7.2

      Oh, and pointing out that the NZ Labour Party spells its name with a “u” is spelling, not pronunciation. Don’t use words that are too big for you to handle.

  8. Nick 8

    Get stuffed Reagan. Arrogant born to rule twat.

  9. Reagan Cline 9

    Mc Flock, how can we know now that these assets will be of benefit to future generations ?

    What the government has succeeded in doing is to persuade many people that a partial asset sale will be benefit this generation and I have not been persuaded otherwise.

    Some capital in NZ has gone for the quick buck I suppose – the Auckland housing bubble is perhaps an example of this.

    Not sure what “Capital” and “neolib” mean. The people I spend time with never mention these words – too busy getting on with life.

    I keep mentioning the NZ Labour Party because I think they are the party most likely to come up with a program (short enough McFlock ?) that will enable more people to live a good life.

    • bad12 9.1

      The reverse of your query holds more truth dont you think,how can we KNOW that National will use the proposed proceeds from asset sales to the advantage of future generations,

      We can hardly turn back the clock on the sales should such ”promises” from Slippery and Co turn out to be yet more empty rhetoric,

      Ridding the country of the shysters and charlatans at the ballot box can hardly be of any recompense for the revenue stream transferred from my partial ownership,(and everyone else who opposes such sales),without having first gained my express permission to sell off my share of what generates the present income stream into the Government coffers…

    • Draco T Bastard 9.2

      Not sure what “Capital” and “neolib” mean.

      Then I suggest you shut up, fuck off and get an education before you say anything more.

    • Colonial Viper 9.3

      Not sure what “Capital” and “neolib” mean. The people I spend time with never mention these words – too busy getting on with life.

      As philosophically blind and ignorant neoliberal capitalists, perhaps?

    • prism 9.4

      @ Reagan Cline I note the words ‘I think’ near the end of your comment RC. Is that true? You have no shame at offering up your ignorance Not sure what “Capital” and “neolib” mean. and lack of interest to get informed. (I pop up to google when I want simple information like that.) Have you tried google?

      Then why bother to write a comment at all? Get out and get on with life while you still can. Who knows what is going to happen in the near future.

    • McFlock 9.5

      Let’s say I have a company that gives me 50k a year in dividends.
      Someone suggests selling my shares for half a million.
      Now, if I do that I will have half a million that I can use to pay off debt, and maybe leave to my kids, and buy some gadgets that will probably break after a year or two.
      But on the flipside, if I keep the shares I will be able to pay off the same amount of debt, and after ten years or so I will still be getting 50k a year.
         
      Do you think my kids will be better off if I sell, or if I keep the shares? Or is it all too impossible to know? In which case why do you bother defending your opinion?

  10. Reagan Cline 10

    bad12. We don’t know. Economic predictions are unreliable. Another government could buy back or appropriate some or all of the 49%.
    You could be right though, maybe holding on to things we believe are assets and finding some way of spending the income stream is better than letting others have a share of the ownership and income stream in exchange for their access to new capital and their input into running the enterprises. At the moment any new capital has to come from the NZ taxpayer directly or through borrowing and the ideas required to ensure that the enterprises thrive are coming from a smallish group.

    • Colonial Viper 10.1

      the ideas required to ensure that the enterprises thrive are coming from a smallish group.

      A tiny group in fact.

      The people who control the most money and capital in this country seem intent on taking control over existing enterprises instead of doing the harder work of taking risks with innovative new start ups.

  11. bad12 11

    Reagan Cline,BULLSHIT!!!we have constantly been told over and over every time the price of electricity has risen to the consumer that this is neccessary so as to provide these energy companies with capital to enable the building of new infrastructure and the up-grading of what we all have already paid for,

    Any reputable business will tell you that selling off part of its asset stream without having a carefully costed plan on how that asset stream will be replaced is plainly stupid and a recipe for bankruptcy,

    You and the Member for Dipton DONT KNOW how much the 49% of assets sold will fetch into the Government coffers,its all at best a guess,and,we can sure as hell tell you that Slippery and Co have NO PLAN what-so-ever to build X road,X school,or,X hospital with the sale of assets that they as the Government of the day are the custodians of and not the owners of,

    So what we have here is the appearance of Slippery and Co using tax cuts as an incentive to be elected for a first term of Government,using the part sale of assets they have no ownership of as the incentive to gain a second term of Government,

    But what of a third term,surely Slippery and Co has to be the party that keeps on giving in order to be elected,which just leaves us to speculate that the proceeds of the part asset sales will be used to shore up the billion dollar hole in the Governments revenue stream caused by Slippery and co,s first tax cutting incentivsation of the voters OR Slippery and Co will simply offer the proceeds of the part asset sales as incentive to vote for them with another offer of tax cuts…

  12. While I think there are good economic reasons for not supporting the partial sate of asset – full privatisation is a better option – the reasons given above don’t stack-up as I argue here.

    • bad12 12.1

      For a bit of amusement on a quiet Sunday after tea we actually read some of what you have pointed us toward with your link to that obscure little blog,

      The 3rd word in our post 11 would seem ample answer for one so ”talented” at advancing an argument for asset sales such as you…

      • Paul Walker 12.1.1

        “The 3rd word in our post 11 would seem ample answer for one so ”talented” at advancing an argument for asset sales such as you…”

        You mean “BULLSHIT”. Well I’m glad to see that intelligent, rational and sophisticated argument is not dead on New Zealand’s blogs. If you actually bothered to read what I wrote you would have noticed that I said there are good economic reasons for opposition to National’s partial privatisation plans. Its just that the arguments made in the posting above are not those reasons.

        • McFlock 12.1.1.1

          Promoting full privatisation over partial is like promoting P over alcohol. If you must link-whore, at least pick your audience. Or did you cut&paste here the Kiwiblog  advert by accident?
           

          • Paul Walker 12.1.1.1.1

            Actually full privatisation would overcome many of the problems with National’s plan. And if National don’t want to go that far then no privatisation may be the second best.

            • McFlock 12.1.1.1.1.1

              Yeah? Well I ain’t buying what you’re selling.
                  
              Maintaining full public ownership keeps the dividends in the public coffers, management in public control and natural monopolies in public hands.

              • RedLogix

                Public monopolies are accountable through the political process. By contrast when you privatise it is only accountable to it’s shareholders.

                And don’t give me the ‘competition’ argument…. all mature markets, like electricity, with enormous capital barriers to entry are operated as oligopolies.

                In the real world everyone avoids actual competition like the plague because it drives profits to zero. (Which incidentally is the same profit level an SOE can be run at if it’s government owner so decreed for social reasons.)

                • Political markets are an inefficient way of trying to make any firm accountable to anyone. SOE are “accountable” to the government and to no one else. Power generators are not monopolies. There are, for sure, internal economies of scale with generation but demand is such that such economies are exhausted before demand is satisfied. The important thing about competition and profits isn’t that they are zero, its that they are not zero. Positive profits attract entry and drive innovation. What is important is the process of competition and not the end result. This suggests that barriers to entry are important. But note that regulation itself can act to reduce the process of competition. Also as Oliver Williamson has noted the idea of an efficient outcome is one in which no other feasible outcome can be implemented with welfare gains. Thus non-zero profits need not be a sign of inefficiency.

                  • McFlock

                    yeah, bullshit. Lots of claims about innovation and what is or is not a monopoly, no data. 
                       
                    Keep preaching your religious catechism, mate, but it’s still bullshit.
                          
                    You might find this mantra useful:
                    OH-money-payme-NOW OH-money-payme-NOW OH-money-payme-NOW OH-money-payme-NOW OH-money-payme-NOW 

                    • “Lots of claims about innovation and what is or is not a monopoly, no data.”

                      The bit about monopoly is simply comes from the definition of a natural monopoly and the innovation bit follows from a very simple incentive argument. How much economics have you done? This is all first year stuff.

                    • McFlock

                      Yeah, it is. And the world isn’t reducible to a slide rule.
                           
                      Power companies tend towards monopoly markets because of the infrastructure barrier and economies of scale. This is where you get into a debate about the theoretical possibility of effective power company competition and proceed to ignore the real world evidence, particularly in NZ.
                           
                      And the “very simple” incentive argument is only valid if you ignore the massive technological contributions made directly and through funding by governments when the private sector failed to do so. In almost any field you care to name.
                           
                       

                    • @ McFlock

                      As I noted there are internal economies of scale with power generators but natural monopolies only occur when these economies are such that demand can be satisfied without exhausting said economies. Or in other words, the cost function for the firm is subadditive up to the point where demand is satisfied. For power generation is not the case. It is more likely that such an industry is a natural oligopoly and thus Williamson’s idea of remediableness comes into play. This says that a mode of organization for which no feasible superior mode can be described and implemented with expected net gains is presumed to be efficient. This may mean that an efficient organizational form for power generation is not perfect competition.

                      As to the incentive argument I don’t see how it depends on “massive technological contributions made directly and through funding by governments when the private sector failed to do so.” Firms see profits being made and they want to be part of that industry to make profit as well. I don’t see how that argument depends on government action of any sort.

                    • @ Carol

                      Innovation comes from many different sources but business innovate for the good of all of us. They are not the only source of innovation but they are a major one. Universities, for example, do much basic research into and development of new ideas, that is, they innovate. But they also use patents and copyright to make sure they get a return on that innovation, We are not the worse for this. If fact we are better for it. Being able to make a return on your innovation is one thing that motivate innovators.

                    • @ Coral “Thus, we don’t seem to get much innovation from the right wing parties-of-business in dealing with poverty”

                      This from the Economist

                      THE past four years have seen the worst economic crisis since the 1930s and the biggest food-price increases since the 1970s. That must surely have swollen the ranks of the poor.

                      Wrong. The best estimates for global poverty come from the World Bank’s Development Research Group, which has just updated from 2005 its figures for those living in absolute poverty (not be confused with the relative measure commonly used in rich countries). The new estimates show that in 2008, the first year of the finance-and-food crisis, both the number and share of the population living on less than $1.25 a day (at 2005 prices, the most commonly accepted poverty line) was falling in every part of the world. This was the first instance of declines across the board since the bank started collecting the figures in 1981

                      A lot of the decline has been in China with its economic growth driven by its expansion of the use of markets and business.

                    • McFlock

                      Gotcha. So essentially “efficient” is being redefined as “as efficient as it can get”, and the assumption is that a privately-owned oligopoly will be more “efficient” than a publicly-owned power grid. Care to support that assumption? With something other than a profession of faith?
                         
                      Oligarchies are Clayton’s capitalism – the same shite taste as a free market, but less benefit to the consumer.
                         
                      Innovation:
                      If firms saw the profit potential they would fund the primary research and initial development themselves. They do not do this all the time. Otherwise private firms would have provided all the funding for the development of, for example, the internet. Or in a NZ context, rail upgrades.
                        
                      Or, indeed, developed NZ’s electricity infrastructure without government involvement from the start. That alone suggests that “innovation” being an advantage of 100% private ownership is bunk.
                            
                                
                         
                       
                       

                    • @ McFlock

                      “So essentially “efficient” is being redefined as “as efficient as it can get”, ”

                      Well yes, since this is the only way you can define it. Even an outcome which is Pareto efficient wold satisfy that condition. The Hicks-Kaldor condition would also satisfy your statement.

                      “the assumption is that a privately-owned oligopoly will be more “efficient” than a publicly-owned power grid. Care to support that assumption? With something other than a profession of faith?”

                      On the empirical side I would suggest a reading of “The Financail Economics of Privatization” by William L. Megginson, New York: Oxford University Press, 2005.

                      The following comes from the summary of chapter 4 of the Megginson’s book.

                      “The 87 studies from nontransition economies discussed in this chapter offer at least limited support for the proposition that privatization is associated with improvements in the operating and financial performance of divested firms. Most of these studies offer strong support for this proposition, and only a handful document outright performance declines after privatization. Almost all studies that examine post-privatization changes in output, efficiency, profitability, capital investment spending, and leverage document significant increases in the first four measures and significant declines in leverage.

                      The studies examined here are far less unanimous regarding the impact of privatization on employment levels in privatized firms. All governments fear that privatization will cause former SOEs to shed workers, and the key question in virtually every case is whether the divested firm’s sales will increase enough after privatization to offset the dramatically higher levels of per-worker productivity. Three studies document significant increases in employment [Galal, Jones, Tandon, and Vogelsang (1992); Megginson, Nash, and van Randenborgh (1994); and Boubakri and Cosset (1998)], but most of the remaining studies document significant-sometimes massive- employment declines. These conflicting results could be due to differences in methodology, sample size and make-up, or omitted factors.

                      However, it is more likely that the studies reflect real differences in post-privatization employment changes between countries and between industries. In other words, there is no “standard” outcome regarding employment changes.

                      Perhaps the safest conclusion we can assert is that privatization does not automatically mean employment reductions in divested firms, though this will likely occur unless sales can increase fast enough after divestiture to offset very large productivity gains. Since the empirical studies discussed in this chapter generally document performance improvements after privatization, a natural follow-up question is to ask why performance improves. For utilities, the need to introduce competition and an effective regulatory regime emerges as key, but there is no “silver bullet” answer for what makes privatization successful for firms in competitive industries. As we will discuss in the next chapter, a key determinant of performance improvement in transition economies is bringing in new managers after privatization. No study explicitly documents systematic evidence of this occurring in nontransition economies, but Wolfram (1998) and Cragg and Dyck (1999a,b) show that the compensation and pay-performance sensitivity of managers of privatized U.K. firms increases significantly after divestment. Studies that explicitly address the sources of post-privatization performance improvement using data from multiple nontransition economies tend to find stronger efficiency gains for firms in developing countries, in regulated industries, in firms that restructure operations after privatization, and in countries providing greater amounts of shareholder protection.”

                      Also Sunita Kikeri and John Nellis write in their article, An Assessment of Privatization, “The World Bank Research Observer”, vol. 19, no. 1 (Spring 2004)

                      “This article takes stock of the empirical evidence and shows that in competitive sectors privatization has been a resounding success in improving firm performance. In infrastructure sectors, privatization improves welfare, a broader and crucial objective, when it is accompanied by proper policy and regulatory frameworks.”

                      Mary M. Shirley and Patrick Walsh write in “Public versus Private Ownership: The Current State of the Debate”, Working Paper, The World Bank,

                      “Our review found greater ambiguity about ownership in theory than in the empirical literature. In the debate over the effects of competition, theory suggests that ownership may matter and if so, that private firms will outperform SOEs. The empirical studies squarely favor private ownership in competitive markets. Theory’s ambiguity about ownership in monopoly markets seems better justified, since the empirical literature is also less conclusive about the effects of ownership in such markets. Theories that assume a welfare maximizing government suggest that SOEs can correct market failures. In contrast, public choice theories are skeptical of the benevolent government model. Corporate governance theories suggest that even well intentioned governments may not be able to assure that SOE managers do their bidding. The empirical literature favors those skeptical of SOEs as a tool to address market failures. In studies of industrialized countries, where we might expect more developed political markets to motivate greater government concern with welfare maximization or better information and incentives to overcome corporate governance problems, private firms still have an advantage. The private advantage is more pronounced in developing countries, where market failures are more likely.”

                      On the theoretical side, a summary of when and why privatisation works can be found in chapter 1 of “The Challenges of Privatization: An International Analysis” by Bernardo Bortolotti and Domenico Siniscalco, Oxfor: Oxford Univeristy Press, 2004.

                      Chapter 6 of this book looks at the data and concludes:

                      “This chapter attempts to single out some critical influences affecting privatization in monopolistic industries. It focuses upon two factors that may influence the pace of divestiture in network industries: vertical integration and regulation. The results are straightforward. First, vertical integration of a system substantially reduces the frequency of utility sales. Second, regulation appears to be crucial for the success of privatization in, the utility sector. The regulatory indicators correlate strongly with the quantity of sales of electricity, the size of the stake sold, and the revenue from sales. As the theory suggests, the public-monopoly-turns-into-private-monopoly arg~ent does not apply in well-regulated settings. Consequently, an important rationale for public ownership of natural monopolies loses relevance. This reasoning explains not only the low number of sales and percentage of stock sold in poorly regulated electricity markets, but also why sales are less frequent where vertically integrated players dominate the market.

                      Regulation does not appear to decrease the revenue generated by the sale of
                      public enterprises, although it can reduce the expected profitability of the fum
                      curbing supernormal profits. However, it provides clear rules and a framework in which investments and business opportunities can be more effectively gauged. The regressions in this study indicate that the latter factor dominates the former in investors’ decision-making. Governments should therefore not be wary of regulating first and then privatizing.”

                    • Colonial Viper

                      Fuck “efficiency”

                      Time to refocus on resiliency, robustness and maximal SLA’s and fitness for purpose.

                      The bit about monopoly is simply comes from the definition of a natural monopoly and the innovation bit follows from a very simple incentive argument. How much economics have you done? This is all first year stuff.

                      1) Many of the world’s most powerful breakthroughs were not conducted due to financial incentives, but due to an interest in people and the world. Until the fucking neoliberals turned up that is.

                      2) 1st year economics – guffaw. Tell me buddy, how much use is “1st year economics” anywhere, compared to the damage it has caused?

                      3) Economics is a pseudoscience introverted cult which cannot deliver what it promises as a profession. The only good thing about 1st year economics is that it is not 2nd or 3rd year economics.

                    • McFlock

                      Okay, your sources seemed to be somewhat less certain than you are in supporting the creation of an electricity oligopoly as opposed to purely public ownership.
                      Indeed, they seem to suggest that individual factors in each privatisation affected the outcome more than any general principle of efficiency, particularly regarding the relative abilities of regulators. To which I retort “Brownlee”.
                                
                      As for the definitional debate about “efficiency”, most people tend to use it as a measure of the amount of resources put in for a given output versus the theoretical minimum cost of that output. E.g. if a car burns 100kW but only 20kW goes to moving the vehicle (the rest being lost as heat and sound), it’s 20% efficient. You seem to be arguing “oh, it’s a station wagon, and those are less efficient. But as station wagons go this one gets as much traction as our lowered expectations of station wagons deem possible, so it’s actually 100% efficient”. 
                           
                      Or to put it more crudely: if economists in general have much smaller than average penises, any economist with a four-incher would by that logic purchase extra-large condoms.

                    • “Indeed, they seem to suggest that individual factors in each privatisation affected the outcome more than any general principle of efficiency, particularly regarding the relative abilities of regulators.”

                      Of course. If you do privatisation badly you will get bad results. Just look at the example of Chile in the mid 70s. Its a bit like surgery. If your doctor makes a mistake, you could die but if he does good work, you get better. Well done privatisation works well, badly done privatisation works badly. Making sure you get it right is all important. But this is true of all policy work.

                      As to efficiency, the most common definition is Pareto efficiency (or allocative efficiency) – named after an Italian sociologist. In a Pareto efficient economic system no allocation of given goods can be made without making at least one individual worse off. Productive efficiency is where a given level of output is produced using the lest amount of inputs or a given level of inputs are producing the maximum level of output. Remediableness says that a mode of organization for which no feasible superior mode can be described and implemented with expected net gains is presumed to be efficient. It says you are doing the best you can do while what you are doing may not be perfect. Perfection may be impossible.

                    • McFlock

                      Of course. If you do privatisation badly you will get bad results.       

                      NZ’s track record of privatisation is not exactly admirable. We privatise badly. It’s all very well arguing that if we privatised competently we might achieve an oligarchic market that doesn’t price-gouge (and that’s gotta be idiotic for our BoP if internationals invest in our market – essentially we’d be importing at high prices power that we used to generate ourselves), but in the real world NZ privatises as stupidly as possible. FFS, they wanted to raise ACC levies simply so the private sector could compete.
                           
                      It’s like me saying that I can win the marathon at this year’s Olympics – possible in theory, but the fact I haven’t done an ounce of training suggests that in the real world I wouldn’t even qualify.
                       

                      Remediableness says that a mode of organization for which no feasible superior mode can be described and implemented with expected net gains is presumed to be efficient.

                          
                      Yeah, that’s the bit I think is a dodge. Pareto optimality is a logical limit, choosing mutual non-harm as the benchmark. Productive efficiency takes theoretical limits based on objective facts about production costs etc. But  remediableness simply says that even if a system is objectively inefficient, if it’s the best thing we can think of at the moment it’s “efficient”. No, it’s not. But we DO know that we have control (if we choose to exercise that will) over those SOEs at the moment, we know that the RoI is greater than the interest we’re paying on debt (so selling the assets, even partially, will lose govt money), and we know that every other privatisation attempt of essential infrastructure as practised in NZ has resulted in slowed innovation, less community control, and relatively high consumer costs.
                             
                          
                      So here’s what I think would happen in NZ if we privatised all the way (based on our noted inability to learn from our idiot economic mistakes): we’d fuck it up badly.
                      People would pay more, there’d be more disconnections, the government would use the one-off payment as justification for ongoing tax cuts, our trade balance will take a hit, government debt will get even worse, and then we’ll have to renationalise because the grid goes pop, spend m(b?)illions on that, and then be sued through the WTO because we renationalised. You might not think that this is likely, but we’ve managed to screw it up every other time we’ve done it, so what will be different this time?
                        

                       

                       

                  • Carol

                    And why do you assume innovation is, in itself a good things always and in every case?

                    A lot of the innovation I see in the business world is either superficial (re-packaging and rebranding, and adding little bright shiny custom features) or taking shortcuts at the risk of health and safety.

                    And some innovation is just plain stupid and misguided – e.g. some (probably tallish, able-bodied young men) have recently decided it’s a great use of space to hang some women’s clothes up quite high in clothes shops. These are above or at the limits of my reach, being at the shortish end of women’s height range. But even a woman shop assistant I asked to reach one garment was stretched to reach it. She said a management guy at the firm decided it was a good idea to put it there. Have since then come across the same thing in a totally different clothes shop.

                    I have to be really motivated to ask someone to reach such items…. unlike with most items out of my reach in supermarkets…. what ever happened to customer focused service? Not new or innovatory, but a pretty good golden oldie.

                    • “And why do you assume innovation is, in itself a good things always and in every case?”

                      No. For example, innovation in nuclear weapons is not a good thing.

                    • Carol

                      In lieu of missing reply buttons …@Paul:

                      No. For example, innovation in nuclear weapons is not a good thing.

                      Indeed. It seems to me that most innovation in private businesses is aimed at finding new ways to get people to part with money and improve the profit margins of the business. So any innovations that help all/most sections of the wider community is purely coincidental.

                      Thus, we don’t seem to get much innovation from the right wing parties-of-business in dealing with poverty, providing jobs for all that pay enough to live off, ways to deal effectively with climate change, global resource depletion, affordable health-care for all…. etc, etc.

                    • @ Carol

                      The economist Paul Krugman makes the point that, “Economic history offers no example of a country that experienced long-term productivity growth without a roughly equal rise in real wages. In the 1950s, when European productivity was typically less than half of U.S. productivity, so were European wages; today average compensation measured in dollars is about the same. As Japan climbed the productivity ladder over the past 30 years, its wages also rose, from 10% to 110% of the U.S. level. South Korea’s wages have also risen dramatically over time. (“Does Third World growth hurt First World Prosperity?” Harvard Business Review 72 n4, July-August 1994: 113-21.). What then underlies productivity growth, well one thing is innovation. Innovation means we can get more for less, we find new ways of doing old things and we find new things to do. An obvious example of an innovation that has helped us do old things in new ways and helped us do new things is the computer. Without this blogs would not exist.

                    • Carol

                      Paul, a lot of the innovations with computing, especially in the early days when the arhcitecture of the Internet was laid down, came from hobbyists, grad students, military and academic establishments, and open source afficianados. They developed many innovations through co-operation, often by working through networks not sanctioned by the business moguls trying to make some profit from computing.

                      And many of the later innovations came from amateurs too.

                      In recent times, big business has been trying to find ways to take control of amateur/not-for-profit activities online, and by so doing, are working to stifle many innovations that would benefit the majority.

                    • Colonial Viper

                      Paul, a lot of the innovations with computing, especially in the early days when the arhcitecture of the Internet was laid down, came from hobbyists, grad students, military and academic establishments, and open source afficianados.

                      Precisely.

                      Then bullshit neoliberal managerialism came along and financialised anything and everything to do with community and human motivation.

                      Frankly Paul, any mangement text book will tell you that money usually ranks 3 or 4 on the list of what actually motivates people.

                      Except for the sociopathic neolibs who rate their lives and social status according to it, of course.

              • rosy

                Today I received a newsletter from a local Australian organisation that reports on happenings there. An article was on the cost of electricity in Adelaide. Apparently Adelaide is set to have the highest electricity prices in the world by July… It’s prices are also substantially more than other states.

                When the former Liberal government adopted the policy to privatise the state’s electricity assets, the average household electricity bill was $770. Since then it has more than doubled, to about $1600.

                A quick wiki check shows that the vertically-integrated state electricity provider was sold off in 1999 and the electricity market was deregulated in 2003. People are now arguing that the state should invest in upgrading electricity infrastructure, not the privatised companies. It appears to be a case of the public bearing the costs and the companies reaping the profits, with infrastructure degrading over the period of privatisation. Possibly an interesting case study of privatisation with other states as comparisons. It seems to be such a depressingly familiar story.

        • bad12 12.1.1.2

          Clap,clap,clap,kerlap,well at least your lucid enough as to be able to track down the word,

          Bullshit would seem to be a perfectly rational means of addressing anything You have advanced as argument either economic,political or social either as comment in the Standard or by linking readers to some barely intelligible obscure blog elsewhere without expending anymore energy in formulating such an answer than your posts actually deserve….

Recent Comments

Recent Posts

  • Quarantine-free travel with Australia to remain suspended for a further 8 weeks
    Suspension to be reviewed again mid to late November Decision brought forward to enable access from Australia to first tranche of around 3000 rooms in MIQ Air New Zealand working at pace to put on more flights from Australia from October    The suspension of quarantine-free travel (QFT) with Australia has ...
    BeehiveBy beehive.govt.nz
    6 hours ago
  • Extra support for Ethnic Communities to share vaccination information
    Extra support is being made available to Ethnic Communities to help them share COVID-19 vaccination information within their communities, Minister for Diversity, Inclusion and Ethnic Communities Priyanca Radhakrishnan said. “We know we need to get every eligible person in New Zealand vaccinated. A fund being launched today will allow for ...
    BeehiveBy beehive.govt.nz
    6 hours ago
  • School holidays remain unchanged for Auckland region
    School holidays in Auckland will continue to be held at the same time as the rest of the country, starting from Saturday, 2 October, Education Minister Chris Hipkins said today. “I’ve carefully considered advice on the implications of shifting the dates and concluded that on balance, maintaining the status quo ...
    BeehiveBy beehive.govt.nz
    8 hours ago
  • Government continues crackdown on gangs and organised crime
    Operation Tauwhiro extended until March 2022 Since it was launched in February, Operation Tauwhiro has resulted in:   987 firearms seized $4.99 million in cash seized 865 people charged with a firearms-related offence Gangs and organised crime groups will continue to be relentlessly targeted with the extension of Police’s successful ...
    BeehiveBy beehive.govt.nz
    9 hours ago
  • Speech to Body Positive 'HIV Treatments Update Seminar 2021'
    E ngā mana E ngā reo E ngā iwi Tēnā koutou katoa Ka huri ki ngā mana whenua o te rohe nei. Tēnā koutou. He mihi hoki ki a tatou kua tau mai nei I raro I te kaupapa o te rā. Nō reira tēnā koutou katoa Acknowledgements It’s a ...
    BeehiveBy beehive.govt.nz
    9 hours ago
  • NZ economy’s strong momentum will support rebound from Delta outbreak; COVID fund replenished
    The economy showed strong momentum in the period leading up to the recent Delta COVID-19 outbreak, which bodes well for a solid economic rebound, Grant Robertson said. GDP rose 2.8 percent in the June quarter, following on from a 1.4 percent increase in the previous March quarter. This was a ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Projects create benefits into the future
    Making a well-known lake swimmable and helping to halt the decline of the endangered hoiho/yellow-eyed penguins are among a suite of new projects being supported by the Government’s Jobs for Nature programme across the southern South Island, Conservation Minister Kiri Allan says. “It’s no secret that many of our most ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • New members appointed to Kāpuia
    The Government is adding four additional members to Kāpuia, the Ministerial Advisory Group on the Government’s Response to the Royal Commission of Inquiry into the terrorist attack on Christchurch mosques. “I’m looking forward to having Pamela MacNeill, Huia Bramley, Melani Anae and Katherine Dedo  join Kāpuia and contribute to this group’s ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Timeline confirmed for Emissions Reductions Plan
    Cabinet has agreed to begin consulting on the Emissions Reduction Plan in early October and require that the final plan be released by the end of May next year in line with the 2022 Budget, the Minister of Climate Change, James Shaw confirmed today. “Cabinet’s decision allows organisations and communities ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Pay parity pathway for early learning teachers confirmed
    Pay parity conditions and higher funding rates for education and care services will come into force on 1 January, 2022, Minister of Education Chris Hipkins confirmed today. The Government signalled this work in Budget 2021. “From 1 January, 2022, centres opting into the scheme will receive government funding and be ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Speech to the New Zealand Nurses Organisation Conference 2021
    Kia Ora tatau katoa.   Ka tuku mihi ki nga nēhi, He pou Hauora o Aotearoa, E ora ai tatou.   Whakatau mai  I runga i te kaupapa o te ra Te NZNO conference.   Tena koutou tena koutou Tena tatou katoa   Good morning, and thank you inviting me ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Government investment in farmer-led catchment groups sweeps past 150 mark
    171 catchment groups have now been invested in by the Government 31 catchment groups in the Lower North Island are receiving new support More than 5,000 farmers are focussed on restoring freshwater within a generation through involvement in catchment groups  Government investment in on-the-ground efforts by farmers to improve land ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Fight to protect kauri on track
    The Government is pitching in to help vital work to protect nationally significant kauri forests in Auckland, Minister of Conservation Kiri Allan says. “Ensuring the survival of these iconic trees for future generations means doing everything we can to prevent the potential spread of kauri dieback disease,” Kiri Allan said. ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Joint statement of Mr Bernard Monk; Hon Andrew Little, Minister Responsible for Pike River Re-entry,...
    [Note: The Parties have agreed on terms to fully and finally settle the proceeding and will jointly issue the below statement.] At the heart of this litigation are the lives of the 29 men tragically lost at the Pike River mine on 19 November 2010 and to whom we pay ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • More financial support for businesses
    Today’s decision to keep Auckland in a higher COVID Alert Level triggers a third round of the Wage Subsidy Scheme which will open for applications at 9am this Friday. “The revenue test period for this payment will be the 14th to the 27th of September. A reminder that this is ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Aotearoa New Zealand provides further humanitarian support for Afghanistan
    Aotearoa New Zealand is providing a further $3 million in humanitarian assistance in Afghanistan, Foreign Minister Nanaia Mahuta announced today.  “There is significant humanitarian need in Afghanistan, with the crisis disproportionately affecting women and girls,” said Nanaia Mahuta. The UN has estimated that 80% of the quarter of a million ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Innovative te reo prediction tool announced in Te Wiki o Te Reo Māori
    A new Māori language prediction tool will play a key role in tracking our te reo Māori revitalisation efforts, Minister for Māori Development Willie Jackson announced today. He Ara Poutama mō te reo Māori (He Ara Poutama) can forecast the number of conversational and fluent speakers of te reo Māori ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Further Government support for people to access food and essential items
    The Government is responding to need for support in Auckland and has committed a further $10 million to help people access ongoing food and other essential items, Minister for Social Development Carmel Sepuloni announced today. This latest tranche is targeted at the Auckland region, helping providers and organisations to distribute ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Half a million Pfizer vaccines from Denmark
    The Government has secured an extra half a million doses of Pfizer COVID-19 vaccines from Denmark that will start arriving in New Zealand within days, Prime Minister Jacinda Ardern announced today. “This is the second and larger agreement the Government has entered into to purchase additional vaccines to meet the ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Inland Revenue providing essential COVID support for businesses
    Inland Revenue is seeing increased demand for Resurgence Support Payments and other assistance schemes that it administers, but is processing applications quickly, Revenue Minister David Parker said today. David Parker said the Resurgence Support Payment, the Small Business Cashflow (loan) Scheme and the Wage Subsidy are available at the same ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • New Zealand marks 20th anniversary of 9/11 attacks
    New Zealand is expressing unity with all victims, families and loved ones affected by the September 11 2001 terrorist attacks, and all terrorist attacks around the world since, including in New Zealand. “Saturday marks twenty years since the 9/11 terrorist attacks in the United States, which killed nearly 3,000 people ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Speech to SPREP Environment Ministers
    Talofa Honourable Ulu of Tokelau Faipule Kelihiano Kalolo Tēnā koutou katoa and warm Pacific greetings from Aotearoa to your excellencies, ladies and gentlemen. The new science released by the Intergovernmental Panel on Climate Change on 8 August paints an alarming picture of the projected impacts of climate change on the ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Additional Resurgence Support Payments to support business
    Businesses affected by higher Alert Levels will be able to apply for further Resurgence Support Payments (RSP). “The Government’s RSP was initially intended as a one-off payment to help businesses with their fixed costs, such as rent. Ministers have agreed to provide additional payments to recognise the effects of an ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • More Dawn Raids scholarships announced
    Details of the ‘Manaaki New Zealand Short Term Training Scholarships’, a goodwill gesture that follows the Government’s apology for the Dawn Raids of the 1970s, were released today by Pacific Peoples Minister Aupito William Sio. “These scholarships that are targeted to the Pacific will support the kaupapa of the Dawn Raids’ ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • One-way quarantine-free travel for RSE workers starting in October
      One-way quarantine-free travel for Recognised Seasonal Employer (RSE) workers from Samoa, Tonga and Vanuatu starts in October New requirement for RSE workers to have received their first vaccination pre-departure, undertake Day 0 and Day 5 tests, and complete a self-isolation period of seven days, pending a negative Day 5 ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Govt boosts Pacific suicide prevention support
    Applications have opened for the Pacific Suicide Prevention Community Fund as the Government acts to boost support amid the COVID delta outbreak. “We know strong and connected families and communities are the most important protective factor against suicide and this $900,000 fund will help to support this work,” Health Minister ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Govt parks the expiry of licenses, WoFs and regos
    As a result of the Delta outbreak, driver licences, Warrants of Fitness (WoFs), Certificates of Fitness (CoFs), vehicle licences (‘regos’) and licence endorsements that expired on or after 21 July 2021 will be valid until 30 November 2021, Transport Minister Michael Wood has announced today. “While this extension won’t officially ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • COVID-19 community fund to provide support for vulnerable women and girls
    Minister for Women Jan Tinetti today announced a $2 million community fund that will provide support for women and girls adversely affected by COVID-19. “We know that women, particularly those who are already vulnerable, are disproportionally affected by the kind of economic disruption caused by COVID-19,” Jan Tinetti said. ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Next phase of support for Fiji’s COVID-19 response announced
    A further NZ$12 million of support for Fiji’s COVID-19 response has been announced by Foreign Minister Hon Nanaia Mahuta today. The package builds on previous tranches of assistance Aotearoa New Zealand has provided to Fiji, totalling over NZ$50 million. “Fiji remains in a very challenging position in their response to ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Robotic asparagus harvester aimed at addressing industry challenges
    The Government is backing a $5 million project to develop a commercial-scale autonomous robotic asparagus harvester, Agriculture Minister Damien O’Connor announced today. The Sustainable Food and Fibre Futures fund (SFF Futures) is contributing $2.6 million to the project. Project partner Robotics Plus Limited (RPL) will build on a prototype asparagus ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Additional Pfizer vaccines to arrive tomorrow
    More than a quarter of a million additional doses of the Pfizer vaccine are on their way from Spain to New Zealand, Prime Minister Jacinda Ardern announced today. The additional doses will arrive in Auckland on Friday morning to help meet the current surge in demand for vaccination. “It’s been ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Young people to have their voices heard in Youth Parliament 2022
    The dates and details for Youth Parliament 2022 have been announced today by Minister for Youth Priyanca Radhakrishnan, and the Speaker of the House of Representatives. Youth Parliament is an opportunity for 141 young people from across Aotearoa New Zealand to experience the political process and learn how government works. ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Boosting support for tertiary students affected by COVID-19
    Students facing a hard time as a result of COVID-19 restrictions will continue to be supported,” Education Minister Chris Hipkins confirmed today. The Government is putting a further $20 million into the Hardship Fund for Learners, which will help around 15,000 students to stay connected to their studies and learning. ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • COVID-19: Immediate relief available for Māori and iwi organisations
    The Government has reprioritised up to $5 million to provide immediate relief to vulnerable whānau Māori and communities during the current COVID-19 outbreak Minister for Māori Development Willie Jackson announced today. The COVID-19 2021 Whānau Recovery Fund will support community-driven, local responses to gaps in access and provision of critical ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New beef genetics programme to deliver cows with smaller environmental hoof-print
    The Government is backing a genetics programme to lower the beef sector’s greenhouse gas emissions by delivering cows with a smaller environmental hoof-print, Agriculture Minister Damien O’Connor announced today. Informing New Zealand Beef is a seven-year partnership with Beef + Lamb New Zealand that is expected to result in more ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Appointments to the New Zealand Qualifications Authority
    Education Minister Chris Hipkins today announced new appointments to the board of the New Zealand Qualifications Authority (NZQA). Former Associate Minister of Education, Hon Tracey Martin, has been appointed as the new Chair for NZQA, replacing the outgoing Acting and Deputy Chair Professor Neil Quigley after an 11-year tenure on ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Govt supports residential house building by allowing manufacture of building supplies
    The Government has agreed to allow some building product manufacturing to take place in Auckland during Covid lockdown to support continued residential construction activity across New Zealand. “There are supply chain issues that arise from Alert Level 4 as building products that are manufactured domestically are mostly manufactured in Auckland. ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Government invests in scientific research to boost economy, address climate change and enhance wellb...
    Research, Science and Innovation Minister Hon Dr Megan Woods has today announced the recipients of this year’s Endeavour Fund to help tackle the big issues that New Zealanders care about, like boosting economic performance, climate change, transport infrastructure and wellbeing. In total, 69 new scientific research projects were awarded over ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Transport to drive economic recovery
    The Government is investing a record amount in transport services and infrastructure to get New Zealand moving, reduce emissions and support the economic recovery, Transport Minister Michael Wood announced today. The 2021-24 National Land Transport Programme (NLTP) was released today which outlines the planned investments Waka Kotahi NZ Transport Agency ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Government congratulates NZ Paralympic team
    The Government has congratulated New Zealand’s Paralympic Team following an outstanding showing at the Tokyo Paralympic Games. “Our New Zealand Paralympian athletes have once again shown incredible talent, tenacity and determination at the Tokyo Paralympic Games winning 12 medals, with every athlete who represented New Zealand making us so proud,” ...
    BeehiveBy beehive.govt.nz
    2 weeks ago