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Privatisation, if only

Written By: - Date published: 2:15 pm, June 20th, 2011 - 19 comments
Categories: privatisation - Tags:

NZX Chairman Andrew Harmos has come storming out of his boardroom to position himself in the apparent war of rhetoric surrounding what the New Zealand public generally know as state asset sales or the mixed-ownership model.

He appears to offer some reasonable banter about the financial positives that may potentially flow on from a partial sale of assets, yet there was one paragraph in the NZHerald article that I took exception to;

“If only opponents of this could have the intellectual honesty to recognise that it is a policy that has no losers,” he said. “Emotive terms such as ‘asset sell-off’ are not accurate and mischievous.”

Let’s break this down because it is quite incredible that he has the audacity to make such a claim. Firstly; lamenting with the opening ‘if only’ does not appear to be a very objective way to begin an intentionally objective statement. He goes on to suggest that the only thing missing from the argument is intellectual honesty. I can only assume he is referring to the objective pursuit of truth, unimpaired by personal bias. If I am correct; politics, economics, and generally all other academic fields are more accurately the battlefields of ideas. Within that battle is the clear understanding that there is never a policy that has ‘no losers’. Finishing his sound bite with the word mischievous seems slightly out of place too, if one were to make a fuss.

So this is it huh? Our opponents have been reduced to making unqualified claims that we’re being disingenuous? It could be more understandable if Mr Harmos went on after to back up his argument with statistics, quotes from noted academics, and examples from other states; but he doesn’t. So I must ask in response to his comments; is this really an objective and honest way to approach what is an extremely serious issue to the majority of New Zealanders?

I would argue that Labour, The Greens, various scholars and economic analysts have attempted to present the case against asset sales from a reasonably objective understanding; what we cannot forget is that there is a very recent history to call on empirical evidence when assessing the merits of asset sales. More than that though, New Zealand has a future longer than the next economic cycle to worry about.

On this blog site alone the reader can find many articles that put facts in the face; that attempt to bridge the gap from financial guru to middle income mum; that strike out the rhetoric and replace it with reason; and that never let up on trying to keep the debate honest.

Mr Harmos has made what I can only call a disappointing move. He has again shown the underhanded tactics that those with something to gain  from such policies will take to mask the reality to those that have everything to lose.

Let me be honest for the first time (as Mr Harmos would have it); asset sales do have benefits. We do need to reduce our debt; our capital markets aren’t getting the potential growth they deserve; the failure of SCF and other financial institutions means quality investment options for kiwis are scarce; and the NZX would do well with these assets listed.

Is the answer to these questions a simple sale of state assets though? And isn’t the paragraph above only a summary of one side of the debate?

Only offering half the argument is like giving someone sour milk and allowing them to drink it knowing full well this is the case, but then laughing afterwards and exclaiming the fact that they never asked whether it would taste good.

The NZX is in a position to gain more than any other entity in the listing of these state owned assets; so you have to ask yourself how Mr Harmos can see past the fat dollar signs distorting his panorama and consider whether this policy really has no losers. A mother struggling to keep her children warm may appreciate Mr Harmos informing her that 5 years from now, $5 or more of the bill she’s trying to pay to keep those children warm is heading straight into the greedy hands of some overseas investor. Is she a winner Mr Harmos?

This debate isn’t about the consequences of investment opportunities alone; it is far greater than that. Labour, The Greens, and even people on this site are going great lengths to point that out. They deserve a better opponent than the likes of Mr Harmos if he is going to be so clearly disingenuous.

To end with the wise words of Mai Chen


“If money determines law and policy, then those with money will always win. But a democracy is supposed to be about the power of ideas and a good idea should be able to stand on its own feet without a cash inducement.”

– Rijab

19 comments on “Privatisation, if only ”

  1. Rusty Shackleford 1

    What is the point in the govt owning assets that it can’t efficiently run, need to be intermittently bailed out and don’t offer a cheaper alternative than private firms doing the same thing? I would love if SOEs worked. They could turn a profit and that cash could be used to run the country instead of taxes. That would be awesome.

    • Peter 1.1

      The are profitable so how are they inefficient? Why do people want to buy them, cashflow and profit, minimal risk perhaps?

    • pollywog 1.2

      What is the point in the govt owning assets that it can’t efficiently run, need to be intermittently bailed out and don’t offer a cheaper alternative than private firms doing the same thing?

      dunno, but there is a point in the govt owning assets that are efficiently run, don’t need to be bailed out and offer a cheaper alternative than private firms doing the same thing.

      wouldn’t you say ?

      • Bored 1.2.1

        Gooday Polly, long time no bounce…..

        See you answering Rusty, its one of those things you do once and realise time is far to valuable to be spent arguing with somebody who uses the alias of a bigotted cartoon character who is proud of paying no tax (King of the Hill, Gribble).

        Nice answer though, I might add that compared to good old private enterprise SOEs do well so why list them? Lets face it NZXE has so very few listed companies that are worth a tin of shit, and I cannot remember the last genuine productive and profitable start up that appeared on the NZXE. The guys who run this poxy exchange have to talk it up, pathetic really.

        • Rusty Shackleford

          He wasn’t bigoted was he? He let his wife hang out with a Native American guy after all.

    • RS
      Well none of the power companies qualify under your definition.
      How about a counter proposal.  What is the point of the government refusing to own assets that are of strategic value to the country, return money to the country, and are cheaper to construct and hold than a PPP?
      Would you agree with this?
      For instance constructing and holding school buildings.  How can that be done more cheaply by the private sector?

      • Jimmi 1.3.1

        “For instance constructing and holding school buildings. How can that be done more cheaply by the private sector?”

        Easy. Fixed price contract, private sector takes all the risk on cost over runs.

        • Bunji

          Shame PPPs never seem to work out that way.

          Having looked extensively at the UK and Australian experience, Government moves cost of balance sheet, but always ends up paying more in the long run. Often private companies put restrictions on use of buildings outside school hours, stopping night classes and various community uses, which isn’t a great outcome either.

          And then, when it all goes Pete Tong, the government ends up bailing them out. In theory no risk for company, as government requires things to be built, whether company succeeds or not, and added cost of profit to shareholders and the fact that private companies have to borrow at higher rates to fund project. Some manage to stuff it up and go broke, but then the government still ends up having to pay more in the bailout / legal difficulties / taking over of project etc.

    • Blighty 1.4

      name a bailout of an SOE in the past decade.

      I can name half four major government bailouts of private companies – Tranzrail, AirNZ, AMI, SCF – off the top of my head.

    • Policy Parrot 1.5

      “They could turn a profit and that cash could be used to run the country instead of taxes. That would be awesome.”

      That was the very same argument Douglas used to sell his fellow Labour Cabinet Ministers on the benefits of corporatisation – which are?

      The corporatisation strategy has failed, either the SOE is reaming us or the private shareholders are – axe the SOE model and reconstitute as government departments focused on service delivery/performance.

    • bbfloyd 1.6

      so which soe that hadn’t been sold needed bailing out? i would rather see a real reply rustbucket. we’ve seen enough bullshit from you. now let’s see some reality. WHICH ONES ??

    • Colonial Viper 1.7

      After trillions of private sector losses…Rusty is still running the meme of private firms being more efficient???

      Perhaps if he was talking about destroying workers and retirees wealth and savings incredibly efficiently, as that’s definitely been the case.

      • Rusty Shackleford 1.7.1

        I can’t be bothered defending this one. I just wanted to be first.

        So, you win. The state rules! Enlightened (I’m not sure who, exactly) technocrats can run our lives for us. With computers, no less!

        Three cheers for Helen Clark. HIP HIP Huzzaah!

  2. tc 2

    If the GFC has taught people anything it’s to be wary of anything a banker/broker/free marketeer has to say….these jokers are feeling even more cocky and bulletproof after escaping punitive and/or criminal effects from their recent efforts.

  3. lefty 3

    If you are looking for companies that are inefficient, poorly run, carrying too much debt, not paying any tax, mistreating workers, ripping off contractors and not carrying out any useful function, then the private sector is where to look.

  4. Samuel Hill 4

    My blog:

    The path out of debt is the most exciting one.


    [lprent: see other comment. ]

    • ianupnorth 4.1

      Seems pretty reasonable; the only bit where i wouldn’t concur is the bit about Clark; she actually rid us of overseas debt and reduced poverty. The theme of the fourth term was to be investment in science and technology, but that never happened.

  5. Jum 5


    Is John Lusk a relative of Simon Lusk?
    Is ‘Franks law firm’ Steven Franks?

    Steven Franks was congratulating Harmos on a piece written 18 January 2010 – 6. Stephen Franks (New Zealand) 08:15 AM Thursday, 21 Jan 2010

    “Great stuff Andrew – and you’ve cheered me up to see it.”

    Quote re assets from Harmos – ‘and local authority assets (SOEs) that are suited to true public ownership. They would benefit from the governance, transparency and accountability associated with making their shares available to New Zealanders to own directly. After all, what better place to put your money than a strong utility with stable dividends? New Zealanders (and New Zealand seems pretty much alone in this) are prevented from co-investing with our government in such assets, and directly enjoying, experiencing and learning from ownership.’ We already own these assets; how thick are these people. Harmos likes the Australian model with a 15% share cap, but spot the little problem, ‘preventing takeover activity, without government approval, that would not be in the long-term best interests of Australia’. Key wouldn’t be able to get to his pen to sell off fast enough.

    It’s like a giant cesspit of the same people spinning their little webs to suck New Zealand dry.

    So do Simon Lusk of Brash coup fame and John Lusk of Harmos, Horton and Lusk have a link?

    Harmos, Horton and Lusk also acted in an Advisory & Securities role in:

    ‘Auckland Council Investments (2010) HHL advised the Auckland Transition Authority in respect of the establishment of Auckland Council Investments – the holding entity for Auckland Council’s investments in Ports of Auckland and NZSX listed Auckland International Airport.’

    – We know National will sell off these assets next year if they get the chance. Harmos is also a mergers and acquisitions law specialist.

    All the ducks are in a row ready for the 27 November 2011.

    We need to know who the duck shooters are and what they personally stand to gain.

  6. randal 6

    the duck shooters to use your analogy only care if they get a duck.
    they dont care about where it came from or what happens afterwards as long as there is blood on the floor and they get all the cash.

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