So Blinglish’s new and improved less-bitter poison is part-privatisation. In much the same way as marketing a filling as more fun than a full root-canal, he thinks that if he sells each of his mates one piece of the family silver (and keeps the spoons) instead of flogging off the whole set to one of his mates, we’ll be much happier.
Myth 1: We’ll sell to “Mum and Dad” investors.
They may well not sell direct to just one or two of their mates, but most ordinary New Zealanders will still be lucky to get any share of their assets. Those who can afford to take advantage of the cheap share offer will be mostly “rich prick” NAct voters. They’ll get a fine deal as it’ll no doubt be a little below market-value, justified as helping ordinary New Zealanders get a start in share investing. Which will make it too tempting to do anything other than sell when an Aussie bank / foreign company immediately comes and offers everyone 25% extra for their shares. Several thousand rich NAct voters several thousand better off – hopefully the donations and votes will flow in, and they’ve achieved their objective of getting rid of our assets.
Myth 2: It’ll allow Ordinary Kiwis to truly own a part of Kiwibank/Solid Energy/their Power Company/…
We already truly own these things between us. All equal shares, regardless of our monetary wealth. I don’t need a starchy share certificate to feel like Kiwibank is ours. What it will allow is a foreign company to make Kiwibank/Solid Energy/Power Companies truly theirs.
Myth 3: We need to find ways to make better use of our capital
Much as I hate the “government as company” meme, if a company feels it has some under-utilised assets, it doesn’t necessarily sell them off. For the company to grow it will borrow against them and invest in a more lucrative way. Like, say, borrowing at the cheap interest rates governments can get and investing in shares to earn a much higher rate. This might cover our impending pension gap. I may not be the first to think of this though; something called the Cullen Fund rings a bell.
Myth 4: We need something for Ordinary Kiwis to invest in to get our capital markets going
When this government wants something doing, it sets up a Task Force of people who say what they want to hear and waits for them to deliver a report with the answers they want. So it was with the Capital Markets Task Force: they came back with the suggestion we should part-privatise SOEs to give Ordinary Kiwis something to invest in. But the reason Ordinary Kiwis aren’t investing isn’t because of a lack of investments; it’s a lack of savings. What we need is more savings – probably created by a compulsory super saving scheme, like the one National scrapped in 1975, or just a compulsory beefed up Kiwisaver. Australian capital markets do well as they have a lot of savings: they have compulsory super backed by 12% of salary contributed by their employer.
As it stands selling something like Kiwibank would soak up all the savings of Mum and Dad investors, meaning there’d be none left for all the medium-sized businesses we’re trying to grow. If we want to channel our limited savings into capital investment (a far better idea than going into the inflated housing market) what we need is better regulation and structure so Ordinary Kiwis feel safe, having been burnt by the share-market crash in the 80s and by finance companies in the 00s.
Myth 5: If we sell to Mum & Dad investors it’ll encourage savings
Oo! There’s Kiwibank shares! I know I’ll buy them and won’t buy this 51 inch plasma and sky subscription: after all I’ll be far too busy watching the money roll in to bother with the rugby anymore anyway. I might skip paying the school fees and see if I can get a couple of extra shares.
If we want more savings we need higher wages and more compulsory saving from companies.
Myth 6: When you have a debt problem, you look to sell assets
This I heard from Michelle Boag on National Radio Afternoons. Apparently as individuals, if we have a debt problem we look to sell assets. Bollocks. If we have a debt problem we look to reign in spending and/or how we can earn a bit extra. We don’t sell our house unless things are really bad. And we certainly don’t make the situation worse by giving our rich mates a great big slice of our income. If Blinglish pulls his “we’re borrowing $240 million a week” line after his big cash hand-out to his mates, he deserves to be slapped in the face with a kipper for his sheer cheekiness.
In fact the NZ government doesn’t have a big debt problem, unlike we (New Zealand) collectively do as private individuals. So the government doesn’t need to sell anything. Certainly selling things that make us money isn’t going to help the balance sheet either.