Privatisation: The Myths

Written By: - Date published: 10:57 am, May 26th, 2010 - 66 comments
Categories: assets, privatisation, spin - Tags:

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.

Bunji

66 comments on “Privatisation: The Myths ”

  • Comments are now closed

  1. Lanthanide 1
    26 May 2010 at 11:33 am

    Very good post. Well done.

  2. joe bloggs 2
    26 May 2010 at 11:40 am

    History lesson 101:

    Anyone remember the June 1988 Budget, when Labour announced a comprehensive programme of privatisation. $20 billion would be raised by 1992.

    State asset sales under Labour:
    Telecom
    State Insurance
    BNZ
    Post Bank
    Air New Zealand
    Tourist Hotel Corporation
    New Zealand Steel
    Petrocorp
    Government Printing Office
    Development Finance Coorporation
    National Film Unit
    Rural Banking and Finance Corporation
    Shipping Corporation
    New Zealand Liquid Fuel Investment
    Maui Gas
    SynFuels
    Forest Corp + two generations of cutting rights
    the unconditional sale of NZ Rail

    Labour’s subsequent policy on asset sales, this comment from Hon Trev. Mallard June 2006:
    “mum and dad New Zealanders might get a chance to have shares in subsidiary companies” of State-owned enterprises to be listed on the stock exchange
    http://brownlee.co.nz/index.php?/archives/119-State-owned-Enterprises-Assets.html

    • Draco T Bastard 2.1
      26 May 2010 at 11:53 am

      And that’s the reason why Labour are still in lala land. They really haven’t shifted from the delusion of neo-liberal economics yet.

      • Nick C 2.1.1
        26 May 2010 at 1:47 pm

        Yep as soon as Labour gets back to marxism we can REALLY sort the country out…

        • lprent 2.1.1.1
          26 May 2010 at 2:31 pm

          Ummm since that has never happened in the past, you’re really saying……

          • RobertM 2.1.1.1.1
            30 May 2010 at 7:35 pm

            Surely the Nash, Savage, Lee, Sutch government was pretty close>My mother a karori girl shook in her boots with loathing for the 35-49 Govt till the day she died. She hated the regimentation, the plain clothes, the socialism, the lack of choice. What most bloggers seem to object to is capitalism and free society which is based on the limited liability joint stock company. The whole aim is to redistribute money from the old and stupid to vigorous young investors who will take entreprenurial risks. I don’t want to be associated with the ludicrous fire sales of the like of NZ Steel to Equiticorp and Hawkins but the reality is the steel plant at Gleenbrook, the urea plant and the Gisborne line should never have been built. The reality is that Fay Richwhite were just hard business men who ran the rail at Maximum speed for ll years. They did not close it down as the economists, Treasury and Roundtable wanted. Most of the new right actually think Fay Richwhite showed remarkable restraint and social responsibility in maintaining and perservering with the rail.
            Surely if you want enviromentally efficiency privatisation and the market is often the way to go. For eg ,privatisation of the Lyttleton Wesport rail line would determine whether mining and pike river is viable. Could the miners pay for the tracks, train and tunnel as the law, RMA an dprotestors will stop them using dump trucks through the Lewis Pass to carry the coal to the port.

    • Bright Red 2.2
      26 May 2010 at 11:53 am

      yeah those sales were when Labour was taken over by the neoliberals who now run ACT.

      The Left deserted Labour in droves for what it did in the 1980s and many still don’t trust it.

      Privatisation was wrong then and it’s wrong now.

      And Labour didn’t list any SOE subsidaries, despite Mallard’s brain fart.

      • joe bloggs 2.2.1
        26 May 2010 at 12:03 pm

        The Left deserted Labour in droves for what it did in the 1980s and many still don’t trust it.

        … plus the desertion of the green electorate in the 1990s – and many still don’t trust it, especially after having the door shut in their faces in 2005 … plus the desertion of the Maoris in 2004 – and many still don’t trust it…

        Keep up the good work, you’ve still got Jum Anderton’s party of 1, Peter Dunne and his radical christians and Winnie’s geriatrics and altzeimers who believe in you

        • Bored 2.2.1.1
          26 May 2010 at 1:39 pm

          Joe, I think you are missing something….that flood of people from Labour did not leave to go to your side of the track. They can still see the right for what it is, a pack of theiving venal grasping bastards. And a core of the same are still inside Labour. The only thing I can say is that it is time for a clean out, starting with Gough. Then watch these people flood back.

          • Jim Nald 2.2.1.1.1
            26 May 2010 at 2:00 pm

            Indeed. Labour continues to be subject to the Rabid Right hijacking the agenda just like the rotten and rorting Right who try to hijack The Standard’s discussions.

            • lprent 2.2.1.1.1.1
              26 May 2010 at 2:18 pm

              I (and the other moderators) keep an eye out for anyone trying to hijack discussions, and we tend to overreact when it does happen.

              However, if people stay roughly around the topic (except on OpenMike of course), respond to challenges to assertions made by other commentators, and don’t bombard the discussion with unresponsive crap – we generally let the debate run.

              Of course sometimes people just irritate us because they’re too damn unintelligently ‘noisy’, and we will take nasty actions because it quietens the bickering in the back-seat. But that is the risk of writing comments here. It drives the newbies crazy because that is essentially random past a vaguely defined threshold.

              In our experience, the semi-random actions helps people learn some self-moderation quickly after they receive one of those. We consider them to be a public service 😈

              • Jim Nald …
                26 May 2010 at 2:22 pm

                Cheers, lprent. I do enjoy reading the posts and comments when the discussions get going. And I was recently put off by some of the attempted spins I read. I decided to go away and get on with my life.

                And then I see a comment today re Leaky Homes that sounds quite wrong. Guess we have to put up with inaccuracies that people post. And hope others will comment in response as appropriate.

    • Bunji 2.3
      26 May 2010 at 11:59 am

      Nice history lesson, but I’m not sure what the 80s Labour (aka first ACT) government’s bad behaviour has to do with the left’s thinking in the 10s. Other than to make sure that we don’t have a party get hijacked by the extreme right again.

      And I’m not suggesting that the government should own everything, and possibly that government was right to sell THC and State Insurance. I think it make sense for the government to own natural monopolies and vital communication/transport/economic links. Kiwibank is a bit of a special case; if we had a thriving bank sector with NZ owned banks that were doing a good job of looking after NZ interests it may not have been necessary for a government owned bank to be created. But we don’t, and as it is it could be a very useful tool for the government to add funding to it to allow it to do business development loans to grow NZ businesses.

      And as far as Trevor’s comments go, allowing partial floats of the like of Orcon and other subsidiaries of SOEs doesn’t seem to be quite on the same page as Kiwibank, Solid Energy and the electricity companies with which Blinglish was starting his list.

      • insider 2.3.1
        26 May 2010 at 12:49 pm

        What exactly has kiwibank delivered that was not already available in the banking sector?

        • Lanthanide 2.3.1.1
          26 May 2010 at 1:07 pm

          Branches in many small towns that the other banks don’t have branches in?

          A credit card that if you use it at least once every 3 months, you don’t have to pay any annual fees on?

          • insider 2.3.1.1.1
            26 May 2010 at 1:41 pm

            TSB had branches in every town via the NZ Post network well before KB existed.

            Wow a feeless credit card…that makes the investment so worthwhile

        • The Voice of Reason 2.3.1.2
          26 May 2010 at 2:14 pm

          Customer satisfaction? Retention of profits this side of the Tasman? Low fees, access, friendly staff, my mortgage and lots more, insider. Time you ditched the banks from over the ditch and put your money where it’s going to do us all some good.

          • insider 2.3.1.2.1
            26 May 2010 at 2:33 pm

            I can buy shares in all the Aus banks operating here so retain profits, I pay no fees and that was long before KB was a dream, I can access them nationally and internationally. AS for friendly staff, well they are all staffed by NZers so not sure KB has an inherent advantage, and my bank was considtently rated the best in NZ.

            • clandestino 2.3.1.2.1.1
              26 May 2010 at 3:46 pm

              Could be something to do with the fact the dividend get’s paid to the government and can thus be used for either paying down debt or social spending (i.e. roads, schools, your doctor), or that it has increased competition on interest rates. Combined with the fact there are many who kind of like the idea, I think it is a sufficient reason to exist. 700,000 customers I do believe. Just no farmers, apparently that’s what you lot need to increase the dividend so those savvy investors can make more money for themselves.

              • insider …
                26 May 2010 at 4:24 pm

                “Combined with the fact there are many who kind of like the idea, I think it is a sufficient reason to exist. ”

                A lot of people “kinda like the idea” of free money and subsidised everything. IS that sufficient reason to do it?

                AS for dividends, most of the SOEs don’t make a great return. KB want $200m to expand- that is nearly 10 years of profits.

              • Bright Red …
                26 May 2010 at 4:44 pm

                that’s because Kiwibank operates a low fees, low rates, low profit model to keep the others honest. What’s the first thing that a private investor would want out of an investment in Kiwibank? Higher profits.

                Same with a lot of other SOEs. Do you think that money would come out of thin air? No. It would come out of your pocket as a customer.

              • insider …
                26 May 2010 at 4:54 pm

                Their rates aren;t that low – compare them to a range of lenders – they still charge fees. Can you demonstrate any significant change in the banking market as a result of KB’s arrival?

                I’d rather the $200m KB wants to expand to come out of the pockets of custoemrs than out of my pocket as a taxpayer, expecially when I can’t see any market void KB is filling. Wouldn’t you prefer that money gets spent on education or health or direct support for the poor?

              • clandestino …
                26 May 2010 at 5:15 pm

                Sam Knowles has said this morning that the capital needed for sustainable growth would be ‘certainly less than $100m’ so I don’t know where you got that figure from. Not only have KB come through the recession strongly, they have kept the Aussie banks honest and have satisfaction ratings way above the big four. Here’s a good summary (funnily enough this article would agree with you I suspect):
                http://www.interest.co.nz/opinion/why-kiwibanks-growth-may-slow-ceo-sam-knowles-leaves

                I do not think like Hickey does however that any privatisation is a good idea.

    • MikeG 2.4
      26 May 2010 at 12:21 pm

      Interesting list there Joe – there’s a number where privatisation hasn’t really worked e.g. Air NZ. It’s now doing quite well back under Government ownership.

      I presume that you (personally) are not making the same mistakes that you made 20 years ago – the current Labour party seem to have learnt from the mistakes of the Act Party founders, and don’t want a repeat.

    • Policy Parrot 2.5
      26 May 2010 at 2:46 pm

      All of the above asset sales were a mistake.
      Think of where NZ might be if they’d been held on to.
      While it was wrong, I am more concerned about who is going to sell assets in the future than who has in the past.

      Labour has repudiated the hard-edge of Rogernomics. National has not/never repudiated Ruthenasia.

      Case closed. To stop privitisation, vote Labour or Green.

    • SPC 2.6
      26 May 2010 at 11:24 pm

      Yeah sure joe bloggs, you have nailed it.

      The prototype for National was the 1988 budget – selling assets and cutting income tax rates (then later increasing GST to 12.5% when that was not going to work).

      It was appeasement of the Douglas lead faction and the foreign lenders concerned about the loss of their convert Roger. But Labour has given up belief in such voodoo economics, National is still the same old tax cut junkie it was then.

      Then the opposition National made no opposition to the planned sales – did not question the unwise rush and advise a more reasonable attempt to part-sell in a phased way to maximise price and retain majority holdings. They should have.

      Now at least there is an opposition that seeks to counsel against asset sales and demand a public debate – hopefully this will prevent further mistakes.

      This time there will not be a failure of the oppostion to question flawed economic decisions on income tax cuts and asset sales.

  3. Pat 3
    26 May 2010 at 11:55 am

    Using Kiwibank as an example: I think we can all agree Kiwibank needs capital to enable it to grow. Therefore the debate is really about what options Kiwibank has to obtain that capital, e.g:

    – NZ Govt as owner borrows and injects the capital.
    – Partial float of shares to the public.
    – Direct the Cullen Fund to inject capital.
    – Open up a partial shareholding to KiwiSaver providers.

    Any other ideas?

    • george 3.1
      26 May 2010 at 12:05 pm

      How about Kiwibank’s very large parent company providing the capital? Its shareholders are in a position where they can cope with a decreased dividend return in the short-term in order to gain medium to long term growth.

      • The Voice of Reason 3.1.1
        26 May 2010 at 2:37 pm

        NZ Post has problems of it’s own, george. Mail volumes have dropped to the point where Kiwibank is a significant provider to the group’s overall profit. And the budget bribe/payback means that the Nats are in no position to take less dividends from Post.

    • Bright Red 3.2
      26 May 2010 at 4:50 pm

      Pat. the cheapest option of those would be the government borrowing. Nothing bets sovereign borrowing rates.

  4. MikeE 4
    26 May 2010 at 12:03 pm

    “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.”

    If you can’t sell something, then you don’t own it.

    What the Nats should do, is split it into X amount of shares and distibute these to the general “tax paying” public, then it will truely be in public ownership.

    It should then be left to the public as individuals to choose whether they wish to retain ownership of the family silver rather than English and co. For those of you (such as standard readers) where ownership is a priority you will retain (or possibly put your money where your mouth is and buymore) ownership. For those of us who don’t care or want ownership we can sell it.

    It should not however be sold by the Govt so the money can be “reinvested” (and I use the term very loosely) into whatever the pet project of the day is.

    • joe bloggs 4.1
      26 May 2010 at 12:04 pm

      ah communism – the longest road from capitalism to capitalism…

    • george 4.2
      26 May 2010 at 12:16 pm

      You don’t own your feelings toward your wife or children? That’s really sad.

    • Bill 4.3
      26 May 2010 at 12:27 pm

      “If you can’t sell something, then you don’t own it.”

      Which entails devising a piece of devious shit that will transfer the common wealth of a society, which of course has no discernible ‘individual owner’ insofar as it belongs to society, into the hands of those individuals who seek to stand apart from society and appropriate and sell societies common wealth for their own personal gain.

      way to go

  5. joe bloggs 5
    26 May 2010 at 12:19 pm

    George you are a sexist prick – where have I ever indicated my gender?

    Oh, and as far as I’m aware my family, whether it exists or not, is not a state owned asset (despite the last labour government’s efforts to nationalise us all)

    • Tigger 5.1
      26 May 2010 at 12:38 pm

      Actually joeb, you’re making the assumption that George was assuming you were male. You can have a wife and children and be either male or female. Your assumption is known as heterosexism.

      And, of course, whether assuming the sex of a blogger with an archetypal male name is sexism is no doubt up for debate…

    • felix 5.2
      26 May 2010 at 12:52 pm

      Your assumption that the remark was directed at you (when it was clearly a reply to MikeE) and subsequent knee jerk reaction kinda paints you as an angry stupid solipsistic prick joe, whatever your gender.

      And btw, your next sentence demonstrates that you didn’t even understand what george said. Quite clearly.

      • Lanthanide 5.2.1
        26 May 2010 at 1:10 pm

        Normally we have to rely on Fisiani and Big Bruv for this sort of comedy.

      • joe bloggs 5.2.2
        26 May 2010 at 1:32 pm

        yeah well my bad

        doesn’t overcome the issue that there’s a bunch of pots here calling kettles black.

        Far from being a figment of my fevered solipsistic imagination, and putting to one side all your clever sophistry, Labour has already done everything and more that you now decry National for suggesting.

        Labour’s been an avid seller of state owned assets in the past and Honorable members such as Trevor Mallard still espouse those principles. And all of that is on record.

        • felix 5.2.2.1
          26 May 2010 at 2:12 pm

          Tell it to a Labour supporter then – why should I give a shit?

          Do you support privatisation or not? I don’t. Whether it’s Labour, the Nats, ACT, the Maaaries or anyone else doing it.

          p.s. that “sophistry” you refer to is called “English”.

          • joe bloggs 5.2.2.1.1
            26 May 2010 at 2:20 pm

            yes I do support privatisation. Take assets out of the hands of politicians and give them to managers who know a little more about managing New Zealand Inc.

            ps you can relabel ‘sophistry’ as “Cosgrove” or “Goff” for all I care – it still amounts to wordplay of little or no substance

            • The Voice of Reason 5.2.2.1.1.1
              26 May 2010 at 2:32 pm

              It’s not in the hands of politicians, Joe. It’s in our hands. And if KiwiBank didn’t have good managers, how did get so profitable that the Nats feel it needs to be gifted to their mates? Try looking up ‘governance’, ‘management’ and ‘ownership’, and see if you learn anything that might make your comments less naive.

            • felix 5.2.2.1.1.2
              26 May 2010 at 2:47 pm

              “ps you can relabel ‘sophistry’ as “Cosgrove’ or “Goff’ for all I care it still amounts to wordplay of little or no substance”

              Care to point to it? I have no idea where this sophistry or wordplay is. I’ve been entirely straight with you as far as I can see.

            • Lanthanide 5.2.2.1.1.3
              26 May 2010 at 2:55 pm

              “Take assets out of the hands of politicians and give them to managers who know a little more about managing New Zealand Inc”

              You mean like an SOE that operates as a business separate from political meddling? You know, we already have that.

            • clandestino 5.2.2.1.1.4
              26 May 2010 at 3:56 pm

              May I suggest you read ‘The Unconscious Civilisation’ by John Ralston Saul. Contains some interesting insights into ‘management’ that I think you could learn from Mr/Mrs/Ms joe

        • lprent 5.2.2.2
          26 May 2010 at 3:00 pm

          Ah so?

          National has members who have knowingly rorted the expenses system (double dipton and others come to mind) and are on record as doing so. By your process, you would have to say that National are into supporting widespread corruption by elected MP’s.

          In the past National has gerrymandered electoral seats for political advantage. By your process, you’d have to see that National are currently venally politically corrupt.

          In the past (and present) you have made some incredibly stupid and half-arsed comments that I’d ban a newbie for. Now I let them ride because you are often quite readable. So you have accumulated mana that I bear in mind when making moderation calls.

          By your process, you think that is incorrect and people can’t learn from their mistakes. Should I ban you for congenital stupidity?

        • Draco T Bastard 5.2.2.3
          26 May 2010 at 4:43 pm

          Labour’s been an avid seller of state owned assets in the past…

          The operative word here is “in the past”. The buy back of NZ Rail does seem to indicate that they may have realised their mistake that they made 20+ years ago.

  6. greenfly 6
    26 May 2010 at 12:26 pm

    joe bloggs – ‘where have I ever indicated my gender?’
    Ah! My day’s made!

  7. swimmer 7
    26 May 2010 at 1:06 pm

    Great post.

  8. Bored 8
    26 May 2010 at 1:51 pm

    The myths mentioned are all correct, you missed one other common justification given by privatisers:

    “The ownership of State assets is capitalism in action”…BOLLOCKS. Where is the risk factor? Its just a straight way of taking a rentier position over a monopoly. Landlordism and parasitism of the highest order.

    Its much the same as the creation of money by private banks…we dont need it. Credit should be created by the Reserve Bank and if we need put capital into state assets we should be creating our own and keeping the parasitic profit taking “shareholders” out. If they want to be capitalists let them take some risks for the rewards, not just suck up the safe returns provided by our necessities.

  9. Nick C 9
    26 May 2010 at 1:52 pm

    “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… I may not be the first to think of this though”

    Yep, the Greeks came up with that one.

  10. ianmac 10
    26 May 2010 at 1:54 pm

    Sam Knowles retiring CEO Kiwibank, said on Nat Radio lunchtime today that there was no need to get a huge amount of money, but that about $100,000 would be enough to progress the expansion plan. He also said that it was vital for the brand to remain in Kiwi hands. Might help.

    • Draco T Bastard 10.1
      26 May 2010 at 4:45 pm

      One 40th of what’s being given to a private company for no apparent reason.

  11. Irascible 11
    26 May 2010 at 2:59 pm

    One can certainly keep the brand in NZ hands but the actual asset will, under the English-Key policy of hock off anything that moves, become overseas owned. The Brand Bank of New Zealand remains in NZ but the asset is Australian. The brand All Blacks remains in NZ but the asset belongs to Adidas.

  12. Pascal's bookie 12
    26 May 2010 at 3:40 pm

    That myth 4 is the one that cracks me up.

    The govt can’t run anything properly and the market can best determine whether or not something is worthwhile etc. The NZX sucks and no private person or groups of persons wants to invest in it or list on it, so the crown has to list some public assets on it so that there will be something good on it.

    Seriously? Aren’t the facts of the argument, as the proponents tell them, more of an argument for nationalising whatever actual industries there are on the nzx and getting them out of the ridiculous ponzi scheme that capital markets have become?

    • clandestino 12.1
      26 May 2010 at 4:01 pm

      Agreed. The best argument to me for privatisation only applies overseas. And that’s government corruption or fraud thus inefficiency. Fortunately New Zealand doesn’t often fall in that category, only the private sector does!

  13. Kleefer 13
    26 May 2010 at 8:29 pm

    If privatisation is an inherently bad idea then that implies that state ownership is superior to private ownership, in which case the best course of action is for the government to own everything. Obviously this is a stupid idea. Government-owned “enterprises” are inherently pointless because if they are run on a commercial basis they are needlessly duplicating services that would be provided privately due to market demand. If they are there to perform a “social function” like Kiwibank and don’t actually make any money then they aren’t really enterprises but welfare schemes.

    • SPC 13.1
      26 May 2010 at 11:10 pm

      Kiwibank competition improves the market – is that really just a social consideration? That benefits not just consumers it also reduces the profits of the foreign owned banks – reducing the BOP invisibles deficit – though reducing company tax does the reverse.

  14. SPC 14
    26 May 2010 at 11:04 pm

    They can improve the financial lot of the SOE’s by allowing them to issue new capital – this applies in the case of Kiwbank in particular. That might increase the value of the government held original share – but there would have to be cost-benefit on a case by case basis to see whether the return to government in terms of regular income or asset value would actually increase.

    They can gurantee the local ownership of the issued shares by making them shares only Kiws can own and requiring a fixed period (like PIE) before they can be sold to other Kiwis.

    But yeah, we are capital starved now in terms of funding our economy – foreign loans for our mortgages, lack of access to finance for business (limiting funding business to the level of home values keeps our companies small), inadequate base R and D and lack of an efficient R and D tax credit system, lack of venture capital etc – so sure its mistaken to sell public assets in this context.

    It’s also unwise to reduce the value of your assets while increasing borrowing – it only adds to the cost of debt and makes further borrowing more difficult – placing the government in on-going budget finance difficulties whenever there was an economic downturn.

  15. JonL 15
    27 May 2010 at 5:25 pm

    “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.”
    It’s actually 9% (my boss pays 10%). Rudd is planning on increasing it to 12% over the next 3 years – if they get back in……….

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    5 hours ago

  • Speech to New Zealand China Council
    Thank you, John McKinnon and the New Zealand China Council for the invitation to speak to you today.    Thank you too, all members of the China Council. Your effort has played an essential role in helping to build, shape, and grow a balanced and resilient relationship between our two ...
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    8 hours ago

  • Modern insurance law will protect Kiwi households
    The Government is modernising insurance law to better protect Kiwis and provide security in the event of a disaster, Commerce and Consumer Affairs Minister Andrew Bayly announced today. “These reforms are long overdue. New Zealand’s insurance law is complicated and dated, some of which is more than 100 years old. ...
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    24 hours ago

  • Government recommits to equal pay
    The coalition Government is refreshing its approach to supporting pay equity claims as time-limited funding for the Pay Equity Taskforce comes to an end, Public Service Minister Nicola Willis says.  “Three years ago, the then-government introduced changes to the Equal Pay Act to support pay equity bargaining. The changes were ...
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    1 day ago

  • Transforming how our children learn to read
    Structured literacy will change the way New Zealand children learn to read - improving achievement and setting students up for success, Education Minister Erica Stanford says.  “Being able to read and write is a fundamental life skill that too many young people are missing out on. Recent data shows that ...
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    1 day ago

  • NZ not backing down in Canada dairy dispute
    Trade Minister Todd McClay says Canada’s refusal to comply in full with a CPTPP trade dispute ruling in our favour over dairy trade is cynical and New Zealand has no intention of backing down. Mr McClay said he has asked for urgent legal advice in respect of our ‘next move’ ...
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    1 day ago

  • Stronger oversight for our most vulnerable children
    The rights of our children and young people will be enhanced by changes the coalition Government will make to strengthen oversight of the Oranga Tamariki system, including restoring a single Children’s Commissioner. “The Government is committed to delivering better public services that care for our most at-risk young people and ...
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    1 day ago

  • Streamlining Building Consent Changes
    The Government is making it easier for minor changes to be made to a building consent so building a home is easier and more affordable, Building and Construction Minister Chris Penk says.      “The coalition Government is focused on making it easier and cheaper to build homes so we can ...
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    2 days ago

  • Minister acknowledges passing of Sir Robert Martin (KNZM)
    New Zealand lost a true legend when internationally renowned disability advocate Sir Robert Martin (KNZM) passed away at his home in Whanganui last night, Disabilities Issues Minister Louise Upston says. “Our Government’s thoughts are with his wife Lynda, family and community, those he has worked with, the disability community in ...
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    2 days ago

  • Speech to New Zealand Institute of International Affairs, Parliament – Annual Lecture: Challenges ...
    Good evening –   Before discussing the challenges and opportunities facing New Zealand’s foreign policy, we’d like to first acknowledge the New Zealand Institute of International Affairs. You have contributed to debates about New Zealand foreign policy over a long period of time, and we thank you for hosting us.  ...
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    2 days ago

  • Accelerating airport security lines
    From today, passengers travelling internationally from Auckland Airport will be able to keep laptops and liquids in their carry-on bags for security screening thanks to new technology, Transport Minister Simeon Brown says. “Creating a more efficient and seamless travel experience is important for holidaymakers and businesses, enabling faster movement through ...
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    2 days ago

  • Community hui to talk about kina barrens
    People with an interest in the health of Northland’s marine ecosystems are invited to a public meeting to discuss how to deal with kina barrens, Oceans and Fisheries Minister Shane Jones says. Mr Jones will lead the discussion, which will take place on Friday, 10 May, at Awanui Hotel in ...
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    2 days ago

  • Kiwi exporters win as NZ-EU FTA enters into force
    Kiwi exporters are $100 million better off today with the NZ EU FTA entering into force says Trade Minister Todd McClay. “This is all part of our plan to grow the economy. New Zealand's prosperity depends on international trade, making up 60 per cent of the country’s total economic activity. ...
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    2 days ago

  • Mining resurgence a welcome sign
    There are heartening signs that the extractive sector is once again becoming an attractive prospect for investors and a source of economic prosperity for New Zealand, Resources Minister Shane Jones says. “The beginnings of a resurgence in extractive industries are apparent in media reports of the sector in the past ...
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    2 days ago

  • Ō-Rākau Remembrance Bill passes first reading
    The return of the historic Ō-Rākau battle site to the descendants of those who fought there moved one step closer today with the first reading of Te Pire mō Ō-Rākau, Te Pae o Maumahara / The Ō-Rākau Remembrance Bill. The Bill will entrust the 9.7-hectare battle site, five kilometres west ...
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    3 days ago

  • Government to boost public EV charging network
    Energy Minister Simeon Brown has announced 25 new high-speed EV charging hubs along key routes between major urban centres and outlined the Government’s plan to supercharge New Zealand’s EV infrastructure.  The hubs will each have several chargers and be capable of charging at least four – and up to 10 ...
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    3 days ago

  • Residential Property Managers Bill to not progress
    The coalition Government will not proceed with the previous Government’s plans to regulate residential property managers, Housing Minister Chris Bishop says. “I have written to the Chairperson of the Social Services and Community Committee to inform him that the Government does not intend to support the Residential Property Managers Bill ...
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    3 days ago

  • Independent review into disability support services
    The Government has announced an independent review into the disability support system funded by the Ministry of Disabled People – Whaikaha. Disability Issues Minister Louise Upston says the review will look at what can be done to strengthen the long-term sustainability of Disability Support Services to provide disabled people and ...
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    3 days ago

  • Justice Minister updates UN on law & order plan
    Justice Minister Paul Goldsmith has attended the Universal Periodic Review in Geneva and outlined the Government’s plan to restore law and order. “Speaking to the United Nations Human Rights Council provided us with an opportunity to present New Zealand’s human rights progress, priorities, and challenges, while responding to issues and ...
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    3 days ago

  • Ending emergency housing motels in Rotorua
    The Government and Rotorua Lakes Council are committed to working closely together to end the use of contracted emergency housing motels in Rotorua. Associate Minister of Housing (Social Housing) Tama Potaka says the Government remains committed to ending the long-term use of contracted emergency housing motels in Rotorua by the ...
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    3 days ago

  • Trade Minister travels to Riyadh, OECD, and Dubai
    Trade Minister Todd McClay heads overseas today for high-level trade talks in the Gulf region, and a key OECD meeting in Paris. Mr McClay will travel to Riyadh to meet with counterparts from Saudi Arabia and the Gulf Cooperation Council (GCC). “New Zealand’s goods and services exports to the Gulf region ...
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    4 days ago

  • Education priorities focused on lifting achievement
    Education Minister Erica Stanford has outlined six education priorities to deliver a world-leading education system that sets Kiwi kids up for future success. “I’m putting ambition, achievement and outcomes at the heart of our education system. I want every child to be inspired and engaged in their learning so they ...
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    4 days ago

  • NZTA App first step towards digital driver licence
    The new NZ Transport Agency (NZTA) App is a secure ‘one stop shop’ to provide the services drivers need, Transport Minister Simeon Brown and Digitising Government Minister Judith Collins say.  “The NZTA App will enable an easier way for Kiwis to pay for Vehicle Registration and Road User Charges (RUC). ...
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    4 days ago

  • Supporting whānau out of emergency housing
    Whānau with tamariki growing up in emergency housing motels will be prioritised for social housing starting this week, says Associate Housing Minister Tama Potaka. “Giving these whānau a better opportunity to build healthy stable lives for themselves and future generations is an essential part of the Government’s goal of reducing ...
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    4 days ago

  • Tribute to Dave O'Sullivan
    Racing Minister Winston Peters has paid tribute to an icon of the industry with the recent passing of Dave O’Sullivan (OBE). “Our sympathies are with the O’Sullivan family with the sad news of Dave O’Sullivan’s recent passing,” Mr Peters says. “His contribution to racing, initially as a jockey and then ...
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    4 days ago

  • Speech – Eid al-Fitr
    Assalaamu alaikum, greetings to you all. Eid Mubarak, everyone! I want to extend my warmest wishes to you and everyone celebrating this joyous occasion. It is a pleasure to be here. I have enjoyed Eid celebrations at Parliament before, but this is my first time joining you as the Minister ...
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    4 days ago

  • Government saves access to medicines
    Associate Health Minister David Seymour has announced Pharmac’s largest ever budget of $6.294 billion over four years, fixing a $1.774 billion fiscal cliff.    “Access to medicines is a crucial part of many Kiwis’ lives. We’ve committed to a budget allocation of $1.774 billion over four years so Kiwis are ...
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    4 days ago

  • Pharmac Chair appointed
    Hon Paula Bennett has been appointed as member and chair of the Pharmac board, Associate Health Minister David Seymour announced today. "Pharmac is a critical part of New Zealand's health system and plays a significant role in ensuring that Kiwis have the best possible access to medicines,” says Mr Seymour. ...
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    5 days ago

  • Taking action on Fetal Alcohol Spectrum Disorder
    Hundreds of New Zealand families affected by Fetal Alcohol Spectrum Disorder (FASD) will benefit from a new Government focus on prevention and treatment, says Health Minister Dr Shane Reti. “We know FASD is a leading cause of preventable intellectual and neurodevelopmental disability in New Zealand,” Dr Reti says.  “Every day, ...
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    6 days ago

  • New sports complex opens in Kaikohe
    Regional Development Minister Shane Jones today attended the official opening of Kaikohe’s new $14.7 million sports complex. “The completion of the Kaikohe Multi Sports Complex is a fantastic achievement for the Far North,” Mr Jones says. “This facility not only fulfils a long-held dream for local athletes, but also creates ...
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    6 days ago

  • Diplomacy needed more than ever
    Foreign Minister Winston Peters’ engagements in Türkiye this week underlined the importance of diplomacy to meet growing global challenges.    “Returning to the Gallipoli Peninsula to represent New Zealand at Anzac commemorations was a sombre reminder of the critical importance of diplomacy for de-escalating conflicts and easing tensions,” Mr Peters ...
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    6 days ago

  • Anzac Commemorative Address, Buttes New British Cemetery Belgium
    Ambassador Millar, Burgemeester, Vandepitte, Excellencies, military representatives, distinguished guests, ladies and gentlemen – good morning and welcome to this sacred Anzac Day dawn service.  It is an honour to be here on behalf of the Government and people of New Zealand at Buttes New British Cemetery, Polygon Wood – a deeply ...
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    1 week ago

  • Anzac Commemorative Address – NZ National Service, Chunuk Bair
    Distinguished guests -   It is an honour to return once again to this site which, as the resting place for so many of our war-dead, has become a sacred place for generations of New Zealanders.   Our presence here and at the other special spaces of Gallipoli is made ...
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    1 week ago

  • Anzac Commemorative Address – Dawn Service, Gallipoli, Türkiye
    Mai ia tawhiti pamamao, te moana nui a Kiwa, kua tae whakaiti mai matou, ki to koutou papa whenua. No koutou te tapuwae, no matou te tapuwae, kua honoa pumautia.   Ko nga toa kua hinga nei, o te Waipounamu, o te Ika a Maui, he okioki tahi me o ...
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    1 week ago

  • PM announces changes to portfolios
    Paul Goldsmith will take on responsibility for the Media and Communications portfolio, while Louise Upston will pick up the Disability Issues portfolio, Prime Minister Christopher Luxon announced today. “Our Government is relentlessly focused on getting New Zealand back on track. As issues change in prominence, I plan to adjust Ministerial ...
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    1 week ago

  • New catch limits for unique fishery areas
    Recreational catch limits will be reduced in areas of Fiordland and the Chatham Islands to help keep those fisheries healthy and sustainable, Oceans and Fisheries Minister Shane Jones says. The lower recreational daily catch limits for a range of finfish and shellfish species caught in the Fiordland Marine Area and ...
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    1 week ago

  • Minister welcomes hydrogen milestone
    Energy Minister Simeon Brown has welcomed an important milestone in New Zealand’s hydrogen future, with the opening of the country’s first network of hydrogen refuelling stations in Wiri. “I want to congratulate the team at Hiringa Energy and its partners K one W one (K1W1), Mitsui & Co New Zealand ...
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    1 week ago

  • Urgent changes to system through first RMA Amendment Bill
    The coalition Government is delivering on its commitment to improve resource management laws and give greater certainty to consent applicants, with a Bill to amend the Resource Management Act (RMA) expected to be introduced to Parliament next month. RMA Reform Minister Chris Bishop has today outlined the first RMA Amendment ...
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    1 week ago

  • Overseas decommissioning models considered
    Overseas models for regulating the oil and gas sector, including their decommissioning regimes, are being carefully scrutinised as a potential template for New Zealand’s own sector, Resources Minister Shane Jones says. The Coalition Government is focused on rebuilding investor confidence in New Zealand’s energy sector as it looks to strengthen ...
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    1 week ago

  • Release of North Island Severe Weather Event Inquiry
    Emergency Management and Recovery Minister Mark Mitchell has today released the Report of the Government Inquiry into the response to the North Island Severe Weather Events. “The report shows that New Zealand’s emergency management system is not fit-for-purpose and there are some significant gaps we need to address,” Mr Mitchell ...
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    1 week ago

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