Softening the public up for privatisation

Written By: - Date published: 1:05 pm, May 25th, 2010 - 39 comments
Categories: assets, privatisation - Tags:

One thing National does very well is spend a lot of time softening the public up for unpopular moves so that the public attention has moved on by the time anything actually happens. Look at GST. The ‘rabbit from a hat’ trick of borrowing for larger income tax cuts served to divert attention from the well-signaled GST hike.

They’re running the same strategy on privatisation. All of a sudden the government is concerned that Kiwibank, which it has never liked, does not have enough money to grow. And the Nats’ solution is sell some of it off.

It’s patently ridiculous to suggest that a partial sale is the best way to raise any more capital Kiwibank needs. All that will mean is profits going overseas. If Kiwibank needs more money it should be allowed to retain its profits rather than paying a dividend to the government.

If it really needs a bit more cash the cheapest place to raise that is from the government. It’s less than what has just been borrowed for tax cuts and all the profits stay in public hands. But I think they will struggle to pull another GST when it comes to privatisation. This is a situation more akin to mining.

It can be attacked on a number of rock solid grounds, the first of which is that it doesn’t make any economic sense. Like mining, there are national self-image and economic sovereignty angles too. As we are proud of our conversation lands, New Zealanders are justifiably proud of our Kiwibank and the way it has restored competition to the banking system by taking on the Aussies.

We know, too, that any sale will see more Kiwi profits go overseas, just as mining on schedule 4 land would.

National knows that going into the campaign on a platform of asset sales is an election loser. But selling off the State to its mates (to pay for tax cuts for its mates) is also a core part of National’s business. There’s no point being government if it’s not distributing public wealth to private interests. So, National is starting its propaganda early.

No worries though. It’s a fight, like mining, that the Left can look forward to winning if we stand firm.

39 comments on “Softening the public up for privatisation”

  1. just saying 1

    If the government is so keen to help Kiwibank, why doesn’t it bank with it, instead of aussie owned Westpac Trust? Banking fees currently going across the ditch could be a sizable investment in kiwibank over time. What’s that phrase? revenue neutral or something.

    • Lanthanide 1.1

      Yeah, I’ve made this argument in the past, too. Of course the government will have long-term contracts set up with Westpac, so such a move isn’t as easy as wishing for it, unfortunately.

      • Bright Red 1.1.1

        what’s the point of having a government if you can’t make your own rules now and then?

        But I understand it’s a scale thing with Westpac and they don’t actually make much money off us (of course, they get lots of cash to loan to others)

        • Lanthanide 1.1.1.1

          What’s the point of entering into contracts with the government if they can just decide to vacate them whenever it suits?

          If you’re seriously advocating that is an ok position to take for general business deals, then the costs of all government contracts will increase as companies try to hedge their risks. Of course in certain extreme cases vacating of contracts is the reasonable thing to do (and this also happens with contracts between private parties), but in general it isn’t.

    • toad 1.2

      I think the argument is/was that Kiwibank doesn’t/didn’t have the capacity.

  2. All asset sales will be to the public. What’s your problem?

    • Bright Red 2.1

      yeah. tell me, infused. Who owns most of Contact now? Where do the profits go? It was sold to ‘mum and dad investors’. Now it’s 51% owned by Aussie.

  3. ianmac 3

    Beyond the logic of economics which can be argued at both extremes, the greatest weapon is the emotional attachment to our bank. Keep your hands off my kids bank you perverts!

    • aj 3.1

      If it looks like going ahead the left can make some great remakes of those kiwibank adverts 🙂

  4. prism 4

    Should a Facebook page be started supporting Kiwibank remaining publicly owned and totally NZ controlled?

  5. Santi 5

    Kiwibank should be sold, no ifs and buts. It’s propped by NZ Post, so its actual costs are not real.
    Flog it to whoever wants to buy it.

    • Anita 5.1

      Santi writes,

      [Kiwibank]’s propped by NZ Post, so its actual costs are not real

      Evidence?

      • infused 5.1.1

        What do you mean evidence? It resides inside NZPost. They pay minimal amounts for their presence. If they had actual branches, they would be making a loss.

        • Pascal's bookie 5.1.1.1

          And if it four legs and a tail it might be a donkey.

        • Anita 5.1.1.2

          Infused writes,

          [Kiwibank] pay minimal amounts for their presence.

          Evidence? Care to show that they pay less than the true cost of their co-location?

          If they had actual branches, they would be making a loss.

          As would the BNZ if it provided free public swimming pools in every branch. Your point is?

          The fact that their business model is based on co-location with NZ Post doesn’t mean that they’re subsidised by NZ Post; they may well be paying the full true cost. It may simply be evidence of a smart business decision which benefits both NZ Post and Kiwibank by reducing the branch costs of both.

          • Tigger 5.1.1.2.1

            And making combined banks/post offices more attractive in smaller communities.

            Who said a bank had to follow the age old model of stand-alone branche? Truth is that the bigger banks will struggle to hold branches open in the future and will be forced to take in other tenants or do other business to make money. Kiwibank is actually displaying a more sustainable branch model that we will see other banks ape.

            • Rex Widerstrom 5.1.1.2.1.1

              Precisely as Postbank used to do until… it was sold to the Australians. By Labour, IIRC.

              After they’d announced they intended to sell all of NZ Post (which made an after tax profit that year of $72 million that year (1988)) but backed off after an outcry.

              When Postbank was sold, NZ Post profits dropped to $31 million, suggesting the bank was making about $41 million a year).

              There’s some quote that should go here about idiots who don’t understand history repeating the mistakes of previous idiots…

  6. just saying 6

    Here’s an idea. Why doesn’t the government break the law and say nyaa nyaa nyaa to Westpac Trust, just like Westpac trust did to the government when it defrauded NZ out of legitimate tax revenue. And come to think of it, these tax rorters were given a discount on what they owed as a reward too…….there seems to be a theme here?

    Like all bullies (relentless attacks on beneficiaries anyone?) the government cravenly knuckles under to the bigger boys, and doesn’t even pull the account. It’s just pathetic that our nation is using a banker that admitted trying to defraud us, and did a deal with crown law to not repay the full sum owed with the threat of drawn out litigation that would cost NZ more than the sum of their debt.

    If I’ve got my facts wrong I’m happy to apologise, but this is what I remember happened. I haven’t got time to go link-hunting right now.

    • Draco T Bastard 6.1

      It’s just pathetic that our nation is using a banker that admitted trying to defraud us, and did a deal with crown law to not repay the full sum owed with the threat of drawn out litigation that would cost NZ more than the sum of their debt.

      Under that circumstance, the business should just be closed down with no compensation to the shareholders. Do that and you’ll probably find that other businesses are a little more willing not to defraud the country.

      • Rex Widerstrom 6.1.1

        Hold on… what?

        Shareholders have about as much control over the actions of Directors and senior staff as ordinary party members do over MPs and Ministers. Indeed in large companies they’re more akin to someone who voted for the party and is then “informed” by glossy brochures and kept quiet with the odd cheque (tax cut).

        Does that mean I can take you out and birch you for the actions of whichever lot you voted for in the past? 😀

        [Whoever it was, I can guarantee they’ll have done something I don’t like ;-)]

  7. Lew 7

    Like mining, it’s a fight the left can win. Whether it will win is a different matter. Taking a “no worries” attitude strikes me as the best way to lose it, because simply being in the right isn’t enough.

    L

    • ak 7.1

      Dead right Lew. Kiwibank is enormously popular, and Labour et al need to jump on this with force at every opportunity.
      But keep it simple.
      Like a total of all the profits in the last decade that the “big four aussies” have taken out of our pockets.
      And a total of the donation we made to them last week via the lowering of company tax.
      The public understands billions going from their own pockets to tax-dodgers, they just need constant reminding.
      A decent face-tube fillim-clip parody of a current bank ad would go down a treat – that annoying yank with the specs has been asking for it for a long time…..

      • Lanthanide 7.1.1

        While I’m not very good at this sort of thing, the script almost writes itself:

        Boss: Goldstein, what’s this I hear about Kiwibank being put up for sale?
        Goldstein: Well boss, if National win the next election, they’ve signalled that they’re going to sell Kiwibank off
        Boss: Does this mean I can buy up another New Zealand bank, and suck even more profits out of the country?
        Goldstein: It sure does boss.

      • felix 7.1.2

        ak,

        Yep, keep it simple.

        The message from the nats is “ordinary kiwi mums & dads should be able to buy a piece of kiwibank”

        The correct response is “We already own it, stupid”.

    • toad 7.2

      Indeed, Lew, the only reason we look like we are winning on mining is because of the huge effort NGOs, the Greens and (somewhat belatedly) Labour have put in.

      We need an anti-privatisation campaign with the same level of energy.

  8. jimmy 8

    Did anyone see the self-serving BS masquerading as business advice on the tv3 business segment a couple of weeks ago? Apparently the NZX released a ‘report’ saying they needed more listings and so we should sell our state assets to give everybody more investment opportunities.

    How the hell could this be considered business advice? Sounds like propoganda more like it.

    • Craig Glen Eden 8.1

      Oh come on guys its not like John Key has a mate who runs the stock exchange who would then benefit from large chunks of public assets being listed as companies on that same exchange is it???????????

  9. If National thinks the market needs more investment opportunities perhaps it should be asking the likes of Sanitarium, Talleys and some of its other contributors to list on the NZX.

    Even the bastion of National Party supporters – 80% of dairy farmers oppose listing their concern (Fonterra) on the NZX.

    New Zealand does excessively rely on debt financing rather than equity, but this is because our economy is largely populated by SME’s – and many owners/are adverse to outside control. This is arguably part of the NZ psyche – so why should state assets be any different?

  10. Lanthanide 10

    There’s an insightful and unusually bias-free poll on Stuff at the moment:

    “What do you think about possible asset sales by the Government?”
    27.4% I support asset Sales
    72.6% I don’t support asset sales

    Given the people who generally peruse Stuff during the work day, this is pretty good evidence that National are going to have trouble getting their “mandate” to sell assets at the next election…

    On the flip side, it also shows that a concerted and careful softening up approach is going to be needed for National’s PR – they may not blunder in and make the same mistakes they made for the mining issue.

  11. tc 11

    Mark Weldon’s NZX is playing this game as he’s remunerated on the NZX’s value so it’s 100% self serving of him to push that agenda and also why I reckon he’s swallowed up media outlets in the rural space who oppose Fonterra listing……..IMHO he’s to be watched very carefully.

    I know OZ based folk who state our NZX is an international joke and Weldon’s made no impact at all on corporate governance. Feltex anybody ? or PPCS’s nigh on illegal takeover of Richmond Meats which Diplock/Rebstock etc did F all about or Skycity’s dodgy profit forecasts….the list is sadly a long one.

    Once listed they can be traded so how long would they stay locally owned eh ? Power generator or 2 Mr Gecko…..thanks very much.

  12. Jum 12

    The Herald is running a poll on whether the public wants the government to part sell Kiwibank to the public – their spin – the ‘mums and dads’ – who already own it. Funny that.

    John Key was asked at a pre 2008 election in Waiuku if he would promise not to sell Kiwibank. He was taped saying that he promised it in 2005 and he was promising it now (pre 2008 election). If that government had got in in 2005, all our assets would have been sold by now.

    John Key is a Liar. He lied to every member in that audience; most of them are NAct supporters. What does that say about their current loyalty to him, a Liar, now. Anything they promise now must be a lie, the figures they made up on ACC debt, the ‘little’ bits of mining, the’ poor won’t lose out from the budget’ – all Lies, told by a moneytrader with a poker face, assisted by a spin doctor who controls our transport and communications, as well as the prime minister.

    People who don’t want the Liar Key’s government in power in 2011 vote on Herald poll now. The rest of them who want to sell a bank which is owned by New Zealanders for New Zealanders obviously support Liars who don’t stick to their promises made to a person in Waiuku who taped him promising “we”/his government would not sell Kiwibank.

    Foreignors are nonplussed that New Zealand would sell off any banks that are the easiest moneymaking facilities in the world.

    Key has made a Voldemort promise. His public head promised someone in Waiuku “we”/his government would not sell Kiwibank. His Voldemort head covered by layers of spin and duplicity promised the moneygreedy asset/landgrabbers New Zealanders’ treasures, Kiwibank being just one.

    What a bunch of pondscum.

    Let’s show them just how precious our own/owned Kiwibank, our free libraries, our subsidised services are to us before it’s too late. National supporters have shown themselves to be more interested in money than morals; more interested in having cheap desperate labour resources than a fair and equitable workforce.

    It’s up to the Harry Potters who care about New Zealand to rid New Zealand of this NAct political virus that is sucking our freedoms and our treasured possessions dry.

  13. Irascible 13

    Here’s an interesting privatisation thread from The Guardian (UK). Education – the next big privatisation possibility under the new Tory led government:
    http://www.guardian.co.uk/education/2010/may/25/free-schools-private-companies
    With Tolley boosting grants to the private school system in NZ, with funding going to doubtful providers like Westmount and talk of selling off state assets along with PPPs in education could Key be thinking of putting NZ education system on the block?

  14. kiwi gran 14

    Here’s one way to send a message to the government about Kiwibank:

    All of those of us who are depositors and don’t want to sell, could on one pre-appointed day withdraw our funds (or at least those funds that are available without loss of interest on term deposits) for 24 hours – or a weekend.

    We could do it both in person at the branches, and by internet banking.

    We don’t have to wait until they actually move on it; it’s just a way of sending a message to make the point about ownership by the people.

    We could call it “Plucked” (as in kiwi denuded of its feathers, which is what the government is proposing) Dictionary definition of “plucked”: To remove or detach by grasping and pulling abruptly with the fingers. Sound familiar? And of course, inevitably brings to mind the rhyming word for where we’ll all be if they get away with it.

    A day like the Friday before Labour weekend, or say, 23 December would cause maximum chaos and inconvenience, though it needs to be a date far enough away to recruit as many people as poss but not so far that it runs out of steam, so maybe quite soon?

    If anyone likes this idea, please pick it up and run with it. Especially if you have website and graphic/publicity skills which I don’t, and I don’t do facebook so can’t post it there. If anyone else is old enough to remember the cerebos ad of the boy chasing a chicken trying to put salt on its tail, an adaptation of that with John Key in short pants chasing a kiwi would be pretty cool.

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