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Something missing from asset sales debate

Written By: - Date published: 7:28 pm, September 8th, 2012 - 38 comments
Categories: assets, labour, national, Privatisation, uncategorized - Tags:

Something’s missing from Labour’s position on asset sales. It’s what it will do with the partially privatised companies (if the sales do go ahead despite Treaty issues and the dearth of economic rationale)  when  Labour is once more in  government.  I understand why it cannot promise to buy back the shares but why not make the sales less attractive by saying to potential buyers, regarding Mighty River and co, the next Labour led government WILL regulate power prices so  the private sector will NOT profit from higher prices (or by ‘growing prices’ as they say in the industry these days)?

That’s pretty much what Labour did when National privatised ACC (they announced very clearly that renationalising ACC would be one of its first acts, and it was) and that uncertainty did limit the number of overseas insurance companies willing to enter the market.

Am I missing something?  Why is this not Labour policy?

38 comments on “Something missing from asset sales debate ”

  1. pete 1

    David Cunliffe suggested the renationalisation wasn’t off the table (link: http://tvnz.co.nz/q-and-a-news/david-shearer-cuniffe-transcript-4588650).

    I think he copped a bit of flak for that, but signalling strong regulation would be a much more palatable strategy.

    Since strong regulation is going to be necessary, signalling it now will make it much easier to pass in future. Labour will have a powerful mandate if they announce their intentions early. Buyers will be aware of the regulatory risk when they buy, especially if that risk makes it into the prospectus.

    • BernyD 1.1

      It’s like they are waiting for more polls before they decide.
      Strange that they vet the voices before acting on them.
      A simple “I hear you” is all that’s required, it’s not policy making, just standing with people.
      They have all the policy ready to go, the whole party is Civilised, it’s time for us to hear them speak it.

    • Fortran 1.2

      pete

      Labour will not have enough seats to have a mandate on their own, but with the Greens, and Winston parties they will have.
      There is a need to get some agreement underway now, as Key may well call an early General Election over the Maori water affair.

    • Dr Terry 1.3

      David Cunliffe “suggested” . . . “we would not rule out renationalising them . . . We look very hard at that”. Labour is careful not to make any “commitment” to buying anything back. They just would not rule it out!
      On the whole, in this interview, Cunliffe is considerably more specific than Shearer, however. Shearer is noteworthy for “hedging his bets”, with the one exception of a strong statement concerning our troops in Afghanistan.

  2. Colonial Viper 2

    Am I missing something? Why is this not Labour policy?

    Why why why, what could the answer be???

    And not just simply regulating power prices. Also make it clear that the Government will select the majority of the Board of each power company.

  3. Rory 3

    There’s a strong view amongst the rank-and-file that renationalisation should take place, and that we should announce it before the election. A remit to such effect is travelling to Conference in November.

    If the claims run by Labour and KOA coalition are true (i.e. the economic and fiscal benefits of state ownership), then surely it makes economic and fiscal sense to buy these revenue-generating assets back?

    The implication of not doing so suggests that the claims we make to every kiwi who signs the petition are a cynical political stunt devoid of any real commitment to public ownership of the towering heights of the market.

    Clayton Cosgrove, and David Shearer, dismissed renationalisation as a potential policy commitment at the Region 4 conference and in the media; which makes the remit fight at National Conference particularly interesting. Our MPs may regret being so haste to reject what is really a sensible, ideologically consistent, and politically popular policy. They may be forced to change position come December.

  4. RedLogix 4

    Agreed.

    I’ve been thinking this for some time. If it was clearly signalled BEFORE any sale AND the terms that would be imposed … then there can hardly be an objection.

    It’s so obvious that you have to ask why not.

    • Draco T Bastard 4.1

      Because it’s traditional for a government not to fully and immediately undo what the previous government did even when what the previous government did was a) not in the interests of the country and b) against the will of the people. The reasoning is that if any government did that then you’d get tit for tat governing and thus no stability. Meanwhile, whenever the right get into power they do what they want and the next leftish government is effectively prevented from fixing their fuckups which, of course, adds to the growing inequality and general degradation of our society.

      Need more referendums to get off this path into a Banana Republic that the right have got us on.

      • Shaz 4.1.1

        I think regulation rather than renationalisation might be the best hope and the pressing issue for Labour is the TPP, which, if it goes through will limit a new progressive government’s ability to change legislation in case an aggrieved overseas invesvtor – seeing the likelhood of reduced profits triggers an investor states tribunal case through the TPP mechanism to overturn the legislation and / or exact compensation for lost earnings.

        • Dean Reynolds 4.1.1.1

          The obvious solution is that the next Labour/Green govt withdraws from the TPP. It’s delusional to think that membership of the TPP wil bring any benefits to ordinary New Zealanders

          • Colonial Viper 4.1.1.1.1

            The TPP will no doubt be set up to make it prohibitively expensive to withdraw from it. That’s what signing a deal with the devil usually entails.

      • Macro 4.1.2

        Muldoon and the previous govt super scheme spring to mind? _ and yes look what a mess that turned into. 🙁

      • AmaKiwi 4.1.3

        What do call rulers who make their own rules for how they will be re-elected? Dictators.

        We are not even going to have a referendum on the proposed changes to MMP!

        Leading Labour MP’s hate the mention of binding referendums. Which leaves people who campaign for Labour in an awkward position: “My Labour dictator will be better than their dictator. I’m sorry, democracy is not part of our policy.”

  5. Tim 5

    Interesting debate….and I’m just an interloper trawling the various “soshul netwerking” sites, since it seems to be the thing to do – even though any sort of substance is “v-i-r-t-u-a-l” It’s a nice way though o not actually having to smell shit, or even rotting bodies.
    Seems to me though that what is most paramount is to find a way to ensure this cyclical bullsht that’s driven by ideological extremes can come to rest. Swing right, swing left ………swing LOW sweer chariot. Really it’s all fucked up royally!
    Why do we even vote ffs!
    If we are going to even pretend we are a democracy, then we should be looking at ways whereby things like asset sales (supposedly owned by a “public”) cannot enter into the realms of the used-car-salesman, or any other “mouth” with the gift of the gab, but precious little else.

    It’ all a bit of a joke really. But I d see Keys and Joyces and Bennets hanging off the crossmembers of rural lamposts if they continue with all this crap.

    Roll the dice I spose! Let’s see where it falls. Damn sure though a Key or a JoiceJuice or a Bent really haven’t thought too far ahead.

  6. Wayne 6

    Draco, the same principle also applies to centre- right governments. There are many things that Labour does that National does not undo. ACC has not been opened to competition; the ERA was modified, not repealed, just as Labour did not reintroduce compulsory unionism in 2000. Incoming governments always have to work out what has permanently changed and what can be modified. Renationalisation would be a spectacular waste of money for no gain. The Government would be reborrowing, but for New zealanders there would be no change; power prices would not decrease, no-one would get better services. Surely an incoming Labour Government would want to do things that would change peoples lives in some tangible way.

    • Draco T Bastard 6.1

      Draco, the same principle also applies to centre- right governments.

      Yes, but there tends to be a bit of a difference. What NACT do is detrimental to NZ while what the left does generally isn’t (it’s usually repairing the damage that NACT have done). Not being able to undo the detrimental stuff has us, on average, getting worse off.

      ACC has not been opened to competition;

      Yeah but that’s not because they didn’t try. They got in power, said ACC was in the shit and raised fees. A year later with ACC well into surplus it came out that they’d have to raise fees again just so that private insurance companies could compete.

      Renationalisation would be a spectacular waste of money for no gain.

      Renationalisation is the only option that doesn’t continuously make us worse off.

      The Government would be reborrowing,

      The government never needs to borrow which is part of the problem – they keep doing so.

    • Dr Terry 6.2

      “Surely”? Never be too certain!

    • fatty 6.3

      “the ERA was modified, not repealed”

      Why would National want to repeal such a pathetic piece of legislation? Its as if they wrote it themselves

    • felix 6.4

      “Renationalisation would be a spectacular waste of money for no gain. “

      Obviously the “gain” is the ownership and control of our energy infrastructure. Pretty important as we’re at the end of the age of cheap energy and it would be really, really stupid to put ourselves in a position where we have to pay for the profits of overseas owners just so we can use our own energy network.

      As for the cost of re-nationalisation, it needn’t cost a cent if it’s clearly and fairly signaled.

  7. Mikesh 7

    The difficulty Labour has is that it would not be sensible to do or say something that would lower the price that the government receives if the sales go ahead.

    • Anne 7.1

      Why?

      The lower the price the better. It’s right wing ideological claptrap anyway, so if the Left can help it to fail… all well and good!

      • Nick 7.1.1

        Unfortunately the Government is determined to go ahead with these sales regardless. Even though they said they wouldn’t sell them if they couldn’t get a fair price they will need to sell some if not most of the assets they are looking at before the next election to have any credibility amongst their base.

        If Labour could do something to force the price down but not stop the sales then the books are even worse off than if they get sold for a fair / high price.

        Best bet would be to have something effective block the asset sales completely, if they are going ahead anyway then Labour needs to be careful about its position, we don’t want the sales to have gone ahead, be a failure and Labour take the blame prior to the next election. Crosby-Textor would have a field day.

        • felix 7.1.1.1

          “Even though they said they wouldn’t sell them if they couldn’t get a fair price “

          I’ve heard English say this, but I’ve also heard Key say in the house that they’ll sell them regardless of price simply because selling them is the “right thing to do”.

          • Anne 7.1.1.1.1

            I’ve also heard Key say in the house that they’ll sell them regardless of price simply because selling them is the “right thing to do”.

            Yep. Proves my point at 7.1 “Nothing but ideological claptrap.”

            Get in behind the referendum petition folks. The greater the number of signatures, the less likely this govt. can ignore it – despite Key’s bull-shitting rhetoric to the contrary.

            An example of how worried they are about the petition:

            I heard Bill English claim on Q&A this morning – and I quote “the Labour Party is so desperate it’s getting children to sign the petition”. He went on to say “they wouldn’t get away with it because the kids names will be removed… ha ha ha”. But we know that English is a consummate liar from way back.

  8. Raymond A Francis 8

    One reason was that during the 9 years that Labour was running things they regarded the power companies as a cash cow and would be loath to cut even 51% of that payout
    The rumour that they (the MPs) will be buying up large if they come onto the block is just that (a rumour)

    • Colonial Viper 8.1

      One reason was that during the 9 years that Labour was running things they regarded the power companies as a cash cow and would be loath to cut even 51% of that payout

      Indeed. Labour set those companies up to be irresistable to the Tories to sell.

  9. Treetop 9

    I just love it that the asset sales are keeping the Government up at night; their day dreaming (not seeing all the pitfalls) just has to stop.

  10. Wayne 10

    Felix, are you proposing expropriation without compensation, well you know Labour and probably not even the Greens would do that. Mind you Hone would!

    More seriously what does renationalization actually do. Draco says it means regaining control, but it is not lost with the Govt retaining 51%. More importantly it does not change anything for the voters own circumstances, such as bringing down power prices. Programs relevant to voters require tax and benefit changes or jobs and innovation programs, or social, health, education and housing programs. The actual design of course depends on each parties view.

    By the way Draco Labours ERA retained many of the features of the ECA – Labour in 2000 realized there was no going back to the pre 1984 era, and who would want to?

    • Draco T Bastard 10.1

      Draco says it means regaining control, but it is not lost with the Govt retaining 51%.

      More ignorance. Selling off even a small amount limits what the government can do with the assets as the minor shareholders get veto on anything that might decrease their returns thus a loss of control.

      More importantly it does not change anything for the voters own circumstances, such as bringing down power prices.

      Wrong again. It means that taxes are going to have to go up to pay for the loss of income from the power companies. That is definitely a change for the voters.

      By the way Draco Labours ERA retained many of the features of the ECA

      So?

      Labour in 2000 realized there was no going back to the pre 1984 era, and who would want to?

      The 10% to 20% of the population that have shifted into the Precariat since the neo-liberal reforms of the 1980s? You know, the people who no longer have a stable income and who are living below the breadline.

  11. Wayne 11

    Draco, Tell me anything that has happened over the last several years (and I include the Labour Govt) that the SOE’s do to benefit the consumer in a way that is significantly different to other companies. In fact Trust Power seems closer to the Tauranga community that the Power SOE’s seem to be to us as taxpayers.

    You also seem to be ignoring the fact the the sale reduces debt whereas renatinalisation increases it. Now I know that there will be increased income, but also note the Govt only gets the dividends, not the whole company profit, and of course it has to pay the interest on the increased debt.

    Do you think we should we should go back to the sort of economy that existed prior to 1984, which almost had New Zealand being bailed out by the IMF. The system was unsustainable. In any event it is a sterile argument. Those days are gone and no party who can form the core of a New Zealand government believes that form of centralized, highly regulated economy can return. That is why denationalization will not happen.

    • Draco T Bastard 11.1

      Tell me anything that has happened over the last several years (and I include the Labour Govt) that the SOE’s do to benefit the consumer in a way that is significantly different to other companies.

      Well, kept taxes down.

      You also seem to be ignoring the fact the the sale reduces debt whereas renatinalisation increases it.

      I’m not ignoring it. I realise, unlike you, that it will be temporary as the sale of those assets will induce more borrowing.

      Do you think we should we should go back to the sort of economy that existed prior to 1984,

      Nope. I think we should go to one where the government creates the money, not the private banks and where the government provides necessary services such as power because it’s a public good and not because it can make a profit at it. An economy where capitalism exists as a minor, non-critical part of society.

      In any event it is a sterile argument.

      No it’s not no matter how much you would like it to be so. We’re having it now and we’re having it because the reforms that the 4th Labour government brought in and was continued by later governments has just failed as much as the one that existed prior to 1929. The one that existed in 1984 didn’t fail that much which would indicate that it is somewhat better even if still a failure.

  12. Peter 12

    Good article Jenny. I have been wondering this too, to the point at which I wrote a letter to Shearer’s office in an attempt to get answers. Naturally, I didn’t.

    I would just be bold and renationalise the things. That’s the weapon that Labour currently possesses, but yet, it is too afraid to challenge it.

    Even if that isn’t appropriate, some strong policy on how we regulate the power system might come close.

    Not holding my breath though.

  13. Wisdumb 13

    Apart from changing the MOM Act to ensure that the government selected the boards and specified the chairpersons, and strongly regulating prices, as mentioned above by Col. Viper, a Labour govt should reverse some of the other nasties in the MOM Act: make the 51% owned entities subject to the Official Information Act and the Ombudsman Act. There are no doubt others in the fine print that need to be reversed.

    Renationalising should be a long term objective because the entire NZ electricity system needs to be run as a unified system. This would achieve real efficiencies that would match generating capacity with demand, and keep the Transpower side of things in tune with generation – they have quietly been underinvesting a la Telecom to show book profits, I seem to think, There would be no need for such forced manipulations as the exchange of South Island generation capacity and North Island virtual capacity between Meridian and Genesis, the gaming of the network, the construction of excess capacity for competitive reasons but isn’t then used but we have paid for it in falsely high electrictiy prices, the massive bumph competitive spin and PR, and the duplication of head offices, boards chairmen, and so on and so on. And let us not forget Geoff Bertram’s point, the false upvaluation of historically paid for assets to futher ramp up prices.

  14. captain hook 14

    The national government is fixated on the nineties when a huge shift occurred in the world financial markets and apparatus. namely computers where all the dweebs could sit down and anlayse a multibillion dollar business in an afternoon.
    One of the by productrs of this mass delusion was the falsehood that a spot market could be made in power pricing in every and al countries of the world.
    this was of course hopeless nonsense but the current crop of infantilised tory party mavens still beleive it or even if they dont they know they are in the box seat to get their share parcels.
    ungggggggggggghhhhhh.
    what a gang of creeps we have ended up with in control.

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