web analytics

The best they’ve got?

Written By: - Date published: 2:20 pm, February 13th, 2011 - 18 comments
Categories: privatisation - Tags:

Today’s Herald contains the first unequivocal defence of National’s plan to sell our assets to pay for tax cuts for the rich. It’s disappointing to say the least – confused, piecemeal, and unconvincing. Ironically, it’s written by some guy, Damien Grant,  from some insolvency company – ie. someone who makes money from cleaning up after others’ poor business decisions.

Let’s take a quick look:

“The proposed sale of state assets has caused some hand-wringing by economic illiterates fretting over the risk of foreign ownership.”

The foreign ownership is just one objection. But it’s ironic that Grant starts by dismissing those who are worried about our foreign liabilities as ‘economic illiterates’ considering that overseas debt is one of the excuses for the asset sale agenda and Key and co are at pains to try to convince us that assets won’t go to foreigners. At least Grant is honest enough to admit that privatisation means more foreign ownership of our economy.

“Foreign money brings foreign expertise.”

Ah, yes. The foreign expertise that ran Air NZ into the ground. The foreign expertise that asset-stripped our rail network. The foreign expertise that makes Contact the biggest regulatory headache of the power companies. The foreign expertise that saw Telecom under-invest for 20 years requiring repeated major government interventions to try to lift telecommunications standards.

It’s not that foreign ownership doesn’t bring foreign expertise. It’s that the expertise is in making money for the foreign owners, which is often at odds with the economic interests of New Zealand.

“Today’s youth suffer anxiety attacks if they exceed their monthly text allowance. I suspect their synapses would melt if they had to endure a six-week wait for a landline phone connection, the norm from state-owned Telecom in the 1980s, before Prebble sold it to the Americans”

Has this guy tried to get the Internet wired up to a house? It still takes time to get a tech over to do the work, just like it used to.

“American capital and know-how transformed Telecom from a moribund behemoth into a dynamic enterprise driving the explosion of telecommunications infrastructure that propelled New Zealand into the internet age.”

I have never, ever seen Telecom described as dynamic before. It has been dragged kicking and screaming into each round of upgrades because the private owners don’t like the expense of major capital investment. Look at the government’s ultra-fast broadband project – it has devolved, as critics predicted, into little more than a giant subsidy to Telecom to make upgrades it won’t do itself.

“Try building Trade Me on a telecommunications network made from number 8 wire.”

Too much electrical resistance for one. Is Grant seriously suggesting that if Telecom hadn’t been privatised we wouldn’t have the Internet? The idea that we’re too useless to do it ourselves but instead need the guidance of wise foreigners like Telecom’s $7 million man, Paul Reynolds, was widely held by the Right in the 1980s/90s. I thought they had gained some pride in this country since then. But I guess they still think New Zealand sucks.

“When we as New Zealanders swap some of our assets for cash our net wealth remains unaffected.”

Umm. No it doesn’t. Christ, and he calls us economic illiterates. The value of an asset is the present value of all future returns we will earn from it (plus side benefits like a lower current account deficit, owners who live in New Zealand and so are directly affected by the quality of life here). The value of cash is the interest rate. The Crown borrows at 5.5% and has been getting 7.6% returns on the assets the Nats want to sell. If we sell $6 billion of assets (Patrick Smellie’s estimate of the piece we would get) to offset $6 billion of borrowing, we’re worse off, our net worth has fallen. And it can’t be any other way because the private buyer needs to make a higher rate of return on the asset they’re buying from us than the government can borrow money at.

“New Zealand is facing capacity constraints in our electricity infrastructure, in generation capacity and in the transmission and distribution networks. There is a need for ongoing investment in infrastructure and technology.”

Of course, but who is to say foreign private owners will make those investments? The history is that they won’t. Indeed, it is the legacy of underinvestment by the likes of Telecom that means there is such a large amount of capital investment needed. The cheapest source of funding for that capital is not selling profitable enterprises but government debt or, better, undoing the massive tax cuts for the wealthy which have made the government deficit so large.

“The debate over the benefits of foreign investment has long been settled.”

Yeah and that’s a reason that 80% of Kiwis oppose asset sales. They remember that the last time there were few benefits and massive costs to this country.

18 comments on “The best they’ve got? ”

  1. Anthony C 1

    The ownage of this guy in the comments section is hilarious.

  2. Draco T Bastard 2

    “American capital and know-how transformed Telecom from a moribund behemoth into a dynamic enterprise driving the explosion of telecommunications infrastructure that propelled New Zealand into the internet age.”

    I get so pissed off with the people who spread this BS around. The sale of Telecom brought in no “American know-how” and the capital ended up being exported. We were already upgrading the network to digital before the USians bought it using Telecoms profits. Those upgrades alone is what allows telephones to be connected instantly and nothing to do with the sale.

    If we’d kept Telecom we’d be better off to the tune of $10b to $20.

    • Colonial Viper 2.1

      Great how you spread the love on the Granny’s comments page.

    • Monty 2.2

      Maybe you did not (would not) read the positive part of the article which states “The new American owners took their dividends but these were dwarfed by the benefits returned to the wider economy by a transformed Telecom.”

      Business and individuals prior to the sell off needed to wait six months. The industry was protected and competition as not allowed.

      Because Telecom was sold, all NZers have benefited. Bell South, the vodafone was established in the Mobile market, (Duopoly) and not 2degrees have come in to offer real competition. Free of Government agendas and protectionism, service and technology have increased.

      I know you hate it – but NZ has benefited from selling Telecom.

      • Colonial Viper 2.2.1

        I know you hate it – but NZ has benefited from selling Telecom.

        Oh, how the overseers gleefully chant “It’s for your own good, we’re only doing this because we care about you so much” as they whip the slaves into submission and plough the weakened sick ones into the ground.

      • Draco T Bastard 2.2.2

        Go do some actual research rather than spouting your ideological line of faith. The figures are out there and show that NZ has lost between $10b and $20b due to the sale of Telecom and we’re going to lose more because we’re having to put taxes in to upgrade the network – an upgrade that should have been paid for with the rental money that we’ve paid to Telecom.

        Because Telecom was sold, all NZers have benefited.

        Nope, all NZers are far worse off due to the sale of Telecom.

        And, yes, I did read the propaganda. The reality is that we got absolutely nothing from the Americans. No management skills and no knowledge on designing and implementing a telecommunications network.

      • erentz 2.2.3

        [quote]I know you hate it – but NZ has benefited from selling Telecom.[/quote]

        I really am amazed that so many lay-persons have this view. It is clearly not because they hold some expertise in the field of telecommunications, it’s just something they’ve been told by their masters in Government, and the Telecom C-suite, and they’ve swallowed it whole. The common argument seems to be this silly six month wait business. Yes Telecom was a bureaucratic inefficient nightmare in its prior form. As were many PTTs around the world in that age. But selling it off was not required to fix up those inefficiencies. Those fixes were on the cards regardless of owner. The foreign ownership didn’t magically bring in billions of charitable dollars to improve the business for New Zealanders. All the improvements were done by managers, technicians, etc. living here in New Zealand, paid for by the profits of the company, which come from charges to New Zealanders. The only thing foreign ownership did was export some of those profits offshore.

        • Draco T Bastard 2.2.3.1

          Yes Telecom was a bureaucratic inefficient nightmare in its prior form.

          Actually, it wasn’t all that bad. Sure, it did need to be improved but it certainly wasn’t as bad as it’s made out to be. The “wait” that everyone complains about hardly ever happened and when it did it was due to physical constraints most of which were remedied during the 1980s/90s as new tech became available.

          The only thing foreign ownership did was export some of those profits offshore.

          Actually, it did far worse than that. Prior to the sale of Telecom 100% of profits went back into the network (Upgrading and maintenance). Afterwards it was probably about 25% max and the rest shifted off as dividends most of which went overseas. Some of the figures posted showed that in the first few years more dividends were paid out than there were profits which meant that Telecom also went into debt without needing to.

          I’m not exaggerating when I say that we’d have FttH home being rolled out across the country by now if we hadn’t sold Telecom and deregulated the telecommunications field. We’d also have significantly cheaper and better communications and phone bills.

  3. Colonial Viper 3

    Seriously, does the Herald have a cloning lab where they grow these Right Wing sycophants?

    Recommending selling off our country’s strategic energy assets during peaking oil production for what? Freshly printed US dollars straight off the press. Really?

    Yeah Mr Damien Grant, I think we know who the economic illiterate is here.

    • Deadly_NZ 3.1

      And don’t just Bitch in the comments section as they will have the censors out, but they always leave a e-mail addy so you can load up the inbox as well. Keep em too busy to write more Nat party election drivel.

  4. Jum 4

    You missed the bit which accused concerned Kiwis of racism by comparing Shania Twain’s purchase and May Wang’s negative result; one an individual who fell in love with the New Zealand landscape and the other with a questionable financial profile fronting for a company with a misleading English name to cover its Chinese ownership, but intent on permanently owning, producing and exporting with little benefit to New Zealand, with the intent of owning much more of NZ land.

    The guy is a fxxkwit who has no integrity.

  5. lprent 5

    Quite frankly Jum is entirely correct. I read Martys post, the origional article, and looked at my 30 years in export businesses plus the MBA.

    The writer of this article can only be described as a economically illiterate fuckwit.

  6. I suspect ‘Grant’ is whowuddathort.

  7. ChrisH 7

    Yes and what’s more, back in the dark days of state ownership in the 1980s nobody could be connected to the Internet! I.e. there’s not just economic illiteracy afoot, but quite a lot of technological illiteracy about falling telecommunications costs as well. Unfortunately the privatisation transformed Telecom from an SOE that just covered its costs in the days of copper wire, into a pure monopolist exploiting a little island in the South Pacific as the actual, underlying cost structure fell and fell and fell in the era of the microchip. If Telecom had been in charge of Silicon Valley, we’d still be on 286’s. And cellphones would still be the size of a brick and cost $1995.00.

    • Draco T Bastard 7.1

      Unfortunately the privatisation transformed Telecom from an SOE that just covered its costs in the days of copper wire,

      ~$272m dollars in profit in 1985 or $645,173,672.68 in today’s money. More than enough to upgrade the network which was what was happening at the time.

      If Telecom had been in charge of Silicon Valley, we’d still be on 286′s. And cellphones would still be the size of a brick and cost $1995.00.

      Yep, once privatisation happened with the accompanying exploitation of a monopoly position that was inevitable we were truly screwed.

  8. randal 8

    its called coupon clipping.
    and its done by the investors who are sold the bonds by the BOND SALESMAN and they will be receiving the interest in perpetuity while we pay the bills.
    they are stealing off the people and in simple terms its called looting.

Links to post

Recent Comments

Recent Posts

  • Tokelau Language Week reminds us to stay united and strong
    Staying strong in the face of challenges and being true to our heritage and languages are key to preserving our cultural identity and wellbeing, is the focus of the 2020 Tokelau Language Week. Minister for Pacific Peoples, Aupito William Sio, says this year’s theme, ‘Apoapo tau foe, i nā tāfea ...
    BeehiveBy beehive.govt.nz
    1 hour ago
  • NZ announces a third P-3 deployment in support of UN sanctions
    The Government has deployed a Royal New Zealand Air Force P-3K2 Orion (P-3) maritime patrol aircraft to support the implementation of United Nations Security Council (UNSC) resolutions imposing sanctions against North Korea, announced Minister of Foreign Affairs Winston Peters and Minister of Defence Ron Mark. “New Zealand has long supported ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Pacific trade and development agreement a reality
    Pacific regional trade and development agreement PACER Plus will enter into force in 60 days now that the required eight countries have ratified it. Trade and Export Growth Minister David Parker welcomed the announcement that the Cook Islands is the eighth nation to ratify this landmark agreement. “The agreement represents ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Securing a pipeline of teachers
    The Government is changing its approach to teacher recruitment as COVID-19 travel restrictions continue, by boosting a range of initiatives to get more Kiwis into teaching. “When we came into Government, we were faced with a teacher supply crisis,” Education Minister Chris Hipkins said. “Over the past three years, we ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Border exceptions for a small number of international students with visas
    The Government has established a new category that will allow 250 international PhD and postgraduate students to enter New Zealand and continue their studies, in the latest set of border exceptions. “The health, safety and wellbeing of people in New Zealand remains the Government’s top priority. Tight border restrictions remain ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • First COVID-19 vaccine purchase agreement signed
    The Government has signed an agreement to purchase 1.5 million COVID-19 vaccines – enough for 750,000 people – from Pfizer and BioNTech, subject to the vaccine successfully completing all clinical trials and passing regulatory approvals in New Zealand, say Research, Science and Innovation Minister Megan Woods and Health Minister Chris Hipkins. ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • International statement – End-to-end encryption and public safety
    We, the undersigned, support strong encryption, which plays a crucial role in protecting personal data, privacy, intellectual property, trade secrets and cyber security.  It also serves a vital purpose in repressive states to protect journalists, human rights defenders and other vulnerable people, as stated in the 2017 resolution of the ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Ministry of Defence Biodefence Assessment released
    The Ministry of Defence has today released a Defence Assessment examining Defence’s role across the spectrum of biological hazards and threats facing New Zealand. Biodefence: Preparing for a New Era of Biological Hazards and Threats looks at how the NZDF supports other agencies’ biodefence activities, and considers the context of ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New Approaches to Economic Challenges: Confronting Planetary Emergencies: OECD 9 October 2020
    New Approaches to Economic Challenges: Confronting Planetary Emergencies: OECD 9 October 2020 Hon David Parker’s response following Thomas Piketty and Esther Duflo. Good morning, good afternoon, and good evening, wherever in the world you might be. I first acknowledge the excellent thought provoking speeches of Thomas Piketty and Esther ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Kaipara Moana restoration takes next step
    A Memorandum of Understanding has been signed today at Waihāua Marae between the Crown, local iwi and councils to protect, restore and enhance the mauri of Kaipara Moana in Northland. Environment Minister David Parker signed the document on behalf of the Crown along with representatives from Ngā Maunga Whakahī, Ngāti ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New Zealand and Uruguay unite on reducing livestock production emissions
    Agriculture Minister Damien O’Connor and Uruguayan Minister of Livestock, Agriculture and Fisheries Carlos María Uriarte have welcomed the launch of a three-year project that will underpin sustainable livestock production in Uruguay, Argentina, and Costa Rica.  The project called ‘Innovation for pasture management’ is led by Uruguay’s National Institute of Agricultural ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • 3100 jobs created through marae upgrades
    Hundreds of marae throughout the country will be upgraded through investments from the Provincial Growth Fund’s refocused post COVID-19 funding to create jobs and put money into the pockets of local tradespeople and businesses, Regional Economic Development Minister Shane Jones and Māori Development Minister Nanaia Mahuta have announced. “A total ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Health volunteers recognised in annual awards
    Health Minister Chris Hipkins has announced 9 teams and 14 individuals are the recipients of this year’s Minister of Health Volunteer Awards.  “The health volunteer awards celebrate and recognise the thousands of dedicated health sector volunteers who give many hours of their time to help other New Zealanders,” Mr Hipkins ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Community COVID-19 Fund supports Pacific recovery
    The Minister for Pacific Peoples, Aupito William Sio says a total of 264 groups and individuals have successfully applied for the Pacific Aotearoa Community COVID-19 Recovery Fund, that will support Pacific communities drive their own COVID-19 recovery strategies, initiatives, and actions. “I am keen to see this Fund support Pacific ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Community benefits from Māori apprenticeships
    Up to 50 Māori apprentices in Wellington will receive paid training to build houses for their local communities, thanks to a $2.75 million investment from the Māori Trades and Training Fund, announced Employment Minister Willie Jackson today. “This funding will enable Ngāti Toa Rangatira Incorporated to provide its Ngā Kaimahi ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Training fund supports Māori jobseekers
    Rapidly growing sectors will benefit from a $990,000 Māori Trades and Training Fund investment which will see Wellington jobseekers supported into work, announced Employment Minister Willie Jackson today. “This funding will enable Sapphire Consultants Ltd. to help up to 45 Māori jobseekers into paid training initiatives over two years through ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Ruakura Inland Port development vital infrastructure for Waikato
    The Government is investing $40 million to develop an inland port at Ruakura which will become a freight super-hub and a future business, research and residential development for the Waikato, Urban Development and Transport Minister Phil Twyford, and Māori Development Minister Nanaia Mahuta announced today. The funding has been has ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Appointments made to Defence Expert Review Group
    Defence Minister Ron Mark announced today the establishment of an Expert Review Group to review a number of aspects of the New Zealand Defence Force’s (NZDF) structure, information management and record-keeping processes.  The Expert Review Group’s work arises out of the first recommendation from the Report of the Government’s Inquiry ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • No active community cases of COVID-19
    There are no active community cases of COVID-19 remaining in the country after the last people from the recent outbreak have recovered from the virus, Health Minister Chris Hipkins said today. “This is a big milestone. New Zealanders have once again through their collective actions squashed the virus. The systems ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Clean energy upgrade for more public buildings
    More public buildings will be supported by the Government to upgrade to run on clean energy, the Minister for Climate Change James Shaw announced today. Minister Shaw announced that Lincoln and Auckland universities will receive support through the Clean-Powered Public Service Fund to replace fossil fuel boilers. Southern, Taranaki, and ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Schools back donations scheme for the second year
    More schools have opted in to the donations scheme for 2021, compared to 2020 when the scheme was introduced. “The families of more than 447,000 students will be better off next year, with 94% of eligible schools and kura opting into the scheme,” Education Minister Chris Hipkins said. “This is ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Ruapehu cycle trails gets PGF boost
    The spectacular Mountains to Sea cycle trail in Ruapehu District will receive $4.6 million in funding from the Provincial Growth Fund for two additional trails, Regional Economic Development Minister Shane Jones announced today. “This is an exciting development for the local community, and one that will provide significant economic opportunities ...
    BeehiveBy beehive.govt.nz
    3 weeks ago