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This is the secret agenda

Written By: - Date published: 10:13 pm, July 23rd, 2009 - 27 comments
Categories: privatisation, same old national - Tags:

Remember the mantra about John Key being a centrist? Doesn’t get much play nowadays does it?

And it shouldn’t. Not with the government cutting spending while unemployment rises, dragging Brash and Rankin back from the grave, spending large on private schools, contracting out public services, tax cuts for the rich and the snouts-in-troughs sham that is the super city.

Less than a year ago claiming National had a secret agenda got you labeled as a conspiracy theorist. Even after Bill English admitted as much on those secret tapes.

Now it’s a spokesperson for English talking Private Public Partnerships. You know, the deals where the public take the risks and the private sector makes the profits. All locked in for “25 to 35 years”.

There was a secret agenda and it was hidden in plain sight. Now we’re having to watch it play out.

As an aside, the opposition could throw a real spanner in the works of that PPP plan by making it very clear that the contracts will not be honoured the next time they are in government. It would send the signal to private investors that the taxpayers’ money might not be such an easy target and blow the issue up into the real Left/Right debate – something we need before the centre gets shifted any further without comment.

But I’m not sure the current opposition has the will to do it.

27 comments on “This is the secret agenda”

  1. AndyC 1

    These would be the same PPP’s promoted in the last Labour Governement then. Any Govt. threatening to renaige on a predecessors contractual obligations would have a currency collapse on its first day.

  2. We all love a good conspiracy theory, but this agenda has been on the NZX blog for months, (as in:

    (i) a single, clear “organising idea’ (and a “measurable goal”)
    (ii) a new form of national dialogue
    (iii) improved public-private sector trust-based relationships)

    in glorious and open detail. More interesting than the proposal is the group supporting it, their broader strategy and their links to the leadership of the Government.

    • stormspiral 2.1

      I thought anybody with half an eye could have worked iit out. It doesn’t need to come off NZX.

      Roger must be feeling chuffed because they’ve lifted so much out of his book(s). Or maybe he’ll go them for breach of intellectual property. He’s been too quiet.

      The really scary thing is that so many people have bought it.

      So. Not secret, but definitely a conspiracy.

  3. Byron 3

    “But I’m not sure the current opposition has the will to do it.”

    I’m sure they don’t have the will, or even the desire.

    • Quoth the Raven 3.1

      Didn’t they draft the PPP legislation? In any case I agree with Byron Labour unfortunately won’t do any such thing. Labour can sometimes be as corporatist as National. It’s just like in America you just have two corporate parties. See Clare Curran’s copyright bullshit at Red Alert.

      • BLiP 3.1.1

        Yeah – Labour did – in Papakura .

        A coupla years later and the private sector partners are in the shit and already formulating methods by which the government can bail them out. Anyone in any doubt as to who wins with PPP’s should take a look at this local example as well as the debacles in the UK and across the ditch.

        One can only look forward with dread for when National Inc gets involved, only it won’t be with housing, it will be with education, health and justice. At least Labour knew what it was responsible for – as far as National Inc is concerned the whole shooting match is up for sale to the lowest (initial) bidder – whether the private sector loot comes from New Zealand or not.

        PPP = corporate welfare by the container load.

  4. Swampy 4

    All that stuff was in the election campaign. There is nothing new about any of it. Claiming that is about as credible as claiming that Labour didn’t know in 1984 what Roger Douglas stood for.

  5. Lew 5

    The reason this was conspiracy theory material before the election is because the then-government and its allies didn’t commit to a proper campaign strategy which included this as a key plant. Instead, they chose to lampoon and underestimate John Key, meaning they couldn’t simultaneously (without contradiction) emphasise the sort of threat he and his prospective government could pose.

    The bare minimum would have been including PPPs in the definition of ‘privatisation’, that being the thing National said they wouldn’t do in the first term, and that they would seek explicit electoral mandate before doing at all. Labour didn’t even do that. It’s probably too late now.

    L

    • Draco T Bastard 5.1

      You’re probably right Lew but they could try. Unfortunately, Labour is almost as far right as National and still believes in capitalism. While we have two right leaning capitalist parties that will form the government we don’t really have much chance of change.

      • Lew 5.1.1

        I think they must try.

        But capitalism isn’t the problem with PPPs. It’s just as IB says: the problem is the balance of risk and reward, and the fact that the public partner bears all the former in return for the service which the government would otherwise provide, while the private partner reaps all the benefits (frequently guaranteed by the public partner) as a condition of participation.

        If public partners insisted on reasonable terms, and enforced similar penalties for poor performance or dysfunction as private partners insist on, there wouldn’t be such a problem. It’s an implementation problem; an incredibly hard one, but there it is.

        L

  6. Geez as long as Auckland’s electric trains aren’t funded via a PPP. That approach has been a disaster in Australia and the UK.

    • r0b 6.1

      What disaster – didn’t the private sector make lodasamoney? Sounds like a success to me.

      Oh – sorry – did you mean a disaster for the public? Well who the hell cares about those losers?

  7. In Melbourne the contracts over the city link freeway through the central area require the private partner to be recompensed by the state if the state decides to build any new freeway or public transport infrastructure through the CBD. “Sorry folks, we can’t do anything to ease the chronic congestion on the city loop for 30 more years because we’d have to pay punitive damages to a private tollway company’.

    That’s the kind of crap PPPs lead to.

  8. Draco T Bastard 8

    Quoting the Article

    The main benefits usually attributed to PPPs were accelerated provision of infrastructure projects as a result of using private sector finance, and better value for money due to private sector innovation and whole-of-life cost minimisation, the Treasury paper said.

    Usually attributed with absolutely no evidence to sustain the assertion. The reality is that if private business can do it then so can the government because they have the exact same access to the resources needed to do it – the people. On top of that the government will be able to do if for less because there won’t be any profit to cause the dead weight loss that you get from private providers.

    But there were other ways of obtaining private sector finance without having to enter into a PPP.

    The government doesn’t actually need access to private finance – that’s why it has taxes.

    The advantages of PPPs also needed to be weighed against the contractual complexities and rigidities involved.

    There are no advantages but there are certainly a lot of disadvantages for the public purse.

    General manager, private markets, for the guardians, Matt Whineray, said the investment suited the Superannuation Fund’s long term investment horizon, and stacked up against global alternatives.

    So? It doesn’t suit us because it costs too much to get it from them.

    The only reason for PPPs to even exist is to guarantee some folks an income at the expense of the taxpayer.

  9. omygod 9

    Dont you ever get a grip on reality ‘irish bill’?

    Your government squandered a decade of global growth.

  10. Tim Ellis 10

    PPPs were well flagged during the election campaign. If this was a secret agenda, then it failed the secrecy test on all counts.

    If PPP arrangements means much-needed infrastructure is funded more quickly, and capital is available to get projects completed earlier, then that’s a good thing in my view.

    I agree with Andy. There would be an instant flight of capital from the New Zealand markets if a new government cancelled PPPs and didn’t honour them. The currency would collapse, as would likely the banking system. The government faling to honour the sanctity of contract would ruin the economy overnight.

    For Draco, who thinks that wouldn’t really be a problem, it would see the loss of hundreds of thousands of jobs. If that’s not a problem, I don’t know what is.

    • IrishBill 10.1

      PPPs were well flagged during the election campaign. If this was a secret agenda, then it failed the secrecy test on all counts.

      That was my point. It’s why I described the agenda as “hidden in plain sight”. Despite this they were still being pumped by the media as centrist.

      There would be an instant flight of capital from the New Zealand markets if a new government cancelled PPPs and didn’t honour them.

      Not if the market signal had been sent years ahead. If anything it would give PPP investors a much clearer indicator of investment risk than the average private investment offers.

  11. Tim Ellis 11

    That was my point. It’s why I described the agenda as “hidden in plain sight’. Despite this they were still being pumped by the media as centrist.

    I know you’re not a Labour supporter, IB, but as Lew has written, what this really shows is the incompetence of Labour’s election campaign. I know you are not responsible for other posters at the Standard, but a number of them took the consistent line that John Key was stupid, corrupt and incompetent. There was even a google-bomb that linked John Key as clueless.

    Having said that, there was a lot of publicity during the campaign around National’s PPP policy. There was a lot of discussion around comments Maurice Williamson made about public/private sector partnerships. Several posters at the Standard claimed that the PPP was designed to enrich the National’s Party’s friends at Macquarie’s.

    Having said that, the real difficulty the Labour had in attacking National’s PPP arrangements is that the policy itself is very mainstream internationally. Of developed countries, it is difficult to point to any OECD nation that doesn’t have PPPs as a means of funding infrastructure.

    It was even a policy that Labour was strongly considering, as recently at least as February 2008. http://www.beehive.govt.nz/release/government+investigate+feasibility+ppp+waterview+connection

    It was very difficult for Labour to attack National’s PPP policy during the election campaign when the then government was then seriously investigating it as a policy option.

    Not if the market signal had been sent years ahead. If anything it would give PPP investors a much clearer indicator of investment risk than the average private investment offers.

    I disagree. Any political party committing to dishonour commercial agreements without compensation is basically committing the country to Mugabenomics. It doesn’t matter how far out it is signalled.

  12. Hilary 12

    Is there any contestable and transparent contracting process with PPPs? Contracting with government departments requires contestability for even small amounts and projects. However, to give such huge amounts of infrastructure development away to your mates with PPPs seems very dodgy.

  13. StephenR 13

    Well yes i’m sure everyone is just gobsmacked at this treachery from National :-O

    Interestingly there are some comments from Fletcher’s chief of construction at the end of an article on stimulus spending this morning:

    He is less enthusiastic about the Government’s consideration of so-called public private partnerships, or PPPs, which Transport Minister Steven Joyce has considered to fund Auckland’s electric trains.

    PPPs force contractors to carry greater risk and potentially double the costs before there is any certainty of winning a tender, he said.

    They “are not just design and build you have to bring in a funder and design and build,” Binns said. ”You lose control and it costs you a bloody fortune.”

    He speaks from bitter experience of PPPs in Australia, where Fletcher was involved in the co-generation project for Victoria’s hospitals and Melbourne’s Laverton prison. Both ended with protracted negotiations between as many as eight parties and some “horrendous” legal bills.
    http://www.stuff.co.nz/business/industries/2670062/State-projects-a-lifeline

    Don’t know what happened there, but perhaps they didn’t write up the contracts very well at the start…?

  14. lprent 14

    So far I haven’t seen a successful for the public PPP project. I’ve seen ones with secret clauses, interesting arrangements if the operators cannot run their business, etc.

    Until they do show signs of working for the public elsewhere, I think that labour should take the position that they will repudiate ANY PPP that is not clear and transparent during the bidding. ie that there are no non-public arrangements..They should also require that any project of this type be overseen by the audit office

    • Tim Ellis 14.1

      I agree with part of that, LP. There are genuine reasons for some clauses relating to commercial sensitivity not being publicly disclosed, but all contractual arrangements should be subject to audit, and I doubt that anybody would propose that contractual arrangements entered into by Government shouldn’t be subject to normal audit.

      I don’t have a problem with Labour announcing that it will cease PPPs that are at bid stage if it becomes Government. What I do suggest would be economic suicide is if Labour announced that the Government would cancel existing contracts without compensation. That seems to be what IB is calling for. You haven’t gone that far.

      • Zaphod Beeblebrox 14.1.1

        Tim,
        You’re correct, there is no secret conspiracy, NatAct have always been in favour of PPP’s and it is not inconsistent with the their philosophy. Labour on the other hand have been all over the place on this and other issues, hence until they sort themselves out, will have difficulty articulating a consistent position. At least the Greens can point to policy consistency.

        The problem is, however, that everytime a PPP is attempted, contract disputes soon emerge. Having lived in Victoria, during the1990s, when we had a very gung ho privatise and PPP your public assets State Government, you knew it was only a matter of time before the State Government would have to bail out the private operator. In the end everyone lost- the public ended up with a poor product, the State Government lost financially and the private operators ended with legal and employment disputes. The deals were (and still are) VERY politically damaging.
        I really don’t see why PPP’s are attractive to anyone.

        • exbrethren 14.1.1.1

          There are also cases in the UK where companies just walked away from PPPs when they weren’t making enough money out of them.

          PPP hospitals also had massive charges for the public with car-parking and phone calls from patients beds charged at rates that exploit the sick.

          Companies making money from the ill suggests a moral vacuum around the people involved in those PPP deals.

          • stormspiral 14.1.1.1.1

            Ha. You don’t need PPPs to extort car parking money from the sick. Private contractors already do that. Their fees are horrendous, and they have powers to tow and demand money with menaces–all the usual results of unfettered power to the private contractor Private enterprise has no morality restraints in an unregulated world. Inevitably some will turn into preditors such as the banks and power companies. It happens. It’s nature. Some are crooked and some aren’t.

            Why should the public be subjected to more unregulated lotteries?

  15. Peter Johns - bigoted troll in jerkoff mode 15

    Gee half the Standardrists probaly think N. Korea is a paradise. That is where we will head if their idology takes hold. What part of your standard of living do you despise comrads?

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