Tuesday, August 05, 2008

Why fear privatisation?

What has National become?

A party with the testicular fortitude of a eunuch doormouse that is terrified of even engaging in the debate on this issue (among many many others).

The snivelling, quivering backdown essentially begging:
- Oh believe us, we're no different from Labour on this;
- Don't believe the guy who we want to be next Finance Minister, he has ideas, but he "doesn't choose his words wisely", just to give you confidence in how we want him to spend a good deal of your money in the next three years;
- Please don't discuss this anymore, it's a bit like discussing sex in front of our parents, it embarrasses us to be reminded that we once had a different policy;
- After all that you'll still vote for us right? Labour is worse remember.

It’s very simple, there are solid strong arguments for privatisation. Arguments that have held sway with governments throughout the world, of both sides of the political mainstream.

There have been very successful privatisations in New Zealand that have gone without a peep. The following were easily successes:
- Auckland International Airport;
- BNZ (after a disastrous bailout following the 1990 election);
- Contact Energy;
- NZ Steel;
- Postbank (despite the wasteful emergence of Kiwibank);
- Rural Bank;
- State Insurance (yes the name remains but it hasn’t been “State” for a while);
- Works Infrastructure (yes the old Ministry of Works);
- Wellington International Airport.

Who would argue any of these haven’t worked, that these haven’t become successes, with new investment and better run outside the state? Well the Greens and various socialist retards of course, but otherwise no. Privatisation has worked in many cases, with little evidence to the contrary.

The ones most subject to criticism are largely criticised on flawed grounds (Air NZ, NZ Rail, Telecom).

Take Air NZ. After privatisation it was hamstrung by two actions, both of governments. It saw expansion as necessary in an increasingly competitive market, and wanted to enter the high cost Australian domestic market, but the Australian government prevented it, so it bought 50% of Ansett, with many government terms and conditions stopping it from making serious efficiency improvements to that airlines. Its second and most fatal problem was that the NZ government effectively vetoed by delay the investment of capital by a willing investor – Singapore Airlines – which had it been allowed, would have avoided the government bailout.

The current Labour government let Air New Zealand fail so it could nationalise it and do a deal to part privatise it again with Qantas – which also failed.

Telecom was privatised at a time when technology in telecommunications was starting to move a lot faster than it had in the previous couple of decades. The market was opened up to competition and Telecom simply required on privatisation to allow interconnection with competitors’ networks.

Privatising Telecom brought in enormous new capital, significant efficiencies, technological innovation and responsiveness to competition. For example, $5 unlimited national weekend phone calls were a Telecom innovation which broke the back of years of complicated expensive tariffs for long distance toll calls. Whilst arguments may be made about the levels of investment, there is little doubt that Telecom was sold for a price well above expectations and needed serious capital. In addition it provided an opportunity for thousands of New Zealanders to own shares in a fairly stable growing sector.

Then there is TranzRail. A great myth around that privatisation is that it was pillaged and stripped, and great profits were carved out of it with nothing left behind. This myth is peddled by the rail religious, when the truth is quite different. There was substantial investment in wagons, including on passenger services during most of the 1990s, and a big drive for efficiency, customer service and logistics. In other words meeting the needs of freight customers not politicians. Now some of the customers had a few issues when Tranz Rail wanted it to invest in wagons, and some lines had come to the end of their useful lives (worth running into the ground, but not worth replacing the wornout lines), but that was it. The anti-privatisation story doesn’t really bear close examination.

But what do the public think? Do they believe Air New Zealand failed because it was privately owned? If so, how do they account for so many privately owned airlines in the world, or do they not think any further?

Do they believe Telecom has failed as a private company? They honestly think broadband would be cheaper and faster if government provided? Well clearly the government and Nats thinks so.

And railways? Do they really think railway lines that they have barely ever seen a train on it would be any better under government ownership? Do they really think railways will do anything more than they have done for years – move containers and bulk freight long distances, besides commuter services in Wellington?

So why is National afraid? Is the fear of privatisation about foreigners? The brainless xenophobia of Winston Peters and the Greens? Is it about capitalism, businesses run as businesses, efficiently and to attract customers, being bad? Is it nostalgia that somehow some businesses that are no longer viable should be propped up?

What has gone so wrong with privatisation that politicians, except those in ACT and Libertarianz, wont engage on it?

4 comments:

daniel said...

Thanks, I enjoyed this information.

on the subject of rail... can anyone tell me why everyone wants to electrify the Auckland rail tracks? I dont see the benefit, they will still be the same limited and inconvenient routes... only... electric, whoopee!

JamesP said...

They are afraid because for the last nine years Labour has waged a great PR campaign against the previous National government. Certain topics like asset sales or spending cuts are now viewed by large sections of the public as toxic. They cannot even be debated on their merits because of the negative knee jerk reaction they get. Statements like "the failed policies of the 90s" are simply accepted as fact and repeated in the media even if the same / very similar policies continue today.

Why did National let this happen?
- Insufficient conviction in their ideas
- Lack of talent to push their ideas
- A desire to take the easy path and win by default

And now they have run out of time to make the case. That is why we have this "not in the first term" cop out. Because they will need that time to bring people around to the realization that the world won't end if the government doesn't own an airline, a bank, a coal mining outfit etc.

The Silent Majority said...

Exactly my thoughts today. I think one of the reasons is that the NZ public have bought the arguments of the left wing media, aided and abetted by the Marxists that run this country. We are now a country of apathetic, lazy socialists.

When I think of what this country could be with the ACT policies in place, I just want to yell in the faces of these blind NZ'ers.."Why can't you see?!!"

john-ston said...

"They are afraid because for the last nine years Labour has waged a great PR campaign against the previous National government."

Not just that, but they have also waged a good PR campaign to disassociate themselves with the 1980s, and let us not forget that Clark, Cullen and a few others were in Cabinet at the time. New Zealanders by in large did not enjoy the experiences of the 1980s and 1990s, which is why they elected Bolger first in 1990 (remember, this was on a programme of ending Rogernomics), and then attempted to get rid of National throughout the 1990s.

"We are now a country of apathetic, lazy socialists."

We always were - the New Zealand public were never firmly in favour of the reforms of the 1980s and 1990s, and only voted to support them in 1987, and that was due to the booming economy.

"on the subject of rail... can anyone tell me why everyone wants to electrify the Auckland rail tracks? I dont see the benefit, they will still be the same limited and inconvenient routes... only... electric, whoopee!"

Because it would result in a massive spike in patronage. Brisbane's rail network in the early 1970s had only ten million passengers a year; after they electrified (1979-1988), that figure had become forty million, and is now heading toward the seventy million mark. Perth's rail network in the mid 1980s had only ten million passengers a year; after they electrified (1988-1991), that figure had become twenty million, and is now heading toward the fifty million mark.

Plus, Auckland needs new rolling stock, so you might as well make it electric at the same time.