Socialism rules on water

or so you'd think from the Herald comments section on water privatisation.

Profits are evil, you shouldn't expect a return on money spent on assets, no of course not. I'm sure all those posting would work for a stipend to cover the costs of going to and from work wouldn't they?

Foreign companies are evil, not like New Zealand local government, it would never rip you off would it? Those people who can take your money by force, borrow money and make you pay it back by force. Yep nothing like government to look after you.

Foreign companies will price gouge and milk horrendous profits with privatisation. Even though this would seriously cut demand, and people would find alternatives (not easily mind you, but people can collect rainwater, bathe at pools, beaches or lakes, get watertanks, wash sparingly). Even though many rural water schemes today are falling apart because of gross underinvestment by councils. Blank all that out. Blank out the general public actually buying shares in water companies or even privatisation involving giving shares away. Real public ownership comes from politicians running things doesn't it?

Water is a "human right", which you need to infringe on the rights of others to provide. Funny how food is different. So if there is no water supply is someone having their human rights abused? Another bogus "right", bogus because it demands you force someone else to pay to make it happen - no genuine rights require anyone else to do anything, just let people be free.

Water is free, ignoring that it costs money to treat it, to pump it, to build and maintain pipes to reticulate it, and then to carry away the wastewater and treat it before ejecting it. Blank all that out.

"Electricity was privatised", just blank out the fact that 70% of the electricity market is held by three STATE owned enterprises (but leftwing hysteria is just catching).

The railways were "destroyed" even though a third of all railway lines were closed under state ownership, and when renationalised the railways were carrying record levels of freight on a per tonne km basis. Blank all that out, the myth is that something really valuable was destroyed and bought back for nothing - when in fact it was a business with a lot of sunk assets that needed to be fully depreciated, so it could focus on what it was good at. Another part of leftwing legend.

Finally, not one of the Marxist gits who post even consider that food, petrol, clothing and most housing are privately provided, most regarded as essential to most people, along with umpteen consumables like light bulbs, furniture, appliances etc. All by private companies, many foreign owned.

If you believed this showed what most New Zealanders thought you'd have good reason to understand why the GDP per capita of NZ is so absymal, being full of whinging non-entrepreneurial worshippers of the state, with a malignant view of economic incentives and overwhelming trust in government.

Who inculcates this hysterical hatred of private enterprise, belief business is just out to rip everyone off, overwhelming trust that state ownership makes things better and attitude of near class warfare about the provision of services that quite happily get done privately elsewhere?

Gordon can do it, but John?

Pause for a moment, I am going to praise Gordon Brown.

You see he's about to announce a privatisation programme. Yes you read right. Privatisation, eight months out from an election. It is worth around £3 billion of assets in the first phase, but up to £16 billion overall.

What sort of assets? Well it isn't just surplus pockets of land. It include the sort of assets juveniles would call "strategic":
- Channel Tunnel Rail Link (Folkestone to St Pancras);
- Dartford Crossing (the eight lanes of highway crossing the Thames that completes the M25 ring);
- its stake in Urenco (nuclear fuel enrichment company);
- a third of the debt in student loans;
- The Tote (government owned bookmaker).

So yes, you can privatise a road, a major one at that, which has no serious alternative routes for many miles.

The reaction of the other parties? Would that play this against Brown? Well no:
- The Guardian reported a Conservative Party spokesman saying "Given the state the country is in is probably necessary but it is no substitute for a long-term plan to get the country to live within its means";
- Liberal Democrat Treasury Spokesman Vince Cable said "Given the state of the public finances, asset sales, at least in principle, make sense" but he expressed concern about selling land in a depressed market and how badly the government was in getting value from its privatisations.

So in other words all three main political parties support privatisation.

However in New Zealand it can't be so. National ruled it out to get elected, Labour was the nationaliser extraordinaire, and only ACT of the parties in Parliament warms to privatisation (and even then not too loudly).

Now the UK government could sell much more than that list, but the nature of what is on the list is what is positive. Particularly, given my interests, the Dartford Crossing. It's a tolled crossing comprising two 2-lane tunnels for northbound traffic, and a 4-lane bridge southbound, and it is heavily congested (with plans proposed for an additional crossing). Selling it and letting the private sector choose the best way to expand it will demonstrate to the naysayers who think roads can't be privatised.

Imagine, for example, Auckland's Harbour Bridge and approaches privatised (and tolled) so that another crossing could be financed and built.

However we know it wont happen, for now, but it would be nice if the debate could be had without ghosts of Winston Peters and Jim Anderton taking things to the level of the banal ("but it's strategic, what happens if they want to sell it for scrap").

The New Zealand Government has a whole portfolio of SOEs that could and should be sold, easily, without even going near roads, schools, hospitals or dare I say Kiwirail. There is no good reason why Genesis, Meridian and Mighty River Power are in state hands, when Contact and Trustpower are private sector competitors, and most people don't know whether their power company is private or state owned.

It's time to talk about privatisation - if it isn't controversial in the UK, with its plethora of nanny state quangoes and laws, why so in New Zealand?

Private prisons then?

Not PC and I share some discomfort about the private sector being involved in the delivery and operation of prison services - and Anti Dismal has written much about the issue too, interestingly noting the risks of privatising maximum security facilities. This point stands out in an article he quotes "Moreover, hiring less educated guards and undertraining them—which private prisons have a strong incentive to do—can encourage the unwarranted use of force by the guards. As a result, our arguments suggest that maximum security prisons should not be privatized so long as limiting the use of force against prisoners is an important public objective."

Let's be clear - contracting out of ancillary services at prisoners is no issue, and there may be a case for contracting out prison management. The key is the disconnect between incentives to HAVE more prisoners, and the public policy reason for prisons.

Ideally, prisons would be nearly empty because crime would be rare. Ideally, prisons would deliver people reformed and who would never be repeat offenders.

However, a private prison owner would WANT repeat offenders, and would WANT criminals to want to return. That creates incentives not only to not rehabilitate, but to make prison desirable. Hardly what any of us want.

The flipside is that paying prisons to be feared creat incentives for abuse, and for crimes in prisons to be ignored. As much as many of us have glee at rapists and murderers suffering violence in prison, if you want prison to be a place of corporal punishment you should be transparent about it - as in Malaysia. Don't pretend that a Darwinian approach to justice in prison is a civilised substitute.

So I am wary of privatising prisons, wary of profits from applying force to people, wary of the incentives and malincentives around it.

Indeed, as Not PC has already pointed out, why is National and ACT only pursuing THIS privatisation? Why don't the usual masses of the lumpenproletariat give a damn about prisons, when they go apoplectic about privatising TVNZ, NZ Post, Air NZ, Kiwirail or a power company?

Indeed, if any sector needs more of the private sector, it is education. Imagine if ACT's policy, same as the UK Conservative Party's policy, was implemented in some form - parents not paying twice for education.

Now that's a step towards privatisation that would excite me, privatising prisons worries me, especially when mixed with the attitudes shown here by some in government.

What privatisation can do

Remember the Ministry of Works? Built roads and dams, maintained them too. The stereotype of an expensive, not very clever, lazy organisation.

It became Workscorp under Roger Douglas, you know that man that terrifies National and Labour so much with all those policies he implemented that neither have reversed. In 1996 the Nats sold the consultancy arm to a Malaysian firm, which invested in it Now it is one of New Zealand's most successful companies exporting services under the name Opus. Its head office is in Wellington, still.

The NZ Herald notes:

"Infrastructure consultant Opus International Consultants has exceeded expectations with increased revenue and profits, up around 25 per cent for 2008.

Revenue was $371.5 million, up 25.4 per cent on 2007, and the net surplus after tax was $17.5 million, up 23.4 per cent, for the year ended December 31, 2008, the company announced to the stock market today"

"Business acquisitions in the United Kingdom and in Canada increased Opus' total staff from 2236 to 2563, and it now operated from 81 offices world-wide."

Could you have seen Workscorp doing that, let alone the Ministry of Works?

Hardly.

Given some SOEs are world class in their field (e.g. Airways Corporation, NZ Post) you might wonder how, with private investment, some of our constrained state owned enterprises might perform if let off the leash. Ironically, with the money governments are pouring into infrastructure, as a panacea to recession, Opus is probably a company in one of the best places to grow from strength to strength.

Good job Roger Douglas ignored Jim Anderton. Good job Jim Bolger ignored Helen Clark, Winston Peters and Jim Anderton - and frankly the majority of you out there.

Yes, it is Malaysian owned, but almost its entire management is New Zealand based, and much of its staff are New Zealanders.

Part privatisation of Royal Mail

While New Zealand's new National/ACT/Maori Party/United Future government continues to reject privatisation, Lord Mandelson, Gordon Brown's Industry Secretary today announced that the British government is part privatising the Royal Mail.

The Royal Mail, for anyone used to NZ Post, is a dinosaur. The list of problems it has is long:
- Complicated tariff structures that encourage use of counter staff, not simple stamp purchases;
- No sale of overseas postage outside Post Offices;
- Manual mail sorting;
- Chronic queuing at major Post Offices;
- Limited opening hours, and very limited hours for parcel pickup (often at fairly distant locations);
- Some locations with only cash payment available.

This all with the ever ubiquitous regulator (Postcomm) and government funded consumer representative body "Postwatch", neither of which exists in New Zealand, which maintains high standards of service, without subsidy AND state owned. The UK persistently believes that open markets need regulation, and consumers can't look after themselves. Just small examples of millions of pounds of unnecessary waste.

So a "strategic minority partnership" is sought from the private sector, to restructure the Royal Mail. Taxpayers would take on the £7 billion deficit in the Royal Mail's pension scheme, because those people work so hard for it don't they? It makes a profit, but loses money on its core letter business. It hasn't helped that it lost its statutory monopoly two years ago. New Zealand Post lost its statutory monopoly in 1998 - at the time Jim Anderton leading the Alliance, predicted mayhem.

Funnily enough, standing in a painful queue at a post office recently I was commenting on how it needed to be privatised.

Gordon Brown can do it - yes his leftwing loser backbench waxed on moaning with their northern accents - you have to ask why it can't be done in New Zealand.

Even Austria's left-right coalition privatises

Austria has a grand coalition government, in that the two main parties of right and left are working together. The Social Democratic Party on the left would surely not look far out of place alongside the NZ Labour Party, and the Austrian People's Party is a conservative party of the right.

Their government has just voted to privatise the remaining state owned shares in Austrian Airlines, which is already 57% privately owned. Presumably it doesn't fear an invasion of foreigners (apparently Lufthansa and Turkish Airlines are both interested) despoiling the sovereignty of Austria.

Yet the National Party, seeking to govern alone, wont even engage on privatisation. Why is this? is it:
- The abject failure of the acolytes of privatisation to publicise its successes, demolish the arguments of its failures;
- The braindead ineptness of the mainstream media which so often parrots what politicians and lobby groups say, and rarely investigates what politicians claim unless it is about scandals and juicy titbits that have next to no impact on the general populace;
- National's complete intellectual bankruptcy, in that it doesn't have the confidence or capability to argue against the leftwing "common knowledge" about privatisation in New Zealand;
- National really having a secret agenda to privatise, because it holds the voting public in contempt - much as it did in 1990 when it promised to abolish student fees and the superannuation surtax, but really didn't intend to do so.

If it is the first two, then those of us who believe in less government need to confront, head on, the bankrupt arguments and outright distortions of the left. It means a sustained effort to be bold - it is not a task the National Party is equipped to do.

Kiwibank really an asset?

No Minister thinks not.

$340 million of taxpayers' money has been poured into it. A profit of $48.5 million has ensued so far. However, it has probably squeezed out private sector competition, like TSB, like PSIS and building societies which could do the same.

So why not let NZ Post be a postal operator and you may as well sell that too. Postal business is under increasing competition from the private sector, and of course the internet. It is starved of capital to grow.

Again - no debate, no discussion, nothing.

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?

Greens oppose competition for government companies

Green MP Sue Bradford in the typical "Nanny State knows best" fashion of the Greens has said in her press release against privatisation that despite John Key's decision to have a privatisation policy to the left of the British Labour Party..
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"Key's assurances say nothing about opening up state assets to private competition"
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So the Greens now believe that state owned enterprises should actually be monopolies? She witters on about ACC - the only example in the world of a state monopoly for personal injury by accident cover, and as a result one with the worst payouts. If you're a student doctor and have injuries that prevent you ever being a surgeon you'll get compensation equivalent to you pay as a student - not what you would have lost. You can't sue of course, because that's not allowed in the happy socialist world of "no fault", even if someone drove drunk into you.
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Bradford's view presumably means she thinks that NZ Post should have a statutory monopoly again (the Alliance did vote against it), Air New Zealand surely should have domestic routes to itself, and private companies shouldn't be selling electricity, so bye bye Contact Energy and Trustpower. We know the Greens aren't friends of privately provided health and education, so presumably private hospitals and independent schools should go. Banking is more complicated, because presumably Kiwibank shouldn't have to face private competition.

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So in other words it's ok for the state to rip you off, provide poor service and shut out competitors, because competition is "bad" unless it is the evil private sector facing it. Presumably if you get bad service from the "people's" hospital, you should complain to your MP who will fix it - you know how effective that has been.

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The Greens don't like monopolies except ones that you, the taxpayers have to fund, and which are owned by the big brother state they want to control and grow.

John there IS an alternative - make the argument

So John Key has been reported by Stuff as saying that National has "ruled out" state asset sales in its next term. Why? Well don't expect any thought about it - it's simple, Key doesn't believe in much another than getting elected. Fair enough some of you will say. However, some of us want to think that he'll DO something other than not be Helen Clark and not make things worse.
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Of course, Helen Clark is having him for toast on this. "Miss Clark said Mr Key's stance was "laughable" and could not be trusted." It is and I actually hope it can't. I hope he DOES engage in asset sales, because there is so much the state shouldn't do.
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There are multiple reasons why the state should privatise its commercial operations, and why the abject lies spread by the left about privatisation should be confronted. Here are some:
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1. Taxpayers shouldn't be forced to invest in businesses they don't want to invest in.
2. Politically appointed boards will be less competent than privately appointed boards, because politicians have incentives to meddle and make a company less profitable than it would be otherwise - which then means there is a bigger chance of a bail out.
3. The state should not be engaged in competing with the private sector. It is unfair for private competitors to fund state owned companies through taxes.
4. Private companies can more readily raise capital to invest, update and expand than state ones - this explains why Contact Energy seems more able to fund and build power stations than its competitors.
5. Businesses SHOULD be allowed to fail if they don't perform. It's part of capitalism and the world moves on, and new businesses buy the assets and provide services for people to use. This happened to TV3 in 1991, not that most of you will remember that. Australia was hardly crippled by the collapse of Ansett.
6. Privatisation can provide new expertise and capital to grow and develop businesses. Telecom and Contact Energy are two examples of this. The refusal to allow Singapore Airlines to do the same thing for Air New Zealand is one of the reasons the firm fell over.
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However, arguments about better performance, getting more investment and accountability will not work with most of the public. Even arguing selling SOEs to cut public debt wont wash that much, although it is still valid. John Key could advocate privatisation of a more direct kind - give away the shares.
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Imagine if National offered to give shares to every single citizen, in equal numbers to avoid arguments, in one current SOE. This would be true public ownership. Everyone would own shares, get dividends and watch the value rise and drop - and could decide whether to sell, buy more, and appreciate a little what it means to own business. Oh and the socialists could give the shares away to their favourite charity, not that they would of course.
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So go on John, say you'll sell just one of the three government electricity SOEs (no monopolies here, there are around seven electricity generating firms) like Genesis - with 40% of the shares going in a public float and the rest shares distributed to all citizens. The firm buying 40% would provide the expertise and capital injection, the rest would mean all citizens could vote for directors, attend AGMs and truly own shares.
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How many Labour voters would vote to get their shares? How would it change how people felt about capitalism being all shareholders? Watch how Labour and the rest of the left would say the poor would simply sell the shares - showing their contempt for their own supporters - assuming they are all stupid or that it is wrong to give them a part of the beloved state THEY can control.
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Go on John, it's worth a shot. You could make privatisation NOT a dirty word.

What foreigners can do to an airport

Many people flying to and from London's Heathrow Airport are about to find out. In July 2006, Grupo Ferrovial - a Spanish company - bought BAA plc. BAA plc owns Heathrow. Yes I know, foreigners. Think of the risks!

Now the approval and plans for Terminal 5 were made in 2001, but now Terminal 5 is about to open, on time and under budget. The first passengers will use it on 27 March 2008. British Airways is transferring almost all of its flights there from Terminals 1 and 4, which will provide much capacity at both those terminals to reduce overcrowding across the airport (Terminal 1 is destined to become the Star Alliance terminal, Terminal 4 for the Skyteam alliance and most airlines not belonging to any alliance).

Now Heathrow is far too often a nightmare - largely because of gross underinvestment over many years and a lack of capacity. Terminal 5 promises to transform the experience for British Airways customers, as well as allowing for the terminals it vacates to have ample spare capacity which will be used by reshuffling the airlines broadly into a terminal for each airline alliance.

See The Times for a photo series of the opening of Terminal 5 by the Queen.

So I own a bank, well..

My taxes get to pay for the losses and guarantee the operation of the bank, but I don't get a dividend if it makes a profit (there is no hope in hell that Labour would cut the top tax rate). Worse of all, if it keeps losing money, I keep having to pay for it, but I can't sell my "shares" in it.

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I don't even use it.

Thanks to Alastair Darling.

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Should Northern Rock been allowed to fail? Well, sad to say for all of those with accounts in the bank - yes. Your investment in Northern Rock is not a risk I should have to bear. I don't expect you to bear my risk in spreading my money among four different banks, people with shares don't expect everyone else to cover the loss of any capital value.

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Yes the government guarantee of deposits was the start, the start of the state bearing the losses, the state being the bank of last resort. Now the nationalisation is more like being put in administration, which is pretty much what would have happened anyway - although it may have been a little more brutal for depositors.

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It might not all be bad, according to the Daily Telegraph the UK government may yet make money out of it but...

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"Now that the company is part of the public sector this profit, which will come from selling off its mortgage book, could help improve the public finances, reducing the need for future tax increases. However, in order for the bank to turn in a profit, it will have to be managed well. This means jobs will have to be cut, and the homes of those Rock customers who can't keep up their repayments will have to be repossessed. To the horror of Whitehall, it is now faced with the prospect of doing all this dirty work itself. Taxpayers must hope it has the stomach to do so."

Indeed, I can only hope that it does. A nationalised bank that acts commercially, hmmm. According to Shadow Chancellor George Osborne addressing the Chancellor of the Exchequer:

"You are introducing unprecedented, sweeping, draconian powers that will let you nationalise any other bank or deposit-taking institution in Britain by ministerial fiat. That is something not even Michael Foot dreamt of and it will create further uncertainly in financial markets and do further damage to Britain's reputation"

That in itself is disturbing, and perhaps the only thing saving the reputation is the impression that Gordon Brown himself is really behind this, and he is no Michael Foot. I can only hope the damned thing can be privatised and the relevant legislation repealed.