Labour approved of part-privatisation in 2002

Cast your mind back to the last Labour Government.  A government opposed to privatisation? Not quite.

The evidence is clear, as Michael Cullen issued a press release on behalf of the government in 2002 approving Qantas buying 4.99% of the mostly nationalised Air New Zealand, and approved an application by both airlines to get Commerce Commission and ACCC (Australian Competition and Consumer Commission) approval for Qantas to ultimately buy 22.5% of Air New Zealand.

If it was good enough for Helen Clark, Michael Cullen, Trevor Mallard and Paul Swain (and the rest of Cabinet including Phil Goff, Annette King et al) then, why is it not any good now?

I opposed that at the time for the simple reason that the whole Air NZ nationalisation debacle was partly caused by the government sitting on its hands and not approving Singapore Airlines's request to lift its shareholding in Air NZ/Ansett Australia to 49%, because Qantas lobbied the government saying it had a "better idea" even though all of Air NZ's private shareholders opposed it.

It was a classic example of corporatist lobbying which successful killed off a competitor.  Qantas got what it wanted; the failure of Ansett (its biggest competitor) and a chance to gobble up Air NZ to ensure it was never threatened in its own patch again.  The latter didn't ultimately happen, but let's be clear.  Whilst Air NZ/Ansett did make poor business decisions, its collapse was precipitated because of government interference in a business decision that would have saved it.

That is the level of competence of those in the Labour Party who think, somehow, that they can manage large businesses well, when they have helped bring one to its knees, thanks to its competitor helping it out.  Then Labour sought to hand over part of what is now deemed to be a "strategic asset" (whatever that is) to its biggest rival.

The Greens did oppose any sale, because the growth in the public sector is seen as a "good" by those who think the people = the state.   However, it's sad that while Labour has no credibility, National can't have the courage of its convictions to argue that government should be in the business of owning businesses at all. 

Just one day

The day to remember what happens when the philosophy of selfless sacrifice, the belief that the common good is more important than people pursuing their own ends, the belief that the ends justify the means, the belief that people's ancestry is more important than their deeds, and when individualism is snuffed out completely and absolutely.

Holocaust Memorial Day is a day to recall the millions who were systematically removed from their homes, transported as cattle, enslaved, tortured and murdered industrial style in a manner that has yet to be paralleled by any regime.

It is also a day now to remember how the radical anti-capitalist Red Khmers took over Cambodia, declared Year Zero, abolished money, abolished property, systematically emptied the cities and shot, terrorised, tortured and starved between a quarter and a third of the population of that impoverished country - with the full material and moral support of the People's Republic of China.

A day to remember when the Orthodox Christian Serbian fascists went from town to town in Bosnia Hercegovina and ordered out the non-Serb men and boys, marched them out of town and shot them, and then went about raping the women and girl children of the towns (and one should not forget the Catholic Croatian fascists who did the same on a less organised scale to non-Croats).

A day to remember when the Hutu people of Rwanda had the fear and hatred struck into them to slaughter and butcher the Tutsi people, on a scale and extent that most has never really fully understood.

AND especially a day to remember when the Islamist thugs backed by the Sudanese dictatorship entered Darfur to slaughter, starve, rape and maim thousands of those who were not of them.

Many other mass slaughters and murders should also be part of today, and hopefully they will also be noted, such as the murder of Armenians under Turkish rule in the early 20th century, the Soviet slaughter of ethnic minorities and deemed class enemies under Lenin and Stalin, Mao's mass starvation of Chinese people in the 1960s, the murder, disappearance and purge of one third of the people of Equatorial Guinea in the early 1970s.  The list goes on.

It is why the use of the term "holocaust" should not be used lightly.  It is about the systematic slaughter and indiscriminate murder of vast numbers of people because of their background.   A scourge that the 21st century has sadly not yet purged from the desires of some politicians or religious leaders.

Being rational about privatisation

If there is one issue that is guaranteed to result in hyperboles, reality evasion and emotive banality from New Zealand’s left, it is raising the issue of privatisation of state owned enterprises. I think sometimes that those who claim to be “centre-left” are really hardline Leninists, who react as virulently as Mao’s Red Guards to those who don’t follow the “correct line”.

As a libertarian, I don’t believe the state should be engaged in owning and running businesses at all, because nobody should be forced to have their money tied up in any business. Some businesses the state owns are unviable in their own right and should either shut down, or be severely scaled back. They destroy wealth, and sustaining them is nothing more than taking from taxpayers to subsidise the customers of these businesses, who would otherwise either pay a full market price or go elsewhere. Kiwirail being a good example. If it was properly privatised it would still exist, but not on the scale it currently is at, which is driven by politics, not economics. Bear in mind though that key competitors of Kiwirail are state and local government owned, in the form of roads and ports. This significantly blurs questions of fair competition.

Others are profitable in their own right, but are constrained to expand because they don’t have enough capital and because the state, as a shareholder, tends to resist such expansion. Winston Peters stopped the Airways Corporation, an efficient operator by world standards, from expanding into other countries. An outrageous destruction of opportunity by a New Zealand company that could have taken its international best practice and earned foreign exchange from doing so. NZ Post is in somewhat of a similar position, being an excellent operator which was shoe-horned into entering the local banking sector by Jim Anderton, instead of entering foreign postal markets where it has true world-class expertise.

Some undermine competition and investment from the private sector, because the private sector knows state owned companies don’t fail. Ask yourself why there has been next to no new entry in the electricity generation market as the state has maintained ownership in 70% of generating capacity. Indeed perversely, after nationalising Air New Zealand, the last Labour Government deliberately tried to engineer the suppression of competition in the New Zealand aviation market, by promoting a Qantas part purchase of Air New Zealand. This would have effectively handed the state owned airline virtually all of the domestic, and 80% of the trans-tasman airline market. As it happens, competition authorities stopped the government creating this monopoly, which was not one of entrepreneurs, but the state colluding with a company that itself had its hands manipulating its government.

In cases where competition exists or can reasonably exist, it seems difficult to sustain any argument that the state should be in that market. Examples of this range from banking, to farming, retail energy production, exploration and supply, transport services, broadcasting outlets, telecommunications, postal services to housing. A state owned competitor at best can perform moderately well and be seen as any other player (how many people think electricity supply has been privatised and don’t realise most of the companies in the sector are state owned?). At worst it can distort competition and investment, as competitors see it as the player that cannot fail, even if it underprices and performs badly.

However, is there a case for the state owning any businesses, particularly ones some economists refer to as “natural monopolies”? I would argue no, and measures can be taken at privatisation to manage this over the medium term (such as requiring certain terms and conditions to be applied to competitors, and transitional measures of price control such as happened with Telecom). Yet this isn’t the issue presented by the Prime Minister’s announcement.

He is talking about a part-privatisation of five government companies.

One, Air New Zealand, is already part privately owned, because the last Labour government did not nationalise all of the shareholding. Given the Labour Party sought to sell 20% of Air NZ to Qantas (and Qantas did acquire 5% which it has since sold), the credibility in opposing any sell down of Air NZ is completely empty. Air NZ faces intense competition in some parts of its business, particularly Trans Tasman and long haul traffic to/from Europe. However, it isn’t individual kiwi shareholders it needs, it actually needs a massive injection of capital so it can expand and work more closely with its foreign partners. Whilst it has performed adequately, this is a highly volatile sector, and the airline is weak if it does not have strong support from highly capitalised partners.

Another, Solid Energy, is a commodity producer and exporter in a competitive international market. Some people find what it produces (coal) to be immoral, such as environmentalists. Quite why they should be forced to own a coal mine is beyond me. Quite why the Greens think so is beyond me even more. Solid Energy isn’t a great performer, it doesn’t make a good return on its capital. It has been erratic in paying dividends. There appears little value in the state holding onto it.

The other three are competitive electricity generators and retailers, Mighty River Power, Genesis and Meridian. They all compete with each other, and with the main private generators/retailers Contact and Trustpower. If it is fine for the private sector to have 30% market share, you may wonder quite why it can’t have all of it. Providing adequate power generating capacity to meet demand is a serious issue, and one that isn’t facilitated by companies that dominate the market but are themselves undercapitalised.

By no means would part or even full privatisation of any of these companies deliver harm to consumers, but are taxpayers losing out?

Well it depends on the following:

- Are the companies constrained from success by a lack of capital? In all cases, the answer is probably less. Extra capital means government borrowing or more taxes to “invest”. I doubt whether really faced with the question, most New Zealanders want to be forced to do this.

- Are the companies making returns better than the government debt their sale would retire? Bernard Hickey says yes, but I’d argue that this snapshot is a poor representation of the long term capital value. Solid Energy and Air NZ have not been good returns over a longer period, so these can be ruled out.

So if the electricity companies are making good returns does it still mean the state should hold onto them, because they make more money than the interest on debt that would be saved if they were sold? Well no. It does not make it moral to continue to force people to indirectly “own” any companies at all.

You see the underlying premise of state ownership of companies is force. You are all forced to have a stake in these companies, without actually having any of the privileges of ownership. You don’t get a dividend, the state uses it to spend on what it chooses (which the left assume you benefit from, but it is all in the mix). You get to inject money into the company without your consent. Most of all, you simply can’t get out of this deal and use the money yourself, since you may make more money if you simply had the money in your own hands.

Which raises the question of whether privatisation might better be carried out in some cases, not by selling shares, but by issuing them to New Zealand citizens in equal quantities. That would be true public ownership, and then the “average” “ordinary” “Kiwi Mums and Dads” or whatever sugar-coated adjectives are used, can decide using their own minds, whether they want to be shareholders in power companies, banks, a postal operator, farms, service stations, a railway, an airline etc. Many will want to, many would rather use the money to pay their mortgage, or put into their own business or put into savings. What would be wrong with that, except that an awful lot of socialists don’t actually like people making their own decisions with their own money, because they want to make the decisions for them.

So when the left talks about thinking about the average person, what they are saying is they want to think for them. Ownership by the public is not what the left wants, it is ownership by the state, controlled according to what politicians think is good for the public.

Paternalism pure and simple.

Who in Haiti and Malaysia can aim and fire?

For that's what Jean-Claude Duvalier deserves.  It is the least Haiti deserves.  The Duvalier family are irredeemably vile, murderous crooks.  Even divorcing his repulsive thieving bitch of a wife doesn't make Baby Doc more acceptable.  The record of his family added decades to the poverty, suffering and death of this sad, but proud country.  A country that threw off the yoke of French slavery, but was punished by the West for over a century and a half, and after paying off the French, got handed the Duvaliers.

The same Duvaliers who used the country's tobacco monopoly as a personal slush fund to enrich themselves.   The same Duvaliers who spent US$3 million on their wedding ceremony.  The same Duvaliers who ruthlessly suppressed dissent, maintained a ban on independent media and promoted widespread corruption and patronage.

Meanwhile, Robert Mugabe is in a hospital in Kuala Lumpur.  Another answer to the problems of a nation is in the hands of the brave.

Bear in mind these people are proven murderers and thieves.  If they were not politicians, they would have been subjected to extradition treaties and be treated as the evil men they really are.   However, they are not "common" criminals, they are the extraordinary ones, that hide behind "state sovereignty" to protect their blood dripping hands. 

Both deserve at the most to be treated as criminals, but as they aren't common criminals, their crimes are indisputable, their role in making the law as they go along, means they have no right to that.   As with Saddam Hussein and Nicolae Ceausescu, they have forfeited the rights of human beings.  For the only legitimate use of the death penalty for me, is the removal of tyrants - as it is an act of self defence and revolution.

Greens imply Queensland to blame for floods (updated)

Whilst the Queensland floods have seen the media filled with stories of death, attempted heroism, homelessness and the callous mindless destruction that can be wrought by nature, most have been expressing sympathy and compassion for the victims.

Politicians across the spectrum in Australia are unified in their expression of the natural human emotions of compassion, and benevolence.  Genuine concern for the victims and willingness to do as they can to help.  The Australian Green Party has been no exception, supporting the Queensland Government flood appeal.

Not the Green Party of Aotearoa/New Zealand.  No, it's a chance to blog on climate change.

First, Russel Norman says climate change evidence is compelling and that events like the floods are more frequent because of it.  Even though the scientist quoted says "It certainly fits the climate change models but I have to add the proviso that it’s very difficult – even with extreme conditions like this – to always attribute it to climate change".  "He says the extremes being encountered in Australia this week fit climate change models, but it is too early to prove a direct link to changing weather patterns."  However, if you have the faith, believe in it brothers.  There could be a link, but that's about it.  Given the last flood on this scale was in 1974, unless such floods occur again in the next 5-10 years it would seem to be a weak link at best.

Second, Russel points out one of the key industries of Queensland is coal mining so says "It is also noteworthy that Queensland is one of the biggest coal exporters in the world and so is making a significant contribution to climate change."

Putting those two statements together is effectively saying  "floods caused by climate change, Queensland exports climate change, Queensland brought it on itself".

Finally, after blaming the floods on climate change, blaming Queensland for contributing to climate change, the school prefect in the Greens come out to patronise Queenslanders:

"I hope that, once the cleanup is underway and people have a chance to recover from the impact, the 2011 flood leads to a debate in Queensland about whether they want to continue to be such a big contributor to climate change given that climate change makes such extreme weather events more likely."

Yes, the fools, they should do better next time.  Not that I was elected to represent them, but I want to make a political point anyway.


Presumably if Queensland shut down coal mining tomorrow all that would happen is the price of coal would go up, tens of thousands would be out of work, millions would be poorer off and there would be still no protection from floods - funny that.

He ends it with a weak expression of support "Love to all my family and friends over there. – ‘74 didn’t take out Brissie and neither will ‘11!" I'm surprised he didn't throw in a "you should have known better that this would have happened".

Most politicians responding to natural disasters respond with expressions that show they give a damn about the human beings who are suffering and rebuilding their lives.  Russel Norman has done it to make a political point, to effectively blame the victims and hector them into debating how much of it was their own fault. 

This is from the same people that go on about how they, unlike others, put people first.  No, it would appear they put politics first.  However, it is not the first example this week of people on the political left using a tragedy to score points.

UPDATE: Russel Norman's response is, as before,  to misconstrue and ignore my point, then engage in an ad-hominem attack saying "I really do love the way “Liberty”Scott tries to shut down debate. Keep on writing LS I think you demonstrate nicely the kind of freedom that the far right believes in, and it ain’t freedom of speech!".  All I suggested was that blaming the victims for a disaster on the day people were being killed wasn't good taste, but as someone who plays the man not the ball, he doesn't appear to understand the concept of standing aside from politics in the midst of tragedy.   Then he calls me "far right" because it is all so easy to paint someone libertarian as fascist.

This being the same man who thinks non-ionising electromagnetic radiation from cellphone towers is an issue because it is about adding to "background radiation", but similar radiation from far more powerful TV and radio transmitters can be ignored.  So it is safe to say he has scientific credentials that wouldn't get him passing NCEA Level 1 science, which tells your something about the extent to which he can be taken seriously on anything to do with real science.