Have been watching this debate closely over the last year in NZ, and the more I learn, the more absolutely crazy it sounds. Let's review the status to date.
- National first proposed asset sales, because of a "poor rate or return on capital"
- The next reason was "for the purpose of reducing government debt"
- They then realised how unpalatable asset sales were to the general public. So they decided that the proceeds would be invested in an "infrastructure/capital expenditure fund", for the purpose of improving schools/roads/universities etc. etc.
NZ is a young country. Aotearoa is a lot older. NZ should have a brief review of what happened during the last round of wholesale asset liquidations when we transferred assets from Måori to Pakeha. Maybe then Pakeha would learn a little about colonisation, which in reality is just another name for the sale of publicly owned assets into foreign ownership.
Because colonisation is not so much about people moving from one place to another. It is about taking over the means of wealth production, and extracting that wealth and repatriating it to where you want it to go. One million Europeans could have moved to NZ in the 19th century, but if the means of wealth production had of remained in the hands of Måori, Måori (and the rest of us for that matter; who do you trust the health of the Waikato to, a regional council controlled by farming interests, or Tainui? I know who I would back) would have been in a far better situation than they ended up in.
And the reality is that in the early stages of colonisation, Måori were the entrepreneurs. They set up ship supply centers, they exported potatoes to Australia, they planted and managed large flax plantations for the hemp export industry. They saw the opportunities, but most importantly, they owned, and controlled, the means of wealth creation. They used the wealth generated to import technology, education and knowhow, reinvesting that in what we now like to call productivity.
But what happened? Måori lost the control of the wealth producing assets (at that time physical land). And what we saw was a horrendous spiral; lose control of the assets that produce the most wealth (i.e. the most productive lands, whether they be timberlands, flax plantations or natural harbours). Måori think, "Ok, we still have other assets, we can sell some of them, and use that wealth to invest in new production". But, the real cost of living goes up (in part because before what was previously a luxury is now a necessity, but that is a discussion for another day), and we end up using part (or all) of that asset realisation to fund CURRENT CONSUMPTION, not investing it in growth or productivity. A never ending spiral.
The result? From owning 100% of the productive assets (the land) of Aotearoa, Måori ended up owning less than 3% of NZ in less than 100 years.
Dial forward 150 years. Not really such a long time in the greater scheme of things, is it? My children's great-grandparents are still around, which means my family has a living span of 90 years plus, more than half that 150 years. And what does our erstwhile Government propose? Doing to ALL AOTEAROA/NZ what was done to Måori 150 years ago.
That is the reality. Let's discuss a modern case, the partial sale of SOEs. We all know what happened under the Labour government 1984-1990, and then followed on by the National Government. Wholesale flogging off of assets. I cannot call this anything less than a wholesale loss of confidence in the NZ public service, and the public itself. Why?
If you say an asset is underperforming, so must be sold, you admit that you cannot get a better performance out of it YOURSELF, so you are better off selling and getting the cash now. But this is non-sensical. Anytime an asset is sold, the new owners realise there is a PROFIT there. Who buys a knowingly failed asset?
Would you but a rental property KNOWING that there is no way you could realise a profit, either through capital gains or increased profitablity?
This is insane. By saying there are buyers out there for SOEs, the Government ADMITS 100% that these assets have the potential to return an acceptable rate of return. If they don't currently, well sorry Government, kick your Board of Directors in the arse and get them earning their salary.
So a government that sells an asset, owned by the people of NZ, that returns a dividend (i.e. generates wealth for NZ as a whole), is saying "We are absolutely useless. We can't get a good rate of return because we can't manage this asset profitably. We will sell it off, take the cash, and then see what a private owner can do, IRRESPECTIVE OF whether that is in the GREATER national interest (more below)."
But, the assets that the Government are proposing to sell are ESSENTIAL to the functioning of NZ as a whole. We all need power, right? NZ needs international travel, right? So we will be faced, without a doubt, in the future with the situation of whereby the private owners have extracted maximum wealth from the asset, driven it into the ground, that me and you fellow citizens, will be forced to step in to bail out a private operation that is essential to the operation of the country.
Didn't that happen with the Railways? Didn't it happen with Air New Zealand? Do you really want to see it happen with Electricity?
This is capitalism with a small "c" and a big "P". Whereby the wealth of the nation is siphoned off to the Private sector (normally offshore), while the debt (in the lack of infrastructure investment) is passed off to the citizen (the small "c').