No Reason for Partial Privatization | The Jackal

31 Oct 2011

No Reason for Partial Privatization

The National party would have us believe that without partial privatization of our power companies, we will not be able to fund new schools.

The disingenuous argument from National is designed to make the public feel good about loosing key strategic assets that will only increase in value as oil starts to become more scarce and expensive.

John Key dangles a carrot on a stick, that if followed will only benefit the wealthy. There simply aren't many New Zealand mum and dad investors, and foreign ownership is inevitable. Selling our power companies will mean more expensive power bills with most of the profits flowing overseas.

The profits the government expect from privatizing our power companies are the same as the profits the SOE's make for the country every nine years. That means nine years after any asset sales privatization has been undertaken; the loss in profits will be digging New Zealand further into debt.
If Nationals plan to privatize is designed just to make money to fill a black hole in funding, it will not work. For a start, the black hole is far too deep, with National increasing government net debt from zero in 2008 to $38 billion dollars in Oct 2011.

According to the Business Roundtable (PDF) the total expected Crown proceeds from partial privatization of Air NZ, Genesis, Mighty River, Meridian and Solid Energy is less than $7 billion. However they do not factor in the cost of actually selling those assets or the revenue lost over time... con artists.

And right now, with the market low and lots of other countries holding fire sales, it's not the right time to get a good price. Besides, privatization has already failed in New Zealand... why make the same mistakes again?