Tuesday, March 17, 2009



The new Muldoonism

Last week, we learned that the government wanted more money from state-owned electricity companies. Today, we're told that this won't lead to higher prices. Clearly, John Key - who is not the responsible Minister here - expects SOE's to "look at their business" and find efficiencies. Which is fair enough, and something they should be doing anyway (I expect SOEs to be well-run so as to deliver high dividends to the people of New Zealand). But there are two issues here. Firstly, it looks like the Prime Minister is trying to dictate from on-high how SOEs are run - something the SOE model with its arms-length control was explicitly put in place to prevent. And secondly, if the SOEs do what Key wants, its going to mean the usual story of cancelled investments and deferred maintenance - the private sector won't need to run down our electricity infrastructure, because the government will have done it for them. And all so National's rich friends can get their tax cuts...