Friday, February 22, 2013

Let Solid Energy fail

So, thanks to the management skills of that Mighty Atlas of Business, Don Elder, it looks like Solid Energy is on the verge of bankruptcy, with the government openly talking about a bailout. It shouldn't be. Unlike our electricity companies, coal is not a strategic resource. Neither does it constitute strategic infrastructure, unlike Telecom, KiwiRail, Air New Zealand, or KiwiBank. We own it basically as a legacy problem: it was important once, back in the 19th and early 20th centuries, when coal literally drove the economy. But now we've moved away from coal-powered ships, coal-powered trains, and coal-fired electricity, its just an outdated relic (and a dirty polluting one at that).

Thanks to climate change, its also a relic without a future. Rather than propping it up for another few years, so it can cause more damage to the global climate, we should let it fail. The government has let non-strategic SOEs fail before - notably Terralink (formally the mapping arm of the Department of Survey and Land Information - something else which used to be important). There's no reason they shouldn't do so again. As a bonus, this will also hold the banks to account for their poor lending decisions, rather than implicitly bailing them out as well.

As for the jobs, fuck 'em. If the government wants to run a giant jobs scheme, it should be something less environmentally damaging.

One thing the government should be doing is going hard after Don Elder and his ilk. This collapse is pretty obviously the result of poor management, a weird belief (despite all the evidence) that the good times would roll forever. That poor management has now cost us hundreds of millions of dollars. And we should be trying to recoup that loss from the people who caused it. At the least, we should be reclaiming their golden handshakes and performance bonuses - because its now crystal clear that none of them deserve a cent.