Wednesday, February 29, 2012

Not reassuring

When National announced plans to privatise our state-owned assets, they tried to be reassuring. They'd only be selling half of those companies, and keeping a majority share. So we wouldn't see the sort of asset-stripping fire-sale which marked previous privatisations.

It turns out that they lied:

Treasury advised the Finance and Expenditure Committee today that partially privatised state-owned energy companies should be managed in a strictly commercial way and wouldn’t rule out the possibility that individual assets could fall into foreign ownership.

“Shareholding Ministers will manage their 51 percent shareholding according to ‘best commercial practice’ rather than what is in the best public interest. If it makes commercial sense to sell a dam or two — they’re gone,” said Green Party Co-leader Dr Russel Norman.

“Holding 51 percent of an energy company will not, by itself, guarantee that individual assets remain in New Zealand control.

The boards of those companies would be legally required to maximise short-term profit for their shareholders. If it maximises short-term profit to have a fire-sale, or defer maintenance and run the company into the ground a-la Telecom or TranzRail, then they will be legally required to do it. And it doesn't matter how big the government's stake is; once there are any private shareholders, our assets - vital infrastructure that keeps the lights on - are in danger.

Previous privatisations were a disaster. The current government looks set to repeat that disaster. Don't let it happen again.