Yesterday, Pacific Fibre cancelled its plans for a second international fibre-optic cable, after failing to raise enough capital. The business pages are full of the implications of Telecom's continued monopoly on international bandwidth, but meanwhile they have missed something important: this is a stunning repudiation of the government's asset sales plans.
One "justification" for asset sales is that the sharemarket is small and kiwis need something to invest in (which when you think about it is a pretty strong criticism of the talents of our local business class). Well, kiwis just had that opportunity, and they didn't take it. So if the market won't front up $400 million for a piece of infrastructure, why does the government think they will shell out over ten times that?
The answer, of course, is risk. Pacific Fibre would have had to build something. State assets are already there, and already producing monopoly rents. "Investing" in them is simply parasitical ticket-clipping, nothing more. But that, sadly, is all our local business community seems capable of.
The government should not be supporting this lazy, incompetent business culture by providing them with further companies to ruin. If they want a strong, deep capital market, then they can build it. That is, after all, what capitalism is supposed to do. If it can't, then I think the problem lies with business, not with the government.
