Thursday, May 23, 2013

Fallow on privatisation

Writing in the Herald, Brian Fallow assesses the future of the government's privatisation plans. His conclusion? Not good. The Labour-Greens proposed monopsony combined with uncertainty over the future of Tiwai Point means that

In these circumstances for the Government to press ahead with the selldown of the SOEs turns a policy that was merely kind of pointless - a solution in search of a problem - to one that is either cynical or bloody-minded.

But what about their public justifications for selling? None of them stack up. With high unemployment and rock-bottom interest rates, reducing debt isn't the highest priority, and there's no evidence that SOE's are badly run (by contrast, the problems seem to occur when they are privatised, or in the case of Solid Energy, when they act as if they have been). Finally, there's a real risk that bringing new suckers into the sharemarket encouraging new first-time investors will backfire horribly and just be a (money-losing, for those first-time investors) way of hiding eventual foreign ownership.

But, as Fallow said, the policy is cynical and blood-minded. They're selling because they've said they'll sell - not because its actually in the best interests of New Zealand.