National’s “Future Fund” asset-sale money will be spent on modernising schools we are told. Is the future they have in mind like Conservative Education Minister Michael Gove’s so-called “free schools” now being set up in Britain? It would be no surprise if our public assets were sold down by National to pay for private interests to get a stake in the school system here. We shouldn’t be under any illusions that the agenda is just short-term.
So, that was National’s ‘big announcement’tm? Allocating money they’ve already banked into a fund which is just an accounting fiction for capital spending that was already budgeted for. A billion of it over five years to ‘transform’ schools? $80,000 a year per school … of already budgeted spending. Talk about tired and bereft of ideas.
National has already booked the revenue from asset sales – despite people opposing them 4 to 1. The Budget docs say capital spending will be funded from the ‘balance sheet’: ie. buying new assets like schools and hospitals with revenue from selling the power companies. Key will re-announce this today. But, in the long-run we’ll be able to afford more schools and hospitals if we don’t sell our profit-generating assets.
Update: as expected, Key has re-accounced what is already in the Budget and given it a fancy new name.
It’s not surprising that National are trying to run a presidential, personality based election campaign – after all, their policies aren’t going to […]
When John Key was elected to power in 2008, he was estimated to have a personal wealth of about 40-50 million dollars.
So how much is John Key worth now?
The Nats have released no substantial policy since the Budget and look unlikely to do so. Their election strategy was clearly to keep attention away from a comparison of their policy vs Labour’s, and keep it on Brand Key. The exploding economic crisis has caught the Nats’ flat-footed. Now, they need economic ideas urgently but have none to offer.
A good piece in the Herald by Max Rashbrook on the high costs of PPPs (public private partnerships) with the new Wiri prison […]
Gordon Campbell at Werewolf has an excellent piece pointing out the flaws in Asset Sales. Here’s a quick summary, but it’s worth the read in its entirety.
John Armstrong wants Labour to come out radically different after the Cup. Having refused to cover Labour’s skills package or its mining policy, he’s suddenly interested in policy. He wants Labour to suddenly adopt league tables and forget the 39% tax rate. Armstrong genuinely doesn’t seem to get it. Parties of the Left don’t pick and swap policies on a whim.
If electricity assets were part privatised, future governments couldn’t make the kind of reforms that National made earlier this year because of the need to consider private investors’ rights. Pretty simple, eh? Tell that to Hekia Parata. Bill English has his head in the sand on the effect of falling markets and can’t guarantee Kiwi ownership.
Reading the political spin from David Farrar (channeling Bill English) over the weekend, I have to keep reminding myself that he really has very little idea about the practicalities of business. Where he is concerned about political costs, I find from a perspective of an exporter that I’m far more concerned about reliability of services.
The Nats say their ‘expectation’ is 30% of the assets they want privatise would go straight to foreigners. That’s just their lowside guess. More would be sold offshore by Kiwi buyers. Get $2b cash now from foreigners now. Lose $300m in returns year after year after year forever. And lose control of our future. Doesn’t add up.
With the world’s markets in turmoil (again) how are the Nats going to hock off those assets? Fire-sale time!
Brian Gaynor notes vampire economics of neoliberalism means nearly all the largest listed companies are either privatised former public assets and/or monopolies thanks to government regulation. The capitalist elite has failed to generate wealth and stripped previously privatised assets. Now, their party, the Nats, plans to suck out more of our public wealth.
During his disastrous campaign trip to Kapiti yesterday, John Key said the Kapiti Expressway would be paid for by asset sales. Labour will do neither. National won’t release the Expressway’s benefit-cost ratio but it will cost $500m ($30K per metre). To get it, we would have to sell half of Solid Energy, which has paid us $310m of dividends in the past 5 years.
Darkhorse on why it’s foolish to sell infrastructure assets: Infrastructures do not, at their optimum service level, usually operate profitably, they create opportunity for profit making activity. It is impossible to run an infrastructure to maximise returns to the owner while also maximising economic value to the economy.
At the start of the year, John Key said that he wanted to have a mature debate on asset sales. Now, his Finance Minister and SOE Minister are refusing to front up to debate David Cunliffe on the issue. Instead, that was left to old man Brash on Q+A yesterday. Cunliffe made mincemeat of him. The Right still has no justification for flogging off profitable assets.
The private operators of the new Mt Eden remand prison are using desserts as a reward for good behaviour. It seems to work. But the Right doesn’t know quite how to react: on one hand, it’s mollycoddling prisoners, on the other hand it’s a private operator being innovative. Imagine how they would have reacted if the public prisons started doing this.
English is under attack at the Nat conference over asset sales. The neolibs vultures treat the state as a carcass to pick clean. But old school conservatives believe in investing the nation. And business types know you don’t get rich by selling profitable assets. English has no good excuses. All he can offer is expensive measures that make selling even more unprofitable.
I’ve just been playing Ben Clark’s asset sale game on his campaign website. (Ben is a fellow author here and Labour’s candidate for North Shore). In the game, you have to try to suck up the shares that John Key throws out before the big foreign buyers suck them up – it’s great fun and a little frustrating when they get the shares before you!
National has brought out some of the biggest protests in decades. Petitions of tens of thousands have called on the government to raise the minimum wage, support Kiwi manufacturing through Kiwirail, and protect early childhood education. It’s core policy – asset sales – is opposed 2 to 1. The message from National: if you don’t like it, riot.
Before the government launched its asset sales policy, the Treasury told it that “significant participation by foreign investors” would be “essential” to provide “pricing tension”. In other words, if they can’t sell to foreigners at a high price, they wouldn’t get the revenue they want. So, the second global financial crisis should scupper the plan, eh?
National pollster David Farrar wants scientists to debate a fake Lord climate change denier saying “Why should anyone listen to people unwilling to debate?”. Well, David, next time you’re giving your polling report to the Kitchen Cabinet, tell them that. Because National is refusing to participate in coming debate on their asset sales policy.
The neoliberal myth is that government economic policy doesn’t really matter, it can’t affect the economy – apart from being an anchor on growth. The truth is, government is the biggest actor in our economy. What it does matters. Bernard Hickey has listed 10 ways that the government could act to get the exchange rate down.
Things are going from bad to worse for Steven Joyce. Labour has released its estimate of the cost of lost dividends by 2025 if National’s asset sales plan goes ahead: $9.7b. All omitted from National’s budget. Labour has challenged National to concede the numbers or provide its own. Instead, Joyce’s excuses just show he doesn’t understand accounting.
Associate Finance Minister Steven Joyce has dealt his government’s economic credibility a serious blow by attacking Labour’s costings of its fiscal plan and getting his own numbers wrong. David Cunliffe looks to be enjoying himself as he rips Joyce apart on Red Alert, in the Herald, and in the Dom. So much for Joyce’s dreams of succeeding English as Finance Minister.
In a comment yesterday on Eddie’s post ‘CGT or asset sales? Which do you prefer?‘, Matthew Hooton wrote “Where do I tick “I want both”?” Except for Nat sycophants, most righties acknowledge the need for a CGT. What should they do? Well, a little game theory shows that such a rightie should vote for a Labour-led government, this one time.
At the same time as Phil Goff and David Cunliffe were unveiling Labour’s economic vision, Bill English was defending National’s in Parliament.
Voters will see Labour oppositions on both sides of the world in a completely new light after this week. Phil Goff and Ed Miliband both took the bold step of taking on hitherto untouchable third-rail issues; capital gains tax in New Zealand and Rupert Murdoch’s pernicious monopoly media influence in England. Both leaders have turned the political landscape upside down and given voters a clear choice between the interests of the many and of the few. Go here for all the details. New Zealand is not for sale – game on for November!
Generally, no-one likes taxes, but Labour’s polling shows Kiwis are surprisingly receptive to capital gains tax. Head to head with National asset sales plan, the choice was clear: 55% prefer CGT vs 32% privatisation. In a contest of economic plans, Labour wins hands down. Even John Whitehead agrees. All English can do is scaremonger about the 35% debt ceiling.
Labour has been chipping away at National’s case for asset sales for months. The hole in the budget has been exposed, the ‘mum and dad investors’ myth has been quashed, the efficiency argument has been broken. Now, Bill English has been caught out lying to Parliament over advice that shares would go to foreign buyers. He’ll be forced to resign.
Lockwood Smith has ruled the word ‘privatisation’ is “political” and not “objective”. National doesn’t want to engage in an honest debate on asset sales because it can’t win on the facts. But trying to stop the Opposition using the word privatisation and insisting they use the govt’s spin term ‘Mixed Ownership Model’ is a step too far.
Treasury has confirmed that National’s plan to sell public assets would need foreigners to buy a lot of the shares because domestic demand would be too small for the government to make as much money as it is counting on. Forget ‘mum and dad investors’, the big buyers would be foreign sovereign wealth funds.
David Cunliffe has done the maths. National wants to sell $6.8 billion worth of assets and it says they would be bought up by ‘mums and dads’. How much would each household have to invest to keep hold of the assets we already own? Over $4,000. Have you got that kind of money lying around to buy what you already own? Me neither.
NZX Chairman Andrew Harmos laments opposition to asset sales saying “if only opponents of this could have the intellectual honesty to recognise that it is a policy that has no losers”. Rijab respectfully disagrees and wonders if it isn’t the Chairman of the organisation with the most to gain from privatisation that is being intellectually dishonest.
