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Entry 743, on 2008-04-14 at 18:28:55 (Rating 3, Politics)

Within 5 minutes this morning I heard two radio news items which lead me to believe that the age of ideologically driven politics in New Zealand is over - at least until people forget about what happened last time and we repeat the same mistakes all over again!

With the election looming it seems that the major parties are scrambling over who can occupy the most moderate and centrist position in New Zealand politics. Of course, what we define as centrist changes with time. In 1984 politics moved sharply to the right and its been gradually drifting back ever since. So a centrist party, like Labour, today is close to what we would genuinely call centrist with a reasonable balance of socially and fiscally responsible policies.

So what about the National opposition and, according to most predictions, what will be the new National lead government? Well this morning they backed away from bulk funding schools and stated there would be no state asset sales during their first term. They were criticised for specifying only the first term, but I think that's fair because its unreasonable to make promises of that sort any further out.

So after the mad scramble to sell assets for no good reason in the 1980s and into the 1990s we now have a promise not to sell any more and even the possible option of buying back more, for example the rail system from Toll. I think this is really great news because New Zealand is too small for essential assets to be managed through a competitive, private model. In fact, I would go further and say that no matter what the size of the country this model often fails.

So let's look at the record of privatisation, and especially overseas sale, of our assets...

Telecom is the ultimate example of privatisation gone wrong. They provide poor services, overcharge, and collude with their presumed competition to set up duopolies where no real competition occurs (I'm thinking about our overpriced cell phone services here, where both Telecom and Vodafone are ripping us off).

Telecom's Internet service, Xtra, is the worst in the country but they still sign up many people because of their annoying and pervasive advertising. They underspend on equipment upgrades and ship huge profits overseas. Yes, they represent everything that's wrong with capitalism and if government regulation can restrict their activities that's just great with me. If their shareholders lose out I say tough luck to them - get over it.

Air New Zealand is another example where the government had to step in and save the airline from disaster. Since then it seems to be running quite well and the predictions of problems after government interference seem to have disappeared.

And the government had to buy back our railway tracks because they were being destroyed by incompetent and corrupt private owners. If we could buy back the locos and rolling stock and run the whole service as a government company I think we could really start making some progress with improved transport systems.

And the break up and setting up of a competitive model in the electricity system seems to be somewhat less than optimal as well. We now have two companies arguing over new electricity production because they both need the transmission capacity. What a fiasco!

So that's my anti-privatisation rant over for now. I could give more examples or elaborate on those above, but I would just get even madder about the destruction wrought by the new-right governments of the 80s. Clearly public opinion has swung back to the left and I hope we can now have a center-right government lead by National which will look at these issues on a case by case basis instead of making decisions based on ideology (like their more rabid friends in Act would). And yes, I haven't forgotten that it was Labour that started it all. I'll also be watching them!

Comment 1 (1413) by SBFL on 2008-04-16 at 01:19:33:

"So after the mad scramble to sell assets for no good reason in the 1980s"
- I think you mean Labour here? And no good reason? Why don't you find out? Probably because most weren't making money as they were run by unenthusiastic bureaucrats. Lets not whittle away funds of the state with loss-making companies.

Telecom - clearly you have forgotten the outstanding service of the State-owned Telecom of yester-year. Need a new phone line? No worries if you want to wait 4 weeks. With regard to telecommunications, if you look from afar you will see NZ is still going through the process of getting this right (starting with the privitisation and latest move is the break-up). More to come I hope. Try to expand the window here.

"and if government regulation can restrict their activities that's just great with me. If their shareholders lose out I say tough luck to them - get over it." - well bloody lucky that the shareholders aren't the taxpayer then!!!

Air New Zealand - obviously you are not aware of the prices Air NZ charge today on routes where they have a monopoly.

Ahhh, the good ol days of state owned rail. Another great loss-making SOE funded by the taxpayer!! Maybe, just maybe it's not about the owner, but it's about the fact that rail is no longer the transportation system of choice in the 21st century. Surely that wouldn't have anything to do with it, would it?

There are 4 electricity lines companies and all 4 are owned by the government? There are challenges still here but going backwards won't solve them. We must get to the core of the issues. Changing the model back to a single run SOE is not going to appease the farmers, Greenies etc...

Where you see destruction, I see a rocky road to getting it right. On something so complex, you weren't expecting a quick fix were you?

Comment 2 (1420) by OJB on 2008-04-16 at 14:30:10:

Yes I mean Labour - at least it was called "Labour" at the time. The sales were done through ideology and were unnecessary, and I've heard commentators admitting this (sorry no reference here - it was in a National Radio interview).

Technology has changed a lot since Telecom took over. Its now possible to set new connections up easily. And I'm not necessarily defending the old model, just saying a complete overreaction was unnecessary.

I am aware that Air NZ is run like any other large commercial entity: corruptly and without morals. But what I'm saying is that without government intervention it might not even exists today.

Rail is becoming more popular in countries where the infrastructure hasn't been destroyed. And again, I'm not suggesting the old inefficient model was best, just that foreign ownership isn't the best model for NZ as a whole.

Why won't a single company solve the problems? Isn't that the only way we can have a coordinated response to our energy problems? Just because the new right ideologues keep saying competition is the answer doesn't mean they are right.

Comment 3 (1422) by SBFL on 2008-04-17 at 23:06:31:

You say sales were done thru ideology and were unnecessary but I find this highly unbelievable. These major decisions are not made on a whim, there is a cost-benefit analysis attached. National Radio aka Radio Left Wing from what I see on blogosphere!

Telecom - not an overreation. Not a perfect implementation but a move in the right direction as history shows.

Air NZ - possibly true re govt intervention, but so what? Companies go under every day. If Air NZ did, then maybe they deserved it. I see no issue with a corrupt company without morals going under (as you termed it). My concern would be with the transport service, and no doubt a more efficient company would've filled the void.

If local owners didn't want to buy NZ Rail then thats their choice. The old govt owned model was a failure, so at least someone now is making the best of a bad situation.

Power - a good example that Govt also does not invest in infrastructure. This issue in the news all the time. A single company is more likely to be a pure monopoly. If you think this is good for the consumer, I am keen to hear why.

The competition model may not be perfect, and that may have a lot to do with the fact NZ is such a small market. But nonetheless it is a step in the right direction. Do you really think we will go back to the bad old days of govt owned monopolies? Labour have been in power for 9 years and even they have the sense not to make that mistake.

Comment 4 (1428) by OJB on 2008-04-18 at 13:30:18:

I think we should be using whatever model works best for each individual situation. Milk marketing has been done successfully through the Fonterra monopoly. Just today I heard an item describing success in clearing waiting lists because hospitals were cooperating instead of competing.

The "one size fits all" mentality that private enterprise and competition are always the best solution just doesn't have any credibility. Monopolies, government ownership, etc all have their place. And how bad do things have to get before you admit that electricity supply, railways, phone services, and our national airline have all been badly mismanaged?

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