Sell­ing them what they al­ready own

Kapi-Mana News - - OPINION/NEWS -

Not hav­ing had par­ents who in­vested in the stock mar­ket, I’ll have to take on faith John Key’s claim that ‘‘ mum and dad in­vestors’’ will get the main ben­e­fits from open­ing state as­sets to par­tial pri­vati­sa­tion.

Who knows – maybe there are or­di­nary ‘‘mums and dads’’ who re­ally do have a stock­bro­ker on their speed dial. Cer­tainly, Key has claimed that his pri­vati­sa­tion plans will ben­e­fit Kiwi bat­tlers, first and fore­most. He will face an up­hill bat­tle con­vinc­ing the pub­lic on this is­sue.

His plans ex­tend to open­ing up cer­tain state-owned en­ergy com­pa­nies to pri­vate in­vest­ment, and sell­ing off some of the state’s stake in Air New Zealand, while still keep­ing a ma­jor­ity share. Many vot­ers will strug­gle to see how open­ing en­ergy com­pa­nies to share­holder pres­sure for greater prof­its will re­sult in re­duced power prices.

Sim­i­larly, many will query whether those myth­i­cal ‘‘ mum and dad in­vestors’’ will be the real win­ners, given that the nation’s mums and dads al­ready own the state as­sets concerned, and are thus be­ing in­vited to re-pur­chase a stake in their own pos­ses­sions.

The ex­ist­ing ev­i­dence is that many small in­vestors will sell fast to vir­tu­ally the first buyer of­fer­ing them a profit – and cur­rently, those buy­ers are likely to be cashed-up Aus­tralians look­ing for easy pick­ings. For that rea­son, the par­tial pri­vati­sa­tion plans ap­pear more likely to be­come a mech­a­nism for en­abling wealthy Aus­tralian and Asian in­vestors to gain even greater con­trol of the New Zealand econ­omy.

If so, as Greens co-leader Rus­sel Nor­man has pointed out, the si­phon­ing of the sub­se­quent prof­its off­shore will serve only to fur­ther un­der­mine the cur­rent ac­count deficit and (ul­ti­mately) raise the cost of bor­row­ing.

In the process, New Zealand Inc stands to lose crit­i­cal mass to man­age its re­sources.

On the up­side, the Key Govern­ment is not propos­ing the sort of out­right sales that proved so dis­as­trous in the late 1980s and early 1990s. By keep­ing a ma­jor­ity share, tax­pay­ers should con­tinue to reap some re­wards from any en­hanced per­for­mance by the as­sets in ques­tion.

Par­tial sales should also – in the­ory at least – pre­vent the sort of vir­tual cor­po­rate mo­nop­o­lies that emerged in the 1990s, and which felt free to block com­pe­ti­tion and in­no­va­tion and gouge their cus­tomers for the ben­e­fit of their share­hold­ers.

At the very least, the Govern­ment’s new stance on pri­vati­sa­tion will cre­ate a clear point of dif­fer­ence be­tween the two ma­jor par­ties in this year’s elec­tion.

Key has al­ready said as much – and the pub­lic has am­ple his­tor­i­cal rea­son to be gun-shy about the process, and deeply scep­ti­cal.

It may take all of Key’s con­sid­er­able charm to per­suade vot­ers that they have noth­ing to fear from pri­vati­sa­tion this time around.

Gor­don Camp­bell is an ex­pe­ri­enced po­lit­i­cal jour­nal­ist and colum­nist who has writ­ten for The Lis­tener and Scoop.

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