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Privatisation: Fervently swimming against the tide

Privatisation: Fervently swimming against the tide

Paul Smith

When an ideology once touted as New sounds quaint, you know for sure it's dead in the water. And so it was earlier this month with attempts to revive the corpse of privatisation.

In the New Zealand Herald the executive director of the Business Roundtable, Roger Kerr fretted over the folly of the state once more taking ownership of our rail system. (Personal disclosure here: of all the news stories I'd heard for years, this was one which left me feeling grateful that we'd returned some of the family silver to its rightful place).

But back to the ideology. Above a photo showing a passenger train was an unequivocal and misleading caption reading Learning curve: History shows that generally the private sector is better than politicians at running businesses such as the railways. The fact is that politicians have never run railways. State servants do that for them on our behalf. Up to the mid 1960s, rail, according to the Encyclopaedia of New Zealand, did turn in a profit while serving the public interest. Mr Kerr and the Herald ignore history. The Government financed and planned the rail system and a century ago opened the main trunk line. At the time, a visiting American journalist recorded the pride Kiwis had in their assets:

There is no Vanderbilt to say "the public be damned."…Every detail of policy regarding the extension, operation and manning of the highways is public business, universally acknowledged to be such by the people, press, Parliament and ministry and business interest.

Which makes the caption even more curious but no more so than the headline over Mr Kerr's column. It read 'Privatisation: NZ swims against the tide', as if that was somehow terminally foolish. We swam against the tide when we became the first country in the world to give women the vote; did it again when we adopted a Nuke-Free policy. Swimming with the tide - isn't that for dead fish?

Mr Kerr said some people associated privatisation with the New Right because of Margaret Thatcher's 1980 reforms. In fact the virus that is the New Right emerged from the Chicago school of Economics in the early 1970s. It is absolutely linked to privatisation and was first tested in the Southern American countries in that decade with the aid of invented crises, the military - and torture. All of this is extensively documented in Naomi Klein's book The Shock Doctrine.

Here, Kiwis overwhelmingly opposed the sale of state assets, the key agenda of the New Right. Nearly a quarter of a century later we know from bitter experience what prioritising private interests and the economy has done for that neglected thing, our society. Long ago we heard the slogans: 'no gain without pain, transparency, efficiency - and the repellent rest. We now know better.

We've seen dividends which should have been returned to us, sent instead to overseas investors; seen the family silver sold off. We've witnessed the emergence of a beggar class, seen foodbanks come and grow - and grow; read the statistics which show that we share the unfortunate distinction with the United States as being one of the most unequal societies in the Western world. Worst of all we witnessed greed hardwired into a once egalitarian society.

Privatisation exists to squeeze dividends from what once were our enterprises to overseas and other shareholders. Its advocates like the Roundtable never give up. In his column Mr Kerr says 'Myths about privatisation still abound. The idea that "corporate interests" want to get their hands on SOEs makes no sense".

But then later, he adds: 'A Business Roundtable study estimated New Zealand could gain about 1% of gross domestic product a year by privatising SOEs (leaving aside local Government businesses). Unless wages and incomes in New Zealand are to drift further behind Australia and those of other countries, this is an economic reform that will have to come back on the political agenda sooner rather than later'.

So there it is - a necessary first step: scaremongering for change. Crises, invented or otherwise, are crucial to the success of this lobby. In turn that is linked to the total failure of imagination which characterises the buy-sell mentality of old right advocates. Finally and just as important, the Roundtable is once again trying to set the agenda for more asset sales.

But here's the irony - even the National Party isn't buying - yet.


Paul Smith is a journalist and author and founder of

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