Private Investors to Make a Killing From Auckland
Private Investors to Make a Killing From Auckland Transport Projects
Labour buddies Phil Twyford and Phil Goff have unleashed a stampede of financial pariahs who will be jostling for a share of the profits from financing the $28 billion in Auckland transport projects they jointly announced on Thursday.
Despite having promised before the election to stop the Public Private Partnership schemes of the previous National government, this latest announcement goes even further down the road of privatising new assets.
The new transport projects will be financed by combination of PPP’s and Crown Investment Partners, a government owned PPP scheme in disguise, “which is all about introducing outside capital and attract[ing] co-investment from the private or other sectors”.
Labour used to be the party for the workers but it has just proved it really has turned into a party that shovels taxpayer money into the pockets of the rich, the overseas banks, and the international money shufflers.
Their big profits will be coming straight out of taxpayer’s pockets, who will effectively rent the new transport facilities, having to pay for the construction of the projects and a premium for the lender’s profits.
Public private partnerships have been shown to provide a solid gold 25 year profit guarantee to private developers, while shouldering taxpayers with all the costs of meeting that guarantee.
The four big Chinese government owned banks that have recently set up shop in New Zealand will be the first cabs off the rank to lend money for the projects, with capital supplied by China’s central bank.
Also lining up will be the likes of Craigs Investment Partners who promise investors big returns on PPP investments.
Labour should have looked to the lessons of the real Labour Party of 1935, who used the country’s Reserve Bank, at virtually no cost, to provide funding for housing and infrastructure projects. (see 1949 Ministry of Works report “State Housing In NZ”)
It could also have taken the $4.5 billion dollars in interest it pays annually - $12 million per day, seven days per week - to banks and financial institutions that create the money it borrows out of thin air, and channelled that into improving the country’s transport networks.
That approach was analysed by an International Monetary Fund report released in 2012.
The Chicago Plan Revisited said this – “Allowing the Government to issue money directly at zero interest, rather than borrowing that same money from banks at interest, would lead to a reduction in the interest burden on government finances and to a dramatic reduction of (net) government debt…..”