The politics of privatisation

9:01 am on 8 April 2016

Power Play: If you listen to the National government's opponents, this week has represented a slide towards privatisation.

First there was the announcement the New Zealand Post Group planned to sell 45 percent of Kiwibank's holding company to the New Zealand Super Fund and the Accident Compensation Corporation (ACC).

An "elegant solution", said the prime minister, to the problem faced by Kiwibank's parent company - plummeting mail volumes and falling revenues.

Elegant indeed for a government looking to cut Kiwibank free to grow and develop, provide a cash injection to New Zealand Post and its own coffers, and not break its promise Kiwibank would remain in public ownership.

The sale is tied up with the ribbon of a five-year moratorium for the Super Fund and ACC on selling any Kiwibank shares, and, once that time is up, the government has first right of refusal to buy any shares that are put on the market.

NZ Post chairman Sir Michael Cullen and chief executive Brian Roche announcing Kiwibank proposal on 6 April.

New Zealand Post chairman Sir Michael Cullen and chief executive Brian Roche announcing the Kiwibank proposal. Photo: RNZ / Benedict Collins

Before chairman of the New Zealand Post Group Michael Cullen (who is, handily, a former Labour finance minister and deputy prime minister) had even wrapped up his media conference announcing the new plan, Finance Minister Bill English had issued a media release pledging his government would buy any Kiwibank shares if they were put up for sale.

An easy promise to make, given he is very unlikely to still be Finance Minister in 2021, and a promise that could not bind a future government.

But it sounded good to those seeking reassurance Kiwibank would not be flogged off to the highest bidder.

ACT leader David Seymour called on the government to get some guts and sell the bank, drily noting the Super Fund and ACC were not really purchasing anything, because if you truly own an asset, you have the ability to sell it.

And he accused the government of "campaigning from the right and governing from the left, and even then they have to get Michael Cullen to do it for them."

This cuts to the heart of the debate about privatisation in New Zealand.

Genesis Energy's Hau Nui 1 windfarm.

Genesis Energy's Hau Nui 1 windfarm. The government has sold stakes in energy firms but has been unwilling to go further. Photo: GENESIS ENERGY

Since the Labour government elected in the late 1980s embarked on its sweeping sell off of state assets, the electorate has been wary of privatisation, and, in the main, deaf to arguments there could be economic and social benefits.

ACT, with its one MP, has been a lone voice for broad privatisation.

The National Party recognised the electorate's general opposition and made a number of promises before it came to power about not selling assets.

It ventured into partial privatisation with the four energy companies, but has been unwilling to push the boat out any further.

Contracting out government services to the private sector is another area the government has embraced, arguing there are many private and community organisations which can do the work of the state in a range of areas.

Social Development Minister Anne Tolley

Anne Tolley Photo: RNZ / Demelza Leslie

National has already done this in housing, education, social welfare and (unsuccessfully in the case of Mt Eden at least) the prison system.

Now the Minister of Social Development Anne Tolley has flagged the use of private providers in the agency that will look after children in care.

She said at the moment those services, like doctors or psychologists, have to be negotiated through the agencies, often with the result the child ends up on a waiting list.

Mrs Tolley makes no bones about using the private sector if that will deliver help to children more quickly.

The Greens raised the prospect of this sector becoming privatised and organisations being encouraged to make money from children.

On reading the review about the current system, and the abysmal outcomes for children in care, all parties acknowledge a change is needed, and any criticism about private providers is likely to fade if that makes the system better.

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