Technically Speaking: Partial privatisation of NZ Post would fund the People's Bank

Friday 2nd March 2001

Text too small?

Air New Zealand class B

Contact Energy

Telecom

Tranz Rail

Jim Anderton has finally got his way over the People's Bank but whether that means every customer of his bank translates into a life-saving vote for the ailing Alliance is another matter. The far-left party needs all the help it can get.

Labour has carbon-copied the successful strategy of Francois Mitterand, who when socialist prime minister of France lured the French communists, who had a small but loyal voting base, into a coalition not unlike the Labour-Alliance regime, complete with ministerial baubles.

The manoeuvre destroyed the communists' credibility and they disappeared as a force in French politics.

Jim's bank represents a high-stakes game to save the Alliance from a similar fate, especially as its support is now split with its erstwhile partner now electoral competitor the Green Party.

Ego and politics have driven the foray into banking by New Zealand Post. Some $80 million of taxpayers' money is to be used to provide banking services to beneficiaries already living off taxpayer largesse. To date, nobody seems to have suggested the logical alternative of selling shares in NZ Post to finance the banking venture.

NZ Post could be partially privatised to this end. The same could be done for TVNZ so it could afford its plan, aborted by the present government for cost reasons, to venture into digital television.

There have been mixed reviews of full privatisation of companies such as Air New Zealand, Contact Energy, Telecom and Tranz Rail (illustrated).

The present government, through mouthpiece Michael Cullen, is pledged to "non-privatisation." Presumably that policy was formulated in reaction to a state-owned enterprise being sold off lock, stock and barrel.

Certainly some criticisms about the ways in which the illustrated companies were privatised outright have merit. But there is no need to throw out the baby with the bathwater.

The real issue is not ownership, but control. A shareholder does not need to own 100% of an enterprise to control it.

Averse as our socialists are to private stakes in public assets, they could profitably examine how prudent governments in Singapore and Australia have successfully engaged in partial selldowns of companies like Singapore Airlines, Singapore Telecom and Telstra.

Benefits arising from partial selldown include sharing taxpayer risk with private capital, establishing realistic market value for state-owned assets, opening up new avenues for retirement savings, and acquiring private sector management expertise.

Partial selldowns can allow a government to exit an investment in stages, getting greater overall price and better shareholder mix than might be achieved in one hit.

Such selldowns could coincide with fiscal requirements.

Partial flotation of NZ Post and TVNZ should be regarded as a live option, especially as the ASX-NZSE merger has foundered to the disadvantage of capital listed in New Zealand.

It would also impose a discipline on government plans for SOEs. For example, would a public float of NZ Post shares for the People's Bank have succeeded? If not, why not?

Back to the drawing board for the government that proposed such an idea.

What about a partial float of TVNZ to finance digitalisation?

What impact would the government's determination to introduce politically correct television have on the likely price to be fetched from private investors?

Taxpayers and investors are not well served by the Labour/Alliance government's ideological intransigence over privatisation.

Comments from our readers

No comments yet