Posts Tagged ‘Bill English’
Selling SOEs to “moms and pops” could bite Governments in the bum. Warning signs from Aussie
BigCake used to think there was a missed opportunity during the privatisations of the late 1980s and 90s to create Kiwi “mom and pop” shareholding bases in companies like the Bank of New Zealand, Telecom and New Zealand Rail instead of selling to the Yanks and Aussies.
Now he’s not so sure. Current events in Australia where Telstra, with its 1.4 million “mom and pop” investors, is butting heads with the Government over the price of the national broadband network make him even more uncomfortable.
John Key and Bill English have suggested something along “mom and pop” lines for any eventual sales of Kiwibank and other state businesses.
But BigCake is highly dubious that this is the way to go, even if it has a lot of appeal on the basis of greater Kiwi ownership of NZ businesses is no bad thing.
The problem is the potential for the “mom and pops” to cause trouble down the line. What may be good for the company may not be good for the country and vice versa and politics and business get mixed up.
Mostly sales of state assets to “mom and pops” are offered as a sop to privatisation opponents (ie political reasons) rather than any sound business one.
Anyway Telecom, with only 22% Kiwi shareholding and with a large percentage indirectly held through funds, has managed to scare the sh!it of the last two Governments over moves (based on the overall good of the nation) that’d hurt its bottomline.
Imagine how hard it’d be to move against Telecom if the company’s shareholding register had been stacked with “mom and pops” who, incidentally, are also on the NZ voting register.
Off the top of my head similar issues could arise in transport policies regarding KiwiRail and climate change-related ones to do with power companies.
Across the Tasman, Telstra is negotiating with the Australian Government over the value of Telstra assets needed for the planned new A$43 billion national broadband network.
Telstra says it won’t do any deal that is not in the best interests of its shareholders (many who ummm also happen to be voters).
Well, how did we get here? And how the hell do we move on? Knowledge, courage and bit of luck needed to dump our QWERTY economy
This ring a bell? “And even if many …now recognise what needs to be done to change direction, it still takes large amounts of courage, luck and strength to find a better path.”
The quote’s from Financial Times trade editor Alan Beattie’ book False economy – A surprising economic history of the world, (I’ve posted on this book before), and BigCake thinks it sums up the Government’s predicament with yesterday’s Budget.
Beattie was talking about a thing called “path dependence” where societies and economies can consciously or unconsciously head down the wrong route and “get stuck there”.
And it can be bloody hard to get out.
“…choices are conditioned on the decisions that others have made in the past.”
What’d be New Zealand’s “path dependence”? They don’t have to be bad. How about:
• Our geographical isolation
• British heritage
• A stroppy but insecure culture
• Laid back
• Can do attitude
• Egalitarian outlook.
On the economic front, maybe:
• Lack of ambition
• Short-term approach
• Stickability
• Optimism.
The above, and the powerful historical legacy of the easy commerce of being Britain’s farm, put this country on its current path. We’re now caught in the middle of wanting to be a 21st century economy and thinking like it’s still 1952.
These realities are the roadside barriers that push us in certain directions.
The decisions that got us to this point weren’t necessarily bad, but maybe wouldn’t have been taken if the politicians knew where they’d lead. Examples would have to be Muldoon’s axing of a compulsory super scheme in 1975 and the level playing field mantra of the 1990s.
There’d be others depending on your politics.
Anyway, a great example of how difficult it can be to reverse an obviously crap decision is the QWERTY keyboard. It’s rubbish layout, but it stuck because it got established and no one was bothered enough to push for an alternative.
As Beattie says, inertia has a lot to answer for.
Shifting from one system to another, he says requires co-ordination and a willingness to accept short-term losses in return for longer-term benefits.
And that really sums up the Key Government’s Budget calculation – ‘Can we survive some short-term political losses of doing what needs to be done to shift our economy onto a better footing, and do this on the promise (and uncertainty) of longer-term benefits for the economy’.
Ummm I think the answer they came up with was ‘a bit’. (A good bit in turned out). They showed traces of strength and courage which will put the country on a better path, but we’ve still pretty much got a QWERTY economy.
There’s always luck.
Bill English sets the bar high for next month’s Budget
The Minister of Finance Bill English today set out ambitious Budget goals to fix our “lop-sided and under-performing economy”.
Key ones are to stand out from other countries by virtue of our:
- Low debt and low tax rates by world standards
- Rebalanced economy with growing exports and higher-paying, sustainable jobs.
The global recession, he says has presented New Zealand with an opportunity – “probably one that comes along only once in a generation.
“Our starting point is that we need to change the incentives so resources go towards productive investment, savings and exports – and away from the unsustainable consumption, borrowing and government spending increases of the past decade.
“…this Government is prepared to make the difficult calls where they are necessary.”
Yeah, I know it’s vague on details, but it is promising in terms of its sweep and focus.