Sunday, May 20, 2012

Minister should think more carefully on asset sales

   Local Government Minister David Carter needs to think carefully before advocating sweeping asset sales by local councils, as he seems to be doing at the moment. The lessons of Rogernomics and Ruthanasia have not been learnt by Governments that think you can balance the ledger with one-off asset sales.
   When the Lange 'Labour' Govt flogged off KiwRail for a pittance (after campaigning in 1984 to save it - yeah, right!), it clearly didn't have a clue about the downstream costs of doing so - line closures, price rises, job losses, station closures and, eventually very expensive Government bailouts and buy-backs.
   Here in Hamilton, the 1990's City Council corporatised its power company, losing effective control for 99 years, and condemning its community to years of sharply rising power price rises. it was only narrowly prevented from completely flogging it off, with community trustees being forced to raise megabucks to buy out foreign corporate raiders.
   Selling airport shares can sound attractive at first glance, but if you think an airport is a strategic asset that a community or region needs for reasons like economic development, tourism, convenience of local residents, etc. then you would need to make sure any purchaser was willing to forego market returns on investment in order to keep the strategic asset as a going and affordable concern. Of course there are some purely commercial assets that Councils can, and probably should, sell - in Hamilton's case, it is time that the Novotel/Ibis Hotels shares are sold - the investment has done its job of ensuring sufficient quality visitor accomodation is available, the market conditions are reasonable, so lets sell that one, and use SOME of the proceeds to pay off debt, while ensuring vital social and community services continue.
   But don't sell pensioner housing, and community recreation facilities like the YMCA, unless you can be guaranteed their new owners will stay in the game for which those assets were intended. And if you do, make damn sure the proceeds of social asset sales like these are re-invested for the purposes they were originally intended!
   Finally, its all very well for Mr Carter to say the V8s was an event Hamilton CC shouldn't have funded (isn't 20/20 hindsight a wonderful thing?), and that the Ellerslie Flower Show in Christchurch is a "good" event for a Council to run - if he checked all the facts, he would know HCC tried to 'purchase' the Flower Show when Auckland decided to can it, only to be outbid by Christchurch City. Had Hamilton put up the $1-2 million Christchurch CC forked out, we might have had the 'good' event and Christchurch might have been left with the V8s - to add to their CEO's salary!

1 comment:

  1. If you call Carter incomptent, you are being rather kind. When he was the Tory spokesperson on agriculture, he was conspicuous by his invisibility. Under his watch as Minister of Agriculture, there have been cut backs in biosecurity. Now we had a bio-security breach in the form of a Queensland fruit fly.

    As the 'new' Local Government Minister, his only bit of sub-intelligence advice to solve debt is asset sales. Short-term gain for long-term nothing, the usual right-wing solution!