New Zealand

No to Privatisation: Oppose State Asset Sales

The National-led government has passed the legislation by one vote in parliament to part-privatise 4 state owned energy companies. This is a highly unpopular policy with the public with all polls showing 70% or more members of the public opposing the sales. Such opposition is not surprising as New Zealanders have learned through the bitter experience of the consequences of privatisations in the 80s and 90s.


Mighty River Power will be the first state owned power company to be sold down in Spring. Already the government has stated that the minimum share price offer will be a $1,000. This statement blows apart the government propaganda that the shares will be available to ordinary “mum and dad investors” as “mum and dad” are financially hard pressed due to government austerity and don't have savings to buy what they already own! The reality of the situatiion is that big business will loot the state and ship the profits offshore. The logical conclusion of part-privatisation will be full privatisation at a later date if the Nats can get away with it.

Over the last 5 years the 4 state owned power companies that are to be put on the block had an average return on investment to the Crown of 18.5% per annum. Therefore, after the initial windfall the Crown accounts will worsen as the parasitical private investors demand their slice of the return. This means that public services in future will have to be cut if the shortfall is not made up of hikes in taxation. The point here is workers will pay the price for privatisation both directly and indirectly.

What can ordinary New Zealanders expect from privatisation? It is anticipated that power prices will rise signficantly. Already there is a 12% differential between private and state owned power companies. The price rise will come about has the private shareholders demand a maximum return on investment.

Additionally, we shall see important power generation infrastructure projects not carried out as the private shareholders demand maximum profits and this will stop marginally profitable schemes being carried out that benefit the country. 

The Labour Party is opposing the part-privatisation and is campaigning for a citizen initiated referendum against assets sales with the CTU, Greens and Grey Power. Such a referendum is not binding on the government and as such will be ignored just as public opinion is being ignored now. This campaign ignores the very thing that can defeat the government and that is the economic power of organised labour that if harnessed correctly through a campaign of industrial action can stop the sell-offs and bring the government down.

Unfortunately both Labour and the Greens are refusing to commit to a policy of re-nationalisation when they get back into power on the basis that they do not know what the government books will be like when they are back in power. Further to this the Labour leaders are stating that once the state owned assets are sold they are gone for ever. This shows the bankcruptcy of the Labour leadership that base themselves on capitalism and subsequently capitalism's logic.

The Labour leadership needs to adopt a socialist approach to assets sales and that is a commitment to re-nationalise with compensation on proven need immediately on regaining government. Such an approach would give the private vultures a shock and make privatisation not as tasty a proposition as it is at the moment.

Such a policy backed up with nationalisation of the banks, insurance companies and the key sectors of the economy under workers control and management is the only answer to the Nats and their support for capitalism.  The alternative to such a socialist position is more foreign control of New Zealand, declining public services and declining living standards for all workers.

Socialism is the key to prosperity for all New Zealanders!