Privatisation, the embrace of the free market and the New Right idealogy in New Zealand. These were the policies of sucessive New Zealand governments during the 1980's and 1990's. First under Labour's "Rogernomics", and later continued under National. Telecom was one of many of New Zealand's important assets which were privatised in this era and has come to epitomise the disasterous consequences we are now facing.
From the outset, the public's interest came a far second to the shallow and shortsighted greed of a few. An incredible 96% of New Zealanders were opposed to the privatisation of Telecom. They were completely ignored, and Telecom was sold in 1990 to two United States-based telecommunications companies for NZ$4.25 billion. This was undoubtedly a ridiculously low price, given that the company had a monopoly of all phone lines in New Zealand at the time.
Today there is absolutely no question about the disaster that the privatisation of Telecom has been. A Consumers’ Institute survey of almost 10,000 Kiwi Internet users saw Telecom's Xtra voted as worst ISP of 2007. At the same time it was also voted the worst transnational corporation operating in New Zealand. It has taken this dishonourable title before, only losing out on several occations to TransRail, a similarly disastrous privatisation from the same era. Telecom has done little for the country other than carry their vast profits offshore and leave New Zealand's infrastructure to deteriorate. The New Zealand Treasury once estimated the economic loss from Telecom's monopoly to be in the region of $50–$250 million a year. A severe cost to a small country.
Due to chronic lack of investing, New Zealand has been condemned to fall further and further behind other countries in terms of telecommunications infrastructure. In a paper released by the New Zealand Institute, it was estimated $5 billion of investment is necessary. Even with this investment, it would still not be before 2012 that New Zealand would be able to catch up. Of course, even this possibility of improvement is far fetched, given the poor incentive to Telecom to invest. As concluded by this Institute, the proposed unbundling the loop is not enough. At the current rate, in 2012, we are still not likely to have the Internet speeds which other countries have already been benefiting from for years. New Zealand has an urgent need for modern telecommunications infrastructure due to its small and remote economy. Yet Telecom has already proven that it is not interested in New Zealand, or its population. For nearly 20 years it has proved that it is only interested in ripping us off.
It is now all too apparent that only the profits were privatised. The costs and the burden of New Zealand's deteriorating infrastructure were to be shared by all New Zealanders. In its infancy capitalism played a relatively progressive role in developing the productive forces, society, and creating infrastructure, which kept the economy driving forward. However that time has long since gone, and capitalism has degenerated to the point of being nothing more than a fetter on human development, and a parasite on society. It has come down to multi national corporations grabbing as much as they can from what is left. In the end, the corporations squander their profits predominantly on the non productive sectors of the economy and gambling in the world's stock markets. The result being New Zealanders will be left with third world infrastructure, if not worse.
Telecom should be immediately renationalised. This time under workers' control. Only then will this company function for the interests of New Zealanders, and this country can properly begin recovering the state of its telecommunications infrastructure. Compensation should only be given on a basis of need. Given the massive profits Telecom has been siphoning out of New Zealand for nearly two decades, there should be very little such compensation necessary. Putting Telecom's ownership in the hands of New Zealand workers would help restore confidence in the Labour government and definitely increase the chances of a fourth term; especially if this was linked to a socialist paln for the country's infrastructure.