We in New Zealand have had some horror-show experiences when it comes to privatisations of public assets.

The sale of New Zealand Rail to private interests, and Air New Zealand's sale went so completely tits-up that re-nationalisation was imperative.

Telecom was sold into private hands, almost immediately resulting in monopoly profits being extracted, most of which were expropriated overseas, with precious little re-investment to develop the telecommunications system.

We gave the Australian banks our banking system, simply by selling them our Trustee Savings Banks, the Bank of New Zealand and Postbank.

Remember Graeme Hart, Australasia's wealthiest man? Our National Government, bless 'em, kick-started his career by just about gifting him the Government Printing Office, a strategic asset which even the United States has baulked at flogging off.

There is continuing disfunction in the privatised electricity system, creating blackouts, price increases (we all know about these) an appalling  
maintenance routine, and lack of re-investment capital . The system still fails to provide secure and reasonably priced power.

We flogged off Radio New Zealand's commercial stations to private interests, thus assuring duopoly status in the industry.

By selling off state-owned forestry cutting rights, New Zealand has given away the enormous potential for further timber processing.

Housing Corporation mortgages were sold to private financiers, leaving mortgagee holders feeling ripped-off. 

Two examples: Telecom, New Zealand Railways, and the effect on New Zealand's liabilities. 

Telecom was bought by a syndicate of  US companies Ameritech, Bell Atlantic and New Zealanders Mssrs. Fay, Richwhite, Gibbs and Farmer in July 1990 for $4.25 billion when Telecom had shareholder funds of $2.5 billion. Shareholder funds declined over the next several years despite cost-cutting (achieved by dumping workers, neglecting maintenance and failing to build infrastructure) because of large capital payments to its shareholders who started bailing out of the company from 1997 with a realised capital of $7.2 billion, in addition to a share of dividends worth $4.2 billion.  (1)
Between 1990 and 1998 the company shareholder funds halved to $1.1 billion and it was then heavily in debt.
From 1995 'til 2004, Telecom paid dividends of $6.7 billion from net earnings declared in N Z of $5.4 billion, of which approximately $5.0 billion went overseas.(2)

This Telecom exercise in privatisation added approximately $10 billion to New Zealand's international liabilities.

New Zealand Railways was sold in 1993 in a sale organised by merchant bankers Faye and Richwhite (Yup, them again!) who then, get this, proceeded to benefit from it hugely, by taking a substantial shareholding. A conflict of interest not unlike the behaviour mirrored by the criminals that stripped the post-Soviet Russian economy of enormous wealth.
The main shareholders of the purchaser, Tranzrail, were Faye, Richwhite, Berkshire Fund and Wisconsin Central of the US, and Alex van Heeren.
These people bought a company which had been freed of debt with a public (taxpayer) injection of capital worth $1.6 billion. The price agreed was $328 million, of which they paid only $107 million and borrowed the rest. According to Brian Gaynor they "were responsible for stripping out $220.9 million of equity in 1993 and $100 million in 1995" (3)
By the time they sold out, they had made total profits of $370 million, mainly tax free, because of a lack of a capital gains tax, and insinuations of insider trading.(4) (They paid $20 million to make these insinuations go away).
Wisconsin's safety record was nothing short of disgraceful, shameful. By 2000, fatal accidents to employees were eight times the national average.
Investment and maintenance were appalling, which crippled the whole operation.
They then sold out to an Australian company Toll, who similarly failed to maintain the company, who in their turn sold back to the New Zealand government in two tranches totalling $960 million, which is all very well, but the government now has an enormous deferred maintenance bill (thousands of millions of dollars) to repair the railbeds, signal systems and replace antique, worn-out rolling-stock.

It is difficult to quantify the total costs to the country.
Ruined lives and families, opportunities squandered for the New Zealand people, years of progress, institutional knowledge and intelligence tossed away, not to mention the financial losses. Clearly $1.3 billion was paid to the two owners, even without all dividends being accounted for, most of which will have ended up overseas anyway. The cost to us, (the New Zealand government) the citizens, will be billions of dollars, greatly magnified by the, in this writer's opinion, criminal negligence of the private owners. It illustrates an almost perfect example of selfishness and greed. 
(more to come)


(1) "Testing times ahead for Telecom", by Brian Gaynor, New Zealand Herald, 26 May 2001
(2) "Telecom: What a winner!"  Financial report on winner of the Roger award, Sue Newberry
(3) "Investment: Track record costly to public", by Brian Gaynor, New Zealand Herald, 21 October 2000
(4) "A tough case...and a long one", by Brian Gaynor, New Zealand Herald, 16 October 2004
Bill Rosenberg, Trade union economist, wrote most of this for a New Zealand Fabian Society discussion paper.

 Malcolm Yeates                                                                                                            Jollyoldsalt@gmail.com

“Questioning growth is deemed to be the act of lunatics, idealists and revolutionaries. The myth of growth has failed us. It has failed the two billion people living on less than $2 a day. It has failed the fragile ecosystem on which we are entirely dependant for our very survival. It has failed, spectacularly, in its own terms, to provide economic stability and security in people’s livelihoods” (1).   The system is broken. Business as usual is no longer an option nor tolerable. Prosperity for the few founded on ecological destruction and persistent social injustice is no foundation for a civilized society.

Should we continue on the same path as we have in the past, we will arrive, soon, in a society with a fabulously rich elite, a middle class shrunken into insignificance, struggling to keep its head above water, and a working class that can’t. This unhappy disparity of wealth shall be achieved with more and more production and consumption of goods and services, at a cost in environmental devastation and a fragmented, incoherent and violent society in name only. Unemployment will be for most, the norm, with no chance of contributing to, or being part of a functioning society.

“This is the conundrum of our existence. We have structured our affairs in such a way that economic growth and excessive consumption are destroying us and our world, while their absence dooms us to recession and unemployment.
Clearly we need a steady state economy that can serve human needs without endless growth. Rather than uncritically accepting this mirage of growth, we need to build alternatives” (3).   The minimum wage shall be set at $17.00 per hour. The minimum wage will be adjusted to the inflation rate on an annual basis.

Work hours completed after 35 (thirty five) hours shall be paid at double time.
All workers will be strongly advised and encouraged to join a union.
Five weeks annual holiday will be paid by the employer to each worker.
Maternity leave, for both parents will be set at no less than 26 weeks.
Redundancy for every worker shall start at three month's income, for the first years service or part thereof. Every years service thereafter shall be paid at one month's income. 
Co-operatives will be strongly encouraged and supported amongst workers with a common interest.

  The lowest rate of taxation will be 10% (ten per cent) and apply to all income up to $30,000.
Woe betide any greedy son-of-a-bitch manipulating income to qualify for the lower rate.

  A progressive p.a.y.e tax will be re-introduced. The top rate of taxation shall be 70% and shall be applied to all incomes over $250,000. Trusts and companies used to camouflage income will be banned.
Income levels will be adjusted by the annual rate of inflation.
  An additional social security tax of 10% will be applied, to be used solely for health spending.
  The tax rate on cigarettes and alcohol will increase. All tax received from such sales will be paid to public hospitals.
  Supermarkets and dairies will be unable to sell alcohol. Local communities shall have democratic control as to whether or not alcohol outlets will be permitted in their neighbourhood. 

 
Third party insurance for cars will be compulsory.
The tax rate on petrol will be increased and all tax received from this source will be used on roads and/or public transport.

A discussion needs to be initiated about our use of finite resources, and our almost automatic and thoughtless construction of yet more roads and motorways.


Estate duty on all estates valued at over $500,000 will be re-introduced.
All profits on second homes, investment properties and shares sold within 12 years of purchase will be deemed to be part of the owner’s taxable income.

'Hot money' sent into New Zealand to take advantage of the movement of the exchange rate will be taxed.

 
The exchange rate will be periodically adjusted, to benefit export businesses.
The Governor of the Reserve Bank will no longer be able to increase or lower the Official Cash Rate (OCR).
  “Greater reliance on macro-economic policies in areas such as the exchange rate and interest rates to achieve profit, competition, productivity and innovation. In other words policies directed at controlling inflation by increasing supply rather than restricting demand.
Greater use of fiscal policy and an integration of fiscal policy with monetary policy, so that quicker acting and better focused fiscal measures would take more of the burden of controlling inflation.
A wider remit for the Reserve Bank so that it is required to look at broader goals such as growth and efficiency in the real economy in addition to the current exclusive priority given to the control of inflation.
A more effective monetary policy taking into account major inflationary factors, e.g. huge increases in bank lending for residential properties”(2).

 Or. Replacing the O C R with an Interest Linked Saving Scheme would be more effective in controlling inflation and would encourage rather than destroy the productive economy.

 The final entitlement age for superannuation will be flexible. Some people will still be capable of good work well into their 70’s; others will be worn out at 60 years of age. The amount paid will be adjusted annually by the rate of inflation, and will be 70% of the average wage.
A person will not be entitled to superannuation until they have retired from the work force. Super payments will cease upon any re-employment or part-employment that takes a person's total taxable income above the average wage.

Where there are dependant children, the family income, up to $75,000 may be halved for tax purposes.

 
“Public education is the most important element in the maintenance of a democratic system.
The better citizens as a whole are educated, the wider and more sensible public participation, debate and social mobility will be. Any serious rivalry from the private education systems will siphon off the elites and fatally wound the drive and funding of the state system.
Highly sophisticated elites are the easiest and least original thing a society can produce.
The most difficult and the most valuable is a well educated populace.

Fashionable education consultants (Science of Education specialists) have reduced the budgets for general education and the number of teachers, telling us there is no money and have concluded that our sophisticated system cannot afford to properly educate our people.
It should be pointed out to these specialists that there will be even less money in a society of functionally illiterate people.
We know this is a suicidal and lunatic policy position.
What we are doing is passively accepting the conclusion of lunatics” (5).

Therefore:-

 There will be no money for private schools.
Adult (night classes) education shall be re-established.
There will be extra money for kindergartens, schools and universities.
An enquiry will be conducted into teacher training, pay rates, teacher’s status within the community and the “after hours” public use of schoolroom resources.
An enquiry will be conducted into student loans with a view to the abolition of student loans.


Alternatively, The State will pay those students taking degrees for which there is a shortage e.g. Agricultural Science, Medicine.
Most university degrees will be free, e.g., Arts, Fine Arts, Humanities and the Sciences.
Some courses, e.g., Commerce, Business and Law will be charged at full cost. 

 Of major importance to New Zealanders, is the retention and flowering of
Te Reo Maori.
Te Reo is an official language of this country, spoken nowhere else.
Monoligual people who learn another language also learn another culture.
Bi-lingual people are more sophisticated, bi-cultural human beings.
To this end Te Reo will become a compulsory subject at all educational institutions, with a special emphasis on Language Nests (early immersion classes). 

 New Zealand Railways will be re-established with the aim of building a railways system similar to France.

System analysts have been given control of finances for Government departments and have been busy trying to make each separate government service profitable, yet without realizing that the public service is not a separate private corporation, but part of a whole, which is the entire public structure. 

The proposal is thus:- 
“To treat the rail system as a fundamental need, adhering to the 19th century idea of a national infrastructure which requires investment without any rational plan for a financial return.
In France, they have maintained a large staff at all levels. Taking the view of customer service, cleanliness, of maximum number of services, therefore of choice in the use of trains, of good food and of reliability. They have spent money developing technology to produce fast reliable trains, building new railbeds and signal systems. Property values have increased in proximity to railway stations; business goes to towns served by fast trains-thus helping the policies of decentralization. The balance of payments is helped by not importing fuel for less fuel-efficient modes of transport; e g trucks and aircraft. Tourism benefits with an influx of tourists wanting to use trains. France’s essence of success is that the entire sector is treated as providing an essential public service, worthy of the best high technology in the context of labor, maintenance, and an investment-intensive industry” (5).  Making a profit is not a concern.

 The New Zealand Shipping Line will be re-established to assist our exporters and to complement the railway system.

The New Zealand military forces have concentrated on developing a post modern, hi-tech, abstract idea of professional warfare (frigates and armored personnel carriers).
The result is that our forces, by training, equipment and attitude are no longer capable of fighting a real modern war, which can be watched on television news channels every night.

 A typical postwar conflict now involves irregular and highly mobile combat which mixes armies with civilians and irregular forces, professional and amateur; low-cost (though in some cases highly-sophisticated) equipment and public terror. These rag-tag forces are easily capable of confounding and defeating the most powerful of ‘conventional’ armies.

Since about 1950 this type of warfare has steadily increased to, by now, more than fifty conflicts” (5).
E.g. Vietnam, Bougainville, Somalia, The Balkans, Afghanistan and Iraq.
About 1,000 combatants and 5,000 civilians are being killed every day.

“The National government’s neo-conservative, monetarist inspired
Electricity privatisation reforms in the 1980’s didn’t work, can’t work, and never will.
The government of the day set up five competing generators, commissioned with making a profit. Prices had to rise to pay for five sets of lawyers, accountants and marketeers, all of whom would be receiving over-inflated corporate salaries.

 Networks have been neglected.
Generation capacity has been deliberately stunted, creating higher prices and leaving the nation vulnerable to black-outs.
When networks found they really had to build something, they built short-term, stop-gap, carbon-heavy, gas-fired generating stations.
In our country, which is geographically long, with a small population, sparsely scattered, needs a degree of planning and foresight no amount of market regulation can achieve". (4).

The best way of saving money is conservation. What profit-driven enterprise can promulgate that contradiction?

Electricity is not a commodity in our society; but an absolute necessity; when it is switched off, people die. We have seen that.

It has been revealed recently that electricity companies have overcharged consumers here, by about four thousand three hundred million dollars. ($4,300,000,000).

If any more proof is needed of the lunacy of the present system it is the reshuffling of assets between and around the various generating companies. No amount of re-designing will ever make this senseless model of right wing thinking work. None.
Private enterprise has clearly demonstrated it is not capable of running this essential resource.

Therefore. 
The electricity generating and distribution infrastructure in New Zealand will be re-nationalised.
Government will take the responsibility of rebuilding the system with a unity of purpose and for the benefit of all people.

All privatised water supplies in New Zealand will be re-nationalised and placed under local, democratic control.

 The Wellington City Council’s private water company ‘Capacity’ was:-
Charged with saving WCC several millions of dollars; they have not.
Charged with replacing ten kilometers of water pipe in annual maintenance work; they have not.
The Wellington water reticulation system loses nearly a quarter (22%) of its load between treatment plant and consumer’s tap. 

 
I have compiled this budget after reading and being influenced by several writers (they have much more skill and grace).

Patricia Smith of Christchurch, who published her alternative budget in the ‘Sunday Star Times’ about a year ago. I have used the framework she provided, and modified it to mine. 
(1) Tim Jackson, Economics commissioner, Sustainable Development Trust, independent advisory board to UK Government. “Prosperity without growth” ‘Questioning growth…’ 
 (2) Bryan Gould   Diplomat; Professor of Law; M.P, British Labour Party; Academic and Rhodes Scholar contributed the economic measures starting with ‘Greater reliance…’
 (3) John Rhodes of Greytown, ‘Listener’ letters,   “This is the conundrum…’
 (4) Roger Lacey, writing in ‘The Listener’ letters page, “The National Govt…’ 
 (5) John Ralston Saul, Canadian intellectual and writer ‘The Doubter’s Companion’,
Voltaire’s Bastards’ and ‘The Collapse of Globalism’. His contribution is to Railways, Education and Defence.

 

Malcolm Yeates

Jollyoldsalt@gmail.com

Napier
There are lessons to be learned by the Christchurch reconstruction authority from the Napier earthquake recovery and reconstruction struggle of 1931.
J S Barton, a magistrate and L B Campbell, engineer, were appointed as Commissioners of Napier, charged with organising the reconstruction effort, who together with local committees had the job of organising reconstruction. Local survey plans and land titles were destroyed, neccessitating property re-surveying.
Insurance companies refused to cover the damage from fires that ensued after the earthquake. In 1931 Parliament passed the Hawke's Bay Earthquake Act, which provided loans for local firms and citizens to rebuild properties.
Because of the economic depression at the time, funds provided were far from adequate and repayment terms were steep.
A lot of the recovery funds came from charities, who in subsequent weeks, poured the cash in.
The authorities didn't want haphazard growth and a temporary shopping centre "Tin town", was built in Clive Square and used for several years.
They were then, more or less, told to get on with it.
Napier differs fom Christchurch in that Napier's town centre was pretty much razed. A clean palette, so to speak.
Authorities were able to completely re-design the centre, with wider streets, and some of New Zealand's earliest underground power and
telegraph lines.
Four architectural practices joined together to share ideas and resources.
Louis Hay was influenced by Frank Lloyd Wright.                
Natusch and sons' buildings were simple and clean in style.
Westerholm did many buildings using Spanish Mission style.            
The most popular though, was the Art Deco style, used by E A Williams, emphasising spare clean lines and geometric motifs.
Two  years later, at the New Napier Carnival in 1933, the city was officially declared reborn.
Christchurch
The reconstruction ideas and plans must come from the citizens of Christchurch, who are fizzing, bursting with inspirational ideas for using their ambitions, energy and capital and supported by planning, architectual and engineering professionals who will aid the people to define and design Christchurch as a 21st century city in sustainable design and in the use of energy, food and resources. Imagine new centres of business and laboratories for biotechnology, electronics, finance and other high-value services for agriculture and manufacturing, with plenty of rich opportunities for both science and business and a new relationship between rural and urban communities. The community needs a set of agreements on their own ideas and plans. Council and the government can't mandate that, nor can they micro-manage it as they seem intent on doing. Instead government can set a broad framework for engagement, support of the work, and pledge to build the city the citizens want. (See above how the Napier rebuild was handled). The citizens of Christchurch must own the re-build.

I would like to add my two cents worth, so here's what I think
The Central Business District is a 17th century concept and was created when horses were used for transport and as a means of communication.
Forget the idea of a CBD now.
There are a lot of buildings within the district irrevocably damaged, these can be cleared and the sites returned to gardens.
Hagley Park will be greatly expanded out into the old business district, to the riverbanks, then down to the sea.
Having said that, there are also many hundreds of wonderful buildings in the centre of town needing to be lovingly rebuilt and restored because afterall, it is the old buildings which define Christchurch and make it such a handsome, beautiful city. Some examples are churches and the old University buildings.
New 'hubs' (hearts?) to be developed in the suburbs, incorporating small parks, civic, commercial, manufacturing and residential (apartment) buildings. The new buildings will be constructed in timber and be about three or four stories high and incorporate everything we know about new earthquake-proofing, sustainability and environmental building standards. New vertical farming in converted highrise buildings, garden roofs and green walls. To bring Christchurch back to its genisis as the market-place for the farmlands on the Canterbury plains. An international architectural competition will be held for the designs of these new buildings.  
The hubs will be connected with a web of fast, modern trams and bicycle roads. Imagine highly attractive places for living, shopping, recreation, entertainment and education, with a very high standard and quality of design.

The newly created Canterbury Earthquake Recovery Authority (CERA) is mandated with consulting and executing the recovery plan.
But will it?   I don't think the chances are very high when we look at this government's track record of pushing through legislation under urgency (twice as much as the previous administration) which cripples select committees and the opportunity for careful debate to improve legislation. The new CERA legislation has suffered from this. Its consultation mechanism has been side-lined and it's now all too easy for CERA to ignore, particularly if it uses the example of minister-in-charge of Chch's recovery, Gerry (Bozo) Brownlee. This administation has already abused democracy in Canterbury when it sacked the elected representatives of the regional council and appointed commissioners. It then released a shoddy report which misrepresented the council's performance and ignored the council's progress building concensus on regional water issues. I wonder if Brownlee will tire of democracy at city council level and sack the council as was done to the regional one? People are becoming frustrated, exhausted and frightened. The major cause of frustration is the government itself, which is focussed on immediate issues only and seems incapable of responding to people's needs. "The lockdown of information here is truly scary," an emailer wrote about rebuilding the fabric and life of the city, "No one is talking to us".



Malcolm Yeates
Jollyoldsalt@gmail.com

Right-wing politicians in this country have a rather schizophrenic attitude toward the public service. The National Party came to power, in this last election, promising to cut the numbers of officials who weren’t in the front line.
Christchurch has shown how vitally important back-room officials are, and puts the lie to the nonsense espoused by the National Party (keep the front-line troops, while hollowing out the back-room staff ).

This was bought home to me after the second earthquake. I was talking to my friend, about the six or seven helicopters almost immediately located to Hagley Park.
Clearly, there was Air Traffic Control operating.
Maybe there was even a refueling depot set up. (Is this helicopter fuel? Is this the correct helicopter fuel?)
Maybe even a technician was on hand, helicopters being what they are, with heavy demands on maintenance.

So, it’s not just about the people who aim the hoses or crawl through the rubble.
Intelligence and competence are needed by the back-room, as well as at the front line.
All are needed if the machine is going to work as a whole.

 “How will the government’s response to the recession and the effects of Christchurch’s earthquake affect our ability, as a country, to deal with future disasters?
And will our public service have the resilience to cope?
If we allow government infrastructure to be run-down to the point of uselessness, because of under-funding, will we be able to properly respond to the next big disaster?
Is the shocking response by the incompetent Bush administration to Hurricane Katrina in New Orleans about an incapacity to effectively respond because of the U S government’s “small government” ideology, and continuous cuts to the public sector?
Or will the eventual demise of an effective public sector in New Zealand be used as an excuse to move from tax-payer subsidised public service to subsidising the private sector to provide user-pays, for-profit services in prisons, schools and even emergency response services? (1)

We were able, as a nation, to respond as effectively as we did in Christchurch because the remnants of a strong public service have not yet been completely gutted.

Are tax cuts really worth not being ready for the next natural catastrophe?

(1) Katrina King, Plimmerton, Letters column, DominionPost, March 26th

Malcolm Yeates     Jollyoldsalt@gmail.com