Monday, December 23, 2013

Romantic nonsense about family silver is costly to the poor

Excluding both the profits and the assets of Meridian, Mighty River Power and Air NZ, the NZ Govt portfolio of $45bn in assets produced a net profit of $20m in the year to June 30 2013.

A return of 0.04% on assets. That's zero point zero four percent.

The strongest returns came from:

  1. Transpower – a statutory monopoly which the High Court has just ruled operates under an indefensible regulatory regime costing consumers millions a year – around $150m in fact.
  2. Airways Corporation – another statutory monopoly and the only company empowered to sell air traffic control services. Justified of course but guarantees the company a profit,
  3. Asure Quality – which until September 2012 (i.e. after balance date) held the statutory monopoly for meat inspection in NZ.

So all of the strong performers were strongly assisted by being legalised monopolies. Grand.

The worst performers were:

  1. KiwiRail – $174.6m loss (we paid over $600m for the pleasure)
  2. Solid Energy – $335.4m loss
  3. Learning Media – $9.0m loss

Those losses mean:

  • less to spend on everything else… surgery, drugs, hip operations, young peoples’ education, Maori health, pensions – you name it… and the biggest losers are the poor – the people desperately in need of these funds, and,
  • the Govt bears risk. Risk which drives up the cost of funds for all of us.

All of us pay for some of us to indulge romantic dreams about trains or to feed fanciful beliefs that the government owns these “assets which are valuable”

This stuff is not silver its rust… the best performers can’t perform without laws which force revenue into their pockets, the worst performers are a receivers dream.

Genuine concern for the poor would not see government owning commercial assets.


  1. The family-silver argument is based on emotion not logic. The question those opposed to selling any state owned companies obviously never ask: is this the best use for the money involved?

  2. It's just sad at times when you see some government officials don't think of the greater good for the people who loyally pay taxes.