Local capitalists prove they are no better than foreign capitalists

The debate over ownership of Auckland Airport has been an interesting diversion this past week although it’s easily trumped by the more significant discussion on the future of our rail network.

Early in the week the government signalled its opposition to a possible 40% takeover of the airport by the Canadian Pension Plan Investment Board. It issued an order in council to emphasise cabinet ministers considering the proposed takeover must take into account whether the overseas investment “will, or is likely to, assist New Zealand to maintain New Zealand control of strategically important infrastructure on sensitive land”.

Business interests are fuming. They have labelled it “populist xenophobia”, “reckless” and even “socialist” (if only!) It’s nonsense of course. Every self-respecting country has much tighter rules on foreign ownership of strategic assets than New Zealand. Australia for example protects the likes of its banks and airports. New Zealand on the other hand sold our banks to Australia and every year more than two billion in bank profits crosses the ditch from kiwi wallets to enrich our Aussie cousins.

The more justified criticism is the government’s move coming so late in the piece. It’s been a year since takeover talk was first mooted but our Minister of Finance has been silent till five minutes to midnight.

National’s John Key has been squirming. Instinctively he supports private ownership of everything and has already announced policy to part-privatise what’s left of our major assets such as Solid Energy. But because public opposition to the airport sale is so widespread he says National supports the airport remaining in New Zealand hands.

Many commentators have suggested the public mood has changed to oppose privatisation of state assets but there has been no change. Every major privatisation undertaken by Labour and National in the past 24 years has had a solid majority opposed to it. Most people instinctively understand we would all be better off with 100% of the shares of essential infrastructure in public ownership. Selling assets means that instead of us all being shareholders, with the shares held in trust by the government, only a few wealthy corporates and a miniscule minority of “mum-and-dads” benefit.

Overlooked in the airport kerfuffle is the nonsense that suggests it matters whether the airport is owned by foreign capitalists or the home grown variety. Do we really expect local capitalists to be better stewards of our assets than foreigners? There is no evidence to say they are.

Think for a moment about the activities of our own Michael Fay and David Richwhite. These two kiwis were at the heart of many of the major privatisations of state assets over the past two decades. For example they were part of the group which bought New Zealand Rail and promptly ran this critical asset into the ground. They made pots of money in the meantime and then sold out just before the share price crashed. They left taxpayers to pick up the $270 million tab for upgrading the rail lines after 15 years of neglect. It’s hard to believe any foreign capitalists could have acted in a more self-serving manner. The disgraceful state our rail network should be seared on the national consciousness as a fundamental lesson in the danger of private greed over national service.

Every privatisation tells the same story. Whether it’s Air New Zealand, Telecom or our electricity network local private owners are no better than foreign owners. In every example it’s the all too familiar pattern of privatising the profits and socialising the losses.

Our politicians should have learnt by now. Full public ownership is the only way to protect our strategic assets and there is a glimmer of hope that this truth is penetrating even the thickest of parliamentary skulls. We were treated in the past couple of days to news the government has been negotiating to purchase back our railways and ferries from the Australian company Toll Holdings. It’s a welcome sign even if it’s five years too late. Back in 2003 calls were made for Labour to buy back the railways when the government picked up the battered remains after the likes of Fay and Richwhite has milked it dry. Instead Labour sold it to Toll only to find the Australian owners making incessant and increasing demands for subsidies.

The only surprise in all this is the time it’s taken for the stranglehold on common sense to be eased. It’s a welcome change for some debate about private versus public ownership to come to centre stage.