Labour rewrites history over its SOE record
Labour and its opposition mates are rewriting history in their attempts to score political points over the collapse of Solid Energy.
Like other state-owned enterprises under the former Labour government, Solid Energy was encouraged to diversify its core business and take advantage of subsidies encouraging investment in renewable resources and technologies.
To try to put the blame for the company’s plight on National and its assets sales programme is turning reality on its head.
The same goes for Meridian and Mighty River Power having to sell out of similar forays after closer inspection by the Treasury and other as part of the government’s selldown policy.
That has included MRP withdrawing from a project in the US that was driven by government renewable energy subsidies there.
The press gallery, including Radio Labour, have echoed the opposition line that somehow Finance Minister Bill English is responsible for the near half-billion-dollar plus loss in value at Solid Energy (based on equity of $423 million in June 30, 2012 accounts)..
More cheekily, former Labour president Mike Williams has said coal isn’t a desirable industry because of climate changes and he sees no problem in losing all the jobs. (Labour has a similar view of casino jobs.)
Then there’s Labour telecommunications spokeswoman Clare Curran’s linking of Telecom’s planned reduction in its huge workforce to the National’s handling of the economy.
In widely reported statement that displays a deep ignorance of business as well as history, she is quoted as saying the economy “continues to haemorrhage jobs,” adding that the government “has no idea how to get the economy working and creating jobs.”
In interviews, she describes the economy as weak or worse, flouting facts such as the latest retail sales figures, record exports and strong household and consumer confidence.
It is also worth noting her list of recently announced jobs losses – at Telecom, Contact Energy, New Zealand Post, Mainzeal, et al – can mostly be tracked back to pre-global financial crisis decisions under the Labour government.
Telecom’s downsizing is the natural outcome of the split up ordered by the government and the need to remain competitive in a market that has created thousands of new jobs and opportunities.
Contact Energy, another former SOE, is also responding to market forces in electricity, where over-investment in supply was encouraged, and is looking to become more of a cash cow than an expansionist-minded company.
New Zealand Post, like KiwiRail, is another case of a state-owned company that has had to keep shedding staff by holding on to operations that are no longer needed or have little future.
No amount of bleating by Ms Curran about this will change the facts that these two companies, like Solid Energy, are poor investments for the taxpayers as well as unreliable sources of future employment for Labour voters.
As for the Mainzeal collapse and a scaled-down wool-spinning factory in Oamaru, which have had well publicised job losses, is Ms Curran urging government bailouts as an alternative?
When this stuff is reported as “news” it is no wonder Fairfax political commentators say the public has no confidence in the National government’s handling of state-owned businesses – despite having more than 50% support in the latest opinion poll – and insist the alternative of private ownership “has not always been convincing.”
This usually means bringing up the old canards of Air New Zealand and NZ Rail, predecessor of KiwiRail.
In fact, the Air New Zealand collapse in 2001 after the Ansett acquisition was solely driven by events in Australia. The bailout was successful and the government could have hugely profited on its investment if had sold out in mid-2007 when the shares soared to $2.40.
Instead, Labour held on to them and, despite a recent surge to around $1.25, have failed to reach $1.50 since the GFC at a major opportunity cost to the taxpayer.
In the case of rail, Toll’s management of Tranz Rail made it attractive enough for Labour (at the behest of some large rail users) to spend $695 million on buying the rail and ferry assets off a reluctant seller.
Toll had the business in its books at $430 million and within a year (2009) the value of the purchase had been halved to $349 million.
KiwiRail’s latest accounts (to June 30, 2012) show a net loss of $2.3 billion and a write-off of two-thirds of its asset value to taxpayers – a cool $9.3 billion. Yes, billion.
If this is how governments manage businesses, which other ones do Ms Curran and Fairfax journalists think it should be running as well?
Instead of tortuous rationalisations to retain full ownership of SOEs, Labour and its media mates would be better off working out how taxpayers would be better off by selling them and in turn add to the economy’s momentum rather than hold it back.