A new report claims to provide "compelling" evidence that privatisation would deliver more "value for money" for New Zealanders. How good is the evidence? Not good.
We have an exceptionally good example of why we shouldn't privatise NZ any further. Energy. Last year consumers and businesses paid high energy prices. It couldn't be helped because... the market. Off the back of that Genesis Energy has just posted record profits. It's all a choice and private companies presented with a captive market will price gouge. Now imagine your health care with extremely limited regulations and competition being privatised. Seymour likes to talk about $5000 insurance policies.... try 10 times that.
In the 90's when Ruth was threatening privatisation, I checked out private health insurance because, as a nurse, I figure health important. In the public system where I worked, fripperies, such as health insurance, were not available for staff. An insurance agent gave me a price - expensive but possibly doable, but then he came back to me - sorry, he had made a mistake, very sorry but he had quoted me the deal for a doctor - a professional! Nurses, he said, weren't in that category and their job was more risky, so the fees would be quite a bit more. I didn't take out health insurance.
They use those techniques in every report, it does get obvious when you read enough of them but how many people are dull enough to do that?? 😅 Good breakdown of the rhetorical devices used to grab an audience and win them to their ideas.
The fact of the matter is, even if free market privatisation with competitive elements was the way to go, New Zealand is just not big enough. We are tiny. We are not Australia. We are not America. We are not a European country with land borders with 4 other nations. We are stuck at the bottom of the world and actually really quite insular. We are leeching money out overseas simply through trade which weakens us an economically overall far more than any government debt invested in our infrastructure or our people.
Not a good idea, not a good match for us, not good timing, not good implementation I would expect. Just bad all around.
Common to these privatisation works reports are (i) ignoring technology changes that would have occurred anyway (Telecommunication improvements), (ii) comparing apples and oranges -- eg assessing financial profitability of public services with profitability of privatised services while ignoring the fact that universal public services are not provided for financial profitability purposes, rather as necessary infrastructure for society only needing to cover its costs, and (iii) completely ignoring the who gains/who loses from privatisation compared with universal public services.
Also note that Wilkinson is one of the unrepentant authors of those 1984 and/or 1987 Treasury briefings to the incoming government.
Thanks for reading it so I don’t have to, I have glanced at it and thought it a tad shoddy and biased for a policy research think tank- to be honest I expected it to be better but then again these folks are economists not scientists so it may be expected their research skills may be a little shonky?
You can tell it's very carefully crafted to give an impression of an overwhelming body of research supporting privatisation. They know exactly what they are doing. But the fact that it comes across as still super biased shows they still have ideological blind spots.
Yes. NZ Initiative is an Atlas Network disinformation org, as is TaxpayersUnion & ACT itself. Privatisation will make their key players many millions, while leaving NZers in pain & poverty
For those who don’t know about Atlas - this is quite a good introduction
Massive cuts; demolishing public services; privatising public assets; sacking civil servants; sweeping away constraints on corporations; destroying regs that protect workers, vulnerable people & the living world; supporting landlords against tenants:
American “health” is a good example of the misfortunes of the profit motive. But it pales in comparison to privatization of water in England. The unfortunate bi-product is the conversion of rivers into open sewers. And the profits have been spirited overseas when there is a need for remediation. Have we really forgotten the saga of Wisconsin Rail, Fay Richwhite and the carnage at NZR? Those who don’t remember history are condemned to repeat it.
I reviewed a bunch of info on water privatisation in my preparation for this article. I couldn’t find a way to work them in. It’s truly immoral to privatise and collect rents from water.
Especially if it belongs to a particular group 😊. There was (and may still be) an accounting theory called current cost. It supposedly computes profits only after the physical maintenance of plant is taken into account. Great in theory but practically impossible to implement. The normal historic cost basis cannot measure the degree to which the unscrupulous suck the life blood out.
Thanks Ryan - always good to read these sorts of honest unpackings. It was fascinating to read immediately after seeing some utter drivel from Philip Crump (writing as "Cranmer"; but also, notably, a recent partisan addition to the NZ on Air board and the Waitangi Tribunal).
His latest condescending flatulence is a more subtle approach to 'warming us up for privatisation'; bewilderingly conflating the private debt that Thames Water (UK) borrowed to pay for private shareholder windfalls with our own government "borrowing" [sic] for public infrastructure.
This sort of priming of the (profit-centric-privatisation) pump is getting more and more blatant. ...Truly demonstrates just how contemptuous of the voting public these grimy buggers are!
Yes, ACT MP Todd Stephenson put out a press release a couple a days ago using the same absolutely dishonest "the public economy is like a household" argument to push privatisation reckons as Wilkinson uses in today's NZ Initiative newsletter. It is a clearly coordinated campaign by Atlas Network stooges and running dogs.
Ngā mihi Ryan. Nowadays when i argue against ‘private does it better’ I cite electricity in Aotearoa and health in the USA - case closed. Initiative is so much the wrong word, inhuman might be better but smarter people than me might come up with alternative labels for our version of DOGE and their creepy little operatives
Thanks so much for this analysis. It's heartbreaking to have heard all this same garbage during the 80s/90s and knowing that the present government is inflicting what my family endured in the 90s, and worse, on today's working-age families, and it's going to get even worse if they can carry out their privatisation plans.
Ryan, you may be interested in Diane Stone's theory of garbage cans in relation to the NZ Institute and similar bodies. I find her argument that these institutions are always trying to apply the same solution (privatisation, austerity, free markets) to all problems, regardless of evidence, really helpful in my teaching and writing on this topic.
Stone, D. (2007). Recycling Bins, Garbage Cans or Think Tanks? three myths regarding policy analysis institutes. Public Administration, 85(2), 259-278. https://doi.org/10.1111/j.1467-9299.2007.00649.x
Really excellent work here, thank you for the analysis. It's great having it broken down so clearly so we have the arguments to hand when needed. I'll come back to it when the time comes to make another protest sign ✊
Good analysis. I skimmed the report but didn’t have the time to go deeper. Government doesn’t own assets to extract a return from its people. Every extra dollar extracted is effectively a tax on the private sector (households and businesses), and therefore inflationary. Public ownership should target reducing those costs, and where the govt competes in other markets it should aim to increase competition so other players are forced to innovate.
“If done well …”. Such an easy phrase to slip off the tongue.
A Canadian banker said the same thing when trying to convince me that governments cannot do the things that specialist companies can because they don’t have that “specialist” expertise.
We have an exceptionally good example of why we shouldn't privatise NZ any further. Energy. Last year consumers and businesses paid high energy prices. It couldn't be helped because... the market. Off the back of that Genesis Energy has just posted record profits. It's all a choice and private companies presented with a captive market will price gouge. Now imagine your health care with extremely limited regulations and competition being privatised. Seymour likes to talk about $5000 insurance policies.... try 10 times that.
In the 90's when Ruth was threatening privatisation, I checked out private health insurance because, as a nurse, I figure health important. In the public system where I worked, fripperies, such as health insurance, were not available for staff. An insurance agent gave me a price - expensive but possibly doable, but then he came back to me - sorry, he had made a mistake, very sorry but he had quoted me the deal for a doctor - a professional! Nurses, he said, weren't in that category and their job was more risky, so the fees would be quite a bit more. I didn't take out health insurance.
I certainly don't want to think about my health care being privatised. That way leads to madness
They use those techniques in every report, it does get obvious when you read enough of them but how many people are dull enough to do that?? 😅 Good breakdown of the rhetorical devices used to grab an audience and win them to their ideas.
The fact of the matter is, even if free market privatisation with competitive elements was the way to go, New Zealand is just not big enough. We are tiny. We are not Australia. We are not America. We are not a European country with land borders with 4 other nations. We are stuck at the bottom of the world and actually really quite insular. We are leeching money out overseas simply through trade which weakens us an economically overall far more than any government debt invested in our infrastructure or our people.
Not a good idea, not a good match for us, not good timing, not good implementation I would expect. Just bad all around.
Common to these privatisation works reports are (i) ignoring technology changes that would have occurred anyway (Telecommunication improvements), (ii) comparing apples and oranges -- eg assessing financial profitability of public services with profitability of privatised services while ignoring the fact that universal public services are not provided for financial profitability purposes, rather as necessary infrastructure for society only needing to cover its costs, and (iii) completely ignoring the who gains/who loses from privatisation compared with universal public services.
Also note that Wilkinson is one of the unrepentant authors of those 1984 and/or 1987 Treasury briefings to the incoming government.
Yes! There’s never a control group in these experiments. And as you say the focus is on profitability which isn’t the government’s goal.
So many areas to cover. I usually stop when Substack warns me I’m getting too long for email. Wilkinson is a slippery one.
Thanks for reading it so I don’t have to, I have glanced at it and thought it a tad shoddy and biased for a policy research think tank- to be honest I expected it to be better but then again these folks are economists not scientists so it may be expected their research skills may be a little shonky?
You can tell it's very carefully crafted to give an impression of an overwhelming body of research supporting privatisation. They know exactly what they are doing. But the fact that it comes across as still super biased shows they still have ideological blind spots.
Yes. NZ Initiative is an Atlas Network disinformation org, as is TaxpayersUnion & ACT itself. Privatisation will make their key players many millions, while leaving NZers in pain & poverty
For those who don’t know about Atlas - this is quite a good introduction
Massive cuts; demolishing public services; privatising public assets; sacking civil servants; sweeping away constraints on corporations; destroying regs that protect workers, vulnerable people & the living world; supporting landlords against tenants:
https://www.theguardian.com/commentisfree/2024/jan/06/rishi-sunak-javier-milei-donald-trump-atlas-network
American “health” is a good example of the misfortunes of the profit motive. But it pales in comparison to privatization of water in England. The unfortunate bi-product is the conversion of rivers into open sewers. And the profits have been spirited overseas when there is a need for remediation. Have we really forgotten the saga of Wisconsin Rail, Fay Richwhite and the carnage at NZR? Those who don’t remember history are condemned to repeat it.
I reviewed a bunch of info on water privatisation in my preparation for this article. I couldn’t find a way to work them in. It’s truly immoral to privatise and collect rents from water.
Especially if it belongs to a particular group 😊. There was (and may still be) an accounting theory called current cost. It supposedly computes profits only after the physical maintenance of plant is taken into account. Great in theory but practically impossible to implement. The normal historic cost basis cannot measure the degree to which the unscrupulous suck the life blood out.
Thanks Ryan - always good to read these sorts of honest unpackings. It was fascinating to read immediately after seeing some utter drivel from Philip Crump (writing as "Cranmer"; but also, notably, a recent partisan addition to the NZ on Air board and the Waitangi Tribunal).
His latest condescending flatulence is a more subtle approach to 'warming us up for privatisation'; bewilderingly conflating the private debt that Thames Water (UK) borrowed to pay for private shareholder windfalls with our own government "borrowing" [sic] for public infrastructure.
This sort of priming of the (profit-centric-privatisation) pump is getting more and more blatant. ...Truly demonstrates just how contemptuous of the voting public these grimy buggers are!
Yes, ACT MP Todd Stephenson put out a press release a couple a days ago using the same absolutely dishonest "the public economy is like a household" argument to push privatisation reckons as Wilkinson uses in today's NZ Initiative newsletter. It is a clearly coordinated campaign by Atlas Network stooges and running dogs.
And these dishonest privatisation advocates pretend that we are not a sovereign currency issuing country.
Have a listen to Geoff Bertram on Melanie Nelson's podcast "Coherent". His take is a breath of fresh air.
Ngā mihi Ryan. Nowadays when i argue against ‘private does it better’ I cite electricity in Aotearoa and health in the USA - case closed. Initiative is so much the wrong word, inhuman might be better but smarter people than me might come up with alternative labels for our version of DOGE and their creepy little operatives
Those are really great and terrible examples. I was going crazy reading the report. It’s so obvious they have a corporate agenda.
Thanks so much for this analysis. It's heartbreaking to have heard all this same garbage during the 80s/90s and knowing that the present government is inflicting what my family endured in the 90s, and worse, on today's working-age families, and it's going to get even worse if they can carry out their privatisation plans.
I’m so glad you found it useful. Keep fighting.
God, yes! Every time I read about government needing to make more profit I get nauseous, because that means a service I depend on will be cut.
Ryan, you may be interested in Diane Stone's theory of garbage cans in relation to the NZ Institute and similar bodies. I find her argument that these institutions are always trying to apply the same solution (privatisation, austerity, free markets) to all problems, regardless of evidence, really helpful in my teaching and writing on this topic.
Stone, D. (2007). Recycling Bins, Garbage Cans or Think Tanks? three myths regarding policy analysis institutes. Public Administration, 85(2), 259-278. https://doi.org/10.1111/j.1467-9299.2007.00649.x
Thanks so much for the reference. I will read with interest.
Really excellent work here, thank you for the analysis. It's great having it broken down so clearly so we have the arguments to hand when needed. I'll come back to it when the time comes to make another protest sign ✊
Awesome. So glad you found it helpful. Would love to see your protest sign.
Good analysis. I skimmed the report but didn’t have the time to go deeper. Government doesn’t own assets to extract a return from its people. Every extra dollar extracted is effectively a tax on the private sector (households and businesses), and therefore inflationary. Public ownership should target reducing those costs, and where the govt competes in other markets it should aim to increase competition so other players are forced to innovate.
Wow you have accomplished heaps of work here. Time to digest it.
Yeah but. We can give the NZ Initiative and its little toy friends a practice ground to kick around on before the grass gets too chewed up?
“If done well …”. Such an easy phrase to slip off the tongue.
A Canadian banker said the same thing when trying to convince me that governments cannot do the things that specialist companies can because they don’t have that “specialist” expertise.