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New Zealand Government re-nationalises railways and ferry services

As the NSW Labor government, in defiance of the wishes of the NSW public without any electoral mandate, and cheered on by the corporate newsmedia, presses ahead with its plans to privatise NSW's electricity assets, the New Zealand Government is moving in the other direction and has renationalised its rail network. It is notable that New Zealand's experience of privatisation since 1993 is precisely the opposite of the claims made of what privatisation will achieve here in Australia. According to NZ Finance Minister Michael Cullen, as reported in the ABC, “The selling off our public rail system in the early 1990s and the running down of the asset afterwards has been a painful lesson for New Zealand“

The ABC News of 5 May 2008 reported:

The New Zealand Government has announced it is buying back the nation's rail and ferry services, 15 years after they were privatised.

Under the deal, Australia's biggest freight company Toll Holdings will be paid $500 million.

New Zealand Rail was sold in 1993 by the then National Government, and then Toll Holdings bought it and split the business.

Under the deal, Toll gets to keep its freight forwarding operations, but the New Zealand Government will have complete control of the rail network.

The railways were re-nationalised in order to encourage companies to use rail to transport freight rather than road, as a response to climate change and the spiraling cost of petroleum. The New Zealand government was driven to re-nationalise the railways after a long-running dispute with Toll Holdings over who would bear the costs of upgrading the rail network.

Seemingly, in response to the evident popularity of the Labour Governments' move, the opposition National Party announced that it would not sell off any state-owned enterprise in its first term of office if elected this year. The apparent consensus now against privatisation instead of for privatisation drew a critical response from the New Zealand Business Roundtable in a media release of 8 May. The media release also took aim at other moves towards renationalisation and government intervention in the NZ economy:

… the buy-back of Air New Zealand … the establishment of Kiwibank, the renationalisation of ACC, and the Auckland Regional Council’s reversal of the part-privatisation of Ports of Auckland.;

The case in favour of privatisation largely rested upon the familiar ‘everyone is doing it’ argument:

A few years ago the World Bank observed that “Privatisation is now so widespread that it is hard to find countries not using the approach: North Korea, Cuba and perhaps Myanmar make up the shrunken universe of the resistant.”

They neglected to mention popularly elected Latin American governments in Venezuela, Ecuador and Bolivia, who are now in the process of undoing the theft of publicly-owned assets enacted either under the guns of by murderous military dictatorships, or, in the case of Bolivia, by the betrayal of popular trust by supposedly ‘democratic’ left-of-centre governments (see "The Shock Doctrine", (2007 by Naomi Klein)).

Naturally, they couldn‘t resist contrasting New Zealand ‘unfavourably‘ with Australia where both sides of politics, Labor and Liberal, at both the state and federal level still enthusiastically embrace privatisation:

Currently the New South Wales government is battling with trade unions to privatise its electricity generators. Victoria (under the Liberal government of Jeff Kennett) did so in the mid-1990s, ...

The government of West Australia is looking at private ownership of its water utility and the Queensland government is selling airports and entering into public private partnerships to build schools.

Australia has private prisons and many infrastructure PPPs (Public Private Partnerships).

The media release cited other supposed success stories of privatisation: Germany, The Netherlands, Ireland, and quoted politicians from the UK, where, in spite of Labour having been in government since 1997, privatisation is still the orthodoxy.

The media release cited a A Business Roundtable study which estimated that failure to privatise could cause NZ to miss out on a 1% increase to its Gross Domestic Product (GDP). Even if this could be substantiated, the GDP, which counts all economic activity, including, for example, repairs necessitated by natural or man-made disasters as positives, is hardly a reliable measure of true prosperity. Indeed, it would be not be hard to envisage how the financial paper-shuffling and the additional complexity necessitated by government regulation of privately owned utilities could be construed by the Business Roundtable as adding to NZ's prosperity.

The media release cited the results of a push poll recently conducted by proponents of privatisation in NSW:

A recent survey found that two out of three NSW residents don’t care whether the state government or business runs the electricity industry.

The media release made no mention of another poll conducted on behalf the Union movement of NSW found that 85% of the NSW public opposed privatisation. Those results are consistent with every other poll conducted on privatisation in Australia in recent years which, without exception, showed overwhelming public opposition to privatisation even in the face of relentless pro-privatisation propaganda by business leaders, the government and by the corporate newsmedia. When the NSW Liberal opposition put a platform for the full privatisation of electricity to the NSW public in the elections of 1999 it was roundly defeated.