NZ Herald on Vector sale

It is good to see the media focusing on the hypocrisy in the Government over Auckland Airport and Wellington’s electricity network. In the former example they moved heaven and earth to stop the private owners selling a minority stake to a Canadian pension fund. And for the latter they say there is no issue at all, despite it being 100% sale of a crucial monopoly.

So the NZ Herald editorial is welcome.

It is hard to find in these decisions any consistent policy that might guide foreign investors. The sensitivity of Auckland Airport had nothing do with its land, abutting Manukau Harbour, and it is hard to believe the Government’s comfort with the Vector sale has anything whatsoever to do with the land under the power lines.

It’s ridicolous. Is Dr Cullen really saying that all the hysteria he whipped up about asset sales (overlooking Winston sold it in 1998) was about the land under the airport, and not the airport itself? Yeah, right.

But for reasons that remain unexplained, Labour does not regard an urban electricity network as “strategic infrastructure”.

If that phrase has any meaning it must apply to power lines. A line network cannot be practically duplicated for the sake of competition. It is the classic natural monopoly. If line networks are not kept in public ownership they require careful regulation, as Telecom has shown, to prevent them gouging consumers or denying access to competing traffic.

Now again, so there is no confusion, I have no problem with the sale of the power lines. They will be subject to price regulation as most monopoly assets are. My problem is the hypocrisy.

Vector, as it happens, is a quasi-public entity, owned by a trust elected by Auckland consumers, whom it rewards at the expense of its consumers elsewhere. Wellington’s network has not been sold from this form of ownership wholly into the hands of a private company. It is a privatisation in anyone’s language. Yet the Government was more concerned about the partial sale of an airport in which two Auckland councils would have retained significant stakes. It will defy investors’ understanding.

This is a good point. This sale is far more of a privatisation than Auckland Airport was which was private fund managers selling to other fund managers. Vector is a public trust selling to a private entity.

The Government has steadfastly declined to publish a list of assets it regards as “strategic” because it has no consistent definition in mind. The public and potential investors are left to conclude that a property becomes “strategic” simply when it suits politicians to regard it so. At least that means that assets as vital as power lines can attract foreign investment when their luck is in. But this country’s process of approval should be better than a lottery.

Even Labour Party President Mike WIlliams has agreed that here should be a list of these so called strategic assets.

What this means is that each time Labour in the campaign tries to whip up populist sentiment on the basis of its actions in “protecting” Auckland Airport, their bubble will get pricked by reminders of the Wellington power lines, and Helen Clark’s lofty pronouncement that “asset sales will be a defining issue” looks as hollow as “carbon neutrality”, “closing the gaps” and “top half of the OECD”.