Expert gives views on State enterprise

Press, 9 March 1987, Page 9

Expert gives views on State enterprise

PA Auckland A former top adviser to the Conservative Government in Britain and an expert on privatisation believes the Lange Government’s policy of setting up State-owned enterprises is sound but does not go far enough. Sir John Hoskyns, direc-tor-general of the Institute of Directors, said British experience showed that the greatest benefits would flow from fully privatised industries.

A big fear of the opponents of privatisation — increased unemployment and heavy social costs — had not been borne out in the shift from huge nationalised industries to private corporations, he said. Industries which had proved difficult if not impossible to privatise were often “sunset” sections, such as . coalmining and steelmaking. “Sunrise” industries such as air transport and telecommunications had been hugely successful.

Sir John, who was in Auckland yesterday, said, “There is no reason why a Government should not impose on a utility specific responsibilities provided they are spelt out at the time of flotation.”

He said a clear policy in such areas guarded against the dangers of private monopolies exercising the same powers as the public monopolies they had replaced. The winners from privatisation in Britain had been consumers. Workers in the privatised sectors had also gained from share issues set aside for them at the time State monopolies had been shifted to the private sector. It was better to regulate a private group rather than a State enterprise because Governments could always intervene and change the rules. “Obviously if you can’t balance your books you have either got to cut spending or put up taxes,” he said. “What Govern-

ments should not be doing is round-the-back-of-the-house ways of putting up prices through institutions it controls so that consumers subsidise public spending.”

Sir John, who has a background in business and politics, advised the British Prime Minister, Mrs Thatcher, from 1979 to 1982. He was head of her policy unit.

He is addressing business meetings during the next few days and will meet Mr Lange arid the Leader of the Opposition, Mr Bolger.

Arguing for the continuing public sale of large State trading organisations, Sir John said a key reason for privatisation rather than a half-way step was to separate the big enterprises from political control. ’ * *.•. ;

Leaving them with a measure of Government direction meant the “customer comes first” philosophy still took second place.