Privatisation short-sighted says Mr Anderton

Press, 20 November 1987, Page 9

Privatisation short-sighted says Mr Anderton

Privatising State assets to reduce debt, as suggested by the Minister of State-Owned Enterprises, Mr Prebble, has been rejected as short-sighted by the Government member of Parliament for Sydenham, Mr Jim Anderton. In a nine-page paper released last evening, Mr Anderton said anyone seriously interested in economic security, social justice, and equity must seriously question privatisation. He said he had been preparing his paper for some time and it was not

specifically issued in response to Mr Prebble’s comments. But Mr Anderton directly challenged Mr Prebble’s comment that the Government needed the money that privatisation would raise. That was a particularly short-sighted policy, he said, in spite of the Government’s obviously benefiting from the sale of public enterprises. Some State concerns paid interest and dividends to the Government, so their sale would involve a perpetual loss of

income, he said. Privatised enterprises would not necessarily replace this income by paying tax as many State comapnies, such as the Bank of New Zealand, already paid tax. The average tax rate of the nine biggest corporations was also less than 15c in the dollar, said Mr Anderton.

“Another aspect of this issue is the high opportunity cost of diverting private enterprise investment from potential use in new and expanding industries.”

Mr Anderton suggested the way to solve debt problems was widening the tax base through such measures as capital gains tax. Savings could be encouraged along with productive investment, real economic growth, and more employment. At its worst, privatisation was the pursuit of self-interest for those who wished to plunder the public sector. This could be achieved by selling shares below their real value or gaining a natural monopoly to exploit.