Thursday, 15 June 2006

More power to the people

Transpower lacks capital, and like the other state-owned energy trusts it will continue to lack capital just as long as it remains state-owned. And without capital, there is no investment -- and without investment . . . well, you saw what happened on Monday.

The answer is to privatise: as Liberty Scott summarises, "Transpower lacks capital - the government wont provide it - so the private sector should." Here's how:
49% of Transpower should be privatised - sold to a single buyer or consortium. This would inject new capital into the company, see a revitalised board (with privately chosen businesspeople not politically chosen ones) and wipe some more public debt (reducing interest payments and giving more room for tax cuts).

The remaining 51% should be distributed as shares to all citizens equally . . .
As it happens, I agree with him. And as it happens, so too does Libertarianz leader Bernard Darnton -- who would have thought. "Sell Transpower to better secure Auckland's power," says Bernard, and based on the sorry record of state-ownership one can only agree with him.

LINKS: Power cuts - Liberty Scott
Sell Transpower to better secure Auckland's power - Bernard Darnton, Libertarianz

TAGS: Privatisation, Energy, Politics-NZ, Auckland



Anonymous Polemic said...

I'm not familiar with the law w/regards shares, SOE's etc, but if 51% of the shares are owned by the public then the private sector needs only 2% of those shares to gain control of the company. Doesn't this defeat the purpose a little? (Ie, why not just sell it all off?)

15 Jun 2006, 22:57:00  
Blogger PC said...

Congratulations, Polemic, you've got the point that the soft-cocks alway miss.

17 Jun 2006, 03:43:00  
Blogger libertyscott said...

My point in splitting it that way is that for starters, there isn't a great need to sell the lot off to a single owner for debt repayment, secondly- Transpower is probably a natural monopoly which creates accusations that it will "rip off the public". If the public owned a substantial shareholding, those who fear a "rip off" can exercise their voting power according to their share ownership. It is likely that many shareholders will happily take big dividends or sell the shares and take the capital gain. It gets the public thinking about capitalism and the trade-offs. The proportions don't matter so much, but Transpower at least needs about a 25% capital injection to invest, so should have at least that much sold to grow the firm.

17 Jun 2006, 04:10:00  

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