Last Sunday’s Sunday Star-Times editorialised against the government’s privatisation plans (‘Asset sales road littered with disasters and fiascos,’ 30 January).
Among other things, it said that government-owned companies “can be efficient as well as profitable. Kiwibank has been a brilliant success …”
The first part of this statement is certainly correct. Not all SOEs are poor performers and not all privately owned businesses perform well. But the unequivocal findings of economic research are that on average and over time, privately owned businesses outperform publicly owned ones (see here for relevant references). What matters for policy is this general result. Government should not bet against the odds with taxpayers’ money.
What about the claim that Kiwibank has been a “brilliant” financial success. I have never seen evidence to support this claim. Two points are relevant:
As I understand it, the original Cameron Partners advice to the government was that Kiwibank would ultimately earn profits but that these would not be sufficient on an NPV basis to warrant the investment, and
Many argue that Kiwibank has been cross-subsidised by the postal business of New Zealand Post.
Does the Sunday Star-Times have evidence on these points to justify the “brilliant success” claim? I think we ought to be told.