THURSDAY MAy 24 2012
Private v public ownership, which is best? Mainland Press asked Dr Eric Crampton, senior lecturer in economics at the University of Canterbury what he thought of Government suggestions that Christchurch city-owned assets should be sold. Here are his thoughts. reconstruction. The “short-term vs long-term” aspect of selling council-owned assets should be viewed similarly. What really matters is whether that asset is better owned by council or better owned privately. Some assets are best owned publicly; Orion, the lines company, should probably remain majority-owned by local council. A fully privatised power lines company would wind up being subject to public monopoly regulations that would mean there’s little gain from having it in private as compared to public ownership; private owners then would be willing to pay council just enough for the asset to offset council’s loss of dividends. So there isn’t a lot of difference between
WHILE it’s true that many council assets pay dividends, it’s also true that they would pay dividends to a private owner. And, a private owner expecting to earn large returns from an asset will be willing to pay more for that asset. So when a dividendproducing asset is shifted from public ownership to private ownership, council is really compensated for the loss of the future dividends by the current lump sum payment. Is it “short-term thinking” when the Government sells bonds, getting a pile of money now in exchange for a flow of debt repayments that continue over time? Probably not, and especially when we’re selling bonds to pay for things like earthquake
SAVE 3 PEOPLE tOdAy Your donation can help save lives We will be collecting blood at: We will be collecting blood at:
Bishopdale Reformed Church We will be collecting blood at: Bishopdale Reformed Church Reformed Church Hall Tues Bishopdale 26 October, 2pm-7pm Tues 26 October, 2pm-7pm
90 Highstead Road 6 June from 2pm to 7pm th
To make an appointment or for more information please call us or visit our website
subscribe or renew & receive a
council’s selling some shares in Orion and council’s selling some bonds, so long as people are willing to buy debt from council. But other assets could well fare better in private management. Last I’d checked, council owned more than three-quarters of Lyttelton Port of Christchurch; there’s reasonable reason to expect not only that the port would fare better privately but also that you’d get a decent price for it with an insurance-funded refurbishing of facilities. Standard economic theory says that you should pay for things like earthquake recovery through a mix of debt, reduced current expenditures on non-earthquake activities, and future tax increases. Selling off current assets like the port that can plausibly be better managed privately than publicly can make even more sense than taking on current debt. Tax increases like those currently proposed make sense if council is having a hard time raising money in the debt markets and doesn’t
have assets like the port, or Red Bus, that could be sold off entirely. But council does have those Dr Eric Crampton assets. Finally, we also have to think about the uses to which any revenues from either asset sales or tax increases are put. I’m amazed that council is considering taxing us to fund expensive stadium options so we’re better able to host international test matches; their priorities are perhaps a bit different from mine. While it makes sense to sell off assets like the port to help rebuild our roads and sewers, if we sold off the port to put a roof on a stadium, a hundred economists around the country would have to go to the emergency department for “banging-head-on-desk-related” injuries.
From the editor
Chris Tobin email@example.com
Hanging on to the family silver Christchurch Mayor Bob Parker has come out saying Prime Minister John Key and Local Government Minister David Carter should back off in pressuring the city to sell shares in its assets to fund the city rebuild. Mr Parker believes the council could fund the recovery without resorting to asset sales. He considers the council-owned assets are well managed and generate significant revenue for the city. The concern for ratepayers is that with the high expense of a massive rebuild, there could be a significant rise in what they will have to pay. Yet, last week Cr Helen Broughton said the city’s rates were 15 per cent lower than would be the case due to the revenue return from the assets. One can presume that revenue from the assets would continue to act as a buffer to any possible spiralling rates increase.
Christchurch has an enviable list of cityowned assets. Christchurch City Holdings, the city’s company, owns 89.3 percent of power network Orion, 75 percent of Christchurch International Airport (the remaining 25 percent by government), 79.3 percent of the Lyttelton Port Company and all of City Care, Red Bus, Enable Services and EcoCentral. Besides Mr Key and Mr Carter, there is a strong lobby within the city, among them Peter Townsend, chief executive of the Canterbury Employers Chamber of Commerce, who say the Government is talking commonsense on the matter. It might be commonsense for the Government, but is it commonsense for this city? Flogging off the family silver is often employed as a quick-fix solution to an immediate problem. As time rolls on, it is usually regretted.
go gardening gift card worth $20.00
start subscribing from only
NZ’s do-ityourself ga rdening mag
My books. My stationery. My store.
- 23 2012
www.wee kendgard ener.co.n z
April Loses It: 30 Kilos in 30 weeks
or $89 for 26 issues $159 for 52 issues
By April Ieremia After years spent eating like the Hungry Caterpillar, I am sick of it. Days turn into weeks, weeks turn into months and months are suddenly years. Then all of a not-so-sudden, I am 100.6 kg.
receive a discount of over 40% never miss an issue delivery to your door receive before on sale
king advic e from sa our cards are valid for • Fragrant debutantes – ne ge w roses are comi • DIY – bu two years, guaranteed, and ng ilding a • Step-b vege pla y-step – nter redeemable nationwide at pruning raspberr ies over 200 stores. $5.40 incl.
s u b s c r i b e a n d s av e My detailS:
Method of PayMent:
Order online at www.weekendgardener.co.nz Call FREE 0800 999 886 open business hours
address ________________________________________ ________________________________________________ _________________________________Postcode ______ daytime telephone _______________________________
Please charge my credit card: q Visa q Mastercard q American Express q Diners Club
Mrs/Ms/Miss/Mr __________________________________ address ________________________________________ ________________________________________________ daytime telephone ________________Postcode ______ email ___________________________________________ new zealand: q 12 issues (6 months) subscription $39 Save $25 q 26 issues (1 year) subscription $89 Save $51 q 52 issues (2 years) subscription $159 Save $121
Former Silver Fern netball player April Ieremia has struggled with her weight since retiring from elite sport. Fed up, April challenges herself to lose 30 kg in 30 weeks. No gimmicks and no tricks – just eating intelligently and exercising regularly. She enlists the help of Scott Cottier, former NZ Special Forces trainer, to whip her into shape. April finds it hard to stick to her goal and keep the weight off. Trips overseas derail her programme; she rewards herself with sweet treats; she sits at home in tears, battling with herself to get off the couch and go for a run. April’s weight loss journey will strike a chord with women everywhere. April Loses It features handy training tips from Scott and an adaptable training programme. Follow April through the 30 toughest weeks of her life – and find out how she turns tears into triumph.
The Serpent’s Shadow: Kane Chronicles By Riordan Rick
The third and final book in Rick Riordan’s chart-topping Kane Chronicles series.
cardholder’s Signature _________________________________ expiry date____/_____ cardholders name (Please Print) _________________________
Carter and Sadie Kane face the impossible task of defeating Apophis, the serpent of chaos, before he can destroy the mortal world. Unfortunately the magicians of the House of Life are on the brink civil war, the Gods are divided, and the young initiates of Brooklyn House stand almost alone against the forces of chaos.
email ___________________________________________ Gift SubScriPtion: (Recipients details)
The time has come for transformation.
My cheque is enclosed ( ) payable to Weekend Gardener Subscriptions Please bill me ( ) Weekend Gardener will send you a subscription request by mail.
coMPlete the couPon and Send freePoSt to: Weekend Gardener Subscriptions Freepost 174602 PO Box 91549 Victoria Street West, Auckland, 1142 Weekend Gardener Customer Services firstname.lastname@example.org
Percy Jackson fought Greek Gods. Now the Gods of Egypt are waking in the modern world . . .
Giveaway We have one copy of April Loses It to give away, courtesy of Paper Plus Ferrymead. To be in the draw email email@example.com with April Loses It in the subject line, text MP April Loses It to 4494 (txt cost 50c) or write to Bay Harbour News Book Giveaway, Mainland Press, PO Box 39 176 Harewood, Christchurch 8545. To be eligible for the draw all entries, including texts, must include your name, address and contact number. Entries close Tuesday, June 5th, 2012. Winner of The Occupiers Gregory Lee, Avonhead.