Telecom share decline is a lesson for privatising government

This week's considerable reduction in Telecom's worth is only the latest chapter in a privatisation that should be a lesson to the current government's plans to resume asset sales, Progressive leader Jim Anderton says.

"Today's decline in value is the direct result of a monopoly that got privatised being unable to adapt when its monopoly position finally began to unwind.

"Telecom spent about fifteen years dramatically overcharging New Zealanders and blocking innovative competition because it was privatised as a monopoly.

"Billions of dollars were taken out of New Zealand by foreign owners, at a time when a National Government was saying it was owned by Kiwi Mums and Dads.

"Since its monopoly position has been eroded, Telecom has faded because its monopolistic behaviour was hard-baked into the company and it couldn't adapt.

"Most financial commentators supported the sale of Telecom, but it has been a disaster for New Zealand.

"Today the same commentators are still supporting privatisation of successful Kiwi businesses, like Kiwibank.

"I recall consultant Rob Cameron telling the NZ Post Board that Kiwibank would only have ten thousand 'low value' customers after five years. It has between seven and eight hundred thousand and that shows how much credibility he has in calling for privatisation now. Professor Tripe from Massey University claimed Kiwibank would be a dog, and now says it needs $600 million of private capital because it is growing so fast.

"Instead of listening to people who repeatedly get their predictions wrong, the government should look at the record of privatisation: Telecom, Air New Zealand, Kiwi Rail. Disaster, disaster, and even more disaster."

ENDS

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