Telecom should never have been privatised

Yesterday the Dominion Post published an article from Chairman of the Business Roundtable, Rod McLeod, arguing against the need for further regulation of Telecom. Yet McLeod and the Dominion Post failed to mention a blatant and obvious conflict of interest - Rod McLeod is also a Director of Telecom (hat tip DPF)

McLeod concluded, without citing any real evidence, that "New Zealand has benefited hugely by moving from a state-owned telecommunications monopoly to a competitive (sic) private industry with relatively light-handed regulation. We should keep it that way."

Bullshit. The current fracas over broadband is a direct result of the sale of Telecom by the Labour Government in 1990. While the Business Roundtable claim to be 'free marketeers' McLeod article is just yet another example of how often they run to the defence of private monopolies.

Richard Prebble sold Telecom in 1990 for $NZ4,250 million. Last year Telecom made a $NZ 1.3 billion dollar profit in 2005 alone. Even without some of the more extreme "efficiency" drives (read job losses) Telecom could have made a significant contribution to public funds over the past 16 years if it had stayed in public hands.

It would be nice if some people who support the privatisation of Telecom would actually admit that also selling the local loop was a big mistake, and it is a mistake we are still paying for. The Government could have made free local calling a condition of access to the local loop, and told Telecom that if they wished to charge for local calls they could create their own network (oh the irony). After all, Telecom did not create the local loop, it was created by at least two generations of taxpayers.

One argument that is often used in support of privatisation, especially in "capital intensive" industries, is that sometimes the private sector can provide greater investment than a Government (stop giggling..) Telecom provides a very good example of how this is often not the case. As CAFCA pointed out in their submission on the Overseas Investment Bill in 2005, since privatisation, Telecom have regularly run down their assets at the same time they gifted whopping big dividends to their overseas shareholders.
"Telecom’s overseas owners have failed to live up to the promise of making new technology available to New Zealanders. The company closed off options rather than developed new ones. Its overseas owners have sacked thousands of employees and have extracted billions from New Zealand in profits and capital, while over-charging for services (such as broadband networking to the home) which will be the backbone of the economy in the future, virtually killing others (such as ISDN) in the past, failing to develop services which are commonplace overseas until forced to, and using every possible means to keep out the competitors who would not have been necessary had it been providing a decent service.

From 1995 to 2004 it paid out more than its net earnings in dividends (reported earnings of NZ$6,464 million and dividends paid out of NZ$6,698 million), for most of that time, its capital expenditure barely covering reported depreciation. It was running down its assets. More recently it has used its cash to invest (rather unsuccessfully) in Australia rather than develop the extensive new services needed in New Zealand."

(my emphasis)

CAFCA also quote economic commentator Brian Gaynor who described the privatisation as follows (“Testing years ahead for Telecom”, NZ Herald, 26/5/01):
"The Ameritech/Bell Atlantic/Fay, Richwhite, Gibbs, Farmer syndicate walked away from Telecom with a realised capital profit of $7.2 billion. In addition, the telecommunications group paid over $4.2 billion in dividends in the 1991 to 1998 period, more than half to the consortium members.… These are extraordinary figures for a company that is supposed to be at the cutting edge of new technological developments."

No wonder Sir Michael Fay sang 'Sailing Away' - it is the perfect theme tune for a pirate.

Perhaps if people starting talking seriously about the renationalisation of the local loop Telecom might suddenly start being more reasonable. Given the fact Telecom have been ripping New Zealanders off for years, $1 ought to be adequate compensation. When the Government bought the rail tracks it actually ended up costing them $2 because an official did not have a $1 coin in his pocket. If officials are ever in the position of buying back the local loop they should ensure they have correct change - Telecom don't deserve $2.

Tags: Privatisation, New Zealand, Internet, Corporates, Telecom

PS: Why does the Microsoft Outlook dictionary refuse to recognise 'renationalisation' as a word, and suggest 'denationalisation' as an alternative? More bloody corporate newspeak!

Update on SuperSizeMyPay Christchurch public meeting

Venue Change!

The Christchurch public meeting on the SuperSizeMyPay campaign and Sue Bradford's bill to abolish youth rates is now being held at the WEA, 59 Gloucester Street.

Over at Span, there is some discussion about whether Labour will vote against the Minimum Wage (Abolition of Age Discrimination) Amendment Bill. I would not be surprised, as I remember Labour being hostile to the idea when Laila Harre advocated the removal of all youth rates, but the Alliance was able to push Labour into removing youth rates for 18 and 19 year olds (the so called 'adult' minimum wage used to kick in at 20).

If Labour votes down the Bradford bill and delays or abandons the introduction of a $12 minimum wage it will be increasingly difficult so called 'Labour lefties' to maintain their party is still a part of the centre-left, let alone the 'left'.

IMHO Labour have not been a party of the left in my lifetime.

Make Poverty History in New Zealand

A nationwide campaign is underway to combat poverty here in Aotearoa, by increasing the wages of the lowest paid workers.

The objectives of the campaign are:
- Set the minimum wage at $12 per hour
A single wage earner working a 35 hour week should be able to bring in enough money to support a family
- Secure hours of work
These workers often face big fluctuations in hours from one week to the next so their income goes up and down like a yoyo too!
- Abolish Youth Rates
This is where young people under 18 are paid less than adults despite doing the same work - many employers exploit this law

A private members bill to abolish youth rates will be presented to parliament on the 15th of February by Green MP Sue Bradford.

A public rally will be held at the Auckland Town Hall at 2pm on Sunday the 12th of February, where fast food and other low paid workers will give first hand accounts of the effects of poverty-wages, age-based pay discrimination and insecure hours.

On Monday 13 February the Trade Union Centre in Christchurch will host a public meeting at 7.30pm in support of the SuperSizeMyPay campaign and Sue Bradford's Minimum Wage (Abolition of Age Discrimination) Amendment Bill. Speakers include Sue Bradford, Lynda Boyd (Unite Union/NUPE) and Paul Watson of the National Distribution Union.
----

It ought to be pointed out that asking for a minimum wage of $12 an hour is actually a pretty moderate and reasonable demand. According to International Labour Organisation (ILO) guidelines the minimum wage levels of member countries should be set at two-thirds of the average wage. As the average wage in New Zealand is now around $21, this means the minimum wage should be set at $14 now, if we are to get anywhere near ILO standards.

Watching the extended version of McLibel documentary the other day I came across a very telling little tidbit.

In 1971 McDonald's founder Ray Kroc made a $250,000 donation to the controversial 1972 presidential campaign of Richard Nixon. It is likely this donation was investigated during the Watergate corruption scandal.
"Passages in the 'Behind The Arches' book (written with McDonald's backing and assistance) state that the donation came around the very time that McDonald's franchisees were lobbying to prevent an increase in the minimum wage, and to get legislation (dubbed 'The McDonald's Bill') passed to be able to pay a sub - minimum wage to some young workers."

While McDonalds in New Zealand do deserve some credit for being one of the few fast food employers not to pay youth rates, the wages they pay are still low and the job itself is by definition a 'McJob'.

The fact that Kroc gave cash to crooks to keep wages low speaks volumes about the anti-union, anti-worker culture of the fast food industry.

Update: Aparently McDonalds introduced youth rates for 16 and 17 year olds 2 years ago, and claimed they adopted youth rates because their competition used them. Scumbags! All this does is demonstrate the need for youth rates to be abolished.

Categories: Politics, New Zealand, Poverty, Corporates, Industrial

Two protest camps, Waihopai and Happy Valley

Apologies for the lack of posts of late, I have been out of town quite a bit, attending two protest camps in as many weeks. On 20th of January I travelled north to join the call of the Anti-Bases Campaign to close the Waihopai spy base, and last weekend I crossed the Southern Alps to join the occupation of the proposed open cast coal mine site at Happy Valley on the West Coast.

An 'indefinite' occupation was launched following a High Court decision last month to reject Forest and Bird's appeal against an Environment Court ruling in favour of mining. The mine threatens to destroy a completely unique tussock wetland that is a home to 13 endangered species, including the great spotted kiwi and the giant carnivorous snail powelliphanta patrickensis. Rivers will be polluted by acid mine drainage and twelve million tonnes of carbon dioxide will be released into the atmosphere.

The occupation of Happy Valley has been welcomed by Greenpeace.

Ongoing reports of the indefinite occupation can be read on the Save Happy Valley blog; "The beauty and expanse of Happy Valley is poignantly contrasted with the scarred and devastated landscape that is the Stockton open cast coal mine located not far from Happy Valley."

We travelled by van over to Westport on Friday and undertook the four hour tramp into Happy Valley the next day. It actually ended up taking us over six hours to get to our campsite as the weather was very hot and dry, making a long half-time break at a swimming hole absolutely essential. It was easily the best swimming hole I have ever been to, complete with many deep pools and waterfalls. One could get a great adrenalin rush by leaping from the tall banks of the river or the top of the waterfall into the pool below. It was completely safe, despite it being a long way down.

After a brilliant swim I was aghast to hear the brilliant swimming hole is also on Solid Energy's 'hit list' for mining once they have finished digging up Happy Valley. It is also possible the swimming hole will be polluted by the proposed Cypress Mine if the development in Happy Valley goes ahead.

Despite it being a very hot day, we had to be careful where we filled our water bottles, as some of the streams in the area are already polluted by acid runoff from the existing Stockton Open Cast mine. The water from the pristine streams tastes great.

It was really inspiring to see 75 people join our camp on the Saturday night. There was a great sense of community, even though people were tired from a long tramp saddled with heavy packs. Actions like this take a lot of commitment and sunscreen.

Solid Energy have continued to harass and attempt to intimidate protestors, even though the 'occupation' is occurring on public land. This has included attempting to deliver dodgy 'preemptive' trespass notices and continuing to film protestors against their wishes. Save Happy Valley Coalition spokesperson Frances Mountier said she believes security guards filmed the protestors as "a means to intimidate and quell any public opposition to what they (Solid Energy) are doing".

A spokesperson for Solid Energy Vicki Blyth disputes they are adopting intimidatory tactics, and claims they asked security guards to film protestors to ensure they had a record of any exchanges between the security people and protestors, "So that there can be no question about who said what to whom."

Well I happen to know personally this excuse is simply a croc of shit. If this was so, then Solid Energy would not have attempted to instigate 'exchanges' (under false pretences) with each of those taking part, by asking people if they would like to read a statement from Solid Energy and then shoving a camera in their face. But that is exactly what they attempted to do to me while I was standing on a Christchurch public footpath and had shown no interest in being on Solid Energy's land. Passively filming while security guards do they job is one thing, attempting to capture the faces of all your perceived opponents on camera is quite another.

We fell asleep listening to the calls of kiwi and other wildlife and hoped they could keep their natural home.

Categories: Environment, Mining, New Zealand, Politics, Happy Valley