Deborah Coddington

Deborah Coddington is a Herald on Sunday columnist

Deborah Coddington: Goff, Goff... we are a different country now

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Maybe Labour wants us to buy back the Chateau, sold in the 1980s. Photo / NZ Herald
Maybe Labour wants us to buy back the Chateau, sold in the 1980s. Photo / NZ Herald

Good on Phil Goff for owning his mistakes. He was a major player in the Lange-Douglas Government of 1984 which transformed the New Zealand economy.

Labour now says it was wrong to sell state assets. By definition then, Labour would have let New Zealand go bankrupt.

On June 14, 1984, Prime Minister Robert Muldoon called a snap election and the next day US$110 million of New Zealand funds moved offshore as people believed devaluation would be inevitable, whichever party became government.

With the country carrying recklessly high debt, and funds continuing to move offshore, New Zealand was in danger of not meeting its interest payments. We also faced real threats of foreign banks cutting off our credit.

The Reserve Bank urged Muldoon to devalue, warning of a foreign exchange crisis "of a major kind". He refused and ordered the bank to borrow another $500 million to defend the dollar.

That's just a small snapshot of the way we were and why the Government chose to sell assets to get the best price possible.

But Goff is correct. Mistakes were made, in particular with Air New Zealand and NZ Rail. On TVNZ's Q&A programme last week, Don Brash walked right into a cow pat when he asked: "Does anyone seriously believe that a government runs a business better than private owners do?"

Ever heard of Kiwibank, Dr Brash? Furthermore, private owners have proved they can't run our national airline. The best airline in the world is a great example of public-private partnership.

And I doubt rail will ever survive in private ownership in New Zealand. The geography is too tough and we're too small. Besides, those who romantically support retaining rail networks in remote areas never use them.

But if Goff is genuinely sorry about selling state assets, Labour could put our money where his mouth is and campaign on buying them back.

Telecom's going through deconstruction right now; how about Labour committing to take us back to the good old days of six-month waits for phone connections?

A boost to tourism could be good. Labour could buy back all those Tourist Hotel Corporation resorts sold in the late 1980s when the chairman reported to Parliament an annual loss of $8.8 million.

The state as hotelier had built up an impressive chain of resorts - Pukaki Hotel, Lake House Waikaremoana, Waitomo Hotel, Te Anau Hotel, Milford Hotel, The Chateau, Tokaanu Hotel, Wairaki Hotel, Franz Josef Hotel and Eichardt's in Queenstown.

The whole lot sold for about $84 million. Since they were losing money hand over fist, they were hardly assets, more like liabilities, but if Labour wants them back, they'd be great destinations for Cabinet ministers wanting a bit of R&R.

The thing is, New Zealand is a different country today. Our debt situation is still not pretty - private debt sits at $213 billion, public debt $40 billion - but we're not teetering on bankruptcy.

But frugality is called for. So when the bank says you're stretched, and you own a house, an apartment and a bach, what to do? You don't want to sell because the apartment and bach are rented and bring in a moderate income. But you need more money to do them up, so the rentals could be higher.

So you do what National's intending. You hold on to a majority shareholding of the properties.

Then you tell your family they can buy shares in the remaining 49 per cent of the house, bach and apartment. With their investment money, you improve the properties, increase the rentals and the dividends go skywards.

What about that whining nephew who says he already owns the beach house because granddad built it in 1921 and the whole family contributed labour to improvements over the years? Remind him about the free holidays he's had, and the rent, power, rates and maintenance for which he's only paid a fraction. Inheritance isn't a given.

And if he still doesn't get it, ask how he matches his argument with Labour-Greens' policy to charge the agriculture sector for water to irrigate. Because if every single taxpayer already owns state assets, then the same argument applies that landowners already own their water.

- Herald on Sunday

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