The Instigator
Pro (for)
6 Points
The Contender
Con (against)
0 Points

That the recent partial sale of state assets by New Zealand is regrettable

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Voting Style: Open Point System: 7 Point
Started: 4/4/2013 Category: Politics
Updated: 3 years ago Status: Post Voting Period
Viewed: 1,653 times Debate No: 32109
Debate Rounds (4)
Comments (1)
Votes (2)




I thank my opponent for agreeing to debate this topic with me and welcome her to the site.

The topic refers to the recent program of selling state assets by the New Zealand government. Outside of New Zealand this is not a well-discussed topic, but important background information for those not familiar with it can be found here:

In this debate I will argue that this government program is regrettable, meaning that it will likely produce more negative than positive outcomes. I hold the burden of proof in this debate.

The first round is to accept the debate and clarify anything that needs clarifying. Every round we will have 72 hours to put up 8,000 or less characters of argument.

This is one of those debates that doesn't fit into one category neatly. I've put it under politics and hope people find it. (:

Good luck!


Thanks for your understanding too. Though I'm now kind of unfamiliar with this topic, I'll do some research about it later. New Zealand is a beatiful country and I think the debate will be very nice.

Con is my position, So I argue that the recent partial sale of state assets by New Zealand does more good than harm.

Let's enjoy this debate :)
Debate Round No. 1



NZ's government has long been fairly socialist, and primarily for that reason most of our assets are primarily in government control. During the 80s and early 90s, a massive privatization movement by then-finance-minister Roger Douglas took place. After the new millennium, New Zealand began buying back many of these assets at massively inflated prices due to the incredibly poor returns New Zealanders were seeing.

The model proposed by the NZ government is a mixed-ownership - the government retains a plurality of the shares (we've learned how bad it is to sell all of them) but sells what stake it can. What we're effectively selling is power companies. In NZ, the power market can be roughly described as an oligopoly, with most (but not all) companies in government control.

Due to a large degree to the fact that most of our big companies are owned by Aussies, and they don't like reinvesting back here, coupled with a strong Australian mining boom, wages in New Zealand are incredibly low compared to Australia right now. As a result, many New Zealanders are currently flocking to Australia to seek their fortunes there.

Screwing over taxpayers

So here's the deal - the government spent a lot of time, effort and money building up these power companies and all the resources/assets they own and operate. That money was entirely taken from taxpayers in the form of taxation. So far so good - we paid money, and we get something back for that (a shareholdership in our power generation systems).

When the government sells the stake that they purchased via the people's money, all that money goes to the government. Although they could be nice about it and hand us all paychecks for the paltry prices they are selling their shares for, they're using that money to stop themselves going into debt over the things that they're already providing to us ( Even if this marginal debt was accumulated, it's no problem. Think about it. The government hopes, at best, to make $7 billion off these sales. That's nothing compared to our national debt of around $76 billion (, which is itself pitiful compared to the national debt of pretty much every other first-world country anywhere. So really what taxpayers get back is not having to pay interest on a tiny amount of marginal debt. New Zealand is not in a debt crisis at all - our individual debt share is approximately equivalent to the price of a new Rolex Datejust watch.

But it gets worse. These assets that the government spent millions of dollars of OUR money making, and are now selling for a few thousand in interest payments - the government wants to sell most of them back to New Zealand "mom and dad investors". So they're expecting us to fork out most of the $7 billion they hope to make AGAIN, for shares that we already own.

And it gets even worse. A socialised energy sector exists mostly to provide a steady supply at a reasonable price, while a corporatised sector aims to maximize profits for shareholders. In New Zealand, one of our power companies is fully privatized after a similar series of asset sales - Contact Energy. Contact also so happens to be New Zealand's most expensive provider in all regions ( - and they're currently STILL raising their prices with the explicit aim of increasing returns for shareholders ( Long story short, less socialised systems mean we pay more for power.

The profits from these increased prices go to the shareholders. Despite assurances many of these will be New Zealanders, we know from the experience of every single state asset we've ever sold that those Australians will buy them up, lowering our wages relative to them further and basically screwing over everyone. After all, demand for power is pretty elastic, so if the Australians have a foot in every part of the industry (like they did for a long time with our banking sector after the privatization of Bank of New Zealand was bought up by Australians) then we're forced to invest in their country to the detriment of ours.

Screwing over themselves

Any benefits (in this case, an optimistic prediction of $7 billion) that might possibly accrue from the sale must be seen relative to the opportunity costs that the sale provides. In our case, that's all the income that the power companies themselves generate through the sale of power paid via dividends. A portion of this will of course still go to the government assuming no additional sales are made, but they're basically halving their income. That's a problem because their income is huge, returning an average 18.5% per annum (compared to the cost of borrowing, which is around 4%, so it makes zero fiscal sense to NOT get a loan for those nice things they're already giving us) (

It might help to know that we've been building a lot of new power systems recently, which has of course required large capital outlays, meaning valuing the true returns at 18.5% is in all probability an underestimation. If that doesn't tell you the NZ government is seriously undervaluing the assets then I don't know what will.

What's worse, NZ has two big political parties - National and Labour. They each seem to have a policy of undoing each others work, not unlike the Democrats and Republicans of the USA, regardless of how good the policy in question actually is. That's why we spent billions early in the new millennium (under Labour) to buy our stuff back off the Australians, that we sold for incredibly cheap prices a decade earlier (under National). Now National is back in power and selling our stuff. When we buy it back (there's no "if" about it - in fact Labour's sole policy in the last election was that they were NOT going to sell our assets) we're going to pay a whole lot more for it - again. Of course, the Australians know Labour will pay any price for those assets, so it's anyone's guess how massive their demands will be.

I should also add that certain legal provisions requiring the state's enterprises to care about their communities would no longer apply under the deal, so communities will be worse off too.

Treaty of Waitangi

This is an issue that people internationally sometimes have trouble understanding, so let me explain. When the British came to colonize New Zealand, they did so by signing a treaty with Maori who already lived here at a place called Waitangi. The Brits were allowed to buy land, but the Maori could still keep their important natural assets and became British citizens (much to the annoyance of the French who arrived a short time later). The treaty was at various times neglected, but eventually it was mostly recognized. Importantly, the so-called State Owned Enterprise Act states that the government must act in accordance with the principles of the Treaty of Waitangi when dealing with State Owned Enterprises (like the power companies) (

The courts of New Zealand have already established that this covers things like giving Maori special FM radio frequencies, and have previously also ruled that government asset sales can be in breach of the treaty ( So if radio frequencies, why not electricity? It's not just electricity though. The biggest share of our electricity actually comes from hydroelectric stations - rivers like the Waikato, a Maori resource with Maori water and crucially, Maori fisheries which are specifically protected by the treaty.

It got so bad that the Maori Council themselves sued the government in the government's own courts over these very asset sales (

Selling 49% of the companies is like selling 49% of the saying power that Maori have (in proxy via the state) over the resources they are guaranteed undisturbed possession of. Losing 49% of their possession is a huge disturbance.

I wish my opponent good luck with their first round.


Thanks for my opponent's amazing arguments.



Due to a large degree to the fact that most of our big companies are owned by Aussies, and they don't like reinvesting back here, coupled with a strong Australian mining boom, wages in New Zealand are incredibly low compared to Australia right now. As a result, many New Zealanders are currently flocking to Australia to seek their fortunes there.

New Zealand has a market economy that is greatly dependent on international trade, mainly with Australia. That's one of the reasons why some New Zealanders seek their fortunes there. And here's another, as following:

The 1973 Trans-Tasman Travel Arrangement has allowed Australian and New Zealand citizens to enter each other's country to visit, live and work, without the need to apply for authority to enter the other country before travelling.

The movement of New Zealand citizens to and from Australia depends mostly on the economic conditions of both countries. The number of New Zealand citizens in Australia increases in good economic times in Australia relative to New Zealand, and decreases when the economic conditions slow.

What encourages New Zealanders to move also relys on the Austrilan economy.

Screwing over taxpayers

Compared to other countries, New Zealand offers a favourable tax environment for investors’ earnings and assets. As said here:

While it is no tax haven, New Zealand has comparatively simple tax laws with a focus on minimising loopholes. It has the major attractions of simplicity, fairness and predictability.


Good for New Zealanders

The mixed ownership model, created by a partial float of shares in SOEs, would broaden investments available to New Zealanders. It would only go ahead if the government retained a majority stake and NZ investors would be in front of the queue. The partial sales would have to provide good oppotunities investors, the free-up capitals would be used to fund new public assets and they would have to be satisfied that industry-specific regulations would protect consumers. As explained here:

Mr Key says the government will keep the majority of shares in the companies, which represent 3% of state assets, but that 85% to 90% of shares sold will remain in New Zealand: “It gives mum and dad something to invest in.”

With the promise of the government, the partial sale of state assets will benefit New Zealanders most.

Good for country

Selling shares in state assets will allow New Zealand to get out of debt, without risking a situation such as Spain or Greece. As said here:

"New Zealand as a whole needs to save more, spend less and reduce our reliance on foreign debt. "The Government would consider further changes to the tax system, to KiwiSaver and investment products suggested by the Savings Working Group.

What happens when you load up with debt is you lose control of your country. So it's appropriate to take the partial sale of state assets in the long run. The Budget reflected a balance that needed to be struck between ensuring New Zealand was "whiter than white" in debt markets where it was still one of the most indebted countries to foreigners in the world and on the other hand laying the platform to take advantage of the opportunities of being on the doorstep of the fastest growing economies in the world.


SMALL, VERNON . John Key reveals plan for asset sales. 2011. Print.

Gray, Nick. Debate in a state over sale of assets. 2011. Print.
Debate Round No. 2


I'd like to thank my opponent for making a decent effort at rebuttal. Of course, everything I've said for "context" in the last round was just generalisation. Most of what my opponent adds regarding the reasons for a large net emigration from New Zealand to Australia is probably true to some extent as well.

Screwing over taxpayers

It's true that our tax laws are pretty simple most of the time. That simply means it is easier to pay tax, which means it's easier for the government to pay off debt. This makes taking on a small amount of additional debt pretty unjustifiable, particularly given that we are not in a debt crisis.

This tax has been used to create assets on our behalf. This is now being sold back to us despite the fact we already own them. Imagine if some person came up to your house and tried to sell it to you. Of course you'd say "no - this house already belongs to me - why would I give you my money for it?"

Regardless of our taxes, the cost of power is seperately paid. If that rises substantually, our poor are the ones who will suffer.

As much as John Key can fantasize about Kiwi mums and dads - the majority of whom are probably too poor to afford the shares - owning 90% our power companies on the initial sale, the reality is that the shares will go to the highest bidders eventually. Such the Australians have lots of money compared to us, they'll grab those shares. Australia has a pretty long history of stealing New Zealand's stuff - Pavlova, Phar Lap, Russell Crowe, Pineapple Lumps, spreadable butter (actually the whole world stole that one), Weetbix etc. Oh yeah - and almost every government asset we've ever sold too.

Screwing over themselves

We don't need to risk Spain or Greece because our financial position is fantastic - but regardless it's stupid to sell our highest performing assets in such a situation. If New Zealand has a debt problem it is with private debt to overseas lenders (90% of our debt is this) and that's because most of our banks were stolen by the Australians. Our government debt is the third lowest in the western world. In fact our net government debt (counting things that are owed to us) is negative. (

So the claim that we're one of the most indebted in the world is ridiculous and untrue. And when Labour comes into power, we're going to have to pay for these assets again, and probably have to borrow more money to make that happen.

Treaty of Waitangi

My opponent had no rebuttal to this point. I'll take it as conceded.

The resolution is affirmed.


Thanks for Pro's understanding again. Here's some research proviede by College of Business Pro Vice-Chancellor Professor Lawrence C Rose. He has researched the performance of privatised companies in Australia and New Zealand and believes partial sales are a critical part of improving our rate of economic growth.

He speaks to Kathryn Farrow.

You have come out in favour of the partial sale of state assets. What is your support for the Government’s proposal based on?

It actually goes back to my reading of Socialism by Von Mises about the study of the state, originally published in 1922. He basically said that the growth of government is not the solution to the hard economic problems facing us. In fact, it is the opposite: it is the move to individual ownership of assets and taking responsibility for one’s actions that will move society forward. There has been extensive research and ongoing debate on this subject over the years. One thing that is pretty clear is that private ownership of assets by individuals has allowed great strides in individual welfare while solving the hard problems of the world in the past couple of centuries.

But if these assets aren’t failing, why sell them?

Although they are not necessarily failing, they aren’t performing at the level they should be. Plus, how do you define failure? It is legitimate for governments to have social and redistributive goals and objectives, and if they are achieving these then that is certainly not failure. But people have to understand that their standard of living might not be as high because of those redistributive effects. As the baby boomers leave the workforce, there will be more pressure on the remaining workers to provide both for themselves and for the retiring workforce. So the workers will need to be more productive.

From what has been surveyed, I strongly believe the recent partial sale of state assets by New Zealand does more good than harm.

Debate Round No. 3


Professor Rose is, unfortunately, slightly misinformed about a few simple facts.

Who owns a company does not dictate how efficient that company is. These are not state-run enterprises, they are state-owned. It's not like Facebook magically became more efficient after their IPO, after all. Moreover, in this particular case, the companies themselves do not have much control over their efficiency. Like I said, it's mostly hydroelectric power, and the company does not tell the rivers how much they should flow. The cost of generation depends on the capital involved. I find it impossible to believe that, for example, wind farm design firms, will come up with more inefficient designs for these companies just because of who their client's owners are.

The fact that privitisation does not equal instant efficiency can be seen in Contact Energy, our one fully privitised company in that industry, and also our least efficient by any metric you can name.

Therefore the idea that "they aren"t performing at the level they should be" is crazy. These assets are consistently returning over 15% pa, 18.5% for the last couple of years (that's being conservative about returns) and basically beating the economy despite a tough market. There is hardly an industry in the world that has consistently amazing results like these.

Even if it were more efficient to privitise though, that does not remove any of the other harms of selling, which are big and damaging. Since electricity prices are so inelastic, any efficiency wouldn't be passed on to consumers anyway, but shareholders.

At the end of this debate, con has done nothing that convincingly manages to refute my three contentions: that this is no good for taxpayers, no good for the government, and no good for race relations / the treaty.

The resolution is affirmed.


However, pro just thinks of the big question in a short run.
Debate Round No. 4
1 comment has been posted on this debate.
Posted by larztheloser 3 years ago
"It's a shame that he has such a prejudice against Australia, though, when he'll be creeping over here shortly begging for work :)"

I actually find it kinda amusing how New Zealand is almost becoming a gateway country for Australia. There's tens of thousands of South Africans who come in each year to New Zealand after being denied entry into Australia, stay here for long enough to become a NZ citizen, and then take advantage of NZ's open borders with Australia to move there as soon as they can.

Honestly though, I just wanted to post a comment saying that my views in a debate do not necessarily reflect my views in real life, and Australians really are awesome. Not quite as cool as Kiwis, but still awesome.
2 votes have been placed for this debate. Showing 1 through 2 records.
Vote Placed by rross 3 years ago
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Reasons for voting decision: Con's arguments were pertinent and interesting, but Pro's arguments were wider ranging and he seemed more engaged with the topic. It's a shame that he has such a prejudice against Australia, though, when he'll be creeping over here shortly begging for work :) And I doubt that we would have stolen "pineapple lumps" whatever they are. The other items on the list are Australian.
Vote Placed by RyuuKyuzo 3 years ago
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Reasons for voting decision: Con inexplicably threw his final round, dropping all of Pro's arguments.