Sunday, May 07, 2006

Matt McCarten: Politicians pay the price for hocking family silver in sell-off of the century

Wasn't the decision on Telecom great last week? It was the crime of the last century that our entire public telecommunications infrastructure was hocked off to a multi-national for a song. The profits alone creamed from this monopoly and sent overseas would have been enough to give our country a completely free education system.

Privatisation means the people's assets get flogged off to multi-nationals cheaply. These corporates thus get themselves a giant monopoly and screw us big-time.

To think of the tens of thousands of Kiwis who lost their jobs, and the untold pain and worry that destroyed a generation still makes my blood boil today.

The assets our ancestors had built for us were sold off on the premise that it would help competition and lower prices for us ... Really? Name one privatisation that has lowered prices for consumers.

Every time we have sold off public assets it has meant only job losses, fewer services and higher prices.

Our politicians hocked the family silver on the cheap to corporates which then took out loans to pay for it. The new owners, granted a monopoly, were able to charge whatever they liked to pay off those loans and tap exorbitant profits. The corporates make fortunes; senior managers rake in bonuses that would make any mafia boss's eyes water - and the silly politicians who sold our assets use the purchase money to cut corporate taxes. Telecom was the biggest theft of all. Ever since our phones were sold off, Telecom has expended all its energy in maintaining the stranglehold on its monopoly, preventing any form of competition.

The fact Telecom got the Cabinet paper within hours of it being approved is being touted as the leak of this new century.

It probably is.

But it illustrates the reach the company has had within the political system - and partly explains how Telecom has been able to use its contacts to protect its cash cow.

The decision to cut Telecom's monopoly on internet and phones cost Telecom a billion dollars on their share price in a couple of days. So you can see how important the political strategy to maintain their grip was. Telecom has always has a full-time political lobbying team headed by a senior manager who reports directly to the chief executive.

I have first-hand experience of the company's lobbying strategy.

In 1996, I was running the campaign for the Alliance.

At that time, it looked likely the party would substantially increase its number of MPs and could form part of Government.

I wrote a begging letter to all businesses I knew made political donations, including Telecom.

The usual patter is that, as large companies, they should support the democratic process by making a donation to political parties.

I got invited to lunch by a member of the Telecom lobbying team. He told me Telecom was prepared to make a donation - but was concerned about the attitude of the Alliance towards them.

I reminded him that, of course, we didn't support our publicly-owned phone company being sold off to overseas interests and that view wouldn't change.

My host responded that if we stopped bagging the company and had a telecommunications policy his employer approved then we'd get a substantial donation.

He then offered to "assist" in writing a suitable policy. I was impressed by the audacity of the proposal. I asked if this was an arrangement he had with other parties. He chuckled, and said that it would be irresponsible of his employer to "invest" in the democratic system without a return. Unsurprisingly we didn't get a donation, although he assured me Telecom had made substantial donations to other parties. He no longer works for the company.

During the following election, in 1999, the Alliance didn't even get a reply from Telecom to our standard solicitation letter. Telecom takes its political strategy of keeping its finger on the pulse very seriously.

I'm glad Labour has now changed its mind. I'd rather Telecom kept the monopoly and the Government nationalised it - but the proposed deregulation is the second best choice and the Government should be congratulated for its decision.

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