I might have abandoned Duncan Webb as my local MP but it’s good to know he’s finally got what he wanted and has “Hon” in front of his name. He is the Minister of SOE’s amongst other portfolios. Now that he has power, he has the chance to implement big reforming ideas. The Government could win huge pixie points by deciding to bury neo-liberal practices which are largely driven by Treasury.
Let’s start with RailCorp.
As Minister of SOE’s is Duncan committed to extending RailCorp so that we can all have access to rail transport as NZ citizens? At present the Corporation is required to pay a dividend to the Government. It’s within Duncan’s power for this to be taken to Cabinet for this to be dropped so that the Corporation can make rail transport available to us, the great unwashed. They could also drop “capital charges” but more about that later.
At present rail transport is so expensive only those visiting these shores with American dollars can afford to travel on it. Those of us of a certain age can remember what travelling on a train was like. Now it’s within Duncan’s power to change and get us back onto trains.
When I listened to the CE of RailCorp Peter Reedy last week, he could have been a private sector CE. Public interest is buried by words like “accountability” and “efficiency”. One key area is that if the government is going to move beyond “yap, yap”, on global warming they must provide affordable public transport access to us all. I’d willingly travel by train to other cities. Right now, I’d have to raise a mortgage to go far.
One dogma from Treasury is capital charges. This is a charge which public institutions have been meet for any government capital injection. This is where economists took over rational thinking in the 1980’s from accountants. I will explain with an example.
The government built new buildings at CDHB after the earthquakes. For every dollar invested the government charges 6%. There is no rationale for this charge. The government will be borrowing at below 2%. In the last year when CDHB was accountable to this city the capital charges for the Board were between $60m and $70m. Those funds came directly off supplying health services to this community. They ended up in a Treasury pot. We missed out on health services. Our local Labour MP’s in opposition had wrung their hands with concern at our Health services but when they became the Government they changed their tune and sang straight from the Treasury songbook.
Capital charges were brought in originally, I suspect, because of government departments overcapitalising historically. At the time of introduction of capital charges, I was working as an accountant in the public sector. It seemed a good idea to inject realistic financial discipline into the sector. However, that message has been understood and doesn’t need to be continued.
I suspect if capital charges were dropped with RailCorp, they could start thinking about supplying affordable rail fares for NZ families.
In an article about Warren Buffett in the New York Times last week https://www.nytimes.com/2023/05/02/opinion/warren-buffett-berkshire-hathaway-social-governance.html it was noted:
Corporate boards are now assembled like political platforms, with consummate attention to satisfying multiple interests. Berkshire chooses directors on the basis of “business savvy” and owner — not “stakeholder” — orientation. In short, Mr. Buffett remains a full-throated believer that boards exist to represent shareholders.
I think this paragraph highlights the vexed issue we have created with our SOE structures. The shareholders are us. We own the Railways. The SOE called RailCorp exists to serve us. Not Treasury.
Tell me I’m wrong Duncan. Have you got reasons why the public should not have access to affordable travel?
Here an example of what a train looks like in case people have forgotten.