Selling our Schools

John Minto
National Chairperson
QPEC - Quality Public Education Coalition
(Published in Sunday Star Times 31 July 2005)

The new face of privatization is staring at us. More particularly it is staring at our schools. However it looks different to the privatizations we are used to from the 1980’s and 1990’s whereby community assets were sold outright under Labour and then National governments.

A good example of what happened back then was our Post Office. Under Jonathan Hunt as Minister in the late 1980’s it was firstly split into 3 separate sections – the telephone network, Post Office Savings Bank and postal services. These became State Owned Enterprises required to produce a profit for the government. This first stage was referred to as commercialization. Once they were profitable they were then sold outright to private investors and became Telecom, Postbank and New Zealand Post respectively. This second stage is called privatization.

This means that instead of the profits from these services going back to the community they now go into the back pockets of private investors. In the case of Telecom for example it was sold by the government for just over $4 billion and over the succeeding 15 years it has returned close to $15 billion in profits to its private shareholders. Were this community asset to be still in community hands it alone would be able to pay for fully government funded tertiary education. No student debt - what a novel idea! Alas not. The original investors sold Telecom just a few years ago for $12 billion making a capital gain of some $8 billion or 200% over 10 years. All this money - more than $20 billion - went from the pockets of New Zealanders and into the pockets of wealthy private individuals - mostly foreign in Telecom’s case.

These are staggering figures and represent the reason private investors are always pressuring governments to sell community assets so they can cream handsome profits for shareholders.

Occasionally these privatizations fail but it not the private investors who lose out. Instead they are bailed out by (guess who?) us who must spend more billions of our money to clean up the mess as with Air New Zealand and Tranzrail for example. It’s very much a case of “privatize the profits and socialize the losses” for these rapacious private sector investors.

After experiences like this communities around the world have developed resistance to government sell-offs of their assets. One response has been the use of management contracts. For example with water services, companies are not interested in owning the pipes and dams. Instead they get lucrative “management contracts” for the assets and substantial profits are being made around the world where this is occurring.

So what does the new face of privatization look like?

It is represented by the current Vector share offer to electricity consumers in Auckland. To avoid community opposition to the outright sale of our electricity assets the National government put these assets into the hands of a community trust - the Auckland Energy Consumer Trust. This trust which owns Vector on our behalf is now beginning the privatization process by issuing shares as a way of raising money to expand. (You need a minimum of $500 which cuts out the 15% of families - according to the government’s own figures - who need to borrow money to pay for basic necessities such as the power bill itself!)

So rather than the outright sale of these assets by the government as occurred in the 1980’s and 1990’s the assets are placed instead in the hands of a “community trust” which then proceeds from this “half-way house” to issue shares and move to full privatization.

This is precisely the process which the National Party is setting in place for the privatization of our public schools.

National wants to establish “trust schools” whereby a school Board of Trustees would become a “community trust” and would hold title to all the assets of the school - including the land and buildings - to deal with as they see fit.

One can easily imagine a scenario whereby this “community trust” wants to upgrade their school buildings but can’t get the money from government to do so. The answer will be to issue shares and bring in private investment just as the Auckland Energy Consumer Trust is currently doing.

The school will be gone from community ownership and community control in the blink of an eye.

The interests of shareholders then become the driving force. Private investors will salivate at the prospect of making money from the education of our children but the loss of parent power in dealing with schools which has been so heavily eroded under Tomorrow’s Schools will be complete.

Don Brash says that as far as he is concerned he doesn’t care who owns our schools. We do!

Email: jbminto@xtra.co.nz