Ken Surin on How Privatisation Wrecked New Zealand’s Electricity Grid

Today’s Counterpunch has a very interesting piece by Ken Surin giving his selective impressions of New Zealand. Throughout the article he calls the country by its Maori name, Aotearoa, and part of the article is about the poverty and marginalisation that is particularly experienced by New Zealand’s indigenous people and Pacific Islanders. He begins the article with his reminiscences of on-pitch violence by the county police and county farmers’ teams when he played university rugby back in the ’60s. This has a tenuous connection to the rest of the article as two of his team mates came from the country. He then goes on to discuss the effects of neoliberalism on New Zealand. Reading his article, I got the impression that New Zealand did not suffer as much as other nations from the neoliberal agenda of privatisation, wage restraint, welfare cuts and rampant deregulation. But at the same time, he argues that it hasn’t done as much as it could either to stop and reverse it.

From this side of the Pacific, one of the most interesting pieces of the article is his description of the way privatisation wrecked the New Zealand electricity network when it was introduced, leading to a power outage, or outages, lasting five weeks.

Aucklanders of a certain age remember the Great Power Outage, symptomatic of their country’s dalliance with neoliberalism, that lasted for 5 weeks from late February 1998.

New Zealand’s electric industry had been deregulated, and the company running Auckland’s grid, Mercury Energy, had been formed in 1992. Mercury promptly downsized its workforce from 1,411 to 600, and skimped on cable maintenance to boost profits. At the time of the Great Power Outage, Mercury Energy was also busy trying to take over another electric utility, again to enhance revenues.

One of several assessments of the handling of the Outage by Mercury Energy and the city’s administration described their response, somewhat charitably, as “ad hoc”. They predicated their responses throughout the crisis on best-case scenarios, and were flummoxed when none materialized.

Practical preparation for worst-case scenarios costs money— duh! – and thus erodes profit margins.

Auckland’s electricity was/is supplied by 4 poorly maintained mega-cables (there have been five serious outages since the 1998 crisis), which failed in quick succession.

Traffic lights stopped working, ventilation systems broke down in the southern hemisphere summer, people were trapped for hours in elevators, food rotted in supermarkets, hospitals had to cancel operations, emergency services were put under extreme pressure, workers had to hike up 20 floors in high-rise buildings to get to their offices, and giant generators had to be flown in from Australia to tide the city over while the mega-cables were repaired over the course of the 5 weeks.

Harsh jokes were made about Auckland’s Third World electricity grid. One example: what did Aucklanders use before candles and oil lamps? Answer: electricity.

The mayor, whose city was becoming a laughing stock, and whose competence was questioned as the crisis dragged on, lost his bid for reelection soon afterwards, while Mercury’s CEO died of a heart attack at his desk.

Neoliberalism can be death-dealing, even for its beneficiaries and overseers.

See: https://www.counterpunch.org/2017/12/14/selective-impressions-of-the-new-zealand-aotearoa-conjuncture/

And other economists have pointed out that neoliberalism has been no more successful elsewhere. The American author of Zombie Economics, a Harvard economist, has pointed out that privatisation has not brought in the investment the electricity industry has needed, and resulted in worse performance than when they were state owned.

The Tories and corporate apologists for private industry like to go on about how terrible the British nationalised industries were in trying to put people off voting for Jeremy Corbyn and Labour, who have promised to renationalise electricity and the railway network. A few days ago the I newspaper in their selection of quotes from elsewhere in the press had a paragraph from the Spectator’s Karren Bradey banging on about this, before stating that Corbyn was a ‘Communist’ who was hanging on to an outmoded theory because of ‘weird beliefs’. Which I would say is, with the exception of the term ‘Communist’, a fair description of most Conservatives and other cultists for the free market. They are indeed continuing to support a grotty, failed ideology long past its sell-by date for their own weird reasons. This is an effective rebuttal to their claims.

He also describes how the introduction of neoliberalism into New Zealand wrecked the economy, and created more poverty while cutting taxes for the rich:

The New Zealand economy duly tanked– shrinking by 1% between 1985 and 1992, while productivity stagnated at below 1% between 1984 and 1993, and inflation remained at around 9% a year. Foreign debt quadrupled, and the country’s credit rating was downgraded twice. Taxes were cut for top earners (from 66% to 33%), while benefits were reduced by up to 30% for the poorest families. The number of poor grew by around 35% between 1989 and 1992.

This is exactly what we’ve experienced in this country during these seven years of Tory rule. And New Zealand and Britain aren’t going to be the only nations who’ve suffered these effects. They’re general, right across the globe. Neoliberalism is responsible for these problems. Except if you’re Theresa May and the Tories, who’ll bleat constantly about how all it’s all due to the last, ‘high-spending’ Labour government.

Rubbish. Neoliberalism is an utter and complete failure. It’s promoted by the Tories as it makes the rich even richer while keeping the rest of us poor and desperate. It’s time it was ended and a proper Labour government under Corbyn was elected.

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