Government PR puff pieces alive and well
It appears the New Zealand Government can still rely on the "mainstream media" to deliver unchallenged PR puff pieces... today's was promoting the supposed brilliance of state-owned Kiwibank (an Anderton idea, backed by Labour).
The bank now has almost 650,000 customers "on its books", with loans and advances rising to $5.6 billion (including $700 million from the acquisition of the AMP home loan portfolio).
And while Kiwibank has managed to sell the customer numbers as an impressive figure in its free PR coverage, in actual fact the bank has a very small share of the New Zealand banking market... around just 3%.
Journalists faithfully reported that the SOE made an annual profit of $36.8 million this financial year, an increase of 19% on last year's result.
And the bank is a long way off "breaking even" for the New Zealand taxpayer, and Knowles admitted it's "still a year or two off" paying dividends to the Government.
Kiwibank cost around $80 million to start in 2002. Since then taxpayers have given the SOE another $200 million in funding, including $55 million in additional capital in the year to June '07, and a further $50 million to June this year.
* NZ Herald: NZ Post still shores up Kiwibank
* Stuff: Kiwibank makes $36.8m profit
Posted at 7:51 pm
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If a SOE is profitable, why sell it? Especially if it will pay dividends to the Government instead of further lining the pockets of those who already do very well out of our society.
If the SOE pays dividends, the money will go towards improving our society as a whole and ultimately lowering taxes.
Some businesses need incubation and protection to survive in the market. You probably don't agree but I also think it's incredibly important to have NZ businesses as at least an option for services such as transport and banking (Air NZ, Kiwibank, KiwiRail etc...). It's in the interests of the country to have these services provided and not dependent on entities that have other interests.
"The Market" isn't the be-all and end-all of business, especially when it comes to caring for the consumer. Therefore some SOE's or Crown Entities are sometimes needed.
I believe Kiwibank to be one of those.
Opportunity Cost.
If the profit the SOE is making, is less than could otherwise be made with the cash from the sale of the SOE, then really the SOE is losing money for the taxpayer.