A Treasury cost-benefit study on the privatisation of NZ Rail released today is garbage, Alliance leader Jim Anderton
says.
'This is far right ideology masquerading as maths. The economic analysis is of such poor quality that it demands an
inquiry into the shabby state of economic competence at Treasury and at the Victoria University front-organisation set
up to produce the study.
'Analysis of the study by independent professional economists commissioned by the Alliance showed that equations
underpinning th e study contained political assumptions normally associated with far-right economic analysis.
'The Government's net revenue is the only truly measurable figure in the document. The rest is based on highly
subjective assessments of items such as 'consumer surplus'. The study uses far-right economic assumptions to weight the
importance of many elements.
'The welfare benefits of New Zealand and foreign ownership are assumed to be equal. So, for example, if the sale of NZ
Rail has resulted in profits flowing out of the country, worsening the balance of payments deficit, then all New
Zealanders pay higher interest rates. But the study assumes the effect is zero.
'The study assumes that there is no benefit to consumers from public ownership of a network. So for example, if the
railway makes a small provincial town viable, the study assumes there is no benefit from that, nor any benefit to a
company which can ship goods more cheaply.
'The most sinister assumption is in the statement 'we do not distinguish between the welfare of economic agents as
between their actions as consumers or providers of labour.
' To see what this means, imagine that NZ Rail under private ownership lays off staff and stops providing
apprenticeships, but makes more profit and therefore pays more tax to the Government. If the Government used that money
to give tax cuts to the wealthy, then the study regards that as welfare-neutral exercise. The person who loses their job
or training opportunity is assumed to be no worse off, and society is assumed to be no worse off because of high levels
of unemployment and falling skill levels.
'This is economic garbage of the most sinister and far-right variety and Treasury should be ashamed of its involvement
in it,' Jim Anderton said.