Jonathan Metcalfe: Many pluses to mixed ownership

'Selling the 'family silver' is a deeply unpopular idea for some New Zealanders...'. Photo / Chris Skelton

Opinion

Selling the "family silver" is a deeply unpopular idea for some New Zealanders... A PARTNERSHIP model between public and private interests works - but don't mention the 'P' word.

Selling the "family silver" is a deeply unpopular idea for some New Zealanders, but the Government's latest proposal to look at the ownership mix of its energy companies is a form of public private partnership (PPP) that is already working well here and abroad.

Many voters will remember the heady 1980s, when Finance Minister Roger Douglas and State Owned Enterprises minister Richard Prebble oversaw the corporatisation of government entities such as Coalcorp, Electricorp, Goldcorp, Landcorp and Petrocorp and the privatisation of some of these and others.

One of the most significant examples of this process was the formation of Telecom from the former Post and Telegraph Office in 1987, and its privatisation in 1990.

Critics of these events remain suspicious about the asset's "market" price, the loss of future revenue for taxpayers, the distribution of profits (usually offshore) and increase in service fees to provide commercial returns to private owners.

These sensitivities explain the tentative approach to looking at options for mixed ownership of the state-owned energy companies Genesis, Meridian and Mighty River Power - offshoots of the former Electricity Corporation.

The Government is also looking at reducing its shareholding in Air New Zealand.

In all four cases, the Government intends to retain a majority stake.

Mixed ownership is a form of public private partnership with all the benefits such partnerships can deliver for taxpayers.

Britain's Treasury says such partnerships "bring public and private sectors together in long-term partnership for mutual benefit."

The main advantages of them include:

Value for money for taxpayers by transferring risk to a private partner

Sharing (and transfer) of public and private sector skills, knowledge and expertise

Increased capacity and capability, particularly with involvement of international firms

Accountability through a performance incentive regime

Innovation and diversity in the provision of public services

Effective use of state assets to the benefit of all users of public services.

The involvement of a private partner in the ownership or delivery of public assets and services has worked elsewhere and is working in New Zealand.

Veolia Transport Auckland works in partnership with Auckland Transport to manage the Auckland passenger rail service.

Since 2004, we have trebled the number of passenger journeys on the network.

Despite a slight dip in performance in recent weeks and ongoing disruption from infrastructure upgrades, we have maintained an impressive 85 per cent customer satisfaction level.

Internationally, Veolia operates in several sectors (transport, energy, waste management and water) - a wealth of experience that is readily available to New Zealand's public sector.

Our Veolia Transport division employs 80,000 people in 28 countries with a range of contracts with the public sector, covering all modes of transport.

In New Zealand, Veolia has improved safety management, staff training and provided expertise for the procurement of Auckland's new electric trains.

In Australia, we operate several bus companies and in New South Wales, our operations are 50 per cent more efficient and 20 per cent cheaper than the competition.

We also bear the risk for managing customer issues, can make faster decisions and are more inclined to focus on growth and positive marketing.

Veolia's role as a public/private partner in New Zealand and around the world is working well for commuters and taxpayers.

As the Government continues to explore options for mixed ownership of the energy companies and Air New Zealand, it is important to consider the benefits of private sector expertise, particularly international experience, while recognising the importance of New Zealand ownership and control.

The partnership model can work for New Zealand, as long as we don't get stuck on the 'P' word.

Jonathan Metcalfe is chief executive of Veolia Transport Australasia.