Which brings us to the point. Air New Zealand. I humbly suggest that the koru on its aircraft tails be replaced by a brick, because that’s about as well as it has been flying since it was flogged off by the Douglas/Prebble regime of the 1980s. The narrowly averted total collapse of our national airline this year was a disaster waiting to happen. It was a perfect illustration of what happens when an asset established as a public service is captured by those intent on milking it for private profit. The most encouraging thing to come out of the whole fiasco was that the Government, however reluctantly and temporarily, has renationalised the airline. "Renationalisation". Now there’s a word to make the ideologues choke. It’s a word they thought they had banished forever from the economic and political lexicon of this country. Rather like the phrase "in the national interest", which they never expected to hear uttered again.

The Government has precedents for what it did. One of the very few promises it made before the 1999 election was that it would reverse National’s decision which allowed the insurance transnational corporations (TNCs) into the highly lucrative field of accident compensation. The Government followed through with this promise and duly renationalised the Accident Compensation Corporation in 2000, re-establishing its monopoly in the field and shutting out its private competitors. Also in 2000, the Government refused to allow any of the bidding fishing TNCs to buy Brierley’s stake in Sealord, because this was deemed not to be "in the national interest" (see Watchdog 95, December 2000, for a detailed account of this). But this decision was later reversed and Brierley’s stake in Sealord was sold to one of the bidders, a Japanese fishing TNC, in January 2001 (see Watchdog 97, August 2001).

(Of course, our old friend, the Overseas Investment Commission (OIC), is obliged by law to consider the "national interest", when making its decisions. But the OIC sees virtually everything as being in the national interest, citing it as grounds for refusal in only a tiny handful of cases over all the years that we have been monitoring it. Indeed, see the Watchdog 95 article for a very detailed account of how the OIC fought the Government tooth and nail to have every single bidder for Brierley’s stake in Sealord approved, despite the Government declaring that sale as not being "in the national interest". And, for a more recent example, see Bill Rosenberg’s analysis of the OIC’s April 2001 Decisions, in this issue, to see how an academic study concluded that the OIC failed to meet its own criteria for evaluating the "national interest").

There is an even greater irony in all this, of course. Both the Prime Minister, Helen Clark, and Minister of Finance, Michael Cullen, were Ministers in that 1984-90 Labour government (better known as Roger Douglas and the 40 Thieves) which flogged off so much of the family silver, including Air New Zealand. They have now become highly paid pooper scoopers, cleaning up the mess left by that disastrous regime. On the other hand, Deputy PM, Jim Anderton, was a lowly and lonely Labour backbencher then, one who voted against the sale of Air New Zealand (it was the last straw for him) and, deserted by the rest of Labour’s gutless "Left" MPs, he walked out of the party and began the process that led to him being leader of the Alliance in today’s Coalition. Jim, who’s never had any difficulty gloating, could quite justifiably say "I told you so" to his hapless former Labour colleagues.

Some history is necessary. In 1987, when a Labour government was re-elected for the first time since the 1930s, its election manifesto promised not to sell either Air New Zealand or Postbank. Both promises were outright lies (and both were duly sold). In 1988, the Government announced that it would sell 25% of Air New Zealand. This was suddenly replaced by an announcement that it would sell 100%, apparently because Sir Roger Douglas, Minister of Finance, wanted to achieve his $2 billion State assets sales target for the 1988/89 financial year. Treasury recommended selling it to British Airways (the present owner of Qantas), but Cabinet decided on a consortium. Brierley’s got 60%; Qantas 20%; Japan Airlines and American Airlines 7.5% each. The price was a bargain basement $660 million: "Less than three jumbos", as it was put by Jim Scott, the first chief executive of the new Air New Zealand (Listener, 6/10/01; "Crash Landing", Bruce Ansley). The sale was accompanied by sophistry. Recognising the reality (then and now) that only "national" airlines can take advantage of international bilateral landing rights, the Government pretended that it remained a New Zealand airline. As with the 1990 Telecom sale, the Government retained a Kiwi Share, which gave it some rights over which foreign airlines could buy into Air New Zealand and how much they could own; and Air New Zealand’s shares were split into A and B shares. Only New Zealanders could own the A shares; foreigners could own the B shares only. Officially, foreigners could only own 35% of the airline. And who was the dominant "New Zealand" owner of the A shares? Why, Brierley’s, of course. It’s nonsense now and it was nonsense then (see Watchdog 84, May 1997; "It’s Official: Brierley Investments Is An Overseas Company", Bill Rosenberg, for an excellent analysis of the shabby legal rigmarole undertaken by the National/New Zealand First Coalition government to maintain the fiction of Brierley’s being a "New Zealand" company and thus able to retain ownership of assets such as Air New Zealand).

The consortium of foreign airlines didn’t last long. Japan Airlines and American Airlines sold out quickly; in 1997, Qantas sold its 20% stake for a $120 million profit. That left Brierley’s holding the baby, along with its new partner, the very rich and powerful (and entirely State-owned) Singapore Airlines. Brierley’s, a noted wham bam thank you ma’am asset stripper, broke its own cardinal rule and held on to Air New Zealand for its whole time as a privatised airline.

Australia Proves Its Undoing

Airlines are a notoriously volatile industry. Several American ones have flown for years under the protection of US bankruptcy laws. In the wake of the crisis of confidence by the travelling public caused by the September 11 suicide hijackings, a couple of major European ones have gone belly up. The airfields that serve as the industry’s graveyards, in places such as the Mojave Desert, are doing a roaring trade. But Air New Zealand’s problems long pre-dated the current slump in global air travel or even the global recession that has been gathering force for the past few years. Air New Zealand’s problems can be summed up in one word – Australia.

The Australian government, having allowed Ansett to leave Australian ownership, then relaxed its protectionist aviation policies and allowed in various cutprice competitors. One of them, Virgin Blue (owned by egomaniac British billionaire, Sir Richard Branson) proceeded to decimate Ansett. The latter was not helped by, firstly a partial grounding of its fleet and than a total grounding, both times for safety reasons. These disastrous groundings took place just before the peak air travel periods, in both cases – Christmas (2000) and Easter (2001). The previous owners had allowed Ansett’s planes to deteriorate to the point where they were unsafe to fly.