Act's View of Property Rights;
Fundament or Quicksand?

Keith Rankin, 24 June 1998


Jane Clifton's Listener article "The Right Stuff" (27 June) shows up the central contradiction of Act, New Zealand's right-wing political party.

Act subscribes to the standard neoliberal tenets. Of particular note is its long-term goal "that the state only own and operate as of right the nation's defence, foreign policy, justice and administrative governmental issues". That is longhand for the view that the sole object of the state is to protect private property rights.

Neoliberals always use the word "state" - meaning "government" rather than "nation", "society", "sovereign" or "public". And the word "state" seems to have Orwellian undertones whenever used by neoliberals. The central dichotomy in neoliberal thinking is that of the state standing in opposition to the private individual; unless, that is, the state is confined to its neoliberal role of enforcing private property rights.

Act's political mission, however, is to undermine public property rights as being of no consequence, with a sideline that suggests that Treaty of Waitangi property rights are equally inconsequential. (Hence Derek Quigley's bill to put an end to Treaty settlements. And hence Act's support for Taranaki farmers whose leasehold's were revalued downwards following the introduction of realistic rental payments for Maori land. Support for Maori property rights is not conspicuously present in Act's thinking.)

Clifton says: "Some key [National] ministers, such as Bill English, are starting to enunciate Act's line that people should not get hung up on ownership of facilities, but concentrate on how to get the best, most efficient service out of them." An obvious example is of course the gung-ho attitude of Max Bradford to the property rights of the owners of Electricorp (ECNZ). (See "To Split or to Combine".) When Bradford was on air with Kim Hill for an hour this morning, opposition was expressed strongly by conservative people from places like Waitaki. These people have a strong sense of proprietorship and see their property rights being treated as inconsequential by a group of people who claim to be acting on behalf of "consumers". ("Consumers" is code for private capitalists when they are at play; ie when they are spending the income streams they have gotten control over.)

When, around 1850, Proudhon said "Property is Theft" he was not opposed to property rights. Rather, he was noting that private property had public origins.

Clifton says that Act's leader Richard Prebble "says that New Zealand's social infrastructure is stagnating because the other parties cannot get past the myth of state ownership".

There is no economic theory that claims that one group of shareholders are better owners than another set of shareholders. But that's not the point. The point is that the current shareholders have property rights, and if those shareholders happen to be the public (not the "state" or the "government" which is no more than an agent of the owners; a board of directors) then that does not lessen their rights.

The matter of the sanctity of property rights has nothing whatsoever to do with economic efficiency; it's a matter of jurisprudence. I could not conceive of a law being passed that expropriates private property on the grounds that it was used inefficiently by the current owners. Yet Prebble says "We can't afford the luxury of state ownership anymore". That sounds like a threat of property expropriation by a wanna-be government that claims the role of government is to protect and enforce property rights. That's Orwellian doublespeak.

Property law requires that the selling party wishes to sell, and agrees to the price. Why should public property be exempted from such vendor consent?

The economic purpose of property is the confer on its owner an "income stream". In the case of corporatised public property, the income stream is identical in kind to that of private property; although in modern public accounting practice it offsets taxation. Privatisation is a way of transferring that income stream to private agents, in return for a lump sum payment to the sovereign. The lump sum payment tends to be swallowed by the government of the day, whereas, if a private company was being sold, the proceeds would go directly to the shareholders. The problem with today's public property is that the owners, lacking the social dividends that confer a sense of ownership, fail to recognise the value to them of their property. They therefore acquiesce in its sale to private capitalists, and do not have a satisfactory means of setting the price.

Derek Quigley says: "Act is seen to be ideological, whereas it's not. It's about how we get the best from our resources" [emphasis added]. By "we" he means 'private capitalists as owners and as consumers'. By "our resources", he means resources that were given value by society as a whole, and therefore entitle society to an income stream.

Getting the best from "our resources" should mean gaining an income stream that confers on each of us a sense of responsibility for our public resources, a sense of stewardship, a sense that our resources are valuable; in short, a sense of ownership, of public ownership. We need a government that confers, protects and enforces public property rights. Start by giving me access to my share of ECNZ's profits.

Public property rights should be seen as the first fundament of an economically developed society. For Act, on the other hand, they represent quicksand. At least, that is, until they have been privatised. Then, for Act and their ilk, property rights miraculously become the fundamental bedrock upon which their self-regulating economic utopia must rest.


© 1998

Rankin File | 1998 titles