PUBLIC OWNERSHIP AND THE COMMUNITY.

• Author: Scrimgeour, Frank
• Position: Review

Public Ownership and the Community is Peter McKinlay's third book prepared for the Institute of Policy Studies since 1987 on matters pertaining to public sector reform. The focus of this volume is the restructuring of New Zealand's trustee saving banks and electricity distributors into a series of trust-holding assets worth more than $5 billion. However, McKinlay is not so much interested in these sectors for their own sake. Rather, he is interested in the community ownership of economic assets of which these are examples. In essence the book is an exploration, within a New Zealand context, of aspects of Buchanan's (1965) economics of clubs, Lueck's (1995) exploration of property rights and the design of law, and Williamson's (1985) analysis of the economics of institutions. However, the book does not address these issues conceptually, but rather in a style of anecdote, incomplete cases, and partial histories and discusses the practical challenges of evolving property rights, institutional design and governance in a world of hurried and imperfect policy advice.

The 165 pages of text are divided into 11 chapters that cover a multitude of issues without any framework to provide signposts to the reader. Chapter One scopes the issues. The study began as an analysis of the "more market" argument, but quickly moved to other issues including the distinction between ownership of specific assets and the ownership of wealth, the validity and appropriateness of various ownership structure and governance relationships, and how all these issues interact with the concept of social capital.

Chapter Two provides the context for the study by setting it within the history of New Zealand reforms since 1984. These reforms are interpreted as being driven by management theory and the New Institutional Economics. In support of this view, quotations are made from Treasury's 1987 briefing to the incoming Minister. The views of Francis Fukuyama are then presented to show at least one alternative paradigm to that which dominated the decade from 1984 onwards. Its purpose seems to be to allude to values that, it is argued, are not captured by the prevailing wisdom of the time. McKinlay concludes, however, that the view of government as a natural owner of assets on behalf of the national community has now largely gone, to be replaced by an understanding that where government ownership is desirable, it is because of specific circumstances.

Helpfully, the chapter then proceeds to look more closely at local government. He states, "The important point is that there is no inherent argument that the Local Authority, as an institution, has any claim to ongoing ownership or income or wealth" (p.17). However, having developed this line of argument, he points out this view is not necessarily persuasive from the perspective of a community, and illustrates this with the possibility of a regional city having its polytechnic closed. There will surely be local losses even if there is national gain. This highlights potential tensions associated with significant local institutions that are neither owned nor funded by the local community.

Chapter Three documents and discusses the restructuring of regional trust banks, the creation of port companies, corporatisation of electrical supply authorities and the creation and development of the Auckland Regional Services Trust. The banking reforms were driven...