California’s “spending extravaganza” was in the spotlight last month when the Chairman of ZBB energy corporation, Bill Mundell, delivered a lecture to Governor Schwarzenegger and his delegates at the State’s biannual Republican Party convention. “It has been said that the financial crisis is the mother of all inventions, and out of the ashes of our own California crisis can come a brand of Conservatism, one we Republicans can rally behind because it directly addresses our state’s inexorable drive towards indebtedness and financial Armageddon.”
A California enterprise fund would provide a real opportunity to reset the state’s financial profile and begin the process of rebuilding the state’s future.
Mundell asked Californians that, while reinstating the Gann amendment for future reform, are they ignoring their legacy issues, which can be solved, said Mr Mundell, by redeploying stateowned public assets and creating public-private partnerships whereby the state retains ownership of privately-run services.
“Even if we were to fix the problems going forward, we can no longer ignore the accumulation of past mistakes. Our party lost a legacy of greatness in that darkness, and as we fumbled for a light switch we found ourselves looking at the salesman in the other party getting an award for selling Americans that lemon car that had been in the lot for years and years.”
He added: “Our minority interest was traded in for agendas designed to bury our state in debt forever. Now we are paying the price.”
California is currently $72 billion in debt with over $100 billion in unfunded pension liabilities, but without valuing its assets, said Mundell, it can’t be sure of its own bankruptcy.
Mundell exemplified Australia’s economy which turned Aus$100 billion Australian dollars into an Aus$80 billion ‘Future Fund’ through redeploying its public assets in the 1990s.
Mundell has asked Governor Schwarzenegger for an executive order to create ‘the California enterprise commission’ to value California’s assets as the first step to deciding which ones are eligible for the state’s enterprise fund.
Speaking about California’s Department of Motor Vehicles, “the $3.5 billion behemoth bereft of adequate technology investment”, Mundell said, “that money isn’t coming from California’s Government anytime soon”, so the private sector and the State have to “collaborate” and send a “powerful signal of confidence in the golden state.”
We must keep our eye on the big prize, remembering that we are bringing the private sector into the public sector, in some cases bequeathing monopoly rights, not the other way around.
Mr. Mundell said: “I know this ‘capitalism with handcuffs’ will not appeal to everyone. But we must keep our eye on the big prize, remembering that we are bringing the private sector into the public sector, in some cases bequeathing monopoly rights, not the other way around. When it comes to public assets, we have to be seen to be protecting the public interest, not enabling the private sectors mission to make excess profits out of assets held in trust for the people.”
California is the world’s eighth largest economy but it could be lagging the US economic recovery with its employment rate set at 12 per cent. Bill Mundell believes that asset investment will create jobs, particularly with immobile assets: “A California enterprise fund would provide a real opportunity to reset the state’s financial profile and begin the process of rebuilding the state’s future.”
It was a message to which Governor Schwarzenegger will have paid close attention.
Government Gazette, October 2009
Government Gazette is a monthly magazine which provides quality analytical and politically neutral coverage of the leading institutions and policy makers in the European Union, its cities and regions.