Should opposition parties pledge to renationalise companies being partially privatised by the National government?
It is a question that goes to the heart of the debate over the asset sales, and it’s discussed today by John Armstrong in his column, English puts Labour on the spot during defensive week for National.
Armstrong suggests that Labour is being wise to fudge the issue. He says that if a future Labour government was to reverse the partial privatisation process this would have to be funded out of increased borrowing of perhaps $5-7billion, and signalling such an "extravagant" policy would be to "shoot itself in the foot" as it would "cut right across Labour’s efforts to portray itself as a careful manager of the economy".
This is also a position pushed on Labour-friendly Standard blog, see for example: The art of the possible.
On a strategic level this is certainly true, but in substance it makes no sense. Labour’s whole argument against asset sales relies on the premise that it makes more sense to trade off greater government debt for the full revenue streams of the SOEs. So by logical conclusion, Labour and other opponents of the share float should be making it clear that the float will be reversed.
As Armstrong also correctly points out, "the irony is that the threat of a buyback may be the best weapon the Opposition parties have to stymie the share floats. Investors might shy away from applying for shares if they knew they would be required to sell them by a Labour-led government".
Pledging renationalisation would normally be a standard position for any leftwing party opposing privatisation. More radical left-wing parties might even threaten that there would be no compensation afforded to those giving up the shares.
This receives a strong endorsement from No Right Turn – see: NZ First steps up on asset theft
who makes the point that "for all its rhetoric, Labour has refused to do this, putting the interests of the 1% ahead of those of ordinary Kiwis".
Labour’s inconsistency over the renationalisation is highlighted by the fact, according to Tony Ryall and David Farrar, just a few years ago Labour favoured privatising the state-owned Spring Creek Mine, which was sold to foreign interests – see David Farrar’s Labour’s 2007 asset sale
. Farrar argues that this illustrates that "many in Labour’s caucus don’t believe a word of what they say on asset sales".
But, equally, one might ask just how strongly National and its rightwing supporters believe in the partial privatisation programme? Right-wing blogger Cathy Odgers has outlined her problems with National’s asset sales programme in a thoughtful blogpost, Asset Sales Bogey Needs Picking
Her main criticisms are that National is not really using the proceeds of the sales for retiring public debt but instead to invest in public services (ie, to make government bigger) and that National has failed to put forward a credible philosophical argument for reducing state involvement in trading companies.
She also warns, perceptively, that the eventual share float will be a no-win situation because the government will be damned if the share price rises too much and damned if it drops.
Another right-wing blogger, Cameron Slater, suggests that National was wrong to ever down this path because "New Zealanders don’t want asset sales to begin with" and that the government is silly to taunt Labour with the line that "our asset sales are not as bad as your asset sales" – see: National winning the battle but losing the war
The government continues to water down its privatisation programme – the latest example being a decision to drop the "provision that would have allowed the government to sell its stake in the companies below 51% as long as it retained a majority of shares with voting rights – see Adam Bennett’s Sweeteners on offer as asset sales inch closer
The proposed "loyalty scheme" for domestic purchasers of the shares is another example and this is receiving renewed scrutiny. The Greens say that it will reduce the sale proceeds by perhaps 6%, which will be essentially transfer to wealthy share buyers – see: RNZ: Loyalty shares defeat sell off purpose: Norman
And questions are being asked about why the Government is being so unclear about whether the "loyalty scheme" will actually go ahead. One theory is that such an offer is unconstitutional – see The Standard’s Nats’ unconstitutional looters’ bonus
All in all, the whole state assets sales debate is a classic case of compromises being made on all sides, with the usual large doses of parliamentary play-fighting thrown in.
Other important or interesting political items today include:
Gordon Campbell (Wellingtonian): The problem with secret deals