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NZ POLITICS DAILY: Asset sales - where National went wrong

The government has lost the public debate - but opposition parties are not as successful as they think.

Bryce Edwards
Thu, 21 Jun 2012

National lost the public debate on asset sales a long time ago, but it pushes forward regardless.

Surely if the government could turn back the clock it would not bother going down the path of partial privatisation at all. After all the whole exercise has turned out to be so fraught.

This was emphasied yesterday by John Armstrong’s column, National has failed to conquer foreign ownership bogey, in which he intelligently outlines all the ways in which National has lost its way on the issue. 

But has the opposition actually ‘won’ the debate? It’s true that National has been unable to sell the policy programme to voters who appear to remain unconvinced and unenthusiastic about the asset sales.
And this has certainly allowed the government’s opponents a strong weapon to hit National over the head with, which it continues to do with success.
Yet the opposition parties are possibly not as successful as they might think. Yes, the public is unenthusiastic about the sale of assets, but there’s no evidence that the electorate is as angry about the issue as Labour, the Greens and New Zealand First all make out. 
In fact, the whole debate about asset sales has been rather weak and shallow, with both sides appearing to have descended into purely tribal partisanship, finally enjoying the fact that the issue provides a strong ideological "litmus test" in which the "left" can argue for greater public ownership and the "right" can argue for less government.
Yet it is hard to believe that either side in the debate really feels as strongly about the issue as they make out. 
The issue has become a highly technocratic one – will the government’s books be better off if it sells the assets or continues to receive the proceeds of dividends?
There has actually been no overwhelmingly convincing answer to that question. Essentially, all sides have failed to convince the public.
For yesterday’s most detailed coverage of the asset sales debate, see Adam Bennett’s Asset sales bill down to the wire, which provides an outline of the Government’s view and the "dissenting voices" on all the major elements of the debate.
There have been other challenges raised – most notably the question of rising power prices. But as detailed in Wednesday’s very good article by Nicholas Jones, price increases are already extraordinary high under the Labour’s SOE model – see: Power switches show market works: Ryall
Although Labour has really owned the debate, National is now attempting to turn the tables by putting the focus back on Labour’s own position on asset sales and its performance in this area. See for example, David Farrar’s blogpost Asset Sales Labour v National which deals with Labour’s past privatization programme.
Furthermore, National is asking a fair question of Labour and other opponents: If you oppose the sale, will you commit to buying back what is sold? New Zealand First has announced that it would indeed do exactly that – see: Opposition fails to slow progress of asset sale bill.
But until Labour answers that convincingly, it has credibility problems in its attacks on National. See also: Greens undecided on asset buy-back policy
Given National’s weak position on asset sales, could it perform yet another U-turn on this major policy? John Armstrong thinks that it is still possible that the process might be cancelled by the Government before or after the first asset (MightyRiverPower) is put up for sale. But few others see the Government yielding on such a central policy platform.
So why has the government been less inclined to pragmatically give in to public opinion on this issue?
After all it has been uncharacteristic for this National administration to unnecessarily push forward with unpopular policies. Bryan Gould credibly answers this question today in his column, Maori leaders have the right idea.
He says that the government is reliant on the sales proceeds for its electoral strategy: "It is essential to the whole of the government’s strategy. Without it, there would be a huge hole in the Government’s finances, and any chance of eliminating the deficit by 2014-15 would have gone.  Whatever other arguments are pressed into service, the truth is that the sales are needed if Key’s strategy is to retain any credibility in financial terms".
Other important or interesting political items yesterday include:
  • ACC continues to be a political hot potato. Patrick Gower reports that "the ACC-Bronwyn Pullar privacy scandal has now claimed its sixth casualty" – see: Sixth ACC casualty as board member leaves. But the bigger policy debate continues, especially with an excellent backgrounder by Colin James explaining how the ambiguities and different political perspectives on what the scheme should be for has led to recent controversies – see: ACC's unresolved policy paradox. And now the whole question of whether ACC should be a pay-as-you-go-scheme versus a fully funded scheme seems to be back on the agenda, as discussed in Vernon Small’s ACC changes could return $1b to workers, the Dominion Post editorial, Don't discard good with bad, and the Press editorial, Reforming ACC
  • Yesterday was World Refugee Day, and so the Race Relations and Human Rights Commissioner Joris de Bres made atimely critique of the Immigration Amendment Bill before Parliament – see: Refugee detention plan threat to NZ's good name
  • Following on from the "Wellington Declaration" signed in 2010, today the New Zealand Government is signing the "Washington Declaration" with the US. This all signals the much closer defence relations with the US as well as the US’s much greater interest in the Pacific – see Audrey Young’s New Zealand, US to sign new defence pact
  • Diplomatic relations between Britain and New Zealand became slightly frosty this week after British High Commission's First Secretary, Tony Clemson, published a critical opinion piece in the Dominion Post: New Zealand too slow on green growth. The prime minister has described this as "bad manners" and questioned whether diplomats should be engaged in such domestic political activities – see John Hartevelt’s British diplomat ticked off for criticising NZ
Bryce Edwards
Thu, 21 Jun 2012
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NZ POLITICS DAILY: Asset sales - where National went wrong