The National Government is seriously out of sync with public opinion on foreign investment, and suddenly this issue has the potential to do lasting damage to John Key's administration. Yesterday's 'bombshell' from the High Court, which scraps the Government's decision to allow the Crafar farm sale to the Shanghai Pengxin group is a nightmare for National. This controversial issue, more than any other, appears to be resonating with the public, allowing electoral capital to be made by Labour, NZ First and the Greens, all of whom are riding (and promoting) a wave of economic nationalist sentiment that won't be easily tamed by John Key. The must-read analysis today on the political dimension of the Crafar farms deal is John Armstrong's Crafar - a rout of huge proportions. Armstrong argues that although National has already incurred political damage, it thought the worst was over. He says no-one saw the High Court decision coming and National now finds itself damned if it does and damned if it doesn't if it proceeds with the sale should the next OIO decision be the same as the last.
The High Court decision has implications for future foreign investment, and the today's Herald's editorial, Crafar ruling shows need for clarity calls for the Government to enact legislation to provide greater clarity about the rules - see also: John Hartevelt and Tracy Watkins's Crafar setback may force law change.
But as Armstrong says, Key will be reluctant to do this, as it will prolong the controversy and create further opportunity for his opponents to campaign against the government on an unpopular issue.
Patrick Gower points out that Justice Miller may have given John Key 'an escape route'. Gower says 'if the new OIO decision goes the other way, and the Crafar farms stay in New Zealand hands Key avoids the unpopular sale. And Key will have done nothing but followed the law as he has done all along' - see: Crafar bombshell rocks Key Government. In the original decision National made a virtue of accepting the recommendation of the OIO, so if the OIO once again recommends accepting the Chinese bid, it is hard to see how National could rationalise a change of position a few weeks later, as politically tempting as it may be. For further important items on the issue, see Gordon Campbell's excellent piece On the Crafar Ruling, and the New Asset Sales Shortfall, Bernard Hickey's Crafar decision - an overspending addiction intervention and Danya Levy's China 'will see Crafar ruling as racist'.
The likelihood of a Government backdown is also increasing over the SOE partial privatisation programme. In particular, National is probably destined to yield to the Maori Party on Section 9, by retaining it or something similar. The latest hint of this can be seen in Tony Ryall's comments to the Wellington consultation hui on the issue - see Claire Trevett's Govt 'gets the message' on Treaty clause. This would be a major and much-needed victory for the Maori Party, giving credence to their claim that 'being at the table' will benefit Maori and it would also take some of the wind out of the Mana Party's challenge to it.
National is also talking publicly about the possibility it will sell off less than a full 49% stake in the SOEs destined for the sales block - see RNZ's Govt may sell less than 49% in State assets - English. Of course the Government has always said that the sales would involve a 'maximum' of 49% of the shares, although as RNZ points out, 'the target of $5 - $7 billion from the floats was contingent on the Government selling up to 49% of the companies'.
The decision by TVNZ not to give David Shearer a regular Breakfast TV slot will lend momentum to the idea that Labour's new leader isn't exactly setting the world on fire. TVNZ says that Shearer does not have an automatic right to appear on the show and will have to earn a spot by actually making news. Rather than being a 'political broadcasting controversy', the decision by TVNZ actually confirms their long-running procedure. Nonetheless, it raises questions about whether the media should treat party leaders differently in their coverage.
With the National Government under attack on a number of fronts, Labour blogger Scott Yorke says the Labour Party is doing what it always does - scoring 'own goals' - see: I'm Happy To Help. Yorke writes in response to news that Trevor Mallard has been scalping tickets from his electorate office on Trade Me - see Jody O'Callaghan's Mallard sells festival tickets online at profit. He ends his blog post with offering to help his party 'draft a private member's bill to ban Trevor Mallard from the internet'.
Other important items for today are Brian Fallow's Tackling the wage gap a tricky exercise which looks at the issue of increased income inequality from an economically analytical point of view and Vernon Small's Memo to McCully: be more careful in future.By Bryce Edwards Email Bryce