Fran O'Sullivan on business

Business analysis and comment from Herald columnist Fran O'Sullivan

Fran O'Sullivan: Popular or not, Key must push asset sales

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It would not be credible for John Key to do a u-turn on plans for the partial sales of four state energy companies which include Mighty River Power. Photo / APN
It would not be credible for John Key to do a u-turn on plans for the partial sales of four state energy companies which include Mighty River Power. Photo / APN

Memo to PM: Don't take any notice of the Herald poll showing a majority of punters are against asset sales. The only poll that counts is the general election on November 26. You've got loads of political capital. Just spend it.

That's the kind of advice John Key may well be getting from his chief press secretary Kevin Taylor (aka Captain Panic Pants).

Surely, the best thing about being Prime Minister is that you do get the chance to lead your country in new directions. Not simply embellish your personal Rolodex with the many interesting and powerful connections that any political leader worth their salt will make in the top job. Otherwise, why wouldn't Key simply go back to New York, London or Shanghai instead of staying in Wellington?

This is a fight worth winning.

Regular readers of this column would be aware that I strongly took issue with the Government's decision to count the revenue for partial sales of state-owned enterprises as a done deal in the latest Budget.

I've still got misgivings about the fiscal probity of this move.

But at second blush, one of the great benefits of the Government's decision to pervert the usual Budget process is that it rather delightfully locks the more nervous Nellies on the Beehive's ninth floor into place.

It would simply not be credible for Key to execute an about-face on plans for the partial sales of four state energy companies, simply because the Herald poll (or National's private polling) shows nearly two-thirds of the punters are still hung up on some flawed asset sales in the 1980s/90s wave of privatisations.

So, instead of caving in to hysterical pressure (as Key did on the Government's proposal to mine on conservation land) the Prime Minister is presented with a great opportunity to lead from the front and change minds.

In his bones, Key will know that in the longer term the partial privatisation policy will prove very popular indeed, particularly if the sales are sweetened with a sprinkling of "popular capitalism".

Australia's Queensland Government - run by Labor's Anna Bligh - did just this by offering incentives to mum and dad investors in a highly successful string of assets sales.

There were no brokers' fees, a specified maximum price per share and a loyalty bonus to incentivise small shareholders to hold on to their shares, as well as a free parcel of shares for relevant workers; particularly with the float of Queensland Rail (now QR National) - the second largest IPO in Australia's history.

It is notable that Australian Prime Minister Julia Gillard (also a Labor politician) urged Bligh to stay the course over the top of opposition from some party factions.

The intrepid Bligh is now preparing to face down her critics at the next Queensland elections.

But on this side of the Tasman, Labour leader Phil Goff - who was an integral member of the David Lange Cabinet that privatised many state assets - is hell bent on re-erecting Fortress NZ.

What I dislike about Goff is that he reneges on policies he previously promoted when he believes he can score a naked political advantage.

Hence at the 2005 election he blithely stood by while a fellow Cabinet minister made untrue allegations that the United States was writing New Zealand's policy even though he knew full well that an American slagged off as a National "bagman" had partially under-written a New Zealand lobbying programme in the US capital.

So when Goff gets all pumped up and red-faced and hyperbolic, Key only has to dip into the recent history books to underscore the Labour leader's hypocrisy.

In fact, the partial asset sales will provide an investment home for KiwiSaver providers, the NZ Superannuation Fund, iwi and retail investors. They will also release capital for the Government to reinvest in much needed new infrastructure and to help get the budget back into the black.

The best thing about Finance Minister Bill English's latest Budget is that it does finally signal a much greater role for the private sector in the New Zealand economy. And another step along the way to extract this country from the political cul-de-sac in which Helen Clark's Labour Government parked us.

Where the Government does have more work to do is on dampening down the media-induced hysteria over Chinese investment in New Zealand.

So what that the Chinese Investment Corporation is poised to buy several billion dollars of New Zealand Government bonds? This is surely a vote of confidence in the New Zealand economy's long-term prospects.

So what also that a Chinese company is looking at buying the Crafar dairy farms (and paying top dollar where New Zealanders can't or won't).

Realpolitik dictates that if Fonterra makes good on its plan to set up 20 dairy farms in China, Chinese companies will want to know why they were denied the opportunity to invest here.

- NZ Herald

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