Herald on Sunday Editorial: Guesses get wilder by the day

Bill English used the word 'guess' - not one commonly used by a Finance Minister. Photo / Mark Mitchell

Opinion

Finance Minister Bill English presented an easy target this week when he acknowledged that estimates of how much the Government would make from partial sales of state-owned enterprises were "a guess".

The Government has repeatedly said the sales would yield between $5 billion and $7 billion. Those were the numbers that featured in last year's Budget and the pre-election fiscal update. But this week, after the decision was confirmed by Cabinet, Treasury had to pick a number.

The $6 billion that it settled on - the middle of the previous range - was suspiciously imprecise and English moved quickly to clear himself some wiggle room. "It is not our best guess," he said. "It's just a guess ... That's an honest answer."

It seemed odd. If the Minister was suggesting that a better guess were possible, why did he not ask the highly paid boffins across Bowen St to produce it? In all likelihood, they did, of course, but English wasn't prepared to have any number carved in stone. His vagueness was canny, but it would have been more honest to say nobody has much of an idea.

He did say "If there is an economic meltdown in Europe, then we would need to rethink," which meant much the same thing. The global economic turmoil makes asset sales an unpredictable business. Making matters worse is that the National-led administration has to at least consider tailoring (read watering down) the relevant legislation to take account of intense opposition both from the public at large and the Maori Party, whose confidence and supply agreement provides the Government with a secure majority.

So English's "guess" has more to it than the down-to-earth honesty of a Southland farmer. It was in response to a requirement of the Public Finance Act that the Government came up with a forecast for Thursday's statement but he didn't want to be seen as setting a limit on investors' generosity. Such was his keenness to insure himself against later fallout, political or fiscal, that he was prepared to use the word "guess" - not one commonly used by a Finance Minister.

His hope was doubtless that the G-word, so easy to ridicule, would draw the fire that might otherwise be directed at the actual numbers of the sale proposal. What he hoped would be drowned out by the laughter was the Government's admission - made this week for the first time - that selling the assets will cost $100 million more over four years in forgone dividends than it will make by reducing overall debt.

Critics of the sales process have long said as much and Green Party co-leader Russel Norman crowed that "even by his own numbers, John Key can't economically justify his ideological commitment to asset sales".

This is not the death knell of asset sales - Key is too politically committed to the process to back down completely - but alarm bells should be ringing in the Beehive. Together with the bombshell High Court decision overturning the approval of the sale of Crafar Farms to Chinese company Shanghai Pengxin, it adds up to a rough week for the Government. The two issues are quite separate, but tend to merge in the public mind to create an image of an administration holding up an "Aotearoa For Sale" sign. From any angle, that's a very bad look.