John Armstrong: Asset sale curve-ball for Opposition

Mr English says there would be no more significant sales or share floats after Genesis Energy. Photo / NZ Herald

Bill English's declaration that privatisation days are over may leave opponents with a hollow victory

Much to the mortification of Opposition parties, Bill English has thrown them a curve-ball as they ready themselves for their unofficial three-week campaign to maximise the "no" vote in the referendum on partial asset sales.

The credibility of those parties - Labour, the Greens and, to a lesser extent, New Zealand First - is on the line. It is not a question of the result of referendum going their way. It would be a massive embarrassment to those parties if a majority vote in favour of privatisation.

Given that is highly unlikely, which side "wins" the referendum will hinge on turnout. That can be notoriously low in referendums. Even one as controversial as the smacking of children ballot in 2009 produced a turnout of less than 57 per cent.

National's tactic has been to reduce the turnout in the latest referendum by stressing it will carry on with its current sales programme regardless of the result.

Enter English. The Minister of Finance yesterday delivered a surprise by saying that once Genesis Energy was partially floated early next year, there would be no more significant sales or share floats. National's privatisation days were effectively over.

English's declaration may cut turnout even more, leaving the Opposition with a pyrrhic victory at best.

National's opponents were already accusing it being deeply cynical in completing the sell down of 20 per cent of Air New Zealand prior to the referendum.

However, it could be argued that the timing of that sell-off actually favours the Opposition. The more than three million referendum voting papers will start landing in letterboxes from this Friday as the citizens-initiated plebiscite gets under way. Sure, voters may have been left powerless to block the tranche of Air New Zealand shares going on the market. But they are hardly powerless when it comes to registering their disapproval of the move. Voters' memories are notoriously short. But not that short.

Their disapproval might have been stronger if the sale price of the Government's holding was to have turned out to be a lot lower than last Friday's closing price of $1.65 before trading in the national carrier was temporarily suspended.

However, the Government now expects to get between $1.60 and $1.65. Ministers are clearly punting that it is more preferable to sell the lot all at once while Air New Zealand shares are at a five-year high. The shares were trading as low as $1.24 earlier this year.

The sale price for those shares has become even more important since the disappointing float of Meridian Energy. Another botched partial privatisation - along side the likelihood that the Government will fail to breach even the bottom end of its $5 billion to $7 billion target range for proceeds from its partial asset sales programme - would have done far more damage to National's credibility as a competent economic manager than the result of the referendum.