National chose to make asset sales an election issue by announcing its policy of partial privatisation of selected State Owned Enterprises, and Labour has attempted to make the election a referendum about it. Yet, despite being unpopular with voters the issue has never really obtained the popular traction that Labour had hoped for. This gulf between voter belief and behaviour is perplexing. On the one hand privatisation has become a dirty word in New Zealand politics and National's policy is opposed by a significant majority of voters; yet on the other hand the issue does not seem to translate into voters punishing National at the polls. As Brian Rudman says in his useful analysis today (Win will not give Nats right to sell assets), 'While overwhelmingly opposed to state asset sales' voters have 'put that issue to one side, preferring to treat Saturday's vote more as a contest between two presidential-like rivals. And here, Mr Key has no rivals'.
Another explanation for the failure of the asset sales issue to save Labour is the simple fact that the public has no great emotional or rational attachment to the status quo, and in general, Labour and National's positions are not as dissimilar as their might first appear. Very few voters hold any sort of emotional connection with a business like Solid Energy, and most would fail to even identify which energy companies are state owned. Labour's policy is to retain businesses like Solid Energy under the State Owned Enterprises Act, which means that they run along totally commercial lines and with the profits going to the current shareholder - effectively the Treasury. Therefore the real policy debate is between the option of Labour's 'Corporatised model' for the energy companies or National's 'half-corporatised, half-privatised' model. As far as citizens are concerned, in practice there's really no difference in these models - both mean high electricity prices and the market model. So what might on the surface look to some like two opposite policy models ('privatization versus public ownership') is in reality a false dichotomy, because Labour's status quo means that those assets in question currently operate outside of any sort of public control and they serve no real social function beyond profit. For more on this, see my previous blog post, A leftwing perspective on asset sales. In line with this, it's also worth reading Brian Fallow's analysis (Both parties overstating benefits of asset policies), which correctly points out that 'Both major parties have exaggerated the fiscal benefits of their respective policies by glossing over the opportunity costs involved - dividends foregone in National's case and a higher interest bill in Labour's'. For Labour's view on the issue, see John Pagani's two items today: We've already sold assets - and ended up with debt and Do you really want to sell our assets?.
In the last few days of the campaign, National's asset sales policy has come under increasing scrutiny. This is partly because National itself hasn't put it under any scrutiny - particularly their assurances that the assets will be sold to New Zealanders - see: TVNZ's Ombudsman called in over asset sales. Today, National has gone on the defensive, emphasising that there will be regulation to stop any private owner buying too many shares in a company - see: Derek Cheng's Asset sales: Govt considers 10pc cap plan. For more on the disjuncture between the unpopular policy and the popular National Party, see Adam Bennett's Key's popularity unaffected by asset sale plan.
Despite not being much of a salient issue for voter choice in the election, the issue of asset sales is at least acting as an important vehicle for the discussion of coalition possibilities for the minor parties that would seek to negotiate with National after election day. For the Maori Party, in particular, the issue is problematic. On the one hand they say they oppose asset sales, but if they were sold they would try to ensure iwi corporate buyers would get preferential treatment. National - their current and prospective coalition partner - isn't having a bar of it, undermining the Maori Party's main campaign thrust that it makes real gains for Maori by sitting around the table with National.
The Greens, too, have to deal with the issue of asset sales when considering whether to support a National Government after the election. And today it's been reported that 'The Green Party has put asset sales at the centre of any post-election negotiations - but stopped short of ruling out a deal with National' - see: Paloma Migone's SOE sales likely deal breaker for Greens. Once again, it seems, the Greens are being opaque in their messages about post-election arrangements with National.
