KEY POINTS:
John Key doubtless thought he was being astute when he proclaimed there would be no state asset sales in the first term of a National government. Fewer than 24 hours previously, the Prime Minister had told the Labour Party congress that such sales would be a defining issue
of this year's election.
Helen Clark's claim was highly doubtful; there are far more searching issues for voters in October or November. The National Party leader must have thought that, at least in part, he was neutralising that thrust. The politics might have been sound, removing a possible negative. But in eliminating economic principle he made himself look insipid.
Mr Key is tip-toeing around the issue because he clearly sees no public relish for asset sales. Rather than startle the horses, he seems happy to bow to the prevailing mantra that state control is good and privatisation or corporatisation is bad. He is not prepared to advocate the selling of assets and to explain the benefits. That is unfortunate because, as Mr Key well knows, there is a strong case to be made.
This is not about ideology. It is reasonable to ask whether it is sensible for the Government to own the likes of vehicle testing stations, farms, coal mines and courier businesses. But most of all, this is about such businesses operating more efficiently and providing a better service to the public. Part or full privatisation brings a discipline, transparency and customer focus that is absent when a business is underpinned by taxpayer funding.
This is also about questioning whether Government ownership of three-quarters of the electricity sector - with Contact Energy sitting awkwardly off to one side - is a successful formula. Ongoing concerns over power supply suggest that is far from the case, and that Genesis, Mighty River and Meridian cannot be said to have passed the public service performance test. This, more than sale receipts and retiring public debt, must be the main motive for disposing of state assets. It is also the reason why Mr Key should abandon his timidity.
At the very least, he should be promoting the idea of a shareholding democracy. This concept, popular in Britain and Australia, sees mum-and-dad investors owning stakes in fully or partly privatised utility companies. Experience with Contact, Vector and Auckland International Airport shows it holds a strong appeal to New Zealanders. They gain steady income and long-term returns, while aiding company growth, job creation and economic growth.
Unfortunately, the concept has suffered because of the Government's cavalier disregard for shareholder rights in its thwarting of the Canadian Pension Plan Investment Board's bid for 40 per cent of Auckland airport. That, however, need not be a fatal blow. A National government that promoted utility sales and pledged not to indulge in such hamfisted action could restore confidence quickly.
Mr Key has, to some degree, fudged National's intentions by declining to say what would happen during a second National term. He referred only to seeking a mandate from the public for any change of policy. That, again, smacks of safety-first politics.
This was momentarily abandoned following the Government's blocking of the bid for Auckland airport when Mr Key noted, quite appropriately, that future investment in New Zealand and confidence in the sharemarket would be affected. He also said a National government would, on Overseas Investment Office advice, have let the Canadian bid proceed.
That represented a refreshing willingness to stand up for what should happen. For once, Mr Key was not a slave to election-year politics and the notion of sleep-walking to victory. He should be similarly bold about the real merits of asset sales.