John Armstrong: Key boxes clever on assets, but public's not buying it

Prime Minister John Key. Photo / Supplied

Opinion

No matter how much in the way of cosmetics National applies to pretty up its plan to sell shares in some state assets, the policy is never going to be popular. John Key is doing his darnedest to make it so, however.

He even thinks National can turn the tables on Labour on the one issue that finds the opposition party firmly on side with majority public opinion.

This is wishful thinking on the Prime Minister's part. Key will have done well enough if he manages to persuade voters that National's partial privatisation intentions have nothing to do with ideology, but are a very necessary unlocking of spare capital in straitened times.

That was the main objective of Key's speech at National's campaign launch yesterday in which he announced that $5 billion to $7 billion that the Government expects to reap from selling 49 per cent of the shares in power generators Genesis Energy, Mighty River Power and Meridian, the state coal company Solid Energy plus a chunk of Air New Zealand will be placed in a special ring-fenced fund.

Rather than paying off debt, the money will be used to modernise and upgrade state assets, with the first $1 billion already designated for building new schools.

What stops this being little more than an accounting exercise is that the fund will have to be transparent in detailing money in and money out so the public gains confidence that the proceeds from asset sales are actually being retained to spend on new public assets.

The device is classic John Key. The Prime Minister does not like to feel vulnerable on any front. Instead of the macho posturing in which politicians indulged during the privatisations of the 1980s and 1990s, Key's tendency is to sweeten something for which the great bulk of voters have no appetite.

This ploy also allows Key to argue that because there is no money allotted in this year's Budget for spending on capital assets, Labour would have to borrow to build new schools and hospitals because it would not have the $5 billion to $7 billion flowing from the part privatisations.

National is pulling out the stops to stigmatise Labour as a bunch of borrow-aholics, while portraying its own "mixed ownership model" as win-win in terms of investment opportunities for New Zealanders.

That the first tranche from the fund will go to education is no accident. It will be difficult for Labour to criticise the proceeds from asset sales being spent on new schools, especially if they are low decile ones.

It is clever tactics on Key's part. But his cunning plan may still not convince voters. While the fund may be transparent, so are Key's motives. He is trying to solve a political problem - one with which National has made little headway since earlier this year when it flagged the sell-offs should it win the election.

Taking the seemingly less politically sensitive option whereby the Government would retain majority control while still picking up half of any dividends does not seem to have worked.

When push comes to shove, it seems most voters simply don't like privatisations, partial or otherwise.