When John Key unveiled National's plan for partial asset sales early last year, it was going to be win-win for everybody.

Selling up to 49 per cent of the three remaining state-owned electricity generators plus up to 49 per cent of the state coal company would bring the supposed benefits of privatisation without the Government losing control of those enterprises.

Public share floats would enable small investors whose fingers had been burned by the collapse of finance houses to put their money into safe havens.

A financially strapped Government would reap between $5 billion and $7 billion from the sales which it could use to either pay off debt or for capital spending on such things as new schools and hospitals. The companies would flower commercially from being subject to market discipline.


However, National's preaching of the virtues of privatisation instead ran smack into the brick wall of public opposition to asset sales in any form.

The party has been unable to steer the debate on its terms. For example, the prospect of freeing up money for vital capital spending turned into an argument about the loss of dividends. National failed to get on top of the "foreign ownership" bogey. The party has failed to convince many voters it has a mandate for the sales.

Even couching the sales as an exercise in debt reduction - something which has strong voter support - has failed to translate into acceptance of the privatisation programme.

National's latest tactic is to challenge Labour and other Opposition parties to commit to putting up the money to buy back the shares that have been sold if they win power. That is fine - but it does not justify the sales in the first place.

Likewise National's attempts to rekindle public memories of Labour's rampant privatisation agenda in the 1980s.

Even National sugar-coating its partial asset sales plan - possibly by offering a "loyalty" bonus of extra shares to those investors hanging on to their original allocation for a set period of months or years - does not seem to have generated much public enthusiasm for the forthcoming share floats.

The only out for the Government now would be a dramatic weakening of sharemarket confidence. It could then cancel the first float on the grounds it would not get a satisfactory price for the shares it is offering for sale or that it might fail to sell all of those allocated to investors.

Alternatively, the Government could complete the partial privatisation of Mighty River Power - the first company to go on the block. That might be enough for National to feel it has made its point. It might then be seriously tempted to put the other sales on hold for the time being.