Should opposition parties pledge to renationalise companies being partially privatised by the National Government? It's a question that goes to the heart of the debate over the asset sales, and it's discussed today by John Armstrong in his column, English puts Labour on the spot during defensive week for National.
Armstrong suggests that Labour is being wise to fudge the issue. He says that if a future Labour Government was to reverse the partial privatisation process this would have to be funded out of increased borrowing of perhaps $5-7b, and signaling such an 'extravagant' policy would be to 'shoot itself in the foot' as it would 'cut right across Labour's efforts to portray itself as a careful manager of the economy'. This is also a position pushed on Labour-friendly Standard blog, see for example: The art of the possible.
On a strategic level this is certainly true, but in substance it makes no sense. Labour's whole argument against asset sales relies on the premise that it makes more sense to trade off greater government debt for the full revenue streams of the SOEs. So by logical conclusion, Labour and other opponents of the share float should be making it clear that the float will be reversed. As Armstrong also correctly points out, 'The irony is that the threat of a buyback may be the best weapon the Opposition parties have to stymie the share floats. Investors might shy away from applying for shares if they knew they would be required to sell them by a Labour-led Government'.
Pledging renationalisation would normally be a standard position for any leftwing party opposing privatisation. More radical leftwing parties might even threaten that there would be no compensation afforded to those giving up the shares. New Zealand First has come out and clearly stated with characteristic chutzpah that it 'is committed to buying back the shares at no greater price than paid by the first purchaser' - see: NZ First Committed To Buying Back State-Owned Assets. This receives a strong endorsement from No Right Turn - see: NZ First steps up on asset theft who makes the point that 'For all its rhetoric, Labour has refused to do this, putting the interests of the 1% ahead of those of ordinary kiwis'. Similarly, the Greens have credibility problems, with it being reported that the party 'will not commit to a policy of buying back state-owned assets' -see: Greens undecided on asset buy-back policy.
Labour's inconsistency over the renationalisation is highlighted by the fact, according to Tony Ryall and David Farrar, just a few years ago Labour favoured privatising the state-owned Spring Creek Mine, which was sold to foreign interests - see David Farrar's Labour's 2007 asset sale. Farrar argues that this illustrates that 'Many in Labour's caucus don't believe a word of what they say on asset sales'.