Audrey Young: Nats' big message for year: Fear of debt

Labour leader Phil Goff delivers his party's State of the Nation Speech. Photo / Getty Images

Even if these had been golden days, and there had been no global recession to put the Government's books in a parlous position, about now National would be outlining a programme for partial asset sales to take into the 2011 election.

Good times or bad times, it was going to be part of its agenda for a second term.

The bad times have given it a better set of reasons to do it - pragmatic reasons that are less susceptible to accusations of ideology.

And what has become clear in the past two days is that National's big message this year is going to be debt - fear of debt.

Labour leader Phil Goff's state-of-the-nation speech on Tuesday gave Prime Minister John Key a good platform from which to dive into his own speech yesterday.

The lack of certainty on how Labour would find more than $1 billion to pay for a $5000 tax-free zone opened Goff to claims it would have to borrow as well as raise taxes for the wealthy.

More borrowing means higher interest rates for everyone. There is no such thing as a free tax cut.

Key segued into his state-of-the-nation speech yesterday on partial sale of state assets, and cutting the new spending allowance from the already meagre $1.1 billion to as little as $800 million a year.

Again it was all about debt.

The argument is that even that small reduction of the cap on new spending - small beer in a Government spend of about $70 billion this year - would add up to nearly $1 billion. That is $1 billion less that needs to be borrowed.

The same goes for the assets sales argument - every dollar the Government gets from a partial privatisation is money that does not have to be borrowed for the future capital programme of $33 billion over the next five years.

The five assets that could be put up for part sale are valued at about $15 billion, so with about half of that being sold, the Government could be looking at having to borrow $7.5 billion less than present forecasts.

Just as Key would have been delighted with the Goff speech, Goff must have been delighted that Key's first big speech gave Labour something solid to kick against in terms of a policy difference.

It will spend the next 11 months demonising asset sales as the Alliance and NZ First successfully did against the 1988-1999's $20 billion of sales.

Price rises, foreign control and repatriation of profits offshore will all be big arguments.

It was April of election year, 2008, that John Key as Opposition leader first said there would be no whole or part asset sales in a first term.

That promise was undermined when Bill English was secretly taped a few months later at the National Party conference cocktail party agreeing with an imposter that "eventually" the aim was to get rid of Kiwibank.

Since then the policy has been that any sale or part sale would have to be mandated at a general election.

Last year English floated the notion that Kiwibank could be one of those in for a partial sale. Within a week, Key had ruled out any sale, part or whole, of Kiwibank under his leadership.

The argument against part asset sales will be harder to make than it was in the 1990s or in 2005 and 2008.

National's openness has put paid to Labour's accusations it has a secret agenda; it has chosen assets with little sentimental value and it has made an economic case for part sale.

But most importantly, voters' efforts in getting their own debts down suggest they might welcome a similar effort by the Government.