John Pagani: We've already sold assets - and ended up with debt

The Labour Party has launched its campaign protesting the National Party's plan to sell state assets. Photo / Natalie Slade

If selling assets worked, we would be rich by now. We've sold enough already.

Asset sales are such a central election issue because they represent profound differences in the way government solves problems.

In the eighties and nineties Labour and then National governments cut the top tax rate, creating huge debt holes that they tried to fill with the proceeds of asset sales.

We ended up with more debt than we started with and the deficits drove inflation so high that interest rates soared over 20 per cent. Entire provincial townships never came out of the longest recession in our post-war history that resulted.

Labour learned from the episode about the time they had to start buying back the airline and railway, and open Kiwibank.

But now National wants to repeat the failed policies of the past.

Again we are stuck in a long recession. The slow economy is reducing the government's tax take and increasing spending on dole and other benefits. Combined with the effects of Christchurch, we had to spend a lot more than we earned.

But we didn't need to make our debt worse, as the National Government did by cutting tax by $42 million a week for the top 12 per cent of income earners.

Everyone else got a tax cut that merely "compensated" for GST, though price rises have left real incomes far behind for most middle income earners.

Now National wants to sell assets to pay for roads and restore our credit rating, but if we hadn't cut the top tax rate in the first place we wouldn't have needed to.

The tax cuts for the top haven't brought the economy out of recession, so New Zealanders are still leaving - 106,050 people left permanently since John Key promised we would wave goodbye to higher taxes, not our loved ones.

The Prime Minister assured Newstalk ZB on Monday that New Zealanders support asset sales as an alternative to borrowing when the debts of Italy, Greece and Spain have made financial markets wary.

But if those troubled markets are bad for borrowing, how bad must they be for a sale of our power companies?

The alternative to selling our assets, the Prime Minister said, would be to build no new infrastructure at all for five years. It makes you wonder how governments in the past ever managed to build up our power companies and airline at the same time as they built our hospitals and schools.

Curiously, he left out the alternative that is actually on offer, which is Labour's capital gains tax and a plan that returns to surplus in the same year as National.

So on Saturday I'll be voting to stop asset sales and to bring our economy out of debt instead.

If National and its support partners reach 50 per cent then they will have a mandate to sell down the power companies, even though we will all get angry when power prices start to rise.

But the election is not over yet.

Polls are showing Act might lose Epsom and not return to Parliament, while Peter Dunne might lose Ohariu.

John Key's attacks have given Winston Peters remarkable attention, and I believe party polling shows NZ First surging over 5 per cent.

NZ First helped sell Auckland Airport, started selling Contact Energy, and three years ago wanted to sell down Kiwibank. But Mr Key has ruled out working with Mr Peters.

Therefore, National may have to look again to the Maori Party or the Greens for a support agreement to form a government.

In 2008 many potential Green voters refused to vote for the party because it had ruled out working with National. This time the Greens have adjusted their position and say they might work with National.

Some Labour voters considering switching to the Greens might want to consider how they will feel if their votes end up helping a National-led Government sell assets. There are better ways to pay off the debt than making the same old mistakes all over again.