Editorial: Asset sales would push up prices

A new survey shows that while most of us are opposed to asset sales, many of us would buy shares in those entities if we could.

The Key Research poll, commissioned by the Herald on Sunday, showed that a whopping 63.8 per cent of respondents said they did not support the partial sale of state assets. However, 59.9 per cent said they would buy shares in any state-owned assets. The survey was by telephone calling 700 eligible voters nationwide aged 18 and over. It had a margin of error of 3.7 per cent.

The state entities on the block are Mighty River Power, Genesis Energy, Meridian Energy, Solid Energy and potentially Air NZ at a later stage. The Mixed Ownership Model Bill allows for the sale of 49 per cent of these companies, excluding Air New Zealand, which is not included in this legislation.

The results of the Key Research survey appear to be backed by the growing number of signatures on a petition to force a citizen-initiated referendum. Quite interestingly the petition is being promoted by the strangest of bedfellows - Labour, NZ First, the Greens and interest groups ranging from student associations to Grey Power. So far 95,000 signatures have been counted with an estimated 50,000 more on forms that have not been returned yet. Figures like this should make Prime Minister John Key and his National Government sit up and take notice, but they probably won't.

Mr Key has been adamant that because his party won the election comfortably, they have a mandate to partially sell some assets without asking the public again in a referendum. He says it was part of their policy going into the election, so people knew what they were voting for.

Opposition parties disagree and say that just because someone voted for National, that does not mean they support asset sales.

If this latest survey is to be believed, then they would be right..

I suppose the bottom line is that many people get nervous when a government starts tinkering with the very fabric of our infrastructure and, to an extent, our identity. It is a bit like flogging off the family silver - once it is gone, its gone. That thought makes many insecure. Mr Key argues that the Government will still have a controlling stake in these companies and also that the shares may stay in local hands if Kiwis buy them. Well, the second part of that survey shows that many Kiwis say they are keen to invest. How many of them would actually do it is another story.

Selling the assets may achieve a short-term goal of raising capital to reduce our debt, but is it in our benefit long term? Probably not, as once those shares are sold, the chances of any future government buying them back are slim.

Also, power companies are very attractive proposition for investors. One can rest assured that power prices will only rise once the private sector gets involved. Private investors will want maximum profit and the way to do that is to increase power prices. Already, as our front page story today shows, power prices in this area have increased significantly. A private-sector buy-in would see this trend continue - probably at a faster pace.

The Government may have claimed the mandate to sell, but the groundswell against it appears to be growing.

The public backlash may just make the class-sizes debacle look like child's play.