Brian Rudman: Cocky salute to democratic process

Finance Minister Bill English (left) and Treasury deputy chief executive Andrew Kibblewhite. Photo / Mark Mitchell

While the politicians battle away on the hustings, the bureaucrats at the Treasury seem to have already decided that National is the winner of the general election. So confident are they that they've appointed Australian investment bankers Lazard Pty as an independent adviser on asset sales.

Lazard's was involved in the privatisation of Qantas and in the selldown of power companies by the Victorian state government, which makes it a good fit for the National Government's planned part-privatisation of four state-owned energy companies, and the dilution of Crown ownership of Air New Zealand.

For supporters of asset sales, the move will no doubt be seen as a case of Treasury being prepared for all eventualities, but for opponents, it will seem a rather contemptuous two-fingered salute to the democratic process.

Opponents might also say the same thing about the determination of Prime Minister John Key to persevere with the part-privatisation programme, despite the overwhelming opposition of voters, including many from within in his own party. At times it seems as though Trader John tossed this contentious issue into National's election manifesto just to make a game of what was looking to be a very uneven contest. Let's see how far I can go as Mr Popular, before starting to turn my fans off.

It all seems very casual. The Government has no idea how much it's going to realise from the proposed sales. Speaking to an Auckland business audience in January, Mr Key said the asset sales would free up as much as $10 billion. By mid-year, the figure was down to $5 billion to $7 billion, to be raised over five years. Last Sunday, on TV One's Q&A programme, Finance Minister Bill English conceded, "we can't guarantee the amount". All he was sure of was "they're certainly worth a lot of capital". Mr Key is also trying to hose down opposition by saying he'll ring-fence the proceeds in a fund for "feel good" projects such as improving the stock of schools and hospitals. This hasn't mollified critics. Nor has his pledge that any privatisation will be restricted to a minority stake. Which isn't surprising, because to his right, the criticism is just as strident as that coming from Labour and the Greens.

From his rightwing allies, the complaint is that partial-privatisation is hardly worth the effort. The late Business Roundtable boss Roger Kerr wrote endlessly on the matter. A year ago he complained that National's ruling out full privatisation of state-owned assets was "a major disappointment". This year he quoted approvingly from a Roundtable report that "there is no lasting difference between the performance of fully state-owned and partially state-owned enterprises"; that "partial privatisation is not a desirable long-run state" but that "as a stepping stone towards full privatisation [it] has merits". The Government's 2025 Taskforce, headed by one-time National Party leader, now Act leader, Don Brash, said much the same thing. Partial floats "are likely to be a rather poor middle ground" and "a pattern of ownership [that] may prove unsustainable in the long run".

To these critics, "stepping stone" is the key phrase. They'll be hoping Mr Key's proposed partial sale will be a pause on the way to full privatisation.

In Monday's Herald, Auckland University economics professor Tim Hazledine argued against selling down the public stake in these "strategic assets" in order to protect our largest export industry, tourism, and to ensure an ongoing supply of "low-cost hydro power". He also doubted asset sales would "have any fundamental effect on the public sector's true financial position", pouring cold water on one of the Government's key arguments in favour of the sell-off.

Poll after poll shows how widespread the unease is. In May, a Herald-Digipoll survey recorded 62.6 per cent of voters disapproving of even the minority sell-off that National plans. A week ago, a Research New Zealand poll showed nothing had changed, with 52 per cent of respondents "strongly opposed" and remarkably, only 14 per cent in support of the policy.

Which does rather beg the question, why then is National polling so well?

A Herald-Digipoll survey taken around the same time seems to answer that. The public's love affair with Mr Key seems to transcend politics. We might hate his plan to sell off our assets, but when asked which political leader we'd most trust to see us right if stranded on a desert island, Mr Key came top with 40.4 per cent. Mana Party leader Hone Harawira was next on 15.7 per cent while Labour's Phil Goff scored just 10.1 per cent. Mr Key also scored 70.6 per cent as preferred prime minister.

The Opposition has less than three weeks to break this spell, and persuade voters that when he's not rescuing them on desert islands, he's actually plotting the sale of state-owned assets. Labour activists point to Corngate during the 2002 election campaign, when overnight, support for similarly popular Helen Clark suddenly plunged, as evidence that such miracles can happen. Then, what else can they do?