John Armstrong: Brash gaffe fails to ignite fear of state sell-offs

A vast gulf exists between Labour and National when it comes to selling state-owned businesses. But things are not as black and white as Labour would like voters to think.

Take that pivotal moment during last week's TV3 leaders' debate when Don Brash brushed over the fine print of National's policy and was caught out by the Prime Minister.

His assertion that there would be no asset sales during the next parliamentary term brought her swift reminder that National had flagged its intention to sell farms run by state-owned Landcorp.

She neglected to mention Landcorp has been selling farms under Labour's watch.

Helen Clark also reminded Dr Brash of National's plan to sell a minority stake in Solid Energy, the state coal company.

Landcorp's occasional farm sales - along with the odd purchase - are seen as a necessary tool of operational efficiency.

National and Labour may differ markedly in that the former does not believe the state should be in the business of buying or selling farms.

But they agree on one thing: SOEs cannot be preserved in aspic. If they are not to be sold, they need the flexibility to adapt to shifting market conditions and to grow and diversify to meet their commercial objectives, rather than stagnating and becoming a drain on taxpayers.

Labour has quietly been conducting "ownership reviews" of SOEs to assess the implications of keeping them in Government hands long-term.

The dilemma for Labour is that expansion and diversification over time can dilute the original rationale for them being in state ownership.

National's SOE policy also seeks to balance the public's desire to retain ownership with the need to maximise commercial performance.

However, suggested innovations to drive better performance, such as private minority shareholdings, leave National exposed to Labour's charge that it is introducing the thin end of the privatisation wedge.

Having put the question of "trust" at the forefront of her campaign, the Prime Minister has seized on such initiatives and Dr Brash's many statements down the years favouring further asset sales as evidence of National's "hidden agenda".

Labour has mounted a fresh billboard offensive which quotes Dr Brash as "not willing to say" what his stance is on asset sales.

That makes him sound as evasive as he was on the future of the anti-nuclear policy.

Labour is being naughty. Brash made the "not willing to say" remark last year - long before National unveiled its policy on asset sales.

Ignoring that duplicity, Dr Brash's gaffe in the leaders' debate could not have been scripted better by Labour.

But the story died, possibly because of all the cliched talk of "hidden agendas" and possibly because National struck first to get privatisation off the election agenda.

A number of strategic, monopoly and electorally sensitive assets - namely power generators Genesis Energy, Meridian Energy and Mighty River Power, national grid operator Transpower, TVNZ, and the rail track network - now carry the "not for sale" sign, although National is not saying for how long.

By being upfront about core SOEs, National has reduced Labour to scavenging around the edges of its policy to convince voters Dr Brash will not keep his word.

However, his word may be kept for him. If, as appears likely, National needs Winston Peters' backing to form a Government, asset sales will be a non-starter anyway.