Editorial: Mr Popular makes his mark

Prime Minister John Key. Photo / APN

Opinion

If it is true, as opposition parties say, that John Key and the National Government have shown their true colours this week, it is not before time.

Key's state of the nation speech, in which he announced plans to partially privatise some state assets, was much bolder than anyone predicted. It was always likely the Nats would look to a sell-off eventually, but it has come quicker than most picked.

The plans - initially involving the sale of minority holdings in power companies Mighty River Power, Meridian and Genesis, coal company Solid Energy and a reduction in the Government's stake in Air New Zealand from 76 per cent to 51 per cent - are hardly revolutionary. Because of the disastrous results from the sales in the 1980s, and the subsequent expensive buy-backs, that is hardly surprising.

There is no public appetite to see the family silver head offshore and Key's compromise solution recognises that.

It still deserves, though, to be rated a bold move.

With an election to be held this year, Key has put everything on the line and given Labour a key point of difference that Phil Goff will no doubt be relishing. His own state of the nation address, the day before Key, pledged tax rises for the rich and a universal no tax for the first $5000 of earnings. Finally there are clear philosophical differences between the two parties and voters will have less reason for confusion.

Putting the merits of the sale plan aside for a moment, Key's transparency is to be applauded. He said he would not sell off assets without the voters having their say, and they will get it, likely in November.

It is also heartening to see the Government doing something to put the brakes on its borrowing and to stimulate the moribund economy. Apart from the long overdue reining in of state sector costs, National has until now appeared to be indecisive and lacking ideas on how to help spark a recovery.

Of course, the moves are not a panacea, but they are a start. Upwards of $8 billion is expected to be raised in the sales and that money will go towards reducing our debt and into other infrastructure. They will prove a major boon for the sharemarket, with new listings just what the Capital Markets Development Taskforce says was needed to fire up the NZX.

As commentators have said repeatedly in the days since the announcement, the opportunity for mums and dads to invest in solid businesses that we know will continue to generate sizeable profits is likely to appeal to those burned by finance company collapses that have flushed away billions of dollars of savings.

With the Government guaranteeing to keep majority ownership, the biggest obstacle to sell-offs has been removed and there are more reasons to welcome the moves than to oppose them.

But what will it mean for the big dance later in the year?

Key and National continue to ride high in the polls - they would not have taken this step had they not been so far in front.

But it is still a risk, one that Key has acknowledged. "It's of course our political future, in the sense that every three years politicians go to the people and test their views."

It is not, however, likely to be the decisive factor in the outcome. That, as usual under MMP, will be the fate of the minor parties.

No party has been able to govern alone under MMP and that will not change this time around, unless National can build on its record levels of support, which is unlikely.

Key's management of the relationship with the Maori Party, whether Rodney Hide can revive his flagging Act and the possible return of maverick Winston Peters are the key factors.

Key's personal rating, however, should have been enhanced by the moves this week. He has been a populist leader so far in his first term and has been reluctant to rock the boat.

We have now seen strong, decisive leadership. That, more than the sales themselves, should be the most comforting aspect of the political week.