David Seymour is still setting the political agenda. For a few jolly days after the Prime Minister’s State of the Nation speech, National outlined its growth strategy, promising an extravagant orgy of technocratic microadjustments: the coalition would merge seven Crown Research Institutes into three public research organisations; rebrand the economic development portfolio; change the status of tourist visas to allow remote work; split the international investments function at New Zealand Trade and Enterprise off into an autonomous crown entity.
It was an impressive display of a government doing as close to nothing as possible while still technically holding office. Then Act’s leader and the soon-to-be Deputy Prime Minister came back from holiday and ruined it all. He disrupted National’s carefully crafted image of decisive drift by talking about privatisation. Why not sell publicly owned assets such as the 60,000 state homes? Why not open the health and education systems up to state-funded private providers? Why, Seymour asked with doe-eyed mock innocence, was New Zealand so squeamish about the P word?
Seymour knows his enemies well. The amalgam of academics, media commentators, activists, left-wing politicians, NGOs and public servants – which Act refers to as “the blob” – cannot resist an opportunity to revisit the crimes of the neoliberal reforms of the 80s and 90s, privatisation and asset sales chief among them. In an instant, the discourse reverted to Act policy, away from whatever it was Christopher Luxon and Nicola Willis were talking about, and the nation was once again shouting at Seymour on their screens.
US political strategist Karl Rove used to say that successful politics was about making sure that 30% of the country hated you. Act understands that under MMP, a minor party can dial this up to 60%, maybe even higher.
Clinging to assets
It’s an odd thing. Because Roger Douglas, Richard Prebble, Ruth Richardson and their disciples were so incompetent (the list of assumed faults is extensive), New Zealand has a higher level of state ownership than the OECD average. Although other developed nations spent the late-20th and early-21st century quietly and competently shifting capacity to the private sector so governments could focus on core competencies, we clung to our state assets, with the exception of the energy companies, which were part-privatised under the Key government. The voters were unhappy about this but not enough to put Labour – busily consuming itself in a brutal civil war at the time – back into power.
The dire state of the energy sector has validated the public’s opposition to that policy. Seymour is correct when he points out the state is hopeless at owning things (and some of its current assets should be sold – it’s hard to understand why we own Landcorp or Quotable Value, and TVNZ looks more marginal every year).
But our state is also terrible at regulating markets. We have learnt the harsh lesson that badly run public entities are better than private sector monopolies and cartels.
Wealth transfer
Act also wants to give us the option to opt out of state provision of health and education. Healthcare costs about $6000 a year per person, and education costs $330,000 over a lifetime, so why not give people the option of spending this money on the public system or contracting out to a private insurer or school?
Many OECD nations have voucher systems for education, giving families choice about where they educate their children. In New Zealand, this would mostly function as a subsidy for private schools, but some policy experts think it would be a good model for funding special needs students – currently the shame of our education system.
But none of our peer nations choose this model for healthcare because the obvious strategy for private insurers would be to cover richer, healthier clients, leaving poorer, higher cost patients for the public sector – with less money to care for them. It would be a gigantic wealth transfer from the poor to the rich.
It is depressingly easy to imagine a right-wing government implementing exactly such a scheme and subsequent left-wing administrations furrowing their brows at the cruelty of it all, commissioning damning reports, appointing healthcare commissioners – and doing nothing to change it.
Infrastructure deficit
National has ruled out asset sales in its first term. It will seek a mandate from the electorate before it starts selling off stuff. Treasury is loudly pointing out that the state owns a number of assets it’s losing money on, is also carrying a lot of debt and has a significant infrastructure deficit. It would be better to sell the things it doesn’t need to own and use that money on pipes, hospitals and roads instead of borrowing even more.
The government is also looking at injecting more equity into Kiwibank to try to create more competition in the banking sector, with funding coming from private capital, albeit restricted to New Zealand buyers.
New Zealand First has suggested creating a holding fund to manage state assets. All of these are sensible policies, far more substantive than National’s current busy work changing letterheads and shuffling officials about. But now, they’ve been vastly complicated by Seymour’s speech.
National has a host of euphemisms it prefers when discussing this topic – capital recycling, active management, capital injection – because it knows the policy disasters of the past cast such forbidding shadows.
Both Act and the opposition prefer the P word because they relish the bright glare of media light that explodes like a supernova over any hint that a government has a covert privatisation agenda.
