National’s Party con job

The New Zealand National Party is preparing to try and con New Zealand voters. John Key, party leader and currently prime minister, has announced the beginning of “partial” asset sales. The right and "business communuty" have, predictably, cheered—and launched into full spin mode to promote the National Party’s agenda.

I said that National would definitely keep one of its 2008 promises and not try and sell-off all state-owned assets. With some 8 out of 10 Kiwis opposed to asset sales, they’d avoid promoting a policy that would cost them the election.

But don’t be fooled: National absolutely plans to sell off all state-owned assets completely; it’s been core party principle for some 20 years.

Key proposes to sell up to 49% of state-owned electricity companies Mighty River Power, Meridian and Genesis, along with coal company, Solid Energy. They will likely sell-down the government’s 75% stake in Air New Zealand, too. That’s only what they admit to.

Key recognises that New Zealanders want these assets in public hands, and last night on TVNZ’s Close Up programme he made bland, vague acknowledgement that “mistakes” had been made my the neo-conservatives’ fire-sale of assets in the 1980s and 1990s. He tried to suggest his government would be more sensible.

The New Zealand Herald's joyful editorial trumpeted the plan, pointing out that when electricity was sold off under the last National government, it was also floated in New Zealand so Kiwis could buy the shares, rather than sell them overseas. Let me put this plainly and bluntly: Big fucking deal.

Once the shares are publicly traded, anyone can buy them. Key, the Herald and the rest of the right says “mum and dad investors” are giddy with excitement at the prospect of having these shares to buy. They’re all liars. First, there’s no credible or independent evidence that this supposed demand actually exists, and believing it to be true doesn’t make it so.

But the biggest scam the right is foisting on us the “mum and dad investors” crap: They already own the state owned assets as citizens and taxpayers! The government isn’t some giant alien mollusc; it is all of us, combined. So we the people already own these assets.

But the right says that this will “free up capital” for the government and create “new opportunities for investors”. They’re lying about both of those, too.

Under a best-case scenario, the “partial” privatisation will yield the government at most a third of the money they plan on spending, meaning they’ll have to get the rest somewhere else. According to several estimates I’ve seen (here's one), the current yield from these assets is higher than the cost of borrowing a similar amount of money. What that means is that the government could borrow the same amount of money and still come out ahead!

Instead, Key wants to sell off the assets to make the government lose money. Why? Because of the big, bad scary monster of national debt. But that isn’t nearly what Key and the right claims.

New Zealand’s public debt (which is all government borrowings less repayments) is 25.5% of GDP (2010 estimate), which sounds scary until you realise that this ranks New Zealand 97th in the world (out of 131 countries); Canada is ranked 16th, the United Kingdom is ranked 21st, the US is ranked 36th, and Australia is better at 107th place.

Key suggested our debt situation is about as bad as four countries in the news, but it simply isn’t: Greece’s debt is 144% of GDP (ranked 5th), Ireland is 98.5% of GDP and ranked 11th, Portugal is 83.2% and ranked 15th and Spain is 63.4% and ranked 27th. Compared to them, New Zealand is doing really, really well.

But if Key succeeds, and the ownership is transferred to foreign owners, as is inevitable, it will make things worse for New Zealand because it will increase external debt, that is, the foreign currency liabilities of both the private and public sector that are financed out of foreign exchange earnings. This happens because the profits earned in New Zealand have to be shipped overseas, rather than staying here, as they do now.

So, National’s moves have nothing to do with economics, global or local, and have nothing to do with debt or even budget deficits. Instead, they’re all about plans to sell off everything that’s not nailed down, and to hoodwink Kiwi voters into thinking that it’s all necessary to “save” New Zealand.

If they were serious about improving the deficit, they’d tell us what government programmes they’ll cut, but Key is pretending that they haven’t talked about that at all. If they were honest, they’d admit that they plan to sell off state assets to make more money for the rich—they same people their tax cuts were geared toward. But they’re neither serious nor honest.

Finally, rightwingers have been touting the fact that Key’s not doing this to Kiwi Rail and Kiwibank as some sort of “proof” that National isn’t planning to completely sell off assets. The Nats aren’t partially privatising those because they plan to sell them off entirely, something that they couldn’t do if those pesky “mum and dad investors” had shares. The question is whether they’ll sell Kiwi Rail and Kiwibank, the question is, how soon? It’s either naive or wilfully deceptive to suggest otherwise.

There is nothing new in this: As a matter of principle, National, like Act, doesn’t believe the government should own anything. They will sell everything off, sooner or later. What they’re telling us is just one big con job. Again.