National's privatization dreamland | The Jackal

3 Dec 2011

National's privatization dreamland

Despite the National party only gaining 23% of the populations vote, John Key believes National has a mandate to sell off our best performing SOE's.

Key and Finance Minister Bill English have a reputation for being prudent financial managers yet their three-year deficit of $35.5 billion compares with a $35.6 billion surplus by the previous Labour Government and a $5.7 billion surplus by the 1990 to 1999 National Government.
As a result gross Government debt has blown out from $43.5 billion to a forecast $79.8 billion in June 2012 under the Key Administration, whereas it increased from $36.6 billion to $43.5 billion in nine years under Prime Minister Helen Clark.
As there is limited investor appetite for low-growth electricity generators, particularly with the regulatory overhang, the sale process will have to be carefully organised to achieve the $5 billion to $7 billion target.

The pro-privatization rhetoric has increased since the election with the stalwart of right wing propaganda the Otago Daily Times slamming out a huge article with a number of factual errors and contradictions.

Dene Mackenzie writes Demand likely to be high for assets:

Labour campaigned hard to stop the partial sell-down but it now seems inevitable the sales will proceed and the debate was seen as a defining election issue.

It was a defining election issue with one poll showing that over half of those who voted for National are against the asset sales.

Sam Stubbs, chief executive of Tower Investments, said SOEs were a rare commodity to put on the market and would create confidence in the investment community.

So clearly somebody is lying. Either there will be demand for the assets or there wont. Keep in mind that there is still a worldwide recession going on.

Mr Stubbs was confident that the Government would structure the assets so Kiwis would get a decent opportunity to buy stock.

National has said that they cannot legally structure the sales so that New Zealander's get first dibs. But don't let that fact get in the way of your propaganda. Dene Mackenzie continues:

This week, the OECD gave its approval to the plan to partially sell the assets, saying the Government needed to get back to budget surpluses, improve controls on the quality of social spending and seek to sell some state assets.

This is what the OECD actually said in their Medium and Long-Term Developments: Challenges and Risk document 2011 (PDF):

There are no further losses to government balance sheets as a result of asset purchases or guarantees made in dealing with the financial crisis. No contribution to deficit or debt reduction is assumed from government asset sales.

The OECD's projection (PDF) of New Zealand's General government gross financial liabilities as a percentage of GDP is set to grow from 28.9% in 2008 to 50% in 2013. It looks like the asset sales National have planned will make no difference to our borrowing regime.

John Key, Dene Mackenzie and the rest of the hacks are talking rubbish!

You can sign the online petition to stop asset sales here.