National tries to sweeten asset sales

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Last updated 19:04 30/10/2011

So now we know the sugar pill National has prepared to make the asset sales medicine more palatable: a ring-fenced “Future Investment Fund” that will be used to redevelop hospitals, modernise schools and invest in transport projects.

It could even be used to expand KiwiBank’s capital base, if the state owned bank move into small and medium business banking, PM John Key told reporters after the campaign launch.

The fund is a fund in name only though; similar to the Canterbury earthquake recovery fund, with no separate structure of its own but essentially an in-an-out accounting exercise designed to reassure voters the money will not be blown on consumption and pet projects.

National’s problem will be convincing voters that the extra projects will come on top of capital spending that would otherwise be made … and if it is such great investment why the Government would not invest the money anyway, without selling off income producing assets to fund it.

Unless, that is, it can convincingly argue the interest on debt saved is clearly more than the dividends and retained earnings from the sold assets.

Key, however, told me afterwards he believes it is easier to sell the asset sales message, with minimal direct impact on individuals' lives, than it will be for Labour to sell the very personal message that workers in their 40s are going to have to slave away for another two years under Labour.

The protest sit-in outside the Sky City conference centre – maybe 200 people at its peak – was a cross between Unite Union and Occupy Wall St. Most of the rhetoric aimed at National and John Key, though Phil Goff got a flick on a couple of banners.

The most impressive part of it was the end.

Police looked like they were getting antsy and told the crowd to move to let traffic flow – after first thanking them for their protest!

The organisers complained that the reason they had stopped was because the 20-strong police line had blocked their way – and if they moved they would be gone in five minutes.

I was braced for the cops to stand on their dignity, and for things to get ugly but the deal was struck, the police stood aside and off they went peacefully.

Kudos all round.

30 comments
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DanM   #1   08:05 pm Oct 30 2011

Too many politics blogs. Pity you can't find one decent blogger to do the lot again. I'm starting another campaign to run simultaneously to the election campaign - Bring Back Colin.

South Islander   #2   08:30 pm Oct 30 2011

I believe the investment in schools etc will need to be done regardless. However, since there is not surplus cash in the kitty the govt would have to borrow to pay for this. Most of the investments I am aware of the dividend return would be much less than what you would pay to borrow money.

My big issue with National (and in case you don't know, I am a National voter) is that they do not seem to be able to explain their policies very well. They made a hash of selling the tax cuts with a lot of uneducated people still believing they are worse off when in fact they are not. And letting Labour go on about "tax cuts for the rich" when in fact everyone got the tax cuts. And the dollar value, which Labour go on and on about is directly in proportion to the amount of tax paid in the beginning. But National does a poor job of explaining this.

They have once again made a poor job of explaining the asset sales. So many people just don't get the fact that they are only selling 49% so will always retain control of the assets.

I think National could do with getting a new PR firm, or else it will end up like the World Cup final. Instead of NZ winning by a huge margin (like everyone expected) they only won by one point. I would hate to see National squandering their current lead in the polls and ending up at the mercy of some smaller party.

Trev Crosbie   #3   09:05 pm Oct 30 2011

Flogging off up to 49 percent of assets we already own in order to provide capital to increase the nations asset base is a bit like me selling the lounge off my home to add a new bedroom. The sad part of Keys plan is the capital needed for health and education doesn't have to come from selling the silver or borrowing from the global money markets. The capital can simply be created using the same mechanism banks use on a daily basis to extend loans to clients. The 1st Labour government used it in 1936 to provide capital for state housing and essential public good infrastructure but unfortunately it was seen as eroding the ability of the finance sector to profit from their monopoly of creating debt as money and they campaigned long, hard and successfully to shut it down. Now NZ is like most other economies, bogged down with an ever expanding burden of debt that far from meeting Nationals campaign slogan of a brighter future will instead lead to a blighted future for generations to come. The reality is that no economy has ever succeeded in solving a debt as money problem by injecting more debt into the system. Some 97 percent of our money supply exists through the creation and use of debt as money and until that percentage is severely reduced the ability of the economy to meet the aspirations and needs of society will continue to be choked off.

Field Marshall   #4   09:21 pm Oct 30 2011

No matter what Key does - it never goes down well in Bum Crack Valley, and that's why Key is spending the sale money on schools - they need it!

And as for Goff -stealing handbags of little old ladies- is what he is looking like doing- especialy when he is maintaing the handouts to 'working age single mums' who are getting 3 times the handout per week than aged pensioners are!

We all know that Labours super idea will be hi-jacked by Feminists and dole advocates - and that is because women who take time out of work and those who don't work - will have less money to put into super.

A simple look at compound returns and the fact that NZ's loud Feminists have not raised the issue tells us it is ready for a hi-jacking!

National will govern alone!

PaulT   #5   09:29 pm Oct 30 2011

One word John. Bulls**t! Stop pissing around with empty promises and just pay some of our burgeoning debt. You politicians are great at making promises and then breaking them. This is why your are one of the least trusted members of society. So cut the sweet talk "carrot in front of donkey" stuff and do something practical. For once.

John   #6   09:32 pm Oct 30 2011

South Islander #2. Good article and you're exactly right about National not explaining it very well. But, that is not all their fault as there are many out there that don't want to understand. They think they own the assets simply because they paid income tax. When there are so many people that actually believe that then you can understand National's problem.

stephen   #7   09:48 pm Oct 30 2011

@ South Islander #2: While your statement "Most of the investments I am aware of the dividend return would be much less than what you would pay to borrow money" might be the case generally, otherwise everyone would borrow money from the bank and buy shares, there are a couple of differences to consider.

Governments aren't like the rest of us, they can borrow money at a cheaper rate. For the New Zealand government this rate is 5.5% (well was before the recent downgrades anyway).

The average return on the four major assets that National have said they want to sell that the government received last year was 7.9%.

In this case the rate of borrowing is less than the dividend return.

kat   #8   09:54 pm Oct 30 2011

What Key is proposing to spend the proceeds from the sale of assets on is what govts are elected to normally do. This new 'fund' is nothing more than a PR sweetener to try and make assets sales appear more palatable. I really don't think even National supporters are that gullible.

Keys comment regarding 40 year old 'workers' having to 'slave' a further two years under Labour is an unfortunate choice of words and somewhat condescending.

Is it possible that National have dropped Crosby Textor?

noggin   #9   10:03 pm Oct 30 2011

Unlikely as it may seem to the nats and their lovers, any suggestion of blue skies ahead is a dream. Key knows its a dream...he is in this for the short term. Make a buck and get out. NZ is as doomed as the rest of the world. Its just a matter of skewed perception. Labour cannot fix this crisis either. I doubt anyone can.

Dean   #10   10:10 pm Oct 30 2011

There's no new money for schools here.

This was all in the Budget and Key is just announcing it again with a fancy new name.


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