Roughan on Key

July 2nd, 2012 at 12:00 pm by David Farrar

An interesting column by John Roughan on John Key:

Labour, however, staked its whole campaign on opposition to .

The Opposition did far more than Key to ensure the election was a referendum on them.

Mercifully, I wasn’t here to see what happened but it seems to be agreed National was returned despite its programme, not because the nation was reconciled to it.

Labour and the Greens were sufficiently heartened by opinion polls then and since to oppose the sales all the way to the enactment of the necessary legislation this week.

Polls continue to find most people against the idea but the Government has not suffered very much.

Its polled support is down to around 47 per cent, which is high considering the state of the economy and the steps it is taking.

The election result and everything that has happened since can be explained, I think, by Key’s business credibility.

The voters have responded like small shareholders in a large company when a good chief executive proposes to sell some lucrative assets and they know they will lose him if they vote against it.

Shareholders in this situation can quite comfortably accept decisions they don’t much like or barely understand, because they like the chief executive, trust him, respect his judgment and want to keep him.

Leaders can make unpopular decisions, so long as the public believe the leader has a honest belief in their policies. John Howard was a great example of this – winning four terms despite introducing what was an unpopular GST, taking part in Iraq and a refugee policy which at the time was very unpopular.

When someone like Key looks at a profitable state-owned enterprise he doesn’t simply see a stream of future dividends as most people do – and as the Greens did when they calculated the sale of power companies would be a net loss to the public.

Key looks at those properties and thinks of the cost of the capital he is having to borrow for other public purposes.

Because he is running a country, not a company, he thinks the best use of his capital is in public services that cannot operate profitably and attract private capital.

Labour and the Greens think so too – that is why they haven’t undertaken to buy back the assets Key will sell. And not many of us would want them to. It is a curious thing that while there is heavy opposition to privatisation there is no public enthusiasm for nationalisation.

Indeed. But Peters is saying nationalisation will be a bottom line. Of course he once said no baubles of office also.

 

Tags: , ,

8 Responses to “Roughan on Key”

  1. ross69 (3,652 comments) says:

    And that was a party political broadcast on behalf of the National Party. :)

    “Key looks at those properties and thinks of the cost of the capital he is having to borrow for other public purposes.”

    But according to Bill English, borrowing at low interest rates is the way to go, which is why NZ has been borrowing hundreds of millions of dollars each week since National were elected.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  2. hmmokrightitis (1,590 comments) says:

    Just as well they were elected eh ross, because labour had already flagged they would borrow significantly more, some of it to invest in the super fund. Thank goodness that stupidity never saw the light of day…

    And still labour continues to underestimate Key, and his support, waiting for the electorate to regain its senses. Thats right, cos we is dead fick in we…

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  3. KH (695 comments) says:

    Good analysis. But PM Key and the party have used up a lot of political capital recently over all sorts of issues.
    When will it run out. Possibly quite soon.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  4. Bob R (1,377 comments) says:

    ***Leaders can make unpopular decisions, so long as the public believe the leader has a honest belief in their policies. John Howard was a great example of this – winning four terms despite introducing what was an unpopular GST, taking part in Iraq and a refugee policy which at the time was very unpopular.***

    I don’t think the honest belief is the issue here. What Roughan is saying is that overall people still trust Key’s judgment and want him to stay on as leader – even if it means accepting dubious policies like partial asset sales.

    btw. I thought John Howard’s refugee policy was what won him the 2001 election? The majority want a hardline on invaders.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  5. UpandComer (537 comments) says:

    Ah yes Ross, the great contradicting whirligig.

    Ross who attacks the govt for a toddlers conception of ‘austerity’ and now attacks the govt for borrowing money to pay for CHCH and the middle class welfare system he sees as the way to grow an economy.

    Bill English sees borrowing at ‘relatively’ low interest rates for necessary borrowing, as the way to go.

    Keep on whirligiging, just like Labour with their faux-passionate entreaties to nationalisation, but who will never buy the assets back because they know the alternative is worse.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  6. mikenmild (11,247 comments) says:

    When was the last time Australia was actually invaded? 1788?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  7. Harriet (4,979 comments) says:

    WW2 – being bombed with regular bombing runs would be considered as being invaded.

    No….1788….was not an invasion as they faced no opposition.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  8. Mark (1,488 comments) says:

    Key looks at those properties and thinks of the cost of the capital he is having to borrow for other public purposes.

    Roughen needs to go back to school and learn about the calculation of the cost of capital and debt. He is talking through a hole in his head. And what’s more it is not just the dividend flow that should be considered but the government should be thinking about NPAT given up v the risk of retaining the asset.

    There should be no discounting and that’s sales should only proceed if the price reflects positive value to the taxpayer. I am sceptical that this will be the case if Europe remains unstable and the markets remain as volatile as they are currently.
    If we can get fair value then the sales make sense. My concern is people like Roughen who try to justify the sales with some nonsense measure other than the tax payer getting a positive economic benefit.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote