In policy terms, Key has three options on asset sales – plow ahead, cut a deal with iwi, or call it quits. The politics around each is very different.
Trying to cut a deal with iwi now would be a major change of tack for the Nats. There would be some loss of face in that but Key has shown the back-flip in the past and be awarded points for technique by the punditry.
The rednecks, though, would have a tougher time accepting any such deal – and they would feel betrayed by the PM who spent the last few weeks dog-whistling to them over Maori water rights. That would leave openings for NZF, the Conservatives, and maybe even Labour if they are deft enough to pin the blame for the recognition of water rights on to the Nats’ asset sales (several iwi have said that they are happy with the status quo around use of hydro water while the companies remain publicly-owned, so there’s some truth to that angle).
Calling it quits would be a massive loss prestige for the Government. They, and the Government’s many opponents, have made asset sales National’s flagship policy. It would leave the Budget in disarray with National in the short term either having to borrow more or cancel new capital spending (in the longer-term, of course, not selling the assets means less borrowing).
But how long would the damage last? Would it be better to take that hit now than suffering through court action, protests, a referendum…? Might it be the smart thing to cut their losses and invent some other flagship policy? I’m sure Steven Joyce can turn out some glossy booklets to give the impression of action.
And, let’s not forget, dropping the asset sales would be the fiscally and economically smart thing to do. Selling them incurs a $100m a year – every year, forever – loss to the government over and above the interest costs it could avoid by not having to borrow. It is not and never has been in the interests of the government or the New Zealand economy to sell our assets.
On the other hand, National’s purpose in government is to enrich the rich at the public’s cost. If it can’t succeed in handing over billions of dollars’ worth of public wealth to its backers at bargain prices – then what’s the point of being in government? Only keeping the Left out and National’s backers expect a bit more in return for their investment.
But I don’t think they’ll take up either of those options.
While they’ll probably hold some kind of sham consultation with Maori, they will stick with the playbook they’ve written so far: try to sell the assets and use the water issue to foment racial division to weaken the opposition and win back a few redneck anti-asset sales voters. It reads fine from National’s perspective but the Waitangi Tribunal has been very clear – attempting to proceed on this route with a deal with Maori would be a Treaty breach. The political strategy from National, and we’ve already seen this, would have to be to try to ‘other’ the claimants and portray Maori as greedy opportunists who are after “our” water.
National may think that’s not a big deal, even a good thing, in polling terms but that over-estimates New Zealand’s racism and ignores the changing ethnic make-up of New Zealand. Since Orewa in 2004, a whole generations of new young voters has replaced the older generation. The 1996 cohort – the 18 year olds in 2014 – is 28% Maori and 72% Pakeha (individuals in these stats can have more than one ethnicity so the summed total is over 100%) whereas only 10% of those who died last year were Maori and 84% were Pakeha. We are not as predominantly Pakeha as we were a decade ago and we are a socially more liberal country (look at the marriage equality debate) as the generations change and attitudes do to. National would find it much harder to use asset sales to whip up racial division than it did the foreshore and seabed.
And, no matter how much Key panders to latent racism, it doesn’t get the assets sold. National would lose court case after court case and face injunction after injunction if it tried to sell the assets without first having a deal with Maori. That would delay any sales not just into next year but until after the referendum is held in conjunction with the local body elections in late 2013. Pleasing a diminishing number of racists by ‘standing up to the Maoris’ is small reward for being a government whose flagship policy is getting dealt blow after blow.
National’s asset sales programme is in crisis. The smart thing to do, for the good of the country and for National’s own good, remains to drop the policy altogether. But they won’t. Instead, they’ll play the race card. But that old joker isn’t the trump it once was.