Imperatorfish – National’s toolbox Is empty

Written By: - Date published: 9:48 am, March 8th, 2012 - 4 comments
Categories: debt / deficit, Economy - Tags:

Nobody will be surprised to learn that Treasury is forecasting a deficit blowout. Treasury forecasts always have to be taken with a grain of salt, but the tendency in recent times has been for Treasury forecasts to be unduly optimistic. The fact that the news is so grim isn’t promising, because if recent trends are anything to go by the next set of forecasts will reveal an even direr picture.

At the same time National’s asset sales programme appears to be ramping up, and it becomes clearer by the day that the shares sold will return much less to the country than previously predicted.

Those few protections we were told would be in place to ensure the partially-sold SOEs acted responsibly and that New Zealanders would be first in line to buy the shares, have gone missing from the asset sales legislation introduced into Parliament. Now we are told “don’t worry, we’ll make sure rules are in place to put Kiwis first in line”, though why this can’t be legislated for isn’t clear. We are expected to trust the Government that there’s a perfectly sound reason for this omission.

We are also assured that big corporations already act in a socially responsible manner, meaning that legislation entrenching this obligation is not necessary.

If big corporations are already behaving as good corporate citizens, then what would National have to lose by including a social responsibility obligation?

Could it be that some large companies do in fact act in a socially irresponsible manner, and that when the need for profit clashes with social responsibility the profit motive often wins? This should be no surprise, because most corporations exist for the purpose of maximising returns to shareholders.

I can see how removing constraints on the operations of the partially-sold SOEs might potentially make them more attractive to investors, especially overseas investors who might be nervous about investing in a market they are not intimately familiar with, and under conditions where participants can’t just maximise profits.

I can also see why the government would want to hoodwink us into thinking that such restrictions are not important and that social responsibility obligations don’t matter, and that the main recipients of the shares will be “Mum and Dad investors”.

But the desire to maximise the return on the sale of assets will come at a long-term cost. It seems likely that a large proportion of the shares sold to private investors will end up in overseas hands, meaning that much of the profits of these companies will go offshore, worsening our current-account deficit.

The good news for opponents of this government is that it is doing a lot of quite unpopular things, at a time when the economic news just gets worse and worse, and it appears to be showing in the polls. The bad news is that by the time we finally get rid of these incompetents a lot of the damage will already be done.

A conspiracy theorist might conclude that the further the public accounts worsen the easier it will be for the government to justify urgent and drastic measures, such as extending the asset sales programme and gutting public services.

But it’s much more likely that this government just doesn’t have a clue how to grow the economy. National’s only tools appear to be the knife and the box of matches.

4 comments on “Imperatorfish – National’s toolbox Is empty ”

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  1. marsman 1
    8 March 2012 at 12:46 pm

    And yet every time one of the Nact gang opens their mouth they say at the end of the drivel they’ve spouted ‘we are focusing on growing the economy’. Sheeesh! They are very much like bullies who paint themselves as victims in order to keep on bullying.

  2. Tombstone 2
    8 March 2012 at 1:14 pm

    Gotta say I’m starting to seriously think about packing up our home, shutting down my work shop and leaving New Zealand behind because it’s getting harder and harder to keep our heads above water and if National’s track record so far is anything to go by then I can only but see things getting even worse. They don’t even seem remotely interested in job creation or governing for the people rather than their rich corporate mates and I just can’t see for the life of me how the country is going to benefit from that kind of governance. Key makes me sick as do the entire National Party. They’re just a pack of clueless bullies and this country is paying a huge price for their incompetent go nowhere governance. I’d rather endure another large earthquake than listen to another pile of bullshit from Key and his razor gang and that’s saying something believe you me.

  3. marsman 3
    8 March 2012 at 2:21 pm

    The Nat’s ‘Governance’ is not for the good of NZ and it’s people, the Asset Sales scam BLATANTLY so. Are there any sharp bright legal people out there who could take this bunch of crooks to Court and get out an injunction/ sue them/ have them locked up for treason/sabotage their scams/tie them up and entangle them in legal tape????Anything????Please,please.

  4. Matt 4
    30 March 2012 at 5:14 pm

    I agree completely. This is a scam to undersell profitable companies we all own to cashed-up Kiwi’s (probably John Key’s mates, mostly), who will then sell them to overseas investors for a quick buck. It’s brutal.