Robert Frost once said that "A liberal is a man too broadminded to take his own side in a quarrel." I guess that makes me a liberal.

The National-led Government has a policy on selling minority shares in some state assets - a policy it currently is putting into practice by way of the Mixed Ownership Model Bill wending its way through Parliament. You may have heard of it ... it's been somewhat controversial, and there was a bit of discussion about it during the election campaign (before we moved on to more important things like the tea-tapes).

For National, this policy is simply a "debt-for-equity" swap that will raise capital to reinvest in things like schools and roads, which in turn will lead to more productive endeavours down the track. For National's opponents, it's an ideologically driven move that makes no economic sense and inevitably will lead to yet-more foreign control of our economy.

 Now, let's say you're of the latter opinion - you see this policy as being deeply misguided and contrary to the nation's interests. And you want to stop it; or, if you can't stop these particular sales, at least make the National-led Government pay such a heavy political price for pursuing them that future asset sales policies become untenable. Given the righteousness of this cause, anything that can help accomplish it is a good thing. Right?

That appears to be the position of the Green Party, which has acknowledged spending some $50,000 of its taxpayer funded parliamentary entitlements on hiring people to go out and collect signatures towards forcing a Citizens' Initiated Referendum (CIR) on the topic. In addition, according to this news article, it's set aside another $28,000 for assorted "sundries" associated with the campaign.

Boo, I say. Boo! Much as I like the Greens in general, and much as I admire their principled stances on many issues, this is a bad move for several reasons.

First of all, I think CIR generally are an expensive waste of time and money. So as far as I'm concerned, this is an example of spending public money on an activity designed to force the spending of more public money on something that should not happen. Which is, in my opinion, a bad thing to do.

But so what? While I don't happen to like the CIR process and think it isn't a justifable use of public funds, it is an available mechanism for pursuing political issues in the public square. And if it is available, why shouldn't the Green Party (and others ... this is not by any means a Greens-only intiative) use it? And if they are going to use it, then what's wrong with spending the funding they are given for promoting their party policies on this particular activity?

The initial problem with the Greens throwing their support behind the CIR process is that it leaves them somewhat open to charges of, if not hypocrisy, then at least selectivity. Because our last experience of CIR - the so-called "Smacking Referendum" back in 2009 - produced a pretty decisive vote against a policy that its member was instrumental in guiding through the House and into law. Yet on the day the vote's outcome was announced, then-Green MP Sue Bradford responded to it by saying: "Even a large `No' vote tonight won't be a clear mandate to the Government to act in any particular way."

(That's to say nothing of the earlier CIR votes overwhelmingly in favour of cutting the number of MPs to 99, and supporting Norm Wither's multi-pronged criminal justice measures - none of which seems to have made its way into Green Party policy.)

Now, I know what the response will be. Those examples of CIR were "bad" because they were based on ambiguous at best and misleading at worst questions. So any result coming from these examples of CIR is so tainted as to be useless. Which is why Sue Bradford then proposed a members bill to try and clean up the process by which questions are written and phrased. 

But this time the process is a good one, with a clean question: "Do you support the Government selling up to 49% of Meridian Energy, Mighty River Power, Genesis Power, Solid Energy and Air New Zealand?" So the result of any vote on this issue can be treated as a "a clear mandate to the Government to act" - or, rather, as a rejection of the Government's claim that the election result gives them a mandate to act on this policy.

Well. OK. But how clean is that question really? Yes, it fairly represents the Government's intention with regards these assets. But where is the mention of what the Government intends doing with the money raised from their partial sale? Doesn't the question just dwell on the negative ("do you like asset sales?") without balancing this with the positive ("do you like more spending on schools and roads?")? Wouldn't a more honest question be "do you support spending $7 billion more on infrastructure developments, funded by selling up to 49% of Meridian Energy, Mighty River Power, Genesis Power, Solid Energy and Air New Zealand?"

My point is not to allege male fides on the part of those behind this petition. Framing an issue is a major part of politics - there is no such thing as a "neutral" or "unbiased" way to see what people "really think" about an issue. But given that the Greens have recognised this fact in respect of past CIR questions, it is (at the least) somewhat convenient for them to overlook it with respect of this one.

There then is a broader problem with a political party so deeply involving itself in the CIR process. When this was set up, it was designed to be a way in which broader civil society can send a message to parliamentarians on issues that it thinks important enough to mobilise around. (Actually, it was designed to be a sop to public outrage with politicians that might be enough to stop them voting to change the electoral system ... but never mind that for now.)

So to now have a political party effectively bankrolling the process of forcing a CIR represents something of a distortion of its intent. (I note that Labour is somewhat implicated in this as well, albeit without apparently providing the same financial muscle.) Essentially, it is turning CIR's from expressions of the views of a self-organising general public into yet another campaign tool deployed to advance the particular interests of organised political parties that are funded through public subsidies.

Now, again I foresee responses to this. The Greens are simply providing people the opportunity to sign the petition, not paying people to support the cause. If 300,000 people then sign up to it, this itself is an indication that the public genuinely do care about the issue. 

OK. That's fine. But there's still a couple of flow on consequences from this action.

First, it becomes pretty hard to rail against the influence of money in politics when you yourself are spending money trying to influence politics. For example, the Green Party's policy proposal on campaign finance reform reads:

No person or entity can donate more than $35,000 to a political party in any twelve month period. This would need to include rules to make it illegal to split up large donations into lots smaller than $35,000 to avoid this cap.

So why exactly is giving more than $35,000 to a political party to spend on trying to achieve political outcomes A Bad Thing, whilst spending $50,000 (at least) on trying to achieve political outcomes is A Good Thing? Sure, you can maybe square the circle - there's the concern about corruption, or the like - but it becomes a tougher argument to make when you have to start from the position of justifying why you should be able to do something that others cannot. 

Second, even if you achieve your goal of getting the requisite number of signatures and force a CIR vote on the issue, it is going to be tainted by accusations that it is just a Green/Labour stunt rather than a genuine exercise in demonstrating the public will. And that then hands the Government the perfect excuse to ignore the result of the vote, no matter how overwhelming. And that then makes the whole exercise a waste of time and money. Which brings me back around to my first point. We should just dump CIR's altogether - not use them for things we like, while ignoring them for things we don't. 

Comments (26)

by Philip Grimmett on June 01, 2012
Philip Grimmett
You appear to devalue the rights of the public to seek a referendum to indicate the intensity of public concern on major issues. I thought this was an essential part of having an informed and participatory Democracy. You suggest this is uneccessary and a waste of money. I have always enjoyed the wavering pontifications of lawyers and remind myself that the law is not necessarily about justice.
by Merrin Macleod on June 01, 2012
Merrin Macleod

Typo in the last paragraph: 'signitures'

by Andrew Geddis on June 01, 2012
Andrew Geddis

Phil,

I covered the reasons for why I think the CIR experiment hasn't worked in NZ here (and I linked to it in my post above). No reason you should agree with me, of course, but surely it deserves a bit more than the label "wavering pontification"?

Merrin,

Thanks ... evidence of the danger of over-reliance on spell check when that function isn't available!

by Peter Green on June 01, 2012
Peter Green

First, it becomes pretty hard to rail against the influence of money in politics when you yourself are spending money trying to influence politics.

This makes no sense.  The objection to money is politics is the quid pro quo for donors, especially when those with more quid can buy more quo.  The objection was never to "political parties spending money to do things".

by Peter Green on June 01, 2012
Peter Green

Wouldn't a more honest question be "do you support spending $7 billion more on infrastructure developments, funded by selling up to 49% of Meridian Energy, Mighty River Power, Genesis Power, Solid Energy and Air New Zealand?

This assumes that the "notional fund" will be used for extra spending, rather than spending that would happen anyway.  It also requires an estimate of the proceeds from asset sales, and I don't think a "guess" is  an appropriate way to do this.

by Andre Terzaghi on June 01, 2012
Andre Terzaghi

I guess that makes me a liberal too.

I certainly think the asset sales are incredibly dumb, and should be stopped by any legitimate means possible. But it doesn't look to me like the Greens using Parliamentary for this purpose is legitimate. So they should be smacked for it, but we're not allowed to do that anymore.

Given CIRs are non-binding, they seem a bit of a waste to me too. But what other civilised way do you suggest to get a clear message to a government that seems determined to ignore a large majority opinion? Street protests? I had hoped we had left behind the serial dictatorships we had under FPP, but evidently not completely.

It always seems to me there's a couple of things always used to confuse the issue on asset sales:. First is the percent return the assets generate, and second is what the money will be used for. First, the return on the "value" of the asset is irrelevant, what matters is what someone will pay for it. Anyone prudent looking to buy the asset will conclude it's riskier than buying government debt (for now and the foreseeable future), so will buy at a price that delivers a greater return. So if the government needs a billion dollars for something, it's better off keeping the asset and borrowing the money, because the dividend flow from the assets that could be sold to raise a billion dollars is pretty much guaranteed to be higher than the interest cost on a borrowed billion. Which pretty much covers the second point, a project should be analysed on whether it's worth doing, regardless of where the money comes from. If it's worth going ahead, then you figure the best way to raise the money. Which won't be selling profit-making assets.

by Andrew Geddis on June 01, 2012
Andrew Geddis

@Peter: Sure - as I said, you can square the circle on that point through the "corruption avoidance" rationale. But it's a harder sell when your opponents will throw the fact of your own spending back at you. And what of this part of the Green's campaign finance policy:

Any non-political-party may not spend more than $50,000 on election activities over the course of the election campaign.

As for saying the "goods" of asset sales are provisional and uncertain, whilst the "bads" are certain and fixed, isn't that just another example of issue framing in a way that helps get you the answer you want? After all, we don't know who will buy the shares the Government is going to sell. And if the 49% of the assets get bought by Iwi groups and the NZ Superannuation Fund, doesn't that make the policy look a lot nicer than if GreedyCorp and its subsidiaries do?

@Adrei: "But what other civilised way do you suggest to get a clear message to a government that seems determined to ignore a large majority opinion? Street protests?"

The seemed to work pretty well in stopping the mining of schedule 4 conservation land! As for "serial dictatorships" ... given the amount of attention paid to this policy in the election campaign, I honestly think it is hard to say that National doesn't have the right to pursue this policy (in conjunction with its other economic development initiatives, which depend to some extent on the sales taking place). Point being, if government policies are put in place on a pick-and-choose basis as to what is popular and what isn't, then why have a government at all?

by Peter Green on June 01, 2012
Peter Green

Any non-political-party may not spend more than $50,000 on election activities over the course of the election campaign.

Has the election campaign started already?

There's no circle squaring going on.  "Receiving money from people who want something from you" and "spending money" are superficially similar in the sense that both concepts involve "money", but pretending they are the same thing is just silly.

As for saying the "goods" of asset sales are provisional and uncertain, whilst the "bads" are certain and fixed, isn't that just another example of issue framing in a way that helps get you the answer you want?

No.  Selling up to 49% if the assets is the actual policy.  We can say, with a good deal of confidence, that the result of implementing a policy of selling up to 49% of the assets will be the sale of up to 49% of assets.

You can be radically skeptical and treat all knowledge as provisional and uncertain, but if you take it to that extreme you're going to look ridiculous.

 

by Andrew Geddis on June 01, 2012
Andrew Geddis

@Peter,

No, the election campaign hasn't started. But why is it wrong for a person to spend $50,000 trying to get people to vote in a favour of parties that (say) support coal mining, but it is not wrong for the Green Party to spend $78,000 trying to get people to sign a petition to hold a referendum with the aim of stopping an assets sales programme?

And yes - the policy is to sell 49%. But whether that policy is assessed as good or bad may depend on factors that are not yet apparent, and which are not part of the question asked in the CIR. Which is to say, the question achieves clarity and certainty only by failing to encompass the whole set of circumstances that may be necessary to judge the policy's merit. Which is to say, referendums are blunt and crude devices.

by Ian MacKay on June 01, 2012
Ian MacKay

Wouldn't a more honest question be "do you support spending $7 billion more on infrastructure developments, funded by selling up to 49% of Meridian Energy, Mighty River Power, Genesis Power, Solid Energy and Air New Zealand?

That's not fair. Would the proponents of the Partial Sale outline the negatives to get a balanced reponse? No way!

Surely when you put up a petition for signing or not signing, the debate then flows considers the merit or otherwise of the issue. (incidentally the line about spending on schools and hospital is as nebulous as spending money to improve the quality of teaching. )

by Peter Green on June 01, 2012
Peter Green

But why is it wrong for a person to spend $50,000 trying to get people to vote in a favour of parties that (say) support coal mining, but it is not wrong for the Green Party to spend $78,000 trying to get people to sign a petition to hold a referendum with the aim of stopping an assets sales programme?

The Greens have that $78k to spend because they got enough votes to get into parliament which gives them access to that funding.  Everyone gets one vote.

I can't drop $50k on an election campaign.  Someone like Louis Crimp can.

by Andre Terzaghi on June 01, 2012
Andre Terzaghi

The Nats have a right to pursue asset sales, but since Peter Dunne and the Maori Party clearly campaigned against them, I don't think they have a moral right to now support them. But I'd bet National made any agreement conditional on getting them to reverse their campaign position. Of all the parties in the election, only the Nats and ACT (and Libertarianz?) supported asset sales, comprising 48.5% of the vote. All other parties, 51.5% of the vote, clearly opposed. And we can be very sure a lot of voters voted for National despite, rather than because of the policy. Fer God's sake, even Treasury says the business case says don't sell them. So they're doing it because they won and they can. Add all of that up, forging ahead with the policy is starting to get into serial dictatorship territory in my view.

As for pick and choosing policies based on popularity, sometimes a government needs to get ahead of public opinion and do the right,thing, even though it's unpopular. The anti-smacking law being an example. But to pig-headedly go ahead and do something dumb, when the majority knows it's dumb, and you can't even articulate a clear and consistent reason why it's being done, surely that's an area where popular opinion should sway a government.

by Matthew Percival on June 01, 2012
Matthew Percival

Prior to the election Phil Goff tried to make the election into a referendum on the mixed ownership model. It was the single biggest issue at the last election. Result? National romped home and was able to form a government with like minded parties (ACT and United Future).

I can understand a CIR when a party launches a new policy mid-term that wasn't aired at the previous election. But a CIR when the voters have already voted with full knowledge of the consequences is simply put a waste of time, resources and money.

The argument about letting the National Party know of the public opposition to the Mixed Ownership Model is redundant. They've been hearing it since they launched the policy!!

by Draco T Bastard on June 01, 2012
Draco T Bastard

Because our last experience of CIR - the so-called "Smacking Referendum" back in 2009 - produced a pretty decisive vote against a policy that its member was instrumental in guiding through the House and into law. Yet on the day the vote's outcome was announced, then-Green MP Sue Bradford responded to it by saying: "Even a large `No' vote tonight won't be a clear mandate to the Government to act in any particular way."

Yeah, there was a reason for that, the question was designed to get a "no" answer and that's what it returned. Hell, I knew that going in to the referendum and still almost ticked "no" rather than "yes". I'm sure that if the question had been Should assaulting children continue to be legal? then we would have got a different response. The problem with the CIR process ATM is that the questions can be manipulative and leading.

So why exactly is giving more than $35,000 to a political party to spend on trying to achieve political outcomes A Bad Thing, whilst spending $50,000 (at least) on trying to achieve political outcomes is A Good Thing?

One is a person donating to a party to try to influence that party, the other is a democratitc party representing thousands spending what is, on a per person basis, a miniscule amount.

by Draco T Bastard on June 01, 2012
Draco T Bastard

We should just dump CIR's altogether - not use them for things we like, while ignoring them for things we don't. 

Nope, we should make them binding. There would have to be some checks to prevent abuse of the system but we really should be making the Will of the People the basis of our governance.

by Draco T Bastard on June 01, 2012
Draco T Bastard

First, the return on the "value" of the asset is irrelevant, what matters is what someone will pay for it.

Wrong, the only value that counts when selling assets is how much it costs to replace them.

So if the government needs a billion dollars for something, it's better off keeping the asset and borrowing the money,

Well, actually, it would be better off keeping the assets and raising taxes. In context, specifically raising the taxes on the rich and getting rid of the loopholes such as the lack of CGT.

Which pretty much covers the second point, a project should be analysed on whether it's worth doing, regardless of where the money comes from. If it's worth going ahead, then you figure the best way to raise the money. Which won't be selling profit-making assets.

Bingo!

And if the 49% of the assets get bought by Iwi groups and the NZ Superannuation Fund, doesn't that make the policy look a lot nicer than if GreedyCorp and its subsidiaries do?

Nope. It still shifts the assets from the community into private making the community poorer.

I honestly think it is hard to say that National doesn't have the right to pursue this policy (in conjunction with its other economic development initiatives, which depend to some extent on the sales taking place).

Actually, it doesn't but that's because of Peter Dunnes ambiguity during the campaign. Specifically, he didn't campaing on asset sales and actually looked as if he was against them (He specifically said he was against such assets sales as water and a lot of people would have thought that meant power as well).

Point being, if government policies are put in place on a pick-and-choose basis as to what is popular and what isn't, then why have a government at all?

Good question. I  much prefer anarchy myself. That said we would still need the administration that government provides and the immediate responses that sometimes crop up. Which means we still need the ministries and we still need to elect representatives but that major policy settings would be set through referendum.

And yes - the policy is to sell 49%. But whether that policy is assessed as good or bad may depend on factors that are not yet apparent,

Well, the figures that we're seeing show that the sale of the assets is bad. Making decisions on "factors that are not yet apparent" is really quite stupid.

 

by Andre Terzaghi on June 02, 2012
Andre Terzaghi

Further to the debate about CIR, democratic processes, and the anti-smacking legislation, let's remind ourselves that that particular legislation passed Parliament 113 to 8. As a direct result of John Key and Helen Clark getting together and negotiating an amendment that made it more broadly acceptable. Participatory consensus democracy working the way it should. Which is nothing like jamming through a policy just because you can, and you've get the numbers in Parliament ever so reluctantly and by the smallest margin.

And to me, Key taunting the Greens over the anti-smacking bill, when he was instrumental in actually getting it passed, adds an extra delightful flavour to the whole thing.

by Andrew Geddis on June 02, 2012
Andrew Geddis

@Peter: "I can't drop $50k on an election campaign.  Someone like Louis Crimp can."

But that's the problem right there, isn't it? Because the reason the Greens can drop $78,000 on this campaign is because they've been given greater resources than the ordinary individual/organisation, thus can deploy greater financial power in pursuit of their desired political aims. Why does it matter how they got those resources?

I'd also note that the spending on gathering signatures is somewhat in tension with the rule that states "Every person commits an offence and is liable on summary conviction to a fine not exceeding $20,000 who, either alone or in combination with other knowingly spends, on advertisements published or broadcast in relation to an indicative referendum petition, more than $50,000 ... ." Sure, it doesn't breach that rule 'cause the signature gatherers aren't "advertisements". But isn't the spirit of the law here important - those with greater financial resources (howsoever obtained) ought not to have an unfair advantage when it comes to the referendum process?

Finally, my point here is that if I, as a usually Greens-sympathetic commentator, can make these points, what do you think the haters are going to do? Sure, haters will hate no matter what, but if you give them ammunition they can do a lot more damage than otherwise. And is it worth it for the gain of a few more signatures than otherwise would have been gathered by the 2000-odd volunteers reportedly on the job?

@Draco,

The asset sales policy may well be a very dumb idea - I shouldn't be read as saying "I like this policy". All Governments do things all the time that people (whether a majority or not) think are dumb. That's not really the issue I'm addressing here. My point is that, even if you think that the policy is really dumb, it still is a bad thing for any political party to be spending the public funding they are given to promote their policies on trying to force a (non binding) referendum on the matter, and a particularly bad thing for the Green Party to do. That is all.

by Scott Chris on June 02, 2012
Scott Chris

Well. OK. But how clean is that question really? Yes, it fairly represents the Government's intention with regards these assets. But where is the mention of what the Government intends doing with the money raised from their partial sale?


Speaking as one who believes in the separation of government from the productive economy, my view of the question posed is that it is neither misleading or ambiguous. There is no need to include an explanation of the government's rationale, just as there is no need to include an explanation of the rationale of those who are opposed to the sale.

On the subject of using  taxpayer funded parliamentary entitlements to hire signature collecters - naughty, naughty greens. Damage control time. Pass the buck and apologise vaguely immediately.

by Andrew Geddis on June 02, 2012
Andrew Geddis

@Scott: "Speaking as one who believes in the separation of government from the productive economy, ... . "

But then how would you vote on the question? Surely selling 49% isn't enough for you ... so wouldn't you have to say "no" to it - as the Greens want you to? 

by Scott Chris on June 03, 2012
Scott Chris

Andrew I see your point, however I can still truthfully say:

"Yes, I  support the Government selling up to 49% of Meridian Energy, Mighty River Power, Genesis Power, Solid Energy and Air New Zealand" (subtext: I would also support the government if they were to divest themselves completely of said companies)

By the same token, I would still expect the government to exert sufficient legislative control of the market to ensure the best possible outcome for consumers - within reason. (like they aren't doing with the supermarket duopoly for instance)

 

by DeepRed on June 04, 2012
DeepRed

@Scott Chris: I'm not particularly hopeful, given the recent history of blue-rinse Govts to look the other way with the likes of Telecom and TranzRail - and still are. Brian Gaynor also points out that the sharemarkets of our trading partners are made up mostly of long-established globally focused firms and entrepreneurs made good, while ours is dominated by inward-looking former state-owned monopolies. In the same paper, Liam Dann also cited the misfiring Facebook float as a cautionary example.

If the sales go ahead, I hope the Three Davids, Russel and Metiria can harden their hearts, give the Commerce Commission some regulatory MOABs, send the share prices crashing, and buy the assets back for a fire sale price. Those who invested in Telecom - as did Deane and Gattung -  knew they were milking a vertical monopoly cash cow for short-term gain, instead of seeing ahead and getting behind our Sam Morgans and Rod Drurys. If that all sounds harsh, then try finding a spare $7 billion to bypass the local loop, because Telecom's competitors couldn't. Bernard Hickey, even before he went market apostate, believed the local loop should be publicly run.

by DeepRed on June 04, 2012
DeepRed

And in the words of Gareth Morgan: "There’s only one thing worse than a legislated State monopoly, and that’s a private one."

by Scott Chris on June 05, 2012
Scott Chris

And in the words of Gareth Morgan: "There’s only one thing worse than a legislated State monopoly, and that’s a private one."

Maybe so Red, but in theory a monopoly can be broken quite easily by simply introducing legislation which would prohibit any one company from owning more than, say, 20% of any sector of the market. But decisive apolitical legislation  can never be enacted whilst the government still has skin in the game. 

by DeepRed on June 05, 2012
DeepRed

@Matt Percival: the sad fact is, people can be easily convinced to vote against their own interests, if they sense they're slipping down the ladder and presented with a "2 Minute Hate" national scapegoat. And not just in NZ either. This post-GFC joke sums it all up:

A Wall Street banker, a middle-class battler, and a blue-collar are standing beside a table with a plate of 12 cookies. The banker takes 11 of the cookies and whispers to the battler, "Careful of that Commie parasite, he'll kick the stuffing out of you for your cookie."

Weimar Germany basically cranked it up to 11.

by stuart munro on June 07, 2012
stuart munro

Well I'm not surprised you don't like CIR Andrew - but the fact remains that they are a better and more democratic instrument than the self-serving machinations of most of our MPs.

The real answer, when a government becomes as massively corrupt and incompetent as the incumbents, is defenestration. This would cause a serious rethink among surviving MPs about the wisdom of selling their countrymen down the river. And the reason this process is to be preferred is that the incumbents have proven themselves deaf to public entreaty, blind to the consequences, and more obtuse than Chingiz Aitmatov's menkurt servants in their worship of neoclassical economic dogma.

Sooner or later they're going to have to go, and those of us who remain will have rebuild New Zealand from the wreckage they have left us. They cannot go soon enough.

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