Some common sense emerging from Labour

On Friday, Labour released a speech David Cunliffe gave on Thursday. It gave me hope for a more rational Labour Party. First:

Crucially in a capital constrained fiscal environment, we will better leverage the Crown’s balance sheet in new and innovative ways.

We can expand public-private partnerships for new transport infrastructure.  The project scale must be right and the PPP benefits must outweigh any increase in cost of capital, but that leaves plenty of scope for win-wins .

Yay. PPPs should be on the table as an option in pretty much all circumstances. Decisions on whether to have a PPP should be made on the merits of an individual case. Great to see Labour starting to take steps away from ideology and towards rationality.

We can unleash State Owned Enterprises to create and grow new subsidiaries with private partners and shareholders, without diluting the taxpayer’s equity, or wholly or partially privatizing the SOE.

Again this is a good step in the right direction. While still a very modest step, it at least means that Labour are no longer saying the private sector has no role in assets owned by the state. And trying to argue that a partial stake in an asset owned by an SOE is good but a partial stake in an SOE is evil, will test the finest debaters.

Now Labour have pointed out that their policy is intended to apply to new subsidiaries only, but that is frankly illogical. Take Kordia for example. A while back they purchased Orcon. This means the taxpayer now owns an ISP. Labour seems to be saying that Kordia is not allowed to sell Orcon.

This is the bizarre outcomes you get from blanket bans. Private sector investment in any state asset should be considered on a case by case basis. There is a pretty strong argument to own Transpower, and there was a very weak argument to own a chain of competitive vehicle testing stations.

In the legal area, National has in fact nationalised certain aspects (crown defence service) and allowed private sector into others (build and manage a prison). That is because decision are being made on the basis of what will achieve the best outcomes.