Doing The Right Thing For The Wrong Reasons. Labours "Unprincipled" Opposition To Asset Sales.

Are You Serious, David? Labour's reasons for opposing the partial sale of state energy generators have been as inadequate as they have been changeable. It's position would be improved dramatically if the party's leaders allowed themselves to be guided by the "democratic socialist" principles set forth in Labour's constitution.

“THE NATURAL RESOURCES of New Zealand belong to all the people and these resources, and in particular non-renewable resources, should be managed for the benefit of all, including future generations.” In any debate over the merits of public versus private ownership in New Zealand one might assume that these words, taken from the second, “Principles”, section of the Labour Party Constitution, would constitute the bedrock of the Labour Caucus’s argument.

For, surely, if any resources belonging to the people are alienated from the people, then they should be restored to the people. Indeed, such restoration should be mandatory given Labour’s “principle” that: “All people, either individually or in groups, may own wealth or property for their own use, but in any conflict of interest people are always more important than property and the state must ensure a just distribution of wealth.”

If ever there was a “conflict of interest” between the right of the people to benefit from the resources they own, and the right of wealthy individuals to convert public resources to private profit, it lies in the struggle over the partial sale of state-owned energy generators. On the basis of its founding principles, Labour’s position on these asset sales should be very simple and very clear. First: The assets belong to every New Zealander and should not, under any circumstances, be sold. Second: If the assets are sold they will be repurchased by the state at the earliest practical opportunity.

On this issue, Labour’s principles do not permit very much in the way of wiggle-room. If it is the obligation of the state to ensure a just distribution of wealth, then it is vital that the citizens’ access to something as important as energy not be restricted or rationed according to their ability to pay. The right of commoners to gather firewood on the lord’s estate was recognised as far back as the middle ages. To deny people the means of lighting and heating their homes, and cooking their food, was simply unthinkable. In the social-democratic New Zealand of 1935-1975, the successors of those medieval barons were required to pay their workers “a living wage” which incorporated the cost of energy. Massive state investment in hydro-electric power schemes from the 1940s to the 1980s made this possible by ensuring all New Zealanders had access to cheap and abundant electrical power. A Labour Party committed to its constitutional principles would make energy security a cornerstone of its appeal to Twenty-First Century voters.

Why then did the Phil Goff-led Labour Caucus shy away from basing its opposition to asset sales on the Labour Party’s constitutional principles mandating the public ownership of natural resources and a just distribution of wealth? And why hasn’t its successor, the David Shearer-led Labour Caucus, made a point of re-stating the party’s “democratic socialist” commitments? Could it be that Mr Shearer and his colleagues no longer subscribe to those beliefs?

From the very beginning of this latest privatisation drive Labour’s parliamentary leadership has offered a bewildering combination of explanations as to why the state-owned electricity generators should not be sold. Initially we were told that the energy assets were too profitable to justify privatisation. That the dividends they paid to the Treasury were so substantial that it made more commercial sense to simply borrow the sum any asset sales were likely to realise from international lenders. Then we were told that the sale of the state’s energy generators would see the shares in these strategic infrastructural assets being flicked on from domestic to foreign investors. Now we are told that the National-led Government’s efforts to ensure that most of the shares remain in Kiwi hands can only be achieved by ordinary taxpayers subsidising the Government’s “Loyalty Scheme”. Most importantly, however, from the point of view of first principles, New Zealanders have been told repeatedly that the Labour Party can give no guarantee that a future Labour Government will buy back the private sector’s shareholding in the state’s energy generators.

This refusal to commit to renationalisation is explained, in part, by Labour’s 2010 decision to exclude energy generation from the “closed list” of strategic infrastructural assets that the party’s economic policy-makers had recommended be run “in the New Zealand interest” and which foreign investors should be debarred from purchasing either in whole or in part (see here and here).

A more honest explanation for Labour’s refusal to endorse renationalisation, however, is simple embarrassment. Most Labour MPs would feel “naïve and stupid” advocating such a policy. Business leaders, civil servants and academics would ridicule their “1930s thinking” and they would be branded dinosaurs by their right-wing opponents in Parliament and the media. Labour’s Constitution may still declare that New Zealand’s natural resources “belong to all the people” and avow the state’s duty to “ensure a just distribution of wealth”, but the sort of people who make up Labour's current caucus are no longer prepared to pay even lip service to such “principles”.

That is why the Labour Caucus’s opposition to asset sales rings so hollow, and why the justifications for its position on this issue have been so inadequate and so changeable. Ideologically-speaking, the views of the party’s current MPs are little changed from those of the men and women who introduced and supported Rogernomics (and initiated the policy of full-scale privatisation in New Zealand). They no longer believe that the opportunities for private individuals to profit from the existential needs of their fellow human-beings should be progressively diminished and, ultimately, extinguished. The duty of twenty-first century policy-makers, as they see it, is to inform and expand the choices of free individuals operating in free markets. The only real difference between Labour’s spokesperson, David Parker, and National’s Finance Minister, Bill English, is that the former sees the state playing a much greater role in informing and expanding those choices than the latter.

Labour Party members should be on their guard. The weird peregrinations of their parliamentarians when it comes to explaining their opposition to asset sales is proof that their hearts are not truly in the fight. Eventually (and it may be sooner rather than later) the Caucus and its advisers will realise that the policy preferences of “modern social democracy” are incompatible with Section Two of Labour’s existing Constitution. Like Tony Blair, they will insist that the old commitments to wealth redistribution, public ownership and the “principles of democratic socialism” generally, be jettisoned in favour of a “new” Labour Party.

One that even Tories can vote for with a clear conscience.

This posting is exclusive to the Bowalley Road blogsite.