Kiwis likely to be able to sign up for SOE shares via banks, internet, as govt tries to make it easy to sell to locals

By Alex Tarrant

New Zealanders are likely to be able to buy shares in the four partially privatised energy companies via their banks and over the internet, Prime Minster John Key says.

This would be in a bid to make shares as accessible as possible to potential local investors, many of whom had never owned shares before, or did not know how to go about purchasing them.

A decision had not yet been made on what the minimum parcel size for the shares would be, Key told media in Parliament Buildings on Tuesday morning.

“But the point of concern would be, if the amount was too low, then the transaction fees could outweigh the benefits of owning the shares. So there’s a point where a reasonable sized parcel is required. Conventional wisdom is that NZ$1,000 is about that sort-of point, but that decision hasn’t finally been made yet," Key said.

“What we are going to make sure though, is that access to buying those shares is made as easy as possible for New Zealanders, and there’ll be lots of options to make sure that’s done in a low cost way, an accessible way, and they understand what they’re doing," he said.

"The decision to either buy or not buy those shares is something that New Zealanders need to get their own advice on, but we’ll try and make the process as simple as possible."

That included potentially being able to buy shares offered at the companies' IPOs via a bank, and purchasing the shares through an on-line platform.

Share parcels for Iwi?

Meanwhile, Finance Minister Bill English would not rule out holding back share parcels in the companies back for potential Treaty of Waitangi claims. However, it was unlikely the government would do so, he said.

The government had always said it would welcome Iwi investment in the companies through the usual routes of purchasing shares during initial public offerings or buying on the open market. While there were no current arrangements for shares to be included as part of Treaty claims, it was possible such a request could arise.

“If you take, say, [Ngati] Tuwharetoa, there’s a Treaty claim process underway regardless of the energy company sales," English said on Tuesday morning.

“As you get down the track there’ll be some kind of settlement, which generally involves cash, transfer of some Crown assets to them. It’s possible that in that context, as part of their Treaty settlement, they may be interested in shares in the energy companies, because they live with the assets," he said.

“We certainly don’t rule that out. But in the shorter-term, they are more interested in making sure the Crown understands their claims, and that the Crown isn’t trying to get round the claims by...the sale.”

In May, Ngati Tuwharetoa expressed concern over the partial sale of Mighty River Power, the first of the four companies on the block, and Genesis Energy due to its ownership of lakes and rivers used by the companies for electricity generation in the central North Island.

"We harbour very real fears that the mixed-ownership model will have a significant impact on our legal, customary Treaty rights and interests," paramount chief Sir Tumu te Heuheu told Parliament's Finance and Expenditure select committee in May.

"The [mixed-ownership] model expressly enables the privatisation and consequential commercialisation of schemes that were previously operated in the national interest. That fundamental change means that we need to revisit the operation of these schemes upon our lakes and rivers," he said.

'No arrangements'

English said on Tuesday morning there had been no concessionary arrangements entered in to in regard to shares being given to Iwi as part of a Treaty claim.

“Iwi are interested in these shares, because they seem to like the kind of assets, and we want to make sure they have the opportunity to bid in," English said.

Asked whether the government would look to keep some shares in reserve in the case of Iwi asking for shares in the companies through Treaty claims, English answered:

“Look, I wouldn’t rule that out completely, but we wouldn’t need to because, once the company’s floated, it’s actually easier for Iwi to get access to ownership of those companies. While it’s 100% Crown-owned, they just can’t.

“And I think they understand that. While the Crown owns [the companies] 100% there’s no way Iwi can get part-ownership of those assets. When it’s floated, they can turn up with their cash and buy the shares, and then they get some ownership,” he said.

It was "unlikely" the government would keep share parcels to one side in case of Treaty claims, English said.

“But we’re working in an open discussion with a good level of trust and confidence with Iwi, and I wouldn’t want to get into the game of ruling things in or ruling things out.”

“I would not want to pre-judge that. The focus from Tuwharetoa has been not on trying to get concessions out of the Crown, it’s been on making sure their claims, which are pretty strongly held claims with some fairly strong history behind them, are well understood, and that the Crown is going to get on and resolve those claims," English said.

“Now that could have happened anytime in the last 15 years. They’ve got to a point now where they do want to get on and resolve it, and so has the Crown," he said.

A scenario where the government had to buy shares in the companies off the open market as part of a claim was theoretically possible in the same way the government now went on the open market to buy assets like farms for inclusion in Treaty claims.

"The point here is we’re getting a very responsible approach from Iwi. They’re not trying to be opportunistic, they’re not trying to cut commercial corners," English said.