The government has delayed the partial float of Mighty River Power from December this year to the March-June 2013 period, Prime Minister John Key says.
The delay would give the government more time to talk to Iwi about why it has decided to not go ahead with a plan that would have given certain Maori interests particular rights and powers in relation to the company, which would have been above and beyond the rights of other shareholders, Key said.
See the release from Key below:
The Government will proceed with an initial public offering of up to 49 per cent of Mighty River Power in the period of March to June 2013, Prime Minister John Key says.
That would be followed in the latter part of the year by an IPO of up to 49 per cent in either Meridian or Genesis.
“The Government’s preference would have been for a share offer for Mighty River Power this year.
“However, after careful consideration ministers have decided to undertake a short period of consultation with iwi on the ‘shares plus’ concept raised in the Waitangi Tribunal’s interim report.
“Since receiving that report 10 days ago, much of the legal and official advice we have received has been around this concept,” Mr Key says.
In essence, ‘shares plus’ refers to the idea that certain Maori interests would be given particular rights and powers in relation to the company, above and beyond the rights of other shareholders.
Mr Key says that after careful consideration and discussion, the Government’s current view is that this idea should not be progressed. There are five main reasons for this view:
· It is not in the national interest for any group within Mighty River Power’s potential 49 per cent minority shareholding to be given such rights.
· Almost every form of redress to Maori that could be covered by ‘shares plus’ can be achieved in other ways.
· The remaining elements of ‘shares plus’ in relation to decision rights over management or strategic decisions would not be able to work in practice. To take one example, if some Maori shareholders had the ability to make decisions on strategic issues, under well-established law, those shareholders must act in the interests of the whole company and not simply as a representative of Maori.
· If the ‘shares plus’ concept existed it was likely to make the company less attractive to investors, which could be reflected in a lower sale price and therefore be to the detriment of taxpayers.
· Following consultation with iwi earlier this year, a careful and deliberate decision was made to ensure that the Crown’s obligations under the Treaty continue to rest with the Crown, not with the companies.
However, ministers have today decided that taking some time to talk about ‘shares plus’ with relevant iwi is the prudent thing to do. That means preparation for the Mighty River Power share offer will continue to proceed, but in the March to June window next year, rather than in 2012.
“The timeframe for the IPO does not alter our commitment to providing investment opportunities to New Zealanders through our share offer programme,” Mr Key says.
“It’s good for savers, because it opens up new opportunities to invest in large, local companies. It’s good for taxpayers because we expect to generate between $5 billion and $7 billion in proceeds, which will be invested in new public assets like modern school and hospitals. That’s money we don’t have to borrow from overseas lenders.”
Ministers accept that even after taking the extra period for consultation there remains a litigation risk, Mr Key says.
“Just last Friday the Attorney General received a letter from the Māori Council which made clear their intentions in that regard.
“The Māori Council has told Ministers that if the Government does not follow the Tribunal’s recommendations – which include a national hui on water rights – it will take the Government to the High Court to attempt to halt the partial sale of Mighty River Power.
“However, Ministers have considered and rejected the idea of a national hui, as we don’t believe it is the appropriate way forward.”
The Government’s position on water rights has been consistent and clear.
· In common law no-one owns water.
· Maori do have rights and interests in water that are being addressed, and will continue to be addressed, through the Treaty process when dealing with historical claims and by other mechanisms, iwi by iwi.
· The partial sale of Mighty River Power does not impact on the Crown’s ability to recognise Maori rights and interests in water.
“The preferred focus is to develop models for the control and management of water that reflect relevant Maori interests. We already have those processes in train, through dialogue with iwi leaders and through the Government’s Fresh Start for Fresh Water process,” Mr Key says.
“Accordingly, we will be outlining our position to the Māori Council.
Mr Key says the issue is not about the Government against Māori, or Māori against Government.
“Within Maoridom there are a number of views on this issue – there is no one voice.”
Ministers consider that the Crown would be in a very strong position should legal action go ahead. If it was to occur, the Government expected it to happen sooner rather than later.
In the meantime, work on the various elements of the share offer was well underway, Mr Key says. That work would continue.
41 Comments
Why waste money trying to sell these strategic assets.
The simple option would have been to "lease" them to the NZ Super Fund, ie: sell them at today's market value (on the basis that the NZ Super Fund can't sell them), but must in 20 or 30 years time offer them back to the Crown at the market value of the time. So the Super Fund can make a financial return from dividends and capital gain as a long term investor.
NZ inc doesn't lose out. And yes the crazy Super Fund doesn't sit there with billions of dollars invested in volatile foreign companies.
Cheap, easy and politically palatable. Instant repayment of debts and no fees to investment bankers!
The current Government need to learn that foreign and private aren't synonyms for wealth generation.
Chris J - with the singular (subsidising) exception of Rio Tinto, the rest of your 'financial return' to NZ, is from NZ. You can't make a profit from yourself, a little matter of gravity and bootlaces.
So few folk get what real wealth is. So many are too used to playing with paper....
PDK, as usual you miss the point.
How does selling guaranteed income streams generated from NZ citizens and businesses to foreign investors at discounted present rates during a financial markets slump on the verge of an inflation spiral make economic sense??
That is exactly how to extract wealth from NZ.
On your point about what knowing what wealth is. Wealth is not only created by extracting money from foreigners (whether that is from foreign investors, foreign consumers of our products or the pockets of foreign tourists).
Wealth can be created entirely from within NZ without taking it from the pockets of NZers. Someone who increases the value of an item creates wealth - whether that is turning a seed into food, turning a sapling into a tree, turning timber into a product, turning sand into steel, turning water into energy. All that creates wealth.
Turning a pile of timber into a house also creates wealth, no matter how much you may hate that fact.
Wealth is not about the currency in circulation, it is a measure of the usefulness of the real assets that a country has.
Take two adjoining land owners, one who left their paddock in gorse for 50 years and one who planted out trees 50 years ago. The one who planted the trees created wealth, the one who did nothing created nothing.
If you don't understand wealth can be created from nothing you will get nowhere.
I've created wealth (no matter how much scarfie, PDK et al might dislike it). I create something from nothing which is what NZ needs to work out how to do. It's not hard. Get creative...
Work is being done by that falling water too!
Dams harness energy, energy creates wealth. If you think selling assets that monopolise energy generation is a good thing then it thoroughly proves the point of conjecture that I've mooted many times before - you are a loon!
You are dreamer!
If gold is worth more, paper money is worth less, hence real assets are worth more paper money!
And what about the energy nuts beliefs about peak oil/energy. Surely anyone with one fraction of a brain cell realises that renewable low cost energy producers will become more valuable over time unless climate change and peak oil loons are all outed as heretics (which they should perhaps be!!).
Scarfie, I have plenty of abilities other than just numbers!
And I can clearly see that oil is finite (a no brainer obviously), it's just a matter of how much there is and when it runs out.
Of course I am a believer that other non-petroleum sources of energy will develop. However given that you believe peak oil is near or past, then why would you think selling renewable energy generators is a good idea??
Surely anyone with one fraction of a brain cell realises that renewable low cost energy producers will become more valuable over time
Exactly! That is why it is loonacy to sell these at a time like this. Energy costs will likely keep rising from here on in, it would be sensible to keep such crucial infrastructure for public interests rather than private gains.
Energy will indeed be worth more, as time goes on. It's one of the reasons not to sell the dams.
Chris J - I agree that if you sell it overseas, you lose. But internal ownership is a zero-sum game; you cannot profit from yourselves. That was the point I was making, re leasing to our own fund.
There's a (majority) lot of people who have experienced the charging of profit from each other, concurrent with the use of more and more energy to produce more and more resources. They made the mistake of assuming the 'money' was doing the driving - actually, the resource-extraction was doing the underwriting. A process which had to stop. Leaving the profit process with it's pants down.
I absolutely don't think they should be sold - as said, energy will be more and more in contention - but leasing them to ourselves to profit from ourseles, is delusional.
Using cash from the Super Fund frees up reduces Government debt. It both reduces volatility risk for the Super Fund and achieves all of the benefits the Govt tout that the public float will achieve.
That's why this simple accounting measure makes sense - less debt, less investment risk.
Mr Key says that after careful consideration and discussion, the Government’s current view is that this idea [share's plus] should not be progressed... However, ministers have today decided that taking some time to talk about ‘shares plus’ with relevant iwi is the prudent thing to do.
Say what?
And so, I presume they're going to have behind closed door discussions with "relevent iwi" as "Ministers have considered and rejected the idea of a national hui, as we don’t believe it is the appropriate way forward.”
Sounds like certain non-transparent elitism to me.
Yep agree with you there and agree with your previous observation about Maori elite :-)
Expect to see a sealord type deal where Iwi get 10% ownership. Probably only fair though, although the treaty could not have contemplated electricty or its production, the hydro schemes have deprived Maori of the use of those rivers in a way that they see fit.
The problem lies in your comment from above "a Right to know that the law has served it's decision and multiple jeopardies".
Maori have consistently tried to use the justice system to access their land/resource ownership rights since the treaty was signed using the right guaranteed to them as first British citizens and then New Zealand citizens. The courts refused to deal with them as such, instead treating them as Maori land owners with which the court says it has no authority to deal with. They are told that it is a matter between Maori and the crown.
So the law has not been served in any way or form. There is an entrenched apartheid in the legal system and still no acting law for a Maori land owner. The Privy Council has ruled in the favour of Maori land rights (1903) but was ignored. The Ngati Apa case by the court of appeal was a contemporary decision by the courts that did reinforce Maori rights, but the government quickly passed legislation to overide it.
If there is to be a full and final settlement for Maori, it needs to be an acceptance of their rights by the courts. From the Maori perspective nothing will be resolved until that time. Did you see my comment to snippy about taking away their boat?(in regards to teaching a man to fish)
Any competent Govt would have anticipated the Maori complaint. It has a clear, recent, historical precedent.
When fishing went from open-slather to quota, Maori objected to being closed out from a 'commons' they had rights to.
They got a fair bit of Sanfords, from memory. It took them a long time to sort out a divvying-up format, but they did.
So here they were seeing a 'commons' being closed out, one they had rights to. No surprise they acted in the same manner. Who didn't see it coming, again? I'd like to be able to not vote for them.
Who needs memory when there's Wiki;
The Treaty guaranteed to Māori their lands, forests and fisheries. Over time, however, New Zealand law began to regulate commercial fisheries, so that Māori control was substantially eroded. To resolve this grievance, in 1989 an interim agreement was reached. The Crown transferred 10 percent of New Zealand's fishing quota (some 60,000 tonnes), together with shareholdings in fishing companies and $50 million in cash, to the Waitangi Fisheries Commission. This commission was responsible for holding the fisheries assets on behalf of Māori until an agreement was reached as to how the assets were to be shared among tribes. In 1992, a second part of the deal, referred to as the Sealord deal, marked full and final settlement of Māori commercial fishing claims under the Treaty of Waitangi. This included 50% of Sealord Fisheries and 20% of all new species brought under the quota system, more shares in fishing companies, and $18 million in cash. In total it was worth around $170 million.
Interesting assessment on NBR, likely nothing will be sold ( many comments aren't helpful though, imo)
http://www.nbr.co.nz/article/key-desperate-stay-out-court-ck-127499
"The government’s new timeline of March to June 2013 for the Mighty River Power share issue is therefore at best optimistic and at worst fanciful.
The odds of getting Genesis or Meridian done are even worse.
Even if he achieves two share issues, the reality is that, after 2014, Mr Key will be governing, if at all, with Winston Peters’ NZ First and Colin Craig’s Conservative Party. Both oppose his mixed ownership model policy."
So reinforcing the tribal model is the new consensus approach? Smacks of Papua New Guinea! Are the tribes even united within themselves? We will see.
Though I guess with the ongoing Kaingaroa fiasco, dealing with a group of tribes has proven fraught with delay and debate.
What a mess! But at least it is a step away from the centralise and marginalise approach typical of both major parties. All problems that are local, should have local solutions.
I wish John Key would consult the rest of us on the TPP. Backroom dealmakers should not be trusted, so who voted for him. Or maybe Labour was so hopelessly lost it was truly a win by default.
Isnt it all about property rights and the lawfull position surrounding ownership, like any other asset? Unfortunately too many commentators and individuals whilst professing to know what they are talking about, find it hard to differentiate between fact and emotion. Maori are exercising the same rights as any other New Zealander and that is to contest legally what they believe is being taken from them - nothing more nothing less. There are a hell of alot of ignorant people out there that profess to know what the issues are, and hell of alot more willing to offer an opinion, when really all it shows is their ignorance and racist beliefs. In simple terms there is a contract between the Crown and Maori, and that is the Treaty of Waitangi, and whether or not you I or the man around the corner likes it or not, it exists. Yes it can be contested, changed, or used for toilet paper, but it comes at a cost and to think otherwise is dellusional. Maori are not at fault here. The finger should be pointed at the Government, as they knew this would be a hot potato. There is current case law on water ownership rights already, and to me it reinforces how arrogant the Governmet were, to think they could get sell something which isnt theirs. For Key it is all now about damage control and how best to come out of this diabolical situation, that should never have eventuated with some respectability - Regardless Key will not want to endure the wrath of the masses and will hold firm to his decision to float Mighty River, albeit in an abridged form. Place the blame at Maori - they are always the scapegoat when it comes to issues like this?
An interesting announcement from one of our major manufacturers, and a major beneficiary of govt construction contracts, at a time the govt wants to sell shares in energy gentailers -
Fletcher Building makes moves to further reduce its energy use
Auckland, 5 September 2012 - Fletcher Building today announced it was partnering with the Energy Efficiency and Conservation Authority (EECA) in a move to further reduce its energy usage and environmental footprint.
Fletcher Building CEO Jonathan Ling and EECA GM Business Ian Niven signed a formal energy management agreement this morning during a visit to Tasman Insulation’s Auckland manufacturing facility. Energy and Resources Minister Phil Heatley was also in attendance and witnessed the signing.
Under the agreement with EECA, Fletcher Building will introduce an energy management programme across its New Zealand businesses, beginning with independent energy audits and assessments of its work sites. The results of those audits will be used by Fletcher Building to design and implement commercially viable energy saving initiatives.
Fletcher Building CEO Jonathan Ling said the company was already making great progress in reducing its energy use and greenhouse gas emissions.
“We invest heavily in sustainability, and by partnering with EECA we will have access to a wealth of extra knowledge and experience to go that step further.
“It’s about ensuring our businesses are as energy efficient and productive as possible,” he said.
In the four years to December 2011, Fletcher Building reduced its absolute group greenhouse gas emissions by 15 per cent and its national energy usage by 23 per cent.
“Our Golden Bay Cement business has cut its annual energy bill by $3m dollars, by using renewable wood fuel instead of black coal.
“We’re looking for more opportunities like that - innovative opportunities to reduce our energy use, our emissions and the financial costs that come with both,” Jonathan Ling said.
Fletcher Building businesses are incorporating sustainable work practices across the life-cycle of their products, from the sourcing of raw materials to disposal, to reduce their overall environmental footprint and the energy they consume.
“Our Golden Bay Cement business has cut its annual energy bill by $3m dollars, by using renewable wood fuel instead of black coal.
http://www.nri.org/projects/biomass/conference_papers/farming_wood_fuel_in_cambodia.pdf
So Fletchers are going into tree farming then.....?.....so what's giving way to the renewable source...can't plant trees in a coal mine...cant rollerskate in a buffalo herd......
“We’re looking for more opportunities like that - innovative opportunities to reduce our energy use, our emissions and the financial costs that come with both,” Jonathan Ling said.
Opportunities..? interesting choice of word there....TREE HUGGERS UNITE.....Johnny's going into the lumberjack business......wonder where the prime farming locations are....?
The statement is about $ savings.
It's perhaps all these folk understand, so it's how you have to drive them. Not sure it matters which way. The problem is that neither system makes up for the fact that there isn't the sequester-able area/sink on the planet, currently. You might drive that by $ inducement, but the reality would be that food would be displaced. Deaths of starvation or deaths from AGW? Folk will choose to eat, now.
http://www.masonryconstruction.com/industry-news.asp?articleID=711150§ionID=790
..neither system makes up for the fact that there isn't the sequester-able area/sink on the planet, currently.
There is of course the prospect of planting on masse food producing sequester-able trees - say pine nut planations. But agree - in all likelihood the best time/money is spent on adaptation, as opposed to reverse-degradation. I think the boat's left the harbour on the latter.
Yet orchardists have been ripping out Apple trees for years now because there's no money in it. Some found it cheaper to let the fruit rot on the trees rather than pick it. Meanwhile we need more trees, there are too many unemployed and too many hungry people here and overseas. Surely a bit of lateral thinking can provide a solution. Capitalism may be the best of a bad bunch but it is still often woefully inefficient and wasteful.
People don't seem to think clearly, re sink.
Any existing mature forest, doesn't take up any carbon. Exceptions can be possum-eating depletion, elimination thereof; but once the forest is back to 'mature', that's it. All you can't do is remove it - it's a break-even or go backwards thing.
Planted forest - and I'll grant you an edible content, it's where we're heading on our block - is still a one-off gain. When mature, same applies as above. There is a nonsense that the Govt sees chopped-down timber as 'lost', but if it goes into a 100-year house, it ain't. Yet.
The problem is that we are emitting a stored-in-ground supply of carbon, into the Holocene environment our species does best in.....
Yes, but we need governments to be thinking the same way. When I asked our forestry consultant about a replant of our radiata in pine nut - the problem is there is no timber processing set up for anything other than radiata and (to a very lesser degree) redwood .. walnut isn't on the radar either. I assume you are re-planting fruit tress on your block? What I'd like to go into is something with a dual purpose (timber + edible).
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