The government still plans to sell up to 49% of SOE Mighty River Power between March and June next year, Prime Minister John Key says.
He said legal action from the likes of the Maori Council to try and stop the sale was not unexpected, given the government's decision to not go ahead with a scheme which would have given special shareholdings in the company to certain Iwi.
The government on Monday afternoon dismissed the 'shares plus' concept raised by the Waitangi Tribunal earlier this year.
The Maori Council called for the Tribunal to consider how the partial sales of power companies Mighty River, Genesis and Meridian could affect Maori water rights claims, given the use of hydro and geothermal resources by the companies, which could end up 49% owned by private shareholders.
Along with the three power companies, the government also plans to sell up to 49% of state-owned coal miner Solid Energy, and sell down its three-quarter stake in Air New Zealand to no less than 51% in efforts to raise NZ$5-7 billion over the next five years.
Mighty River was supposed to have been partially sold by now. However, the government pushed its IPO back to 2013 so it could carry out consultation with Iwi on the water rights issue.
Opposition groups claim the government went into the consultation process on 'shares plus' and other possible redress for Iwi with a preconceived idea of the outcome.
Prime Minister John Key has said he expected the fact the government engaged in the consultation would help its position in any legal battle on whether the companies should be allowed to be partially privatised.
See the release from Key:
Prime Minister John Key today outlined the Government’s next steps to prepare Mighty River Power for its partial sale in the first half of 2013.
“I’m pleased to announce today Cabinet made three decisions regarding our shares sales programme:
“First, the Government will not implement the Waitangi Tribunal’s ‘shares plus’ concept, or engage in further negotiations in relation to that concept, before the sale of shares in our energy companies.
“Second, the Government will proceed to remove Mighty River Power from the State Owned Enterprises Act. We will prepare an Order in Council for Cabinet and Executive Council to consider and approve on Tuesday 23 October.
“And finally, we will direct officials to continue to work towards a sale of up to 49 per cent of the shares in Mighty River Power between March and June 2013.”
The decision comes after the conclusion of consultation on ‘shares plus’ with Māori with direct interests in the water and geothermal resources used by Mighty River Power, and Meridian and Genesis.
Mr Key says the series of hui on ‘shares plus’ was part of the Government’s commitment to consult with Māori in good faith.
“From the series of the hui, and the written submissions the Government received, it is clear Māori claim a wide range of rights and interests in water.”
Mr Key says the Government’s position on water has always been very clear:
· In common law no one owns water.
· Maori do have rights and interests in water, and these will continue to be addressed through a range of processes such as Treaty settlements, the Government’s Fresh Start for Fresh Water programme and dialogue with iwi leaders.
· The partial sale of Mighty River Power does not impact on the Crown’s ability to recognise Maori rights and interests in water.
“Following analysis of the oral submissions made at hui, along with the written submissions, the Government’s view is that no new information has come to light to change our preliminary view – which is, that the concept of ‘shares plus’ should not be progressed,” says Mr Key.
The key findings from the consultation on ‘shares plus’ show:
· Financial redress and input into resource management decisions can be provided in other – and in some cases better – ways.
· Appointing directors and exercising shareholder voting rights can also be achieved in other ways with the Crown, which will remain the controlling shareholder.
· The Crown does not believe that providing iwi with special rights in making management decisions will work well and most submitters who considered the idea agreed.
· ‘Shares plus’ would create a potential conflict of interest within and between different iwi groups. And it would potentially weaken existing relationships between iwi groups and the SOEs.
Mr Key says the decisions announced today may lead to legal action from the Māori Council and others.
“That’s entirely a matter for them. From the Government’s perspective, it would not be unexpected.
“I’m confident the decisions we have outlined today will provide further certainty about our share offer programme. They also reaffirm our commitment to offer a minority shareholding in Mighty River Power during the second quarter of 2013, subject to market conditions.
“In terms of next steps, early in the new year Mighty River Power will prepare its half year financial statements for the six month period to 31 December 2012. These statements will be audited and will take about two months after balance date to complete.
“As the Government has previously said, before the offer period commences, New Zealanders will be able to register their interest in purchasing shares.
“Expressing interest is not a commitment to buy shares and no money will be sought, but it is one way in which New Zealanders will be put at the front of the queue for shares,” says Mr Key.
6 Comments
A.J. I doubt too many Central or Merchant Bankers have contemplated the concept of ethics as a ' what should I not do' code of practice.
In a veiled way the author places the emphasis on dynamics and logistics over the culpability of the individual.
Worth the read though..cheers!
In the case of hydro stations, all the water is a flow through, so the power stations will not actually use any water (unless there is leakage of course). With that in consideration will the Maori elite really be able to charge for the use of gravity, via the medium of water?
rc, not to be pedanticor picky but I think you mean "use up" rather than use any water , as clearly the water - and as you say gravity will be used to produce the electricity. We will all be pleased to know that both the water and the gravity will still be there after they have been used. At this stage there has been no mention by the PM regarding privatising gravity nor reconising specific rights to gravity. You do know that this privatisation will be a disaster for New Zealand, that the whole exercise is front loaded, one off gain to government, one off gain to offshore banking interests- bonuses all paid out in current year. The costs will be of course be born by us all over the long term. New Zealand will continue to be less and less competitive. Cheap Hydro power should be giving our manufacturers a competitive advantage to help make u for our high wages costs - driven by our high cost economy. But this opportunity is being lost in the competition for bonuses. So unless you are one of those getting a bonus- what is there in it for you?
Am interested in PDK's views if he's around. I understand electricity demand in NZ has actually softened over the last few years, which could arguably support a commercial case for selling the power companies. (Note that I am strongly against doing so) But if we are past peak oil, but wish to maintain anything like our current lifestyle; and if fossil fuels do cause global warming such that we wish to use alternatives to coal for electricity production; then is it reasonable to assume that power companies that produce most of their electricity with non fossil fuel means, will become more valuable? Not just in NZ, but on the planet generally? Or are there other alternatives, like solar, tidal, wind etc, that will likely quickly become dominant?
I believe the answer is almost self evident that hydro, large scale wind, and geo thermal will be in a very strong position within 5-10 years; but am keen to have someone who has looked at the details more than me, give his views.
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