Selling Mighty River Power

The sale of a 49% shareholding in Mighty River Power has been put off until early next year. In the wake of the Waitangi Tribunal's decision and the threats of legal action against the government, that it entirely unsurprising.

When the decision was announced yesterday, there was an outpouring of venom from those far to the right of us on the political spectrum. John Key was accused of being spineless, pandering to "stone age savages" (NOT our words!) and worse.

Those who lashed out yesterday clearly did not listen to what the PM had to say yesterday. In the media release that accompanied his media conference he said this:

“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.

 Far from "caving in" to iwi, the Government has recognised that the "shares plus" suggestion floated by the Waitangi Tribunal is not a goer. That is a sensible conclusion that the Government will now communicate to iwi. The final bullet point above makes it clear that the Crown will not resile from any obligations it has, but those obligations rest with the Crown and not with Mighty River Power.

On that basis, a delay of the share float until early next year is the sensible and pragmatic approach. It would be pointless rolling out the float a couple of months either side of Christmas, so early next year it will be; still only halfway through the Key-led administration's second term.

The Dominion-Post's editorial yesterday said this:

The proposed partial sale of Mighty River, Meridian and Genesis Energy gives Maori another opportunity to test their claims in court. Neither side can be certain of the outcome.

In an ideal world the dispute would be resolved by negotiation between claimants and the Crown. The Government's lawyers have acknowledged Maori have particular rights when it comes to inland waters. The dispute is over the nature and extent of those rights.

Given that decades of talking have resulted in little, if any, progress Mr Key can be excused for feeling he has no choice but to press ahead if he is to deepen capital markets and boost the Government's books.

However, whatever Maori may think of selling state assets, the sales programme does present an opportunity to Maori. It is the opportunity to gain a greater say in how waters with which they have a particular connection are used and, possibly, a financial stake in the power companies that use the waters. That opportunity will lapse if the Government abandons the sales.

Before putting the matter before the courts the prime minister and Maori should try again to settle by negotiation a vexed issue that is almost as old as European settlement in New Zealand. Only lawyers will win if the matter goes to court. No one will win if the Government uses Parliament to strip Maori of rights they are found by the courts to hold. 

We agree wholeheartedly with that sentiment, especially the final paragraph. Legal action is costly and time-consuming, and should (if you'll pardon the legal pun) be the court of last resort. A negotiated agreement between the Crown and iwi would be a far better solution, especially if it comes at no cost to Mighty River Power.

We're glad we refrained from posting on this yesterday, A night's sleep, rudely interrupted as it was by an early morning wake-up call has given us some perspective. For the MRP share float to succeed, it is far better for it to be briefly delayed and then progress in an orderly fashion than for the Government to press on against a background of uncertainty and threats of legal action. 

Whatever the timing however, we will be applying for a shareholding. It's our way of putting our money where our mouth is, and making a tangible investment in New Zealand's future. 


Footnote: We accept that people have strong views on this issue. However strong views can be expressed without abuse and racist overtones. We will be watching comments to this post more closely than usual.