State Owned Enterprise IPO announcement – some good, some bad
This afternoon, we’ve seen the announcement from Prime Minister John Key on what the Government intends to do on the sale of Mighty River Power after the Waitangi Tribunal requested the Government delay the IPO of SOEs so they can be given time to make a final decision regarding Maori Water Rights. They also mentioned the possibility of giving iwi “Shares Plus”, effectively meaning that these iwi would have the right to be involved with the decision making process when it comes to certain issues.
The Government response came in three parts. Firstly, John Key reminded everyone of the Government’s success rate in responding to Treaty Claims and their policy of ending these claims by 2015. I’m not going to comment on that, because it’s not the most relevant part of the announcement, and to be honest, I haven’t been watching the Government’s track record on Treaty Claims particularly closely.
The next part was on “Shares Plus”. It was announced that the Government would not be pursuing the “Shares Plus” plan. This is good for a number of reasons, the most important of which is you cannot have a company, whether partially or fully private, required to take more note of certain investors and not others. If you want more power within a company, you should buy more shares and receive more voting rights as such. There’s also the point that the Government will not be restricted from righting Treaty Claims involving water with these companies in partial private ownership, so there is no issue to be resolved here.
The final part of the announcement was the disappointing part. The Government will be delaying the sale of Mighty River Power to early next year. This is disappointing for a number of reasons. For me, the more disappointing part is the worrying precedent it sets. If the Government will change their mind simply because a non-binding tribunal says they should, this opens a huge can of worms. Sure, there’s no requirement for the Government to do this in the future, but there’s now an opening for claimants to suggest the Government is breaching their own precedent, which could effect public perception of the Government. It would be an unreasonable change in that perception, but one that’s likely to happen regardless. It’s also worrying that someone can say “Do what I say or else I’ll take you to court” and they get their way – particularly when there is no legal justification for their claim.
Posted on September 3, 2012, in New Zealand Politics and tagged Asset Sales, John Key, Maori Council, Mighty River Power, mixed ownership model, Shares Plus, Waitangi Tribunal, water rights. Bookmark the permalink. 4 Comments.