Monday, February 13, 2012

Ticking the boxes on treaty sell off

Patronising. Condescending. At times nonsensical. State Owned Enterprise Minister Tony Ryall’s performance at a hui in Auckland last Friday to explain the Government’s sale of shares in the four stated owned energy companies was all of those things.
The Minister wasn’t interested in hearing arguments against the sale. He says the re-election of a John Key-led government in November gives National a mandate to go ahead.
What the government wants to know is what kind of treaty clause it can get away with.
When the Act creating State Owned Enterprises was written in the 1980s, pressure from Muriwhenua claimants led to the last minute insertion of section 9, which states that “nothing in this Act shall permit the Crown to act in a manner that is inconsistent with the principles of the Treaty of Waitangi”.
Using that section, the New Zealand Maori Council and a number of claimant groups went to court in what became known as the Lands Case.
The subsequent judgment by the Sir Robin Cooke-led Court of Appeal included guidance on what those principles were, and led to negotiations about how Maori interests could be protected.
A new section 27 was added to the SOE Act requiring memorials to be placed on the title of any Crown land passed over to the new SOEs.
The Waitangi Tribunal was given the power to order the Crown to buy back land it has passed over to SOEs and hand it to claimants.
The tribunal has never exerted that power.
Mr Ryall says the Government intends to retain section 27 memorials on land titles, but the SOES to be part-privatised (or move to a mixed ownership model, in National-speak) - Genesis Energy, Meridian Energy, Mighty River Power, Solid Energy and Air New Zealand – will come under the Public Finance Act rather than the SOE Act.
The government is asking Maori whether they want section 9 included in the new legislation.
Other options include a new treaty clause describing in a more specific way how the Crown will meet its obligations, or having no treaty clause at all.
Mr Ryall says the overwhelming feedback so far is for retention of section 9.
The discussion document also asks Maori to spell out what they believe their rights and interests are in the power companies.
Ngati Whatua negotiator Margaret Kawharu told Mr Ryall it was difficult for claimants to identify rights and interests without knowing what the Crown would do in future, and they feared that if they are unable to identify particular interests now, they would not be able to claim in future.
In their presentations to the various consultation hui, Mr Ryall and Finance Minister Bill English claimed the part privatisation is an act of sound economic management.
Mr Ryall raised the spectre of the United Kingdom, where the new Conservative-led government is looking to lay off up to 700,000 public servants, and to countries like Greece and Portugal which are struggling under mountains of debt they can’t pay off.
“We want to get our debt under control, because if it gets too big, people will lose their jobs in the public service,” Mr Ryall said.
“When a country’s debt gets out of control, you lose your sovereignty … We don’t want to be in that position so we have proposing this mixed ownership model where we sell down less than half these four energy companies, free up we think between $5 billion and $7 billion and use that to invest in schools and hospitals and other capital that we have over next few years.
“We also think it’s a big opportunity for New Zealand. There is a lot of money on term deposit in banks because people are worried about where they invest it. That is why we want to provide these opportunities for investors in mixed ownership companies.”
They’re not arguments that have convinced economically literate commentators.
The drop in the Government’s revenue, and the likelihood a significant percentage of profits will go overseas, means the government’s debt situation it likely to be worse over the medium to long term.
Mr Ryall insisted that because the Crown will retain 51 percent of the shares, it will continue to control the companies. No other shareholder will be allowed to own more than 10 percent, and which it was not written down in the supporting documents, Mr Ryall told the hui he believed between 85 and 90 percent of shares will remain in that hands of New Zealanders.
Sharemarket rules on minority shareholders could mean the Crown will end up with less than absolute control.
Ryall said the Government is looking to float the shares of Mighty River Power in the third quarter, “unless the world economy hits the wall”.
He ruled out setting aside any shares to use for treaty settlements, but iwi would be encouraged to buy shares.
Asked what he saw as the principles of the treaty, Mr Ryall replied: “I understand that to be about partnership through consultation, recognition of obligations of not only consultation but of actual interests are protected, there are a lot of the elements of that we could spend all day talking about.”
There was a sound of boxes being ticked.

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