Supreme Court decision opens way for privatisations
By Pattrick Smellie
Feb. 27 (BusinessDesk) - The government will be racing the clock to try and sell up to 49 percent of state-owned electricity company MightyRiverPower now that the Supreme Court has dismissed attempts by Maori claimants to settle Treaty of Waitangi claims to freshwater rights first.
The unanimous decision of the five judge full bench of the Supreme Court clears the last legal hurdle to the MRP sale, which the government had hoped would be concluded before last Christmas.
However, whether it can meet its own timetable and get the MRP share float done ahead of the May 16 Budget remains to be seen. If delayed until after that date, MRP would have to restate its most recent six monthly accounts as they must be no older than 135 days to meet US securities regulations.
The involvement of US-based investment houses in the float is seen as important to ensuring it is well-supported, although no private shareholder will be allowed to hold more than 10 percent of MRP, while the government will retain a 51 percent controlling stake.
The sale may raise in the order of $1.5 billion and is a lynchpin of the government's economic strategy, despite attracting strong public disapproval. A petition to force a non-binding citizens' referendum is close to being lodged at Parliament, although there is no obligation to hold such a poll before the sale has occurred.
The Supreme Court gave Maori claimants a small bone by rejecting findings last year in the High Court that the Cabinet decision to sell a stake in MRP could not be judicially reviewed.
The High Court did have that power, Chief Justice Dame Sian Elias told a packed courtroom across the street from the parliamentary complex, where politicians of all stripes were waiting to hear the decision.
However, the court unanimously dismissed the appeal's fundamental premise that partially privatising a power company using water for hydro and geothermal power generation would "materially impair" the government's capacity to offer redress for Treaty breaches relating to freshwater rights.
"We are prepared to accept that privatisation may limit the scope to provide some forms of redress which are currently at least theoretically possible," said Elias. "But whether that amounts to 'material impairment', regard must be had to a) the assurances given by the Crown, b) the extent to which such options are substantially in prospect, c) the capacity of the Crown to provide equivalent and meaningful redress, and d) the proven willingness and ability of the Crown to provide such redress."
The court also found the urgent round of consultation undertaken by the government in the latter part of last year was adequate.
New Zealand Maori Council lawyer Donna Hall conceded outside the court the decision would allow asset sales to proceed, but important principles relating to appropriate consultation and redress had been confirmed.
Labour Party leader David Shearer said the government should cancel the sales anyway, given the depth of public opposition.
“Regardless of the Supreme Court decision, there is still a great deal of uncertainty around this plan," he said in a statement. "Compensation may have to be paid to iwi, the concern around Tiwai Point hangs over the electricity sector, Solid Energy has collapsed, electricity demand is predicted to remain flat so selling our energy companies at the bottom of the market is just foolish."