Sunday, April 15, 2012

Submission on Mixed Ownership Model Bill

Below is a copy of my submission on the Mixed Ownership Model Bill to the Finance and Expenditure select committee.


I oppose the intent of this bill because the partial privatisation of the energy companies that are the subject of the bill will result in a loss of wealth and control for New Zealanders collectively. 

I reccommend that this bill not proceed.

General comments

While I am extremely concerned about the loss of wealth that will result from the partial privatisation of these companies and the flawed economic reasoning that underlies this bill, I wish to focus my submission on the loss of control, and in particular the loss of control that will affect the protection of Māori rights that are held under the Treaty of Waitangi.

The Treaty of Waitangi reaffirms the right of Māori communities to exercise tino rangatiratanga over their freshwater and geothermal resources. This includes rights, and corresponding obligations, to protect, preserve, control, regulate, use, and develop those resources. Māori have not willingly sold either their tino rangatiratanga or control over freshwater and geothermal resources.

There must not be a partial privatisation of any power generating State Owned Enterprises (SOEs), or the passing of any new legislation for such a purpose until an appropriate protection mechanism for Māori rights under the Treaty has been negotiated and agreed with Māori.

The partial sale of the power generating SOEs will make the prospect of securing section 27B resumption of any of the assets of the power generating companies highly unlikely. Māori will continue to have no adequate redress for their freshwater and geothermal claims and the pool of assets and range of potential remedies practically available to Māori claimants will be reduced.

Simply transporting the words of section 9 of the State Owned Enterprises Act 1987 into the new legislation will not provide effective protection of Māori rights.  Treaty obligations must continue to apply to the companies themselves, no matter who the shareholders are, if the Crown is to sell down its shareholding and its ability to exercise control over these companies in a way that is consistent with Treaty principles.

In order to effectively protect Māori rights and interests, any alternative formulation of the Crown's obligations would need to recognise the following:

a.  All available land or interests in land which are used or have been used for or in connection with the generation or transmission of hydro-electricity or geothermal electricity and are memorialised under section 27B of the SOE Act 1986 should be returned to Māori.

b.  Māori require compensation for past use of freshwater and geothermal resources, compensation for loss or rights or the ability to profit from economic use of those freshwater and geothermal resources (for example power production) and payment for future use of the proprietary interest in those freshwater and geothermal resources.

c.  Amendments need to be made to the Resource Management Act 1991 and any other relevant legislation required to provide for future Māori rangatiratanga and control over freshwater and geothermal resources.

Power generating SOEs should be retained in Crown hands, and should not be sold/privatised until such time as Māori claims are resolved or Māori otherwise agree and are satisfied with the protections offered by the Crown.

I would also like to register my objection to the process of consultation that has been undertaken on the issue of the protection of Treaty of Waitangi rights.  In short, it did not look like good faith consultation – it was unnecessarily rushed with consultation hui over only a week giving no time to discuss these important issues with whanau.  It is unacceptable that there were no hui in places like Taranaki or Te Tau Ihu.  I do not  think that it met the standards for consultation that are set out in the UN Declaration on the Rights of Indigenous Peoples, which the Government claims to endorse.

Specific comments

As noted above, I am opposed to the overall intent of this bill and recommend that it does not proceed.  However, should the committee determine that the bill ought to proceed, I reccomend that clause 45Q be amended for the reasons set out below.

Clause 45Q
I oppose this clause because it waters down the protection of Treaty rights that currently exists in relation to these energy companies by virtue of s 9 of the State Owned Enterprises Act 1987.  Currently, the Crown has full ownership and control of these companies and a Treaty principles provision that refers only to the Crown may be sufficient protection under the existing arrangements.  

However, in selling down its shareholding, the Government is giving up some of its control to third parties who have no Treaty obligations.  In that situation it will clearly be more difficult for the Government to fulfill its own obligations.  That transfer of shares and control should therefore be completed in a way that is consistent with the principles of the Treaty.  Otherwise, the Government could keep selling down its shareholding in the future and the Treaty principles provision would become virtually worthless. 

The Government has argued that third parties cannot be subject to obligations under the Treaty of Waitangi because those third parties are not party to the Treaty.  Yet, nobody is arguing that other shareholders are a party to the Treaty, rather the argument is that the Crown has obligations to act consistently with its Treaty obligations. If it is going to divest itself of responsibilities (such as giving up full control of State Owned Assets), then it needs to do so in a way that ensures rights under the Treaty are protected.  If this means putting some constraints on third-party rights, then so be it.  It does this already by requiring that memorials be placed on the certificates of title of State Owned Enterprises properties so that any future buyer is aware that such properties may be compulsorily purchased if they are required to be used to settle Treaty claims.  This does not make anybody else a party to the Treaty of Waitangi.  It does not bind non-Crown groups to Treaty provisions.  Third-parties’ rights would be affected by the legislation, not because they have somehow become parties to the Treaty.

If it was impossible for non-Crown parties to be required to act consistently with Treaty principles, why does the Government think it is necessary to insert a clause that stipulates “for the avoidance of doubt”, the Treaty provision in the new legislation “does not apply to persons other than the Crown”?  If it is not possible to bind “non-Crown groups” there could be no doubt about the application of sub-clause 45Q(1).

I recommend that sub-clause 45Q(2) be omitted and clause 45Q be amended to read:

“Nothing in this Part shall permit the Crown, Genesis Power Limited, Meridian Energy Limited, Mighty River Power Limited, or Solid Energy New Zealand Limited to act in a manner that is inconsistent with the principles of the Treaty of Waitangi (Te Tiriti o Waitangi).”


For the reasons set out above, I recommend that this bill not proceed.

In the alternative, should the committee determine that this bill ought to proceed, I recommend that clause 45Q be amended as described above.