Tuesday, July 10, 2012


What will the government do if the Waitangi Tribunal finds that iwi have a legitimate claim to water and geothermal rights used by soon-to-be-privatised SOEs? Buy back shares to compensate them:

The Government could buy back shares in the state-owned power companies to settle Treaty claims.

That is understood to be one option on the table as it faces a challenge from Maori over its asset sales programme.

Quite apart form it being the wrong way to go about things (its unclear if iwi want shares as redress, and even if they do, the proper way of doing it is to halt all sales until it can be negotiated, rather than trying to unilaterally impose an outcome in advance), this is pure madness. This implied promise to buy will cause an increase in the price, and the taxpayer will end up paying far more than we had to if we dealt with it before selling. The economics of the scheme are dubious to begin with, but this makes them flat-out insane.

But then, its been clear for a while that the government is intent on selling, and bugger the economics. They want to see that profitable energy oligopoly in the hands of their donors and cronies, no matter how bad a deal it is for the taxpayer. And if a post-hoc Treaty "settlement" means they have to buy back part of it at an inflated price to give to iwi? Well, that's just more government money into the pockets of those cronies.