Out of control

Ever had that out of control feeling?

Sometimes, you just can’t keep things under control in politics.

You know how it goes –  somehow Treasury documents get accidentally posted on websites; somehow the government’s majority ‘control’ over partially privatised state assets just isn’t what you thought it was going to be …

Importantly, the Government will keep at least 51% control of these five state-owned companies …”

(John Key, 14 September, 2011)

Now, doesn’t that sound reassuring?

But, what’s this … ?

Ministers’ powers … will not be as great as the powers they have under the SOE Act … This is part of the intent of the policy – to move the companies into a legislative and governance framework that will create a greater commercial focus to their operations.

(Deleted section of accidentally leaked Treasury draft on asset sales, reported in New Zealand Herald, 2 February, 2012)

Sounds a bit worrying – but maybe that’s the Herald just trying to be sensationalist. Better look closely at the full comment before we jump to any conclusions.

Here’s the full version of the leaked section:

Deleted section of Treasury Draft

Ministers will no longer be able to direct the companies to pay dividends“???

or to change the content of their main accountability document, the Statement of Corporate Intent“???

What ‘control’, then, does the 51% shareholding give the government?

In the lead up to the election, National made much of the 51% shareholding to be retained by the government. From early on, however, Treasury were sceptical of that objective and believed it was one of the ‘trade offs’ against the fiscal objectives.

Specifically in relation to that objective (Objective 6, below) a 4 March report from Treasury refers to “Government ‘control’“, with, significantly, the word ‘control’ in scare quotes.

4 March 2011 Treasury Advice on Mixed Ownership Model

And, in the relevant (undeleted, p. 11) part of the draft report that was accidentally posted, we have this ‘reassurance’ over the kind of control the government will still have left under the mixed-ownership model:

Responsibilities of Ministers

Ministers will have those powers “afforded to shareholders under the Companies Act 1993“.

Further, “Ministers will look to best commercial practice in how they administer those powers.


This is a necessary pre-requisite where the decisions of the Crown as majority shareholder could affect the property rights of minority shareholders

Now, remember that the deleted bit, as pointed out by the Herald and quoted in full above, said:

Ministers’ powers … will not be as great as the powers they have under the SOE Act …

That is, mention of the reduction in powers has been removed and, then, been replaced by the ‘positive’ assertion of their powers “under the Companies Act 1993“.

Ever had that feeling that the steering wheel is slipping out of your control?

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3 Responses to Out of control

  1. just saying says:

    Really like your stuff PG.
    I’m so e-lazy, is their a way to subscribe so I get an email when you have a new post?

    • Puddleglum says:

      Hi just saying,

      Thanks very much for the compliment! it’s great for the motivation.

      I’ll try to set up some sort of RSS feed widget (or some other form of automatic email) – I’m still a real amateur at the mechanics of blog sites but I’m sure there’ll be a pretty easy way to set something up.

      Apologies that there isn’t something already set up.

  2. Viva Voce says:

    Ditto – like your posts a lot and if you have email feed would like to subscribe. Especially liked your January piece on David Shearer and the politics of the rebuild of Christchurch – on the money!

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