The proposal shies away from tough questions like whether TVNZ, which was changed from an SOE in the Television New Zealand Act 2003 to a Crown entity, should be changed back and sold or whether SOEs like Transpower, which form the backbone of New Zealand's economic infrastructure, should become Crown entities to make privatisation less likely. The Government has adopted a no-surprises approach with the electorate and awaits a mandate.
The mixed-ownership model will, however, be different to how SOEs operate if implemented. These SOEs will be floated and have to meet listing requirements. It is unlikely ministers will retain all powers of appointment to and dismissal from the board, and there will not be the balancing of successful business versus social responsibility under Section 4 of the State-Owned Enterprises Act.
A lot of public money is at stake and it's important we get this right. There are clear opportunities for business. Iwi and others want to buy shares, so this issue is also about assessing the viability of purchasing them.
There is no way you can keep these shares out of foreign hands. What's important is how the policy will affect New Zealand economically now and in the future, and how it can fully use its balance sheet and assets.
The SOE model was never supposed to be permanent, as the architects of the model will admit freely, and the returns from some SOEs have been poor.
To be fair, it is also difficult to get maximum returns from SOEs when you are required to balance being profitable as a commercial business with being socially responsible. Political concerns have an impact - SOEs have shareholding ministers who can formally direct the SOE in writing or who can just call members of the board they have appointed (and can fire) and indicate their preferences as to what they should decide.
I have advised plenty of SOEs over the last 20 years. I have also advised plenty of business owners finding it difficult to compete with SOEs who dominate their market because of their size and the regulation governing the industry.
Some of New Zealand's experiences from past sales haven't been great. Treasury's most recent advice to Government on the mixed-ownership model says that "New Zealand's experience with Telecom arguably represents a case study where the appropriate regulatory environment was not in place before privatisation". Telecom is now being forced to operationally separate to lessen its dominance in the market.
But our experience of government monopolies in administrative decision-making - like ACC, IRD, transport or education - isn't great, either. Some officials are fantastic to deal with while others are unresponsive, arrogant, inefficient and lacking in innovation. And the service is poor because they have no competition.
State ownership appears to be justified where there is both a natural monopoly and a strategic reason to retain control, such as not wanting private owners holding the country to ransom. But regardless of whether they are public or private, these are businesses that need some form of regulation so they remain efficient and effective.
What's needed is an assessment of the evidence, away from the politics. Instead of allowing the debate to be dominated by contending political ideologies, each with their simplifying slogans, we should be asking what's best for the country.
The partial sale of state assets is a high-risk issue. But we shouldn't shy away from it just because we get caught up in political rhetoric. Instead, we should review the proposal in the light of past experience - the lessons learned and the arguments on both sides.
- Mai Chen is a partner at Chen Palmer public and employment law specialists and adjunct professor at the University of Auckland Business School.
