Resounding opposition to asset sales at select committee

The part-sale of energy companies will increase the weighting of the sector in the market. Photo / Simon Baker

A bill paving the way to partially sell the country's state-owned energy companies met with resounding opposition at a select committee hearing in Auckland today.

Parliament's Finance and Expenditure Committee has received some 1400 submissions on the Mixed Ownership Model Bill, which would enable the sale of up to 49 per cent shares in Mighty River, Genesis Power, and Meridian Energy, and coal company Solid Energy.

About 30 submissions were made to the committee in Auckland today, all of which opposed the bill.

A One News Colmar Brunton Poll earlier this month found 61 per cent of New Zealanders were opposed with 30 per cent in favour, while 9 per cent were unsure.

Business consultant Teresa Moore, who recently completed a thesis on the sustainability of solar energy in New Zealand, told the committee today she had seen many businesses go for the "quick shot" of obtaining funds through shareholders.

This had invariably resulted in the companies suddenly having new agendas and new management, with profit becoming their main motivation.

Ms Moore presented a case study of Wellington's local electricity network, which was sold four times in the past 16 years while its value had quadrupled since 1990.

"The main objective of a succession of private owners has been to maximise profits for their shareholders.

"As a result, electricity line charges have risen steeply, and all the profits made from running the electricity network have flowed out of Wellington, mostly to overseas owners."

Manurewa local board member Toa Greening, who appeared before the committee in a personal capacity, said selling the shares would remove the companies from the SOE Act, which "ensures that profit, good employer and social responsibility remains in the forefront of those companies' operations".

"The new mixed ownership company will, over time, change from service, continuity, social responsibility and growth of generation capacity to one of only maximising return," he said.

The companies would also not be able to be held up to public scrutiny through the Ombudsmen Act and Official Information Act should the sales eventuate.

"How will the Government ensure that the companies do not make financially disastrous decisions like performing market manipulations and predatory behaviour?"

Mr Toa also asked how the Government would ensure that the mixed ownership companies did not revert to minimal safety practices in an effort to reduce costs and increase profits.

"Pike River mine performed the minimal safety requirements ... . Solid Energy goes well above the safety requirements because, as an SOE, it has a focus on the safety aspects of being a good employer and not merely the profit line," he said.

Grey Power spokesman Allen Davies, who worked in the electricity supply industry for 37 years, said the sale would benefit large users of electricity, who would get discounts, and electricity suppliers rather than residential electricity users.

"Grey Power concludes that privatisation is primarily for the purpose of this wealth transfer. This purpose has been obscured by the extensive rhetoric, biased analysis, and sheer moneyed interests that have been able to persuade politicians - National and Labour alike - to promote privatisation," he said.

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