National's "mixed ownership model" - the innocuous-sounding vehicle tasked with making the party's unpopular privatisation agenda more appetising - paradoxically may yet end up making the partial sell-offs of state corporations even less palatable to voters.
The model was supposed to take the political heat out of the issue by hocking off minority shareholdings in a clutch of major energy-related state-owned enterprises, rather than selling them holus-bolus.
This week the plan instead raised the temperature of the privatisation debate and, worse, pitted supposed allies against one another.
Too late, the warning bells should be ringing in the Beehive. The model may turn out to be one of those seductive ideas which seem to offer all the answers, but end up stumbling under the weight of their own contradictions and unforeseen consequences.
This week's very public stoush between the Maori Party and National over the retention of a longstanding Treaty clause is the first such sign of trouble ahead.
This problem should have been foreseen. Cabinet papers released under the Official Information Act last year indicate the tricky question of whether the catch-all Treaty protection clause in the 25-year-old State-Owned Enterprises Act should be re-inserted into replacement legislation which will cover the partially privatised companies looks to have been on Treasury officials' radar. But someone forgot to tell the Maori Party.
What the wrangling over the Treaty clause has exposed is the inherent flaw in the mixed ownership model.
Its seeming beauty when unveiled by the Prime Minister just over 12 months ago was that it offered something to appease everyone. The new state companies would benefit from greater commercial and market discipline through having private shareholders. The share floats would be safe havens for small investors. The sale proceeds would make a sizeable contribution to the capital spending budget of a severely cash-strapped Government. All this and the state would still retain control through its majority 51 per cent shareholding.
The latter factor - state control - is the most crucial in political terms. But it will prove to be a myth.
It is a myth that John Key and Bill English were naturally keen to perpetuate in the run-up to last November's election.
Ownership and control are not the same thing. Key, in particular, has confused the two, perhaps deliberately. Moreover, the rights of minority shareholders will have to be taken into account.
Above all, commercial imperatives will drive these entities to the exclusion of everything else.
These restructured companies - the electricity generators Mighty River Power, Meridian Energy and Genesis, and, the state coal company Solid Energy - will not be accountable to the Prime Minister or Minister of Finance. They will be expected to behave like any other privately listed company and be answerable to the stock exchange.
It might be argued traditional 100 per cent state-owned enterprises have been equally profit-driven and rarely, if ever, behave in anything but a corporate fashion.
The difference is that the latter are still potentially subject to ministerial direction and have been over such things as dividend policy and through the drawing up of their guiding statements of corporate intent. The SOEs are also obliged to be "socially responsible", although that has rarely been tested.
The dispute over the Treaty clause has Labour predicting the social responsibility provision will also not feature either when the exact working detail of the mixed ownership model is unveiled in conjunction with the float of Mighty River Power, the first candidate for partial sale.
Labour is probably correct. The Treasury has consistently and insistently warned that any trade-offs to Maori or mechanisms to maintain Crown control will depress the share price and thus reduce the receipts from the share floats.
An inadvertently released draft report setting out the terms for consultation with Maori is also instructive as to the Government's thinking.
It declares that ministers' powers with respect to the mixed ownership model "will not be as great" as they have under the SOE Act.
The intention was to move the restructured corporations into a framework that applies to listed companies and create a "greater commercial focus to their operations".
These statements, however, were exorcised from the report's final public version. Clearly, the Government does not want the public to know yet that these entities are going to be very different creatures from the standard SOE.
The Treasury's advice, meanwhile, notes that introducing other shareholders into a company "fundamentally changes" governance arrangements, be it in board appointments, voting rights or company planning.
The blueprint for the likely structure and corporate governance of these new companies is Air New Zealand, in which the Crown has a 74 per cent shareholding.
It was only as the result of pressure from the Auditor-General in 2003 that Air New Zealand was made subject to parliamentary scrutiny, though only in minimal form. The report covering the last such select committee review of the airline in 2009 had no matters to report and stretched to all of five lines.
It is conceivable National could seek to ensure tighter control of the new state companies through nominating directors and placing veto rights over appointments and introducing specific Kiwishare provisions, for example, to limit foreign ownership.
The public, however, is still under the mistaken impression that these companies will still very much be like SOEs, albeit with some private shareholders on board.
Key and English will have some explaining to do when the public discovers otherwise.
So apart from retaining the dividend flow, what will be the point in the Government maintaining ownership?
National's political opponents will see this model as proof of what they have long been arguing - that the partial privatisations are a halfway house to full sale and that was always National's intention. It will be a difficult charge for National to rebut.By John Armstrong Email John