KEY POINTS:
I see some suggestions that Mercury Energy is privatised. An understandable mistake. No one watching Helen Clark on TV attacking the company would realise that her Government via Mighty River Power is the owner.
Helen Clark as a minister must know that social welfare is approached by 32,000
households a year where residents' power is either disconnected or about to be.
As MP for Mt Albert she would be aware that Mercury Energy, on average, cuts off 150 customers a week. As MP for the next electorate of Auckland Central, I knew exactly what the Auckland Electric Power Board's policy was. If you missed a payment you got a disconnection notice.
Many a holidaymaker returned home to find the power was off, including, I believe, a former employee who was a minister at the time, Sir Robert Muldoon.
The State Owned Enterprises Act empowers the Government to order the SOE not to cut off the power. The media might ask why Cabinet is not considering this.
We know the answer.
The law requires the Government to compensate the SOE for the cost of any directive. Cabinet is willing to pass a regulation putting the cost on consumers who do pay their bills, but would not think of putting the cost on to its budget.
Critics are suggesting it is not possible for an SOE to meet its statutory requirement to be socially responsible with the requirement to earn good profits.
I think this is the wrong issue. A better question is why are publicly owned companies less responsible than private?
I think the reason is that a private company could not afford the bad headlines Mercury has received around the world. Mighty River's share price will not fall because it does not have any.
As minister I found state businesses were prepared to take risks that no private company would take because management knew that their owner had bottomless pockets and could, if necessary, just change the law.
Helen Clark has also not mentioned in her attacks on Mercury Energy that Cabinet has been demanding dividends above what the directors recommend. When your owner is screwing you for every cent, no wonder the company is hard on non-payers.
The directors should have asked questions about the company's disconnection policy. They would have discovered that Mercury had ignored advice to change its disconnection policy.
An examination of the board reveals an ex-archbishop and directors who appear to be there for politics, gender and race, rather than for their commercial experience. Helen Clark might apologise to the Muliaga family for her political appointments.
It appears the failure of the SOEs is not just that they are less socially responsible than the private companies. They are also less commercially successful. A study by Treasury found the private power companies are out-performing the Government-owned.
Just saying the private sector is better does not explain what has been going wrong. When they began, the SOEs were very successful, outperforming the stock exchange average. We have lost something.
I think it is so important that I have written my latest book, Out of the Red, about it.
I think I have identified why SOEs succeed. It was the culture they created. We did not appoint cronies but the best business people in the country. Men like the late Ross Sayers in Railways and Sir Ron Trotter in Telecoms. These leaders transformed the culture of the SOEs from passive to proactive.
There is something wrong in the culture of Mercury Energy. The company's initial response was to deny any responsibility. Refusal to accept responsibility is always a sign of a poor culture. Part of a successful culture is fronting up to mistakes and taking responsibility.
If Helen Clark won't admit as owner she has some responsibility why should anyone else admit to any? Indeed, why would anyone successful in business be an SOE director when Helen Clark publicly snubbed the representatives of Mercury Energy outside the Muliaga home?
They say there are no bad dogs, just bad owners. It is not the SOE model that has failed, just its owner.
* Richard Prebble was the first SOE Minister in a Labour government and later leader of the Act party.
