The $500,000 carrot to keep Doug Heffernan at the helm of
Mighty River Power until the company's partial privatisation is
done and dusted is a reminder of how the Government's asset
sales programme just keeps on throwing up curly questions for
That Mighty River Power was picked as the first candidate for
a minority share float is tribute to Dr Heffernan, who has
been chief executive of the state-owned electricity generator
since it was formed in 1998.
On balance, the company's board was probably justified in
taking a precautionary view and offering a half-million
dollar incentive to entice Dr Heffernan to stay until
December next year.
But not everyone will agree with that decision. Once
performance payments and KiwiSaver contributions are
included, Dr Heffernan's package last year was already close
to topping $1.5 million - more than three times the size of
the prime minister's salary and allowances and nearly five
times what Bill English enjoys in remuneration as one of Dr
Heffernan's shareholding ministers.
Dr Heffernan, of course, is not the only high-flyer enjoying
the fruits of privatisation.
According to the Treasury's annual report, around $6 million
was paid to various consultants in the year to last July to
implement the mixed ownership model and ready the float of up
to 49% of Mighty River Power.
The Treasury had actually budgeted around $20 million for
that work. With the sale delayed, the department has simply
shifted that appropriation into the following financial year.
John Key has declined to comment on Dr Heffernan's bonus - as
has Labour leader David Shearer.
But there is someone else who could be a potential
beneficiary of the generosity shown to Dr Heffernan - Winston
The hefty size of the bonus payment offers a fresh line of
attack in Mr Peters' long-running campaign against
However, the real beauty of the current asset sales programme
for the New Zealand First leader is that the policy's
unpopularity threatens to cut even deeper in some quarters
because of its new Maori dimension.
Mr Peters has long attacked what he calls the Treaty "gravy
train". With the Maori Council and some iwi seeking redress
in the courts over ownership of water rights, the Treaty
vehicle is now seemingly hitched to the privatisation model.
The saving grace for National is that Maoridom is split.
While Mr Peters can continue to single out the business elite
for feathering their own nest through the sell-off of state
assets, he cannot level the same charge at the Maori elite
with such ease, given the Iwi Leaders Group has eschewed
Still, Mr Peters' excursion into the race-based politics of
privatisation - he last month advised all New Zealanders to
pretend to be Maori - puts him one up on Labour and the
Greens, whose target audiences will not let them enter such
All this is added reason why it is essential for National
that the Crown emerges as the victor from next month's
hearing in the High Court on the Maori Council's application
to injunct the part sale of Mighty River Power until the
Crown has implemented an agreed mechanism to protect Maori
cultural and proprietary rights in freshwater and geothermal
Giving the Maori Council a bloody nose would go down well in
some National quarters. It would spike Mr Peters' attempt to
drain away support from National.
While the share float might remain unpopular, victory would
be a massive psychological fillip for the Government, which
has had a torrid time of late.
Paradoxically, judgement in the Government's favour might
also be good news for the Maori Party.
Beehive sources say the Maori Council's stance on water
rights has removed National's ability to be flexible to the
wishes of its support partner.
While defeat for the Maori Council would - funds willing -
see it go to the Court of Appeal and, if necessary, the
Supreme Court, a Crown victory in the High Court would
breathe new life not only into the asset sales policy, but
also underline National's right and capacity to govern.
By the same token, defeat for the Crown in the High Court
does not bear thinking about. You can only delay something
for so long. A ruling against the Government might well push
the privatisation programme into National's next term and
thus effectively into the never-never. That would be a
massive morale-crusher for the National caucus and wider
The Government cannot rule out an outbreak of judicial
activism on the bench. It has consequently invested
considerable time and effort into getting all its legal ducks
in a row.
The most critical element has been its attempt to nullify the
Waitangi Tribunal's advocacy of the "shares-plus" concept,
which would recognise that Maori do have commercial water
rights and that must be reflected in Maori being given an
enhanced role in the governance and management of that
resource before any change in ownership of the hydro
The Government has sought to display good faith by consulting
with Maori and stressing it had an open mind on the merits of
Those claims have been treated with derision by Maori, who
rightly regarded the consultation exercise as a sham and the
Government as having had a pre-determined view.
The court may well take a similarly dim view. What may save
the Crown's blushes are its assurances that it will meet its
Treaty obligations and discussion can take place on
appropriate forms of recognition of water rights and redress
- but only after the partial sale of Mighty River Power has
It is possible that the High Court determines that there be a
compromise that would see the Maori Council ending up getting
much of what they are seeking in the aftermath of the sale.
That would pose difficulties for National in selling such a
compromise to its more conservative supporters.
But it would save the privatisation programme.
The odds on the privatisation programme surviving must be
around at least 60:40. Probably even higher.
This week's initial High Court sitting was limited to setting
a late November date for a substantive hearing. But should
the court have been looking for precedent, it did not have to
look very far.
Across the road at Parliament was a same-day function marking
the 20th anniversary of the Sealord fishing deal.
As Radio Waatea noted, this was effectively the first
shares-plus Treaty settlement.
Not only that. It was a National government which paid Maori
$150 million to buy a half share in New Zealand's largest
fishing company after the Waitangi Tribunal's Muriwhenua
fisheries report found that Maori fishing rights should be
regarded as commercial following the introduction of the
fish-catch quota system in the 1980s.
The parallels are pretty obvious. And enough to make Mr Key
and National break out in a very cold sweat.
John Armstrong is The New Zealand
Herald's political corespondent.