Prebble on Mercury

Richard Prebble asks some hard questions regarding Mercury Energy:

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.

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.

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.

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.

The howls of outrage can now begin …