Adam Bennett

Adam is a political reporter for the New Zealand Herald.

Sweeteners on offer as asset sales inch closer

The Mixed Ownership Model Bill enabling the partial sale of state assets has prompted passionate opposition, including a hikoi this year.  Photo / APN
The Mixed Ownership Model Bill enabling the partial sale of state assets has prompted passionate opposition, including a hikoi this year. Photo / APN

The Government is offering sweeteners to keep the investing public and coalition partner United Future on side as its partial assets sales bill approaches its final hurdle today.

The committee stage of the Mixed Ownership Model Bill was debated in Parliament last night and it is set to get its third reading and be passed either today or early next week.

The controversial legislation removes power companies Mighty River, Genesis and Meridian, and coal miner Solid Energy from the constraints of the State Owned Enterprises Act, allowing the Government to sell up to 49 per cent of them on the sharemarket.

Labour, the Greens, New Zealand First and Mana continued their bitter opposition to the legislation and the Government's line that 85 to 90 per cent of the companies' shares will remain in local ownership.

Labour's SOE spokesman Clayton Cosgrove pointed out that Contact Energy had 225,000 Kiwi shareholders when it was initially privatised in 1999 but now had just 78,000.

But with Mighty River shares to be offered to the public and fund managers some time from September onwards, Prime Minister John Key and his Finance Minister, Bill English, have stoked expectations that so-called "mum and dad" investors will be offered a loyalty scheme to encourage them to hold on to their shares.

A recent example was the Queensland Rail float in 2010 where investors were given the chance to buy further shares at a discounted price if they held them for a set period.

Green Party co-leader Russel Norman said such schemes were a transfer of wealth from all taxpayers to those wealthy enough to buy the shares. As such they were probably unlawful and, in the case of the $5 billion to $7 billion mixed-ownership model programme, could cost the taxpayer up to $400 million.

While Mr Key yesterday dismissed that figure, he conceded a loyalty scheme would reduce returns from the sales.

"We may or may not have a loyalty bonus; we will see. But the Government, all the way through, has said it will not be maximising its return. If we were to do that, we would follow the Labour model of selling 100 per cent and selling it to foreigners."

Mr Cosgrove said a loyalty scheme would be "a scam".

"It's designed simply to hold Kiwis in until the day after the election. That's when the loyalty scheme will expire, thereafter they'll be able to sell them to foreign investors."

Meanwhile, in a late amendment to the legislation, SOE Minister Tony Ryall removed a provision that would have allowed the Government to sell its stake in the companies below 51 per cent as long as it retained a majority of shares with voting rights.

It is understood the change was made after United Future leader Peter Dunne objected on the grounds it breached the wording of his support agreement with National.

Mr English yesterday said MPs and ministers, their staff and spouses were likely to be barred from buying shares in the partially privatised companies.

"When we're a bit closer to the time we will make those rules public. Everyone should expect they'll be very strict rules that anyone who's involved in the transaction won't be allowed to buy shares."

- NZ Herald

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