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Adam Bennett

Adam is a political reporter for the New Zealand Herald.

Asset sales bill passes committee stage

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's partial assets sales bill passed the committee stage in Parliament this afternoon after being held up yesterday by Opposition delaying tactics and is set to become law early next week.

The Government had hoped to pass the bill by the end of this week but a flurry of amendments put up by Labour, the Greens and NZ First strung out the committee stage on yesterday and on Tuesday.

Having passed the committee stage, the bill will receive its third and final reading on Tuesday and will pass with the support of National's partners Act and United Future.

The Government's other partner the Maori Party opposes the legislation but voted with the Government on numerous procedural amendments which came up at the committee stage.

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 yesterday 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, 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.

An 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-$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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