The Government will press ahead with its assets sale plan despite gathering economic storm clouds which could drive down the proceeds the Government gains, Prime Minister John Key said yesterday.

The Government's partial asset sales or "mixed ownership model" legislation passed its second reading yesterday as protesters gathered outside Parliament and the Opposition warned National that the unpopular policy would cost it the next election.

While the Reserve Bank yesterday warned New Zealand's economic outlook had weakened because of political and economic stresses in Europe, Mr Key said the Government wasn't concerned that the difficult current economic conditions might reduce the proceeds netted by the sale of three state-owned power companies and coal company Solid Energy.

"In terms of the prices we might achieve through the mixed ownership model, they're not always directly co-related to the overall feeling in the economy," Mr Key said.


But with the legislation coming back from select committee this week with an amendment that meant the Government could back out of the plan if required, "we've got the option to stop the process if we don't think it will achieve a good result for Kiwis but our intention at this point is to go ahead".

However, there was no chance of delaying the sale of Mighty River and the other companies while a petition to force the referendum was held. He said National won the election with the biggest result for a party in the history of MMP and Labour had its lowest result. He said the asset sales was the main issue of last year's election.

Mr Key also said he favoured some kind of shareholder loyalty programme when shares in the SOEs are floated to encourage New Zealand investors to retain them.

Before the bill was read about 120 people gathered outside Parliament to oppose it.

Their focus was on Peter Dunne, the MP whose vote could either carry or defeat the legislation.

Bearing a puppet likeness of Mr Dunne, James and Emily Blinco from Mr Dunne's Ohariu electorate said it was important to send a clear message to their MP, "the swing voter". The protesters were joined by NZ First MPs Tracey Martin, Richard Prosser, Brendan Horan and Andrew Williams and Green MPs Metiria Turei, Gareth Hughes and Steffan Browning.

Green Party co-leader Russel Norman said it was important for the people to get the opportunity to give their voice on whether the Government should proceed with asset sales.

"When you look at the opinion polls New Zealanders clearly don't agree with the privatisation programme," he said.


As the bill was receiving its second reading, NZ First leader Winston Peters told National MPs they would remember the debate at 7.30pm on election night 2014.

"Our simple message to the National MPs is don't trash the ministerial homes, don't dent the [limousines], because soon they'll be out of them, out of the job, and John Key will be sunning himself in Hawaii."

- Additional reporting: APNZ