NZ business backs state assets sale

Michael Barnett

At least 24,000 businesses support the contentious Mixed Ownership Bill allowing the sale of minority shareholdings in energy companies.

New Zealand Chamber of Commerce is the first to support the proposed bill, telling Parliament's finance and expenditure committee the sales will free up capital for the government and will give ordinary New Zealanders an opportunity to invest in productive assets.

Hundreds of submissions before the committee are negative towards the bill which, if passed, will allow the government to sell minority shareholdings in Genesis Power, Meridian Energy, Mighty River Power and Solid Energy.

The new legislation will ensure the Crown retains 51% of the voting rights in each of the companies and restrict individuals and entities to 10%.

“Some of those opposed to the bill believe the measures will dilute New Zealand’s ownership of key strategic assets. We strongly disagree,” Auckland Chamber of Commerce chief executive Michael Barnett told the committee.

Speaking on behalf of 24,000 New Zealand businesses, said the business community believes the bill will introduce a “strengthened ownership culture” of New Zealand assets.

“Because New Zealanders will have some direct ownership it will help keep those managing the assets a little more focused.”   

Mr Barnett advised the committee to ensure an open, consultative and transparent process is adopted in proposed scoping studies, given the considerable public interest in the bill.

The government should give details on what mechanism will be provided to ensure individual assets remain in New Zealand majority control and to outline restrictions to which will prevent companies from acquiring additional assets, including any from offshore.

“We strongly believe the companies involved must present good opportunities for investors.

"In order to sustain the attractiveness of the companies to present good opportunites for investors, a level of foreign investment, management and trading expertise may be needed,” he says.

Mr Barnett suggested the government consider the shared ownership model as a “pioneer” which could be extended to other central and local government owned assets.

“While there is a public perception to take into account, the reality is the government has a mandate to proceed with these measures.”

However, Ngati Tuwharetoa Trust says it may take the government to court if it proceeds with the legislation.

The trust owns Lake Taupo, its tributaries and the upper Waikato River, which are used by Mighty River Power, as well as Lake Rotoaira, utilised as a storage reservoir by the Genesis-owned Tongariro power scheme.

“We consider the Crown is obliged to identify and protect our rights and interests before this legislation proceeds any further,” the trust says.

While it had been prepared to allow the Crown to use these resources in “good faith”, this did not extent to foreign ownership.

“We do not see how the Crown can sell Genesis without first addressing with us its entitlement to use our lake. As the bill stands, the new companies have no obligations towards us,” the committee was told.

The submissions continue.

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20 Comments & Questions

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The New Zealand Chamber of Commerce supports the mixed ownership bill? I'm truly shocked. It would be news if they didn't.

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i disagree to assets sales john key aotaeroa is not for sale

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What you and many other don't understand is that they cannot take this stuff away overseas. We don't live in the 19th century anymore, the world has changed.

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But overseas owners can take their dividends out of the country & they do. This means less money circulating to local businesses, which hinder local employment.

Where shareholders are not local, they have less regard for the consequences of driving profits, as the wider effects of this are not felt in their local community. Most local businesses will understand this, which suggests to me the Auckland Chamber of Commerce are either ignorant of the effects this will have on small business and their clients or that the Chamber only advocates for big business (which are probably counting on lower power prices at the expense of domestic consumers) and predominantly overseas owned companies.

These overseas companies have too much power already (excuse the pun), without giving them more. Unfortunately, politicians are just puppets, with no teeth to challenge whats right for the wider good.

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"In order to sustain the attractiveness of the companies to present good opportunites for investors, a level of foreign investment, management and trading expertise may be needed,” he says.

This is complete nonsense. He's basically saying we don't have the competence to manage our own energy system. Try again.

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As we all know prior to the election National made it clear asset sales would happen if they were elected. If anyone was so against this why were they not protesting out loud with adverts etc prior to the election? Come on stop the sour grapes, as Anon | Thursday, May 10, 2012 - 9:44am said the assets remain here. It’s the same with Crafer Farms, whoever buys them cannot take the land away. And that’s another interesting point, 99% of the rhetoric around the Crafer sale is from townies. Farmers who do not have a vested interest, Fay etc. believe the sale to the Chinese is OK.

If you look at many of our “NZ” listed companies they have foreign share ownership, it does not mean those shareholders are raping and pillaging the company they invested in. Like NZ share holder they want a return on capital.
Grow up New Zealand we live in a global economy

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Those who are so concerned about selling assett shares: don't get mad - get even. Go and chuck a few boob in General Motors, Microsoft or McDonalds. That'll teach them !

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Sigh So you numbies dont want Mum and dad to have a chance to invest in good sound companies and save for their futures and take the heat off the Gumint(taxpayers) in the future. You would rather that Mum and Dad didnt have good solid companies but had to resort to the likes of Roddys Bridgecorp etc. As others have said a foreign shareholder cant pick up the assets and take them away. they will limited as to the number of shares they can hold. Also you must not want NZers to be able to invest in overseas markets in companies that other Gumints have partially privatised. Geez given the low level of understanding of markets savings and investment in NZ no wonder as a country we do so poorly. We are surrounded by morons and intellectual pygmies

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Perhaps any dividends will cover the extra price of electricity as power firms work to raise profits.

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The bigest increases in power prices took place under the last Labour government, who then took all the extra profits out in dividends. Just another form of taxation by Labour.

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Wow this is news!!

Why don't you phone up the National Parties biggest donors and ask if they support this truely stupid idea, mmm does Andrew Talley and co support asset sales?

Assets sales are the stupidest idea. They are great assets, pay great dividends and in a c**p equity market JK wants to sell them for low valuation so his buddies whom don't have much work on, have something to do. Its insane.

This is like the railways or Air NZ which JK knows alot about. Sell them cheap, let them run them into the ground and then buy them back at 5 times the sale price - great idea

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That was the Labour Party that sold the railways very cheap, then crought them back at considerably higher cost - as too the mixed ownership model of Air NZ.

Very convenient for Labour to forget that...

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As the Might River Power CEO stated
If it had been in mixed ownership in the last 3 years the $1B that went on upgrading infrastructure would have gone in Dividends to Shareholders
Another old telecom in the making.
We will have double digit increases in power for ever into the future and the piliging of the cash flow.

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The fund managers etc want this to go ahead
They are going to make a fortune in fees
Talk about as obivious as the nose on your face.

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With 50+% of the shareholding, plus the capacity, if it so wishes, to limit the level of profits via legislation (price regulation), mean that the Government will have no less control over the companies than it presently has.
Richard

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Government & politicians dont have the teeth to take these corporate owners on. Most MP's would sell their partners to maintain power; and have, so dont count of any legislation of this nature.

Its what you dont hear that is the problem, rather than what you hear..

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Solidarity you are wrong. It was the National party that sold NZR

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Everyone forgets that last years "good dividends" were only because Meridian sold some assets to Genesis and then paid it all back. Thats a one off. Other than that dividends have been pretty low.

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I love selling of assets. <3NATIONAL<3

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i hate selling of assets </3NATIONAL</3

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