NZ business backs state assets sale

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.