The ongoing assets sales debate presents interesting questions for New Zealand’s future and is a debate we should all be interested in. To keep you up to date with the process, this post presents some of the key points of the proposed legislation and where it stands today.
The National Government’s Mixed Ownership Model (MOM) Bill passed its first reading in early March. The Bill outlines plans to partially sell four state-owned energy companies over the next 3-5 years. The State Owned Enterprises included in the Bill are: Genesis Power Limited, Meridian Energy Limited, Mighty River Power Limited and Solid Energy New Zealand Limited.
Between them, these companies account for over 65% of New Zealand’s electricity generation, and about 85% of coal production. The Government also has plans to further reduce the Crown’s shareholding in Air New Zealand; however this has not been included in the MOM Bill as the Government is awaiting further commercial advice.
The opportunity to have your say on this legislation has passed as the final deadline for submissions was the 16th of April. The select committee will present their findings to Parliament on the 16th of July.
As it stands, the Bill stipulates that the Crown will be required to maintain majority control of the companies, retaining at least 51% of the shareholdings. It also states that no non-Crown entity can own more than 10% of the holdings in each of the companies. The Government initially stated that there would be provisions to prioritise New Zealand investors; however, there is no mechanism for this. The Bill makes no reference to how the shares will be offered.
Controversy was sparked in February when early versions of the Bill indicated the Government had planned to remove Section 9 from the State Owned Enterprises Act 1986, removing the Crown’s obligation to act in accordance with the principles of the Treaty of Waitangi. The final version of the Bill submitted for first reading does make specific reference to Section 9 and states that the status quo will be preserved for the MOM companies.
The sale of these companies is expected to raise $5 -7 billion, which the Government has indicated will be directed into a newly established ‘Future Investment Fund’ to be invested in new schools, hospitals, roads and rail, and be used to control debt.