National on 51% ownership

The Mixed Ownership Model Bill was debated in parliament yesterday. National prominently promoted the fact that there would be “51 percent full Government ownership“.

Hon TONY RYALL (Minister for State Owned Enterprises):

It legislates 51 percent New Zealand Government control, full stop, for all time—51 percent full Government ownership for all time, full stop—and it puts a limit of 10 percent on any one shareholder. There will be 51 percent Government control, and 10 percent limit on any shareholder, and that is important, and that is what is being enshrined in this legislation.

Hon TONY RYALL (Minister for State Owned Enterprises):

This part of the Mixed Ownership Model Bill puts in the law a number of the very important features of the mixed-ownership model, particularly the 51 percent legislated guarantee that the Government will retain 51 percent of all shares in these State-owned enterprises, together with the 10 percent cap on any other shareholder.

Under this legislation, we are maintaining 51 percent New Zealand control, as a minimum owned by the Government, and a 10 percent cap on any other shareholder.

Hon TONY RYALL (Minister for State Owned Enterprises):

When the Prime Minister announced in January 2011 that we would have a 51 percent minimum shareholding for the Government and a 10 percent cap on any other shareholder…

TODD McCLAY (National—Rotorua):

Why is that important? It is because Part 2 of this piece of legislation says that it places limits on ownership of companies named in schedule 5. Those limits are 51 percent ownership held by the Crown. It is written into the piece of legislation. It cannot change.

I’m very pleased to see this emphasis, it’s something I think is very important.

But what about credit where it’s due?

Until yesterday, there was no provision for 51% ownership in the bill. National had originally proposed 51% ownership (in January 2011 as mentioned above). But when they introduced the MOM bill that had been changed to:

The Bill prohibits a shareholding Minister in a mixed ownership model company from disposing of any shares in the Minister’s name or permitting an issue of shares or securities (or a mixed ownership model company from issuing, acquiring, or redeeming its shares or securities) if doing so would result in the Crown holding less than 51% of the voting rights in the company…

This was reported on in Stuff:

Loophole allows sale of over 49pc

A loophole in the law covering partially privatised state assets will allow much more than 49 per cent of the value of the companies to be privatised, providing the extra shares do not carry voting rights.

The Government has pledged to retain 51 per cent of the four energy companies it has put on the block, starting with Mighty River Power later this year.

But a “minor policy decision” by ministers, revealed in a Cabinet paper released last week, shows that the 51 per cent limit, as well as the 10 per cent cap on individual shareholdings, will apply only to voting shares.

The Cabinet has agreed “the 10 per cent and 51 per cent restrictions should be calculated on the basis of voting rights rather than the total percentage of all securities held (including those with non-voting rights)”.

But this loophole has now been closed. Supplementary order paper 42 introduced yesterday changed this from 51% voting rights to 51% ownership, as blogged here.

This small but significant change was due to the instigation and insistence of United Future, to ensure their party campaign and Confidence & Supply commitments were met.

United Future made a commitment to keep National moderate, and have clearly done so here.