It looks like the Nats’ attempt to pull a swindle on the meaning of “51% ownership” has been averted. For those who haven’t been following the story, the Nats have, of course, promised to retain 51% government ownership of the state-owned assets they are partially flogging off. But back in April Vernon Small alerted us to an attempt to pervert the meaning of 51%…
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)”.
The wording in the Mixed Ownership Model Bill, which has had its first reading in Parliament, would ensure control of the companies remains with the Government.
But it would not prevent the companies – with shareholding ministers’ approval – issuing or selling non-voting shares, diluting the taxpayers’ slice of the dividends and profits the companies generate.
As I wrote at the time, this wasn’t a “loophole”, it was a simple lie, as the Nats had clearly promised to retain 51% of income (not just “voting rights”). Now, however, I’m pleased to report that the Nats have backed off from this attempted swindle. Vernon Small again:
Government U-turn on SOE sale cap
The Government has backed down on a move that would have allowed it to sell more than 49 per cent of partially privatised state assets, providing the extra shares did not carry voting rights.
Fairfax Media highlighted the loophole in April and it is understood that sparked a backlash from United Future leader Peter Dunne. It is understood the Government made a U-turn after Dunne dug in his toes, arguing the wording in the Mixed Ownership Model Bill would breach his party’s support deal with National.
Last night SOE Minister Tony Ryall moved the amendment to the Bill, which changed the requirement on the Government from retaining 51 per cent of the shares with voting rights to 51 per cent of all shares.
This is excellent news. Full credit to Vernon Small for his excellent reporting of the issue, and Peter Dunne for making a stand. United Future’s Dunedin North candidate Pete George says he alerted Dunne to the issue, and has some more background on UF’s involvement here.
Peter Dunne could, of course, do so much more. He could vote against the legislation to flog off our assets, and kill the move dead. The overwhelming majority of Kiwis are against the sales. There’s “growing frustration” in Dunne’s own electorate at his support for the sales. The overwhelming majority of submissions to the select committee were opposed, and the Nats have terminated the process early to force this unpopular measure through. If they are successful, if the assets do get sold off, it will be because Dunne let it happen. Hey Peter – why not be a hero instead?
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