Cunliffe David: Mixed Ownership Model Bill — In Committee 
Text is incorporated into the Bound Volume 
Cunliffe David: Mixed Ownership Model Bill — In Committee 
[Sitting date: 20 June 2012. Volume:681;Page:3181. Text is incorporated into the Bound Volume.] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 It is a pleasure to take a quick call on Part 2 of the Mixed Ownership Model Bill. For those who are watching the Committee stage of the debate is of course where Parliament wrestles with the detail and where we get down and debate the individual clauses. 
Right at the start of amended section 2 of the Public Finance Act in clause 14 we have the definition of what a mixed-ownership model company is—and of course the key word is “company”. We turn to new section 45P in clause 16 and it says: “In this Act mixed ownership model company means a company listed in Schedule 5.” They are not State-owned enterprises. This is the end of those companies being State-owned enterprises under the State-Owned Enterprises Act. Does that matter? It sure does because a State-owned enterprise is required to be a good corporate citizen; a company is not. A State-owned enterprise is specifically required to be a good employer; a normal company outside standard labour law is not. A State-owned enterprise has full-scale Treaty obligations; these companies do not except to the extent that the half owned by the taxpayer subsidises the risk for the private party that owns the other half. That is the risk. Of course they are not State-owned enterprises so they do not have the reserve power of the Crown to direct them should they be in the situation where some grave danger to the public interest exists.  
When we move down we see the 51 percent control provisions. New section 45R(1) in clause 16 says that nothing should result in the Crown holding less than 51 percent of the voting rights. That word “voting” is very important because as others have pointed out there would be nothing under that provision to stop less than 51 percent of the equity rights being held. We acknowledge that there has been some discussion—desperate discussion—between the Government and Mr Dunne who has a very small fig leaf to cover his betrayal of the electorate. It is the amendment I understand according to media reports of the words “voting rights” to the word “equity”. It is about time because there are several ways that the equity can be diluted. One of them is non-voting shares which would have got around new section 45R(1).  
The next which was confirmed by Mr John Palmer Chairman of Air New Zealand to the Commerce Committee when we did Air New Zealand’s review is that subsidiaries can be created and can be divested or sold by the parent without transgressing this section. So a subsidiary could be sold off without breaking this section. That means that the supposed protection here of the 51 percent majority control is not worth the paper it is written on and that means that the Government has not upheld its election promise to New Zealanders that it will retain majority ownership and control because it is passing a law where it can quietly shuffle subsidiaries off the balance sheet.  
Why would the Government do that? Well a problem the Government has got is that a private partner—the 49 percent shareholder—could insist on their rights to the board to carry out an investment in a highly profitable future investment— 
Hon Dr Nick Smith 
: This is the policy the member advocated. 
Hon DAVID CUNLIFFE 
: —giving the Government what we call the dilution problem Dr Smith—the dilution problem. The dilution problem is a new project that was highly profitable but which the Crown did not want to pursue because for example Mr English has a complete fetish about not spending any money. So he would not want to invest any capital off the Government’s balance sheet into even a highly profitable investment and the Government could be forced to and could be sued by the private party if it refused. That is why the Government is very concerned about having loose language here because it gives the Government one way of protecting itself from that dilution risk. 
New section 45S in clause 16 is the now famous provision about the 10 percent ownership cap. You know I was looking in this bill for some definition of “Kiwi mums and dads”. Was it going to be the case that if you had not had children you could not buy a share? There is no definition of “mums and dads” because that was always public relations spin. The Government and the people of New Zealand know that the New Zealand shares—