Ryall Tony: Mixed Ownership Model Bill — In Committee 
Text is incorporated into the Bound Volume 
Ryall Tony: Mixed Ownership Model Bill — In Committee 
[Sitting date: 20 June 2012. Volume:681;Page:3157. Text is incorporated into the Bound Volume.] 
Hon TONY RYALL (Minister for State Owned Enterprises) 
: 
 It is very interesting that the previous speaker Denise Roche talked about the burden that this bill the Mixed Ownership Model Bill will have for future generations. The fact is that increased debt is a burden for future generations. If you are worried about stealing from your grandchildren burdening them with debt that they do not need is the biggest part of it. 
Some of the more informed members of the Committee have asked a couple of questions about the Treaty clause. I will be very clear with the member: the current Treaty clause in the State-Owned Enterprises Act does not apply to the State-owned enterprises; it applies to the Crown in right of New Zealand. The obligations rest with the Crown. That exact obligation is being transferred in the new legislation and those obligations remain the same. That is the advice that the Finance and Expenditure Committee got from the officials during the select committee consideration. The legislation also recognises—and it was the advice that the committee got—that the memorial regime that currently exists which gives Maori specific rights on land that may or may not be transferred remains as well. 
It is very important to know that there is a penalties regime around those who breach this legislation. Those who breach the 10 percent cap risk losing the voting rights. A Supplementary Order Paper means that they will also lose their dividends from those shares in excess and there is a criminal offence in breaching those securities rules. Right now—and members opposite may not be aware of this but many New Zealanders will be—a company or a holder of investments or shares in a publicly listed company must declare their holding once it is at 5 percent and then they must declare every 1 percent increase in their holding thereafter. If they fail to do that then they are subject to quite significant penalties in legislation which include not only a criminal breach but also a significant sanction. The significant sanction is that they will stand to have shares confiscated. In fact in the last decade there was a high-profile private company that lost I think 6 million shares in an investment company as a result apparently of failing to disclose step increases in its shareholdings. So there are quite significant penalties: losing voting rights; losing the dividends of the excess shares which is part of the Supplementary Order Paper that we tabled on Monday; the criminal sanctions that apply to this; and the very severe sanction that shares could be confiscated if people fail to honour their obligations under those securities expectations. Those are very very significant penalties and I think any investor of any size in the New Zealand stock market is well aware of those and acts to make sure they respect that in order to avoid confiscation. 
This is I think a very good approach to a State-owned enterprise sales programme. I think it replicates what we saw in the Shipley Government where we sold shares in the Auckland International Airport to ordinary New Zealanders. It was called a great example of popular capitalism by the Treasurer at the time. We also had a public float for the sale of shares in Government Property Services and significant thousands of New Zealands took shares in that. When it came to the Contact Energy share float the Government helped to create I think 120000 first-time shareholders. 
The big issue here is that Labour members opposite do not think everyday people are good enough to own shares or that they can be trusted. They do not think that the electrician from west Auckland who has worked hard and is trying to save for his or her retirement should own shares. They think those people are a bit uppity that they might want to own shares and that they cannot be trusted. They have called those people a part of a “small elite”. The nurse who has a bit of money saved from her wages that she wants to put into an infrastructural investment in these times is part of a small elite and she cannot be trusted either. She cannot be trusted because the minute she gets an offer of 10c more than she paid for each share apparently she is going to sell them. 
Chris Auchinvole 
: Just like that. 
Hon TONY RYALL 
: Just like that. Ten cents. The fact is that a lot of everyday people want the opportunity to own these shares and the opportunity to participate because this gives them a good savings opportunity. Many members will remember what it was like when the finance companies collapsed under the Labour Government’s mismanagement. Many many people came along and put their money into Blue Chip New Zealand Five Star Consumer Finance Capital + Merchant Finance and Hanover Finance and they lost it. The previous Government did very little about those situations. It let the securities legislation and prudential management fall into disrepair and that is what happened. The Hon Simon Power had to basically run the process for the previous Labour Government to tidy it up. 
A lot of people know they need to be cautious about investment. But as people add to KiwiSaver and superannuation funds and as iwi accumulate financial resources—and there is over $100 billion on term deposit in New Zealand today—they are looking for opportunities to invest in infrastructure and to invest in yield. That is what part of the Government’s mixed-ownership model programme is about. It is about creating investment opportunities for New Zealanders not only as individuals but also as families iwi and people with KiwiSaver and superannuation funds. Right now people’s KiwiSaver funds have probably got more invested in energy companies in overseas jurisdictions than they have in New Zealand. [ 
Interruption 
] “The Super Fund sure has.” says Mr Foss. We want to create those opportunities for New Zealanders to have a wider range of investments. We are backing that with the mixed-ownership model programme. 
We also trust New Zealanders to make these investment decisions. We do not think people are uppity because they want to own shares. I remember when we made tens of thousands of people first-time shareholders in the late 1990s. People took great pride in their share certificates. They took great pride in their share certificates— 
Hon Clayton Cosgrove 
: On the mantelpiece beside the picture of the Queen. 
Hon TONY RYALL 
: —and they put them on their mantelpieces. I am sure many of them did because it was actually the first time they were able to buy shares. Only 10 percent of New Zealanders own shares directly and that contrasts with I think about 30 percent in Australia. There is a need for New Zealanders to have this opportunity. But Labour members do not trust them. They say that the minute someone comes along and offers them 1c more they are going to sell them—they are going to sell them straight away. The fact is that Port of Tauranga proves the opposite—55 percent local government; 45 percent on the share market. What we are finding there is that New Zealanders are buying out— 
Andrew Little 
: What a shocking example. 
Hon TONY RYALL 
: “What a shocking example.” says Mr Andrew Little. 
Andrew Little 
: Killing workers more than any other port in the country. What a terrible example the Minister’s come up with. 
Hon TONY RYALL 
: How pathetic! Sad sad sad little man! He is accusing the port of killing people. That is sad. It does not even warrant—[ 
Interruption 
] So sad! This is about New Zealanders investing in infrastructure and having those opportunities. That stands in complete contrast to when Labour was last in office. Dr Nick Smith made the comment about the mine on the West Coast. Labour Ministers apparently approved the sale of 49 percent of Spring Creek Mine to foreign interests—foreign interests. They approved the sale apparently to foreign interests. 
Hon Member 
: What were the caveats? 
Hon TONY RYALL 
: What were the caveats? Well I do not know the caveats. One Minister approved it from the perspective of the Overseas Investment Office. Labour was happy to sell a portion of an energy company to foreigners at that time but now that it is in Opposition it has changed its mind. Labour members do not think energy companies should be sold to foreigners; they think there should be restrictions on foreigners. They have changed their minds. Labour sold $10 billion of public assets to the highest foreign bidders and to Fay Richwhite which it did not tell anyone about. When it sold the public assets to the highest foreign bidders Fay Richwhite and the elite Labour did not want to tell New Zealanders. But this Prime Minister has been upfront from January 2011. It was the centrepiece of the election campaign. Labour got the lowest result it has ever had since 1915 apparently and National got the highest vote there has been under MMP. That is a mandate but we take it very seriously and that is the reason why we are working hard to secure a better future for New Zealanders.