Woods Megan: Mixed Ownership Model Bill — In Committee 
Text is incorporated into the Bound Volume 
Woods Megan: Mixed Ownership Model Bill — In Committee 
[Sitting date: 20 June 2012. Volume:681;Page:3170. Text is incorporated into the Bound Volume.] 
Dr MEGAN WOODS (Labour—Wigram) 
: 
 I am very happy to take a call on the Mixed Ownership Model Bill. Specifically I want to talk to clause 16 and address some of the rhetoric we have heard in this Chamber over the last couple of days and the sanctimony we have been hearing—that it is OK to sell assets because someone else has done it before. I do not even want to get started about where that logic could take us. It pretty much leaves it wide open. Anybody could do anything because everything has been done before. 
What we are hearing is the sanctimony from members opposite that somehow what they are doing is offering protection and that our assets will not all be sold. But the bit that I love the most—the kernel I love the most—in this sanctimony that has been flowing from the other side is: “It is OK for us to sell them because we told people first.” Somehow it is OK because they went out and told people. Well do you know what? Going out and telling someone you are going to do them over and then doing it does not make it any better. Selling assets is wrong always has been always will be and it does not matter what you tell them. 
Maggie Barry 
: You’ve got amnesia. 
Dr MEGAN WOODS 
: I have no amnesia “Queen Margaret”. I will tell you about growing up on the streets of Sydenham in the 1980s and the fact that asset sales are very much part of my political whakapapa. 
Let us have a look at the protections—the so-called protections—that have been put in place under clause 16. What we have is a Government that is running scared. What it has said is that it is going to protect these assets because we are going to retain 51 percent ownership of them and it has put these protections around them. 
Let us think about the technicalities of these protections. It is 51 percent of voting shares. This offers no protection against asset stripping. What will still be allowed is the fact that the assets of the companies can be sold. If members opposite want to traverse the history of asset sales in this country I am more than happy to oblige and have a discussion about what National did in the 1990s have a look at what asset stripping did to some of this nation’s assets and talk about the shame that members opposite should feel. They should hardly sit there with the sanctimony and the crowing that we are hearing. Let us have a look at this much-lauded clause 16 about the restriction on the reduction of the Crown’s holdings. 
Hon Gerry Brownlee 
: Is the member going to buy them back? No. 
Dr MEGAN WOODS 
: We do not want to sell them. That is what we are doing here. What we have is a clause that prohibits a shareholding Minister from disposing of shares in the Minister’s name or permitting the issue or allotment of shares or securities in a mixed-ownership model company if doing so would result in the Crown owning less than 51 percent. But ladies and gentlemen this does nothing to protect the very assets that those companies hold. 
Once a mixed-ownership model company has had its shares sold to private investors the assets of that company are very much at risk. Pressure can be put on the company to sell the assets to meet the obligation to return a profit. The assets that these companies own are not guaranteed from being flogged off. It is disingenuous of members opposite to sit here and say that New Zealanders are going to retain a majority shareholding in these companies because it is simply not true. The dams can be sold. The assets of all of our power companies that are being put on the block by members opposite are very much at risk because the bill that this Government has brought to this House offers absolutely no protection against asset stripping. 
We know bitterly from history that members opposite belong to a party that will do nothing to protect against asset stripping. They have shown it once and they will show it again. When Treasury officials came to the Finance and Expenditure Committee to talk about this they confirmed to the members of that select committee that there was no mechanism in this bill to prevent asset stripping. Likewise Solid Energy one of the companies on the block confirmed that under this legislation before the House privatisation would allow it to sell subsidiaries under partial privatisation. 
So I have an amendment that addresses this. I have an amendment to provide that companies cannot sell off individual assets like dams and wind farms to private companies in order to asset strip or defeat the purpose of the 51 percent ownership clause. Instead a mixed-ownership model company would be required to publicly notify that it intends to sell an asset and then must wait for the sale to be approved by the Governor-General by Order in Council. If members opposite really do not want to make a raid on the assets of this country they will vote in favour of this amendment. There is no reason not to—not unless they are lining up to absolutely wholesale flog off the assets. 
Hon Gerry Brownlee 
: Say something new. 
Dr MEGAN WOODS 
: OK Mr Brownlee I will say something new. I am going to talk about Tranz Rail. I am going to talk about Tranz Rail and “back to the future”. I am going to look at the shameless asset stripping that happened when National was last in Government in 1993 when the Bolger Government sold Tranz Rail far too cheaply to a consortium of Wisconsin Central Transportation Berkshire Partners and Fay Richwhite. This was privatised— 
Hon Gerry Brownlee 
: Talk about the bill. 
Dr MEGAN WOODS 
: I am talking about the bill. I am talking about an amendment that will prevent that from happening again. If you do not want to flog off the assets you should vote for it Mr Brownlee. 
The CHAIRPERSON (Lindsay Tisch) 
: Order! 
Dr MEGAN WOODS 
: Sorry; they should vote for it. So what happened? The assets of Tranz Rail were sold off because there was no mechanism to prevent it just as there is no mechanism in this present bill to prevent the sale of assets belonging to the 51 percent - owned company. There is no mechanism in here. It has been confirmed by Treasury officials at the select committee that that mechanism is not present in the bill. The amendment I am putting forward would put such a mechanism in place and would protect the very assets that have been built up by generations of New Zealanders—the dams that New Zealanders have toiled away at and did not build just for members opposite to flog off to the lowest bidder. 
The reason why the pressure will be put on these companies to sell these assets is to return a profit. These are companies that are now going to be covered off by the Companies Act not the State-Owned Enterprises Act. They are compelled to operate with one purpose and that is to return a profit to the shareholders. So there need to be these mechanisms to protect against that in this bill and that is what this amendment is giving.  
What this bill is doing is nothing short of looting. It is a raid on the assets of hard-working New Zealanders who have built these up over generations. We have seen what members opposite and the party opposite did in the dark days of asset sales. We have seen the state that Tranz Rail was in. We have seen the investment that needed to be put in to build it back up. There is nothing that they will do to stop the asset stripping that will happen there.  
The profits of Tranz Rail dropped dramatically from 1999 to 2000. What had to happen when the Clark Labour Government came to bring it back was there had to be a huge infrastructural investment because there was no ability for Tranz Rail to invest in that company. So if members opposite really do believe in a 51 percent stake for New Zealanders if members opposite really do believe that and it is more than empty rhetoric and they are not just planning an ideological raid on our assets they will vote for this amendment and they will put in place the mechanism that will stop the asset stripping. They will put in place the mechanism that will allow New Zealanders to at the very least retain a 51 percent shareholding. You should not be selling them at all but if you are going to sell them then you should at the very least protect against that.