Faafoi Kris: Mixed Ownership Model Bill — In Committee 
Text is incorporated into the Bound Volume 
Faafoi Kris: Mixed Ownership Model Bill — In Committee 
[Sitting date: 20 June 2012. Volume:681;Page:3179. Text is incorporated into the Bound Volume.] 
KRIS FAAFOI (Labour—Mana) 
: 
 I will take a call on Part 2 of the Mixed Ownership Model Bill. This bill is part of what the Government calls the rolling maul of economic initiatives. But today we have had the ANZ bank say that our economy is in the danger zone. I just want to use another line out of that famous early 1980s movie  
Top Gun 
 in terms of concerns in this bill that we have: “This is … a target-rich environment” Part 2. It is a target-rich environment. 
Hon Member 
: Like a fish in a barrel. 
KRIS FAAFOI 
: It is. But I do want to look at one clause in particular and that is section 45S “10% limit on holdings by persons other than the Crown” in clause 16. I will read it for the benefit of those who might be listening: “(1) No person (other than the Crown) may have a relevant interest in securities that confer more than 10% of the voting rights of a mixed ownership model company (the 10 percent limit).” This is the passing effort of the National Party to try to ensure that some—not all—of the 49 percent of the shares that it plans to sell in this share float stay in New Zealand. 
I do need to—as the members across the Chamber have done ad nauseam during this debate—go back to some history. I will go back to 26 January 2011 when John Key gave a speech. There was a press release that came out with it and a point in that press release said: “New Zealand investors would have to be at the front of the queue for shareholdings and the Government would have to be confident of widespread and substantial New Zealand share ownership …”. These are the words out of that press release from John Key on 26 January 2011. As the press releases that come out of the ninth floor do on the odd occasion it came with a Q and A. There were some other points that were made: “Will New Zealanders own the shares that are issued?”. Mr Key in this press release said: “New Zealand investors will be given first priority in any issues. There is substantial capacity between the KiwiSaver funds other managed funds …” blah blah blah. The next question and answer are: “Will foreigners be able to buy shares? Majority government ownership means that control will always rest in New Zealand hands.” The press release says it will always rest in New Zealand hands. “If companies were listed on the NZX then private New Zealand owners would be able to sell and foreign investors could buy. However we expect that most New Zealand investors would be long term holders. This has been the experience of previous floats such as Contact Energy. It is therefore likely that foreign ownership would be limited.” 
Nowhere in this bill—nowhere in clause 16 of this bill—does it limit the size of foreign ownership. It might limit the size of a parcel of shares that you can hold to 10 percent but nowhere in this bill—and I am looking at clause 16—does it put into effect any of the words that Mr John Key the Prime Minister of this country said in his press release on 26 January 2011.  
So I want to have a look at a Supplementary Order Paper that has been put forward by our State-owned assets spokesperson my colleague in front of me Mr Clayton Cosgrove. It is Supplementary Order Paper 49 which would change section 45P(2) to— 
Hon Simon Bridges 
: This is just silly. 
KRIS FAAFOI 
: Mr Bridges might want to listen because it would change the amount of ownership from 10 percent to 1 percent. I would urge members right around the Chamber to back Supplementary Order Paper 49 from Clayton Cosgrove to ensure that as many of these shares as possible—and let me make it clear that we do not want these shares sold at all—stay in New Zealand hands. I would expect the member for Tauranga to try to meet the needs of his constituents to make sure that these shares stay in New Zealanders’ hands. 
There is another Supplementary Order Paper also in my name. 
Darien Fenton 
: An excellent Supplementary Order Paper. 
KRIS FAAFOI 
: An excellent Supplementary Order Paper—thank you very much Darien Fenton. It is Supplementary Order Paper 51 which would also look to amend clause 16 by inserting section 45Y which is titled “Kiwis at front of queue”. My Supplementary Order Paper 51 would restrict the sale of the shares in these State-owned enterprises to people who hold a current New Zealand passport. I am trying to put into effect in this bill what the Prime Minister promised but has not actually delivered in this bill. As we heard before the Prime Minister of this country said that the majority of the shares that will be floated would stay in New Zealand hands but has not effected this in the legislation that is before us in Part 2. If we are looking at those who currently hold New Zealand passports I can tell those at home that that would mean that 3225000 New Zealanders with passports at the moment would be eligible and only eligible to buy our shares in this share float. If you put that together with Mr Cosgrove’s Supplementary Order Paper and the fact that the maximum amount of shareholding you can have is 1 percent we would not concentrate a lot of the value of State-owned enterprises either overseas or with one individual holding too much power. I think in tangent those Supplementary Order Papers and a number of other Supplementary Order Papers that have been put forward from this side of the Chamber to Part 2 would be very wise— 
Andrew Little 
: Very sensible. 
KRIS FAAFOI 
: —very sensible for this Committee to adopt. I also want to look at section 45T in clause 16. This is very interesting. It covers—[ 
Interruption 
] Thank you I was just going to get on to it; I saw you giving me the evils. Section 45T talks about the penalties of exceeding the 10 percent limit which is currently in this bill around section 45S. Section 45T(1)(a) (b) and (c) outlines the penalties if we did happen to go over the 10 percent limit. It gives those who transgress in this way 60 days I believe to make good but that would also give them 60 days to make a profit off those shares then hock them off and get back down to that 10 percent limit. In terms of section 45T we have some problems there and also with section 45T(1)(c). It says that for the person who contravenes that section they cannot “exercise or control voting rights that exceed the 10% limit.” That is actually common sense and we would support that. We do not look at making any amendment there. I believe there is an amendment to section 45T in the name of my colleague Clare Curran—45T? I will continue while my colleague tracks that down but I do believe there is a Supplementary Order Paper under Clare Curran’s name to make sure there is a penalty for anyone who exceeds that 10 percent limit. Clare Curran’s Supplementary Order Paper 50 would institute a financial penalty for breaching the ownership limit applied to the mixed-ownership model which at the moment stands at 10 percent. 
I did want to say that despite the musings from the Prime Minister a year and a half ago that he would protect assets from foreign ownership he has in no way—in no way—enacted this in the legislation before us. I think that is sad. I would ask this Committee that it adopt the Supplementary Order Papers from me from the Hon Clayton Cosgrove and from Clare Curran to make sure that if these assets are sold as many of them as possible can stay in New Zealand in the ownership of Kiwis—I do not want to use “mums and dads”—and the ownership of New Zealanders and that we do not let the limit of 10 percent stand as it is in section 45S at the moment. We need to make sure that the value is spread right around those Kiwis who want to own their shares—they do not want to; they prefer they would not be sold. If they are going to be sold then maybe we should look at my Supplementary Order Paper and restrict the sale of these shares to current holders of New Zealand passports. I think it is a common-sense measure to bring in such a Supplementary Order Paper and I would hope as I look around the Chamber this evening that members at least on this side of the Chamber would support my Supplementary Order Paper. Perhaps there may be a few members across the Chamber who can see that this is a common-sense measure too.