State enterprises are listed in Schedules 1 and 2 of the State-Owned Enterprises Act 1986. They include key strategic assets such as the State electricity generation and transmission companies, New Zealand Post (including Kiwibank), Landcorp (including its extensive holding of farmland) and Solid Energy. Crown entity companies are listed in Schedule 2 of the Crown Entities Act 2004. They include further key strategic assets such as Radio New Zealand, Television New Zealand, and the Crown research institutes.

This Bill will entrench Schedules 1 and 2 of the State-Owned Enterprises Act 1986 and Schedule 2 of the Crown Entities Act 2004 (“the relevant schedules”), meaning that any proposal to partly or wholly privatise a State enterprise or Crown entity company would require support from 75% of all members of the House of Representatives, or alternatively, from a majority of voters in a referendum.

As the law stands, changes to the relevant schedules may be made by ordinary enactment and to a limited extent in relation to Crown entity companies by Order in Council. Once a State enterprise or Crown entity company has been omitted from one of the relevant schedules, a shareholding Minister may sell, or otherwise dispose of, or allot or issue, shares in the enterprise or company. Future parliaments would thereby be limited in their ability to reverse such changes. This means the relevant schedules have a constitutional dimension, and as such, the privatisation of publicly-owned strategic assets should proceed only with a broad political mandate. This Bill would require the Government to seek that mandate in a manner which is more direct and comprehensive than merely proposing privatisation prior to a general election.

The Bill would extend similar protection to the Crown’s majority shareholding in a further strategic asset, Air New Zealand.

Clause by clause analysis

Clause 1 is the Title clause.

Clause 2 is the commencement clause and provides for the Bill to come into force on the day after the date on which it receives the Royal assent.

Clause 3 sets out the purpose of the Bill, which is to ensure that New Zealand’s strategic assets are retained in public ownership unless the proposed sale or disposal of ownership or control of these assets is approved by a 75% majority of all members of the House of Representatives or a majority of the valid votes cast in a poll of both the general and Māori electoral districts.

Part 1
Amendments to State-Owned Enterprises Act 1986

Clause 4 states that this Part amends the State-Owned Enterprises Act 1986.

Clause 5 inserts a new section 10B into the principal Act which places a restriction on the amendment of Schedules 1 and 2 of the Act. This has the effect that a State enterprise cannot be removed from these schedules as a preliminary step to sale or other disposal without approval by a 75% majority of all members of the House of Representatives or a majority of the valid votes cast in a poll of both the general and Māori electoral districts.

Clause 6 amends section 11 of the principal Act and provides that State enterprise redeemable preference shares cannot be sold or otherwise disposed of or allotted or issued to a person other than a shareholding Minister without approval by a 75% majority of all members of the House of Representatives or a majority of the valid votes cast in a poll of both the general and Māori electoral districts.

Clause 7 amends section 12 of the principal Act and provides that State enterprise equity bonds cannot be sold or otherwise disposed of or allotted or issued to a person other than a shareholding Minister without approval by a 75% majority of all members of the House of Representatives or a majority of the valid votes cast in a poll of both the general and Māori electoral districts.

Part 2
Amendments to Crown Entities Act 2004

Clause 8 states that this Part amends the Crown Entities Act 2004.

Clause 9 amends section 9 of the principal Act. Subsection (1)(f) is made subject to new section 9A which is inserted into the Act by clause 10.

Clause 10 inserts a new section 9A into the principal Act which places a restriction on the amendment of Schedule 2 of the Act. This has the effect that a Crown entity company cannot be removed from this schedule as a preliminary step to sale or other disposal without approval by a 75% majority of all members of the House of Representatives or a majority of the valid votes cast in a poll of both the general and Māori electoral districts.

Clause 11 amends section 80 of the principal Act and provides that Crown entity company shares or redeemable preference shares cannot be sold or otherwise disposed of or allotted or issued to a person other than a shareholding Minister without approval by a 75% majority of all members of the House of Representatives or a majority of the valid votes cast in a poll of both the general and Māori electoral districts.

Part 3
Protection of Crown's shareholding in Air New Zealand Limited

Clause 12 restricts the sale or disposal of the Crown's shareholding in Air New Zealand Limited by requiring approval of a 75% majority of all members of the House of Representatives or a majority of the valid votes cast in a poll of both the general and Māori electoral districts.

Hon Clayton Cosgrove

State-Owned Enterprises and Crown Entities (Protecting New Zealand’s Strategic Assets) Amendment Bill

Member's Bill

35—1

The Parliament of New Zealand enacts as follows:

1 Title

This Act is the State-Owned Enterprises and Crown Entities (Protecting New Zealand’s Strategic Assets) Amendment Act 2012.

2 Commencement

This Act comes into force on the day after the date on which it receives the Royal assent.

3 Purpose

The purpose of this Act is to ensure that New Zealand’s strategic assets are retained in public ownership unless the proposed sale or disposal of ownership or control of these assets is approved by a 75% majority of all members of the House of Representatives or a majority of the valid votes cast in a poll of both the general and Māori electoral districts.

Part 1
Amendments to State-Owned Enterprises Act 1986

4 Principal Act

This Part amends the State-Owned Enterprises Act 1986 (the principal Act).

5 New section 10B inserted (Restriction on amendment of Schedules 1 and 2)

After section 10A, insert:
“10B Restriction on amendment of Schedules 1 and 2

No State enterprise may be omitted from Schedule 1 or Schedule 2 of this Act, unless a proposal to do so, including a proposal contained in a clause in a Bill—

“(a) is agreed to or passed by a 75% majority of all members of the House of Representatives; or

“(b) has been carried by a majority of the valid votes cast at a poll of the electors of the general and Māori electoral districts.”

6 Section 11 amended (Ministers to hold all shares in new State enterprises)

In section 11, after subsection (2), insert:
- “(3) However, despite subsection (2), redeemable preference shares may not be sold or otherwise disposed of or allotted or issued to a person other than a shareholding Minister, unless a proposal to do so, including a proposal contained in a clause in a Bill,—
  
  “(a) is agreed to or passed by a 75% majority of all members of the House of Representatives; or
  
  “(b) has been carried by a majority of the valid votes cast at a poll of the electors of the general and Māori electoral districts.”

7 Section 12 amended (State enterprise equity bonds)

In section 12(1)(f), replace “by resolution of the House of Representatives.” with:
- “if a proposal to do so, including a proposal contained in a clause in a Bill,—
  
  “(a) is agreed to or passed by a 75% majority of all members of the House of Representatives; or
  
  “(b) has been carried by a majority of the valid votes cast at a poll of the electors of the general and Māori electoral districts.”

Part 2
Amendments to Crown Entities Act 2004

8 Principal Act

This Part amends the Crown Entities Act 2004 (the principal Act).

9 Section 9 amended (Power to amend Schedules 1 and 2)

In section 9(1)(f), before “omit” insert “subject to section 9A,”.

10 New section 9A inserted (Restriction on amendment of Schedule 2)

After section 9, insert:
“9A Restriction on amendment of Schedule 2

No Crown entity company may be omitted from Schedule 2, unless a proposal to do so, including a proposal contained in a clause in a Bill,—

“(a) is agreed to or passed by a 75% majority of all members of the House of Representatives; or

“(b) has been carried by a majority of the valid votes cast at a poll of the electors of the general and Māori electoral districts.”

11 Section 80 amended (Restrictions relating to shares in Crown entity companies)

In section 80, after subsection (3), insert:
- “(4) However, despite subsections (2) and (3), no sale or other disposal or allotment or allocation or transfer of ownership of shares or redeemable preference shares to a person other than a shareholding Minister may proceed, unless a proposal to do so, including a proposal contained in a clause in a Bill,—
  
  “(a) is agreed to or passed by a 75% majority of all members of the House of Representatives; or
  
  “(b) has been carried by a majority of the valid votes cast at a poll of the electors of the general and Māori electoral districts.”

Part 3
Protection of Crown's shareholding in Air New Zealand Limited

12 Restriction on sale or disposal of Crown’s shareholding in Air New Zealand Limited

Despite any other enactment or rule of law, no sale or other disposal of ownership or control of the Crown’s shareholding in Air New Zealand Limited may proceed unless a proposal to do so, including a proposal contained in a clause in a Bill,—
- (a) is agreed to or passed by a 75% majority of all members of the House of Representatives; or
- (b) has been carried by a majority of the valid votes cast at a poll of the electors of the general and Māori electoral districts.

State-Owned Enterprises and Crown Entities (Protecting New Zealand’s Strategic Assets) Amendment Bill