Clayton Cosgrove
Spokesperson for SOEs

5 March 2012

Asset sale promises a con

As Labour has predicted all along National’s asset sales legislation puts the interest of foreign buyers ahead of New Zealand communities, Labour’s SOE spokesperson Clayton Cosgrove says.

“There’s not a great deal of satisfaction in saying ‘we told you so’ but the legislation unveiled by the government today means that partially privatised power companies will have no legal responsibility to take into account the impact of their actions on New Zealand communities.

“National is admitting that its promises were a con,” Clayton Cosgrove said.

“There will be nothing in this Bill to stop more than 30 per cent of the shares being bought by foreigners. There will be nothing to ensure that ‘mum and dad’ investors are at the front of queue. There will be nothing to stop boards asset stripping these companies after they are sold.

And the loopholes in the supposed cap on 10 per cent ownership by any one investor are large enough to drive a bus through. With foreign companies able to buy more than 10 per cent in total via multiple subsidiaries, it is unrealistic to expect nominee companies to ensure none of their clients purchase more than 10 per cent of a company.

“All this means just two things: If National manages to pass this legislation by a single vote and against the will of the vast majority of New Zealanders, our assets will end up in the hands of foreign corporates who will demand larger dividends, meaning higher power prices for New Zealanders. And the Crown will end up borrowing more to cover its lost dividend income.

“National has a dangerous fixation with asset sales that is hurting this country.

“Labour will make every effort to see that this Bill does not pass,” Clayton Cosgrove said.

ENDS

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