Extending the Mixed Ownership Model
What is mixed ownership?
The Mixed Ownership Model applies to companies partly owned by the Crown and partly owned by private investors. Air NZ has operated along these lines since 2002, under Crown holdings that have ranged between 82% and 74%. In contrast, the SOE model involves companies being 100% Crown-owned.
Why extend mixed ownership?
As outlined in Section 1, the Government's investment intentions include:
- introducing private sector capital and disciplines, where appropriate, to help drive the performance of State assets, and
- prioritising capital to its highest value uses.
Mixed ownership will support both of these intentions, and presents an alternative to continued borrowing to fund priority investment. It also offers three further advantages:
- it broadens the pool of investment opportunities for New Zealand savers and supports deeper capital markets
- it introduces sharper commercial disciplines, more transparency and greater external oversight for the companies involved, and
- it provides the opportunity for the companies involved to obtain more capital to grow further, without depending entirely on a cash-strapped government.
The Government's assessment is that it is doubtful that Air NZ would have performed as well as it has since 2002 under full government ownership.
Can relevant government tests be met?
The Government has set five tests that must be satisfied before it would proceed with extending the Mixed Ownership Model. We are confident these tests can be met for reasons outlined below.
