Treaty of Waitangi issues
A major issue raised by the State-Owned Enterprises Act 1986 was whether the transfer of land and other assets to state-owned enterprises could proceed without taking account of the Crown’s obligations to Māori under the Treaty of Waitangi. In what became the first of many similar provisions in other acts, Section 9 of the State-Owned Enterprises Act stated, ‘Nothing in this Act shall permit the Crown to act in a manner that is inconsistent with the principles of the Treaty of Waitangi.’
In June 1987, six months after the passage of the act, the Court of Appeal ruled that the transfer of specific assets to state-owned enterprises could not proceed without a system in place to consider whether it would be consistent with the principles of the treaty. The following year, the act was amended to make land transferred from the Crown to state-owned enterprises subject to ‘resumption’, whereby it was still available for treaty claims. These decisions paved the way for some significant Māori claims over land and assets vested in state-owned enterprises.
Corporatisation of state assets proceeded quickly – it was only 16 months from the first policy statement in December 1985 to the new corporations beginning operation in April 1987.
1980s to 2000s
In the years after the State-Owned Enterprises Act came into force, some new state-owned enterprises were created, while others were partly or entirely privatised. The government sold either some or all assets (land, buildings or equipment) of state-owned enterprises to private buyers, or it sold the whole enterprise as a going concern to private investors. By 1999 the total value of assets sold came to over $19 billion. Significant state-owned enterprises that were sold included Petrocorp, Contact Energy, the Post Office Bank, State Insurance, the Rural Bank, Air New Zealand, the NZ Railways Corporation, Telecom and the Forestry Corporation. Radio New Zealand and Television New Zealand were converted from state-owned enterprises into Crown-owned companies in 1995 and 2003 respectively. They remained in public ownership.
Some formerly state-owned enterprises were bought back by the government. The government repurchased a controlling interest in Air New Zealand in 2001, to save it from bankruptcy. The creation of Kiwibank in 2002 as a subsidiary of New Zealand Post in effect re-created the Post Office Savings Bank as a full-service commercial bank. The government also resumed ownership of the national rail system in two stages: first by assuming ownership of the track in 2004 and then by repurchasing the rail and ferry businesses in 2008.
The sale of state-owned enterprises, sometimes known as ‘asset sales’, has been controversial. The fourth Labour government, which created these enterprises, began to sell them off in 1989, but it was the National government elected in 1990 that carried out most of the sales. Proceeds from the sales went towards paying off New Zealand’s overseas debt. Polls in the early 2000s suggested that many people opposed further asset sales. After the 2011 general election the National-led government commenced the partial sale of some state-owned enterprises.