'A pretty good cocktail': NZ First candidate, former FMA chairman Craig Stobo's vision for dual-class shares, government debt review and a lower company tax rate

NZ First Candidate and former Financial Markets Authority (FMA) chairman Craig Stobo wants to back dual-class shares on the NZX and look at how Treasury borrows in what he describes as "a pretty good cocktail" for private businesses, sitting alongside NZ First’s pledge to cut company tax for smaller firms.

Stobo told interest.co.nz, should he get into Parliament and be in a position to implement changes, one would be to support the NZX to be able to accommodate dual class shares for listings. 

The NZX earlier this year consulted on dual class share structures. "These structures arise where an issuer has two classes of shares, superior shares with multiple voting rights, and ordinary shares which carry 1:1 voting rights," it said on its website. 

Stobo said there were a lot of founders and owners of businesses in New Zealand "who like to raise capital but don't want to lose control of their companies."

"By having a dual class share structure, an A class share will be one that is owned by the owner, and he retains or she retains control of the company, and in a majority sense.

"And the other, the B class shares are available to everyone who wants exposure to that particular firm or industry, and they want the yield or the earnings or the growth uplift."

He thought it would go down well, adding it was common overseas, "particularly in the US, I want to bring that here to reinvigorate the exchange, NZX."

Cost of borrowing focus

The other was "this rising debt profile and $10 billion of interest costs."

"No one's focused on the way that we raise debt globally by the NZ Treasury," he said. 

"I want to review the 2024 guidelines for debt issuance by the New Zealand Debt Management section of the New Zealand Treasury, and to spend some time reviewing and seeing if there's ways that we can change the way we raise debt to cut the costs of interest," Stobo said.

"Also because by raising a lot of public debt in the marketplace… It crowds out. It affects the costs and access for issuers of private debt by New Zealand companies."

Stobo said no one was focused on how the cost of debt is managed, "and how do we stop the borrowing programme of the government impacting upon private borrowers who also want to raise debt." 

That would go on top of NZ First's pledge to lower the company tax rate to 20% from 28% for companies with turnover under $30 million. 

"By cutting the company tax rate, looking at access to capital on the NZX differently by dual class shares, and thirdly, looking at the costs of borrowing of the New Zealand government, we help private businesses with their cash flow, with their equity capital needs, and also their debt capital needs."

"I think that's a pretty good cocktail," Stobo said. 

Up against Luxon

Stobo is running for NZ First in Botany, a seat currently held by prime minister Christopher Luxon, in November's election.

Stobo resigned as FMA chairman in May after an independent review found "just cause" for him to be removed from the FMA board based on public comments. In its announcement about Stobo, NZ First says he was found to have; "allegedly breached standards of ‘political neutrality’ when he made a personal submission to the select committee on the Treaty Principles Bill where he outlined his views on the principles of the Treaty of Waitangi, and when he queried mandatory climate reporting disclosures."

The statement describes him as "outspoken on issues that matter, he is not afraid to challenge the status quo, and he has the ability to get things done."

Stobo's experience includes working for the Ministry of Foreign Affairs, helping establish BT Funds Management, chairing a review of the taxation of investment income for the then-finance minister Michael Cullen in 2004, and chairing an International Fund Services Development Group under the John Key government in 2010. Stobo is a founding director of the Auckland Council's Future Fund.