Government MPs have at times been directly challenged by submitters during the first of the public hearings for the partial asset sales legislation.
Parliament's Finance and Expenditure committee heard about 40 submissions on Tuesday - most of which were opposed to the Mixed Ownership Model Bill.
The Government plans to sell up to 49% of state-owned energy companies Genesis Energy, Meridian Energy, Mighty River Power and Solid Energy and reduce the Crown's shareholding in Air New Zealand.
Chief Ombudsman Beverley Wakem made a rare appearance before the committee, saying she felt her advice that the companies should be covered by the Official Information Act has been ignored and wanted to highlight this publicly.
Ms Wakem says as long as the Government maintains a majority shareholding, the companies should be subject to the Official Information Act and Ombudsmen Act.
"The fact is that there's no evidence that coverage by these acts inhibits commercial activities, or adds a significant cost factor. The 1990 review of the SOEs concluded that there was insufficient evidence to support that assertion, and we've seen no evidence since that the position has changed."
It is only the third time in 46 years a Chief Ombudsman has appeared before a select committee.
Sparks flew when a member of People's Power Ohariu, which is actively lobbying local MP Peter Dunne about his support for the bill, asked National Party MPs for an assurance that overseas investors could not sue the Government under a Trans-Pacific Partnership trade agreement.
The man was told by the National MPs Tim McIndoe and Maggie Barry that they are the ones who would be asking the questions.
Megan Salole, who is affiliated with the Green Party but appeared before the committee as the head of campaign group Stand Up, encouraged MPs and observers to rise to their feet in a show of opposition to the bill.
National MPs initially stood up, but quickly resumed their seats when they realised the point of the exercise, Radio New Zealand's political staff say.
Other submitters expressed concerns about the long-term loss of strategic assets and the dividends the companies provide to Government and the possible impact on power prices.
Later, select committee chairman Todd McClay called for the public to stop abusing MPs after one outburst from the gallery.
