Legislation enabling the Government to partially sell four state-owned energy companies passed its first hurdle in Parliament on Thursday.
When law, the Government can sell up to 49% of Genesis, Meridian, Solid Energy and Mighty River Power.
The legislation restricts the Crown from holding less than 51% of the voting rights, and restricts other shareholders from holding more than 10% of the shares.
The bill passed its first reading by 61 votes to 60 with the support of National, ACT and United Future.
State-Owned Enterprises Minister Tony Ryall told Parliament that the partial sale was about reducing debt.
Mr Ryall said the Government had thought long and hard about proceeding with the sales.
He told Parliament that although New Zealanders are not enthusiastic about the sales, they remember the high debts of the 1980s and would not want to saddle future generations in the same way.
Labour Party deputy leader Grant Robertson said the legislation was a desperate, flailing attempt by a Government bereft of ideas on how to grow the economy.
He told Parliament the only idea the Government has is to sell off New Zealand's future.
He said the phrase 'mum and dad investors' was a piece of double-speak.
'There is no way this Government can guarantee shares will stay in New Zealand control'.
Green Party co-leader Russel Norman said it was no surprise Grey Power was opposed to the idea.
He said it was their membership which built up the assets the Government is proposing to sell.
The bill will now be considered by the Finance and Expenditure Select Committee which must report back to Parliament by July 16.