Labour, Greens hit out at asset share plans
Labour and the Greens have hit out at the Government's measures to sweeten asset sales, saying poorer New Zealanders will be subsidising others who can afford to buy the shares.
Prime Minister John Key today announced people who bought shares in the upcoming Mighty River Power float would be rewarded for holding on to them for at least three years by receiving bonus shares.
Buyers will need at least $1000 to spend on shares.
Labour MP Clayton Cosgrove said it meant those who can't afford shares will have to subsidise those who can.
"Why should those who don't plan to buy shares, for whatever reason, have their taxpayer dollars spent subsidising those who can?" Cosgrove said.
"This is a tactic to placate Kiwis concerns about giving up our assets to foreign interests, which under this government's stewardship is inevitable."
People with a couple of thousand dollars to spare would be better off paying down their credit card, Cosgrove said.
"Taxpayers are already taking a hit in lost dividends, this is a second blow."
The Greens said bonus shares were a cynical attempt to popularise asset sales.
"The Government's fiscally reckless plan to sell off these productive state owned assets will be made even worse by this cynical move to offer potentially hundreds of millions of dollars in bonuses to wealthy NZ buyers, said Green Party Co-leader Russel Norman.
"There is still no detail on how much the loyalty scheme will cost, and it appears that the Government has not budgeted for the scheme," he said.
"We know from overseas examples such as Queensland that it can cost tens or hundreds of millions of dollars. We also know from the Queensland example that loyalty schemes don't work, when the price of shares went up the shares got on sold."
Key told the National conference this morning about measures to put New Zealanders "at the front of the queue" for the upcoming float of shares in SOEs.
* Loyalty bonus shares in Mighty River Power for New Zealand investors, perhaps after three years.
* Minimum share parcels of $1000.
*A guarantee that New Zealanders seeking up to $2000 worth of shares will not have their application scaled back - meaning they are guaranteed to get the shares they apply for.
* The appointment by Treasury of a retail syndicate of share brokers and banks to help potential investors, particularly first time share investors, to understand how hey can participate in the share offer.
Key said the measures would make buying shares easier for New Zealanders, while also encouraging long term share ownership.
The Government would offer New Zealanders who held onto their shares for a certain length of time a loyalty bonus, in the form of additional shares.
"We're working through the time period involved but it's likely to be somewhere around three years."
"We believe it is important to recognise the loyalty of New Zealanders who retain their shares and we want to encourage long term share ownership among New Zealand savers."
Key, who arrived to a standing ovation from around 500 party delegates, said household saving was positive for the first time in more than a decade and was forecast to increase steadily.
"But for a number of reasons, New Zealanders have tended to put their savings into property, term deposits and finance companies. We own relatively low levels of financial assets like shares, compared to people in other countries. "
New Zealand's sharemarket was only a quarter of the size of the New Zealand economy, compared to around 80 per cent in Australia and that was a problem, Key said.
"The sharemarket is a key way for companies to obtain capital and capital is essential for a growing economy."
Changes to restore confidence in the financial markets was one way the government sought to address this.
Offering investment opportunities was the other.
That was one reason why the Government was selling a partial stake in the four State owned power companies, starting with Mighty River Power, and selling more shares in Air New Zealand, he said.
"Our policy of partial share sales is a win-win and I stand totally behind it."
The conference this weekend has been marked by a heavy police presence in response to planned protests but police nearly outnumbered protesters yesterday.
NZ Shareholders Association chairman John Hawkins said bigger investment firms will see this as an opportunity to attract new investors to the sharemarket.
“Making sure smaller investors can get a parcel of shares guaranteed is a good start because often they miss out.”
Although, he said it was too early too know how many small investors could be potentially drawn in by the deal.
Treasury announced the retail syndicate for the Mighty River Power investment offer are Craigs Investment Partners, Forsyth Barr Limited, ANZ National Bank and ASB Bank Limited.
Those syndicate members will focus on educating first-time investors on participating in the share deal.
Today a group of about 100, clutching umbrellas and wrapped in rain jackets, braved rain and mist to chant against welfare reforms.
At times the group disrupted traffic in central Auckland as they marched around the Sky Tower.
Dozens of police stood between the protest group and convention centre.
Some protests attempted to stare down police, standing and yelling centimetres from their faces.