Loyalty shares could cost $1 billion
Mon, 23 Jul 2012 6:01p.m.
By Tova O’Brien
The Government's plan to give away free shares to investors who buy into asset sales could end up costing the taxpayer more than $1 billion in lost profit.
It all depends on the details of the scheme - which haven't been decided yet - but Prime Minister John Key says the benefits far outweigh the costs.
When Mr Key announced his plan at the National Party conference to give away free shares to loyal investors support from the party faithful was a given, but it's the details of the scheme which are uncertain.
Treasury documents pounced on by Labour show that if the Government holds onto 9 percent of shares to later be used as loyalty shares it loses $1.3 billion from the proceeds.
That's $330 million lost from Mighty River Power alone - nearly a quarter of the profit.
But Mr Key scoffed at the figures, saying it's more likely to be less than half that amount. He called the figures “crazy numbers”.
But the numbers need to be crunched soon as Mighty River is expected to go on sale in September.
“You'd have thought that something of this magnitude he would've worked out and they would've had something more than just a few notes on the back of an envelope,” says Labour leader David Shearer.
The free shares will have to come from somewhere - either by holding some back or issuing new shares in a few years.
Either way there's no such thing as a free share: the taxpayer will pay.
“One hundred percent of New Zealanders are subsidising the 5 percent or less who can afford to buy shares,” says Green Party co-leader Russel Norman.
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24/07/2012 9:18:45 a.m.
Not to worry Fred and Wiseacre, given the 10% of taxpayers who pay 76% of all tax collected will be the ones purchasing the shares in the first place, they will effectively be paying for their own bonus shares anyway.
24/07/2012 6:13:26 a.m.
The poor are being forced to pay for handouts to the rich. Again.
23/07/2012 6:31:56 p.m.
Come to that - how about the the national party buy and pay a fair price for the company and then sell it on to whoever
23/07/2012 6:30:15 p.m.
The problem is that its not this or any other governments money - so the couldnt give a shit.
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