Loyalty asset shares didn't work in Australia
By Political Editor Duncan Garner
Opponents of the Government's partial asset sales say the idea of loyalty or free shares hasn't worked in Australia so why consider it here?
One expert across the Tasman even called it a bribe.
The debate over whether to offer free shares to Kiwis has been fierce. Labour called it "a scam" and the Greens called it “a scheme for wealthy New Zealanders”.
So what happened across the Tasman? When Queensland Rail was sold two years ago locals were offered free shares if they held them for a certain period.
But thousands of investors didn't wait.
Green Party co-leader Russel Norman says it doesn’t work.
“If the price goes up then regardless of loyalty schemes people sell off.”
- Investors could get up to 675 free shares each
- A total of $90 million dollars was set aside
- But only $30 million was taken up
- The shares rocketed up 39c in just the first week
- Of about 80,000 local investors, 50,000 flicked them on rather than wait for the bonus.
Dr Norman says that could happen here too.
“The Queensland taxpayer basically got ripped off because they sold the asset too cheaply so after the sale the price went high... people immediately sold."
Australia's high profile TV finance guru 'The Barefoot Investor', otherwise known as Scott Pape, agreed.
He called the loyalty shares a "short term bribe" and a "trick". Labour agrees.
The 9000 workers at Queensland Rail also got $1000 of free shares up front and they were assured their jobs were safe for three years.
But 1100 jobs have since been lost because "the cost base was too high".
But Dr Norman doesn't expect job losses here because the energy companies are already efficient.
“They’ll probably look at it but I’m not convinced there'll be big layoffs.”
The Government is yet to make a formal decision on a loyalty scheme but polls show this partial asset sales policy is unpopular.
And the noise will only get louder. The law will be passed next week - expect fireworks in Parliament and protests outside.