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Whakamaru hydro station. - Source: Mighty River Power -
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An announcement today of a bonus scheme that puts New Zealanders "at the front of the queue" for asset sales is a "ploy" to gain support for the Government's unpopular asset sales, the Green Party said today.
Prime Minister John Key confirmed at the National Party conference today New Zealanders wanting to buy Mighty River Power shares would be first in line.
But, Green Party co-leader Russel Norman said the plan was "fiscally reckless" made worse by offering hundreds of millions of dollars in bonuses to wealthy New Zealand buyers.
"This is deeply cynical ploy to win the public over to the Government's unpopular privatisation agenda, but it won't work. The New Zealand public will see through it," he said.
Key announced today the minimum application for Mighty River
Power shares would be $1000. New Zealanders applying for up to
$2000 worth of shares are guaranteed to receive what they applied
for and will not have their applications scaled back.
This will help promote broad access and affordability for a wide
range of New Zealanders, he said.
"Big institutions aren't getting any guarantees, so this is another
way we're putting everyday New Zealanders at the front of the
queue," he said.
Loyalty bonus
New Zealanders who keep their Mighty River Power shares for a
certain length of time will get a loyalty bonus, in terms of
additional shares, Key said.
The Government is working through the time period to get the
loyalty bonus but it is likely to be somewhere around three
years.
"The rational behind that time is really just to build some sort of
long term ownership out of those direct investors so that they're
not seen as something that you necessarily buy today and sell
tomorrow," Key said.
Details of the loyalty bonus will be announced closer to the time
of the share offer, Key said.
Norman said there was no detail on how much the loyalty scheme would cost while Labour Party's State Owned Enterprises spokesperson Clayton Cosgrove called the bonus a "ponzi" scheme that punishes tax payers.
"The loyalty scheme is simply an admission of defeat by the Government," Cosgrove said.
"If these shares were so popular and going to be retained and not sold off to foreign interests, why would you need a loyalty scheme?"
Retail syndicate
A retail syndicate of share brokers and banks has been appointed
to assist with the marketing and sale of shares to New
Zealanders.
The syndicate will help New Zealand investors - particularly
first-time share investors - understand how they can participate in
the share offer, Key said.
It will soon be able to tell people how they can pre-register their
interest, without having to commit at that time to buy
shares.
The syndicate will also ensure widespread access for all New
Zealanders, Key said.
People will be able to pick up a prospectus, and other information
about the share offers, from around 500 bank branches throughout
the country.
They will be able to get information through an 0800 number, or
on the internet, and will be able fill in an application for shares
online.
People will not have to use a broker to buy shares, but will be
able to do so, and can get advice from a broker or other financial
adviser, Key said.
"Let me assure you - we will make it as easy as we can for New
Zealanders to take part in the share offers. And we will make sure
they get all the information they need to make informed
decisions."
'A lot of interest'
Key said the Government's intention is for the Mighty River Power
share offer to happen later this year, "subject, of course, to
market conditions".
Now that Parliament has passed the necessary legislation, "we're
seeing a lot of interest from New Zealanders in how they can get
more information and be at the front of the queue," Key said.
Decisions about other aspects of the share offer will also be
made over coming months, he said.
"But the Government's intention is clear. As promised, we will put
New Zealanders at the front of the queue for shares and we're
confident of widespread New Zealand ownership.
"It is one part of my Government's broad programme to build a more
competitive economy based on savings, exports and productive
investment."
Key reiterated that the Government will retain at least 51%
control of the energy companies and no other shareholder will be
able to hold more than 10%.
"Each of the share offers will be organised so that New Zealanders
are at the front of the queue for shares. When we do the share
offers, we expect around 85 to 90 per cent New Zealand ownership of
these companies."
Shares will be owned by the Government, individual New Zealanders,
and funds like KiwiSaver, ACC and the Super Fund, Key said.