Share loyalty scheme is a con, Labour says
Monday 23 Jul 2012 5:13 a.m.
Labour MP Clayton Cosgrove
The Government's loyalty scheme for Kiwis who buy shares in state-owned assets is designed to help National win the next election, Labour says.
Prime Minister John Key announced the scheme at the National Party's annual conference on Sunday, saying New Zealanders who buy into Mighty River Power will get extra free shares if they hold onto those they buy for about three years.
Labour's state-owned enterprises spokesman, Clayton Cosgrove, says the timing is deliberate.
"The next election is two-and-a-half years away and the bonus shares will be triggered after about three years," he told NZ Newswire.
"This is a con, and the only reason for it is John Key wants to go to the country and say `look, all these Kiwis are holding onto their shares' in the run-up to the next election."
Mr Cosgrove says the shares are still going to end up in foreign ownership.
"When those bonus shares are handed out it will be in their best interests to sell and make a windfall gain," he said.
"This just puts off the fateful day when these shares fall into foreign hands."
Mr Cosgrove says the scheme is unfair because the bonus shares will effectively be taxpayer money.
"This isn't a free gift," he said.
"Kiwis already own these shares, and those who can't afford to buy them back will have to pay for those who can afford it," he said.
The government is going to sell 49 per cent of the shares in Mighty River Power later this year, probably in September, followed by the same partial privatisation of Meridian Energy, Genesis Energy and coal miner Solid Energy.
It hopes up to 90 per cent will be bought by New Zealanders and Mr Key also announced they will be able to buy at least $2000 worth without their application being scaled back.
Mr Cosgrove says most "mum and dad" investors haven't got that much money to spare.