Government plans to spend up to $400m more on asset sales

The time has come for the National Government to be up front about the cost of providing a so-called 'loyalty bonus' to purchasers of shares in its asset sales programme, Green Party Co-leader Russel Norman said today.

On Q+A this morning, Tony Ryall joined John Key in expressing support for a loyalty scheme, such as the 1 for 15 bonus share that was offered to retail shareholders in Queensland Rail National who held their shares for two years, but would not offer any information on how much it would cost.

On a $6 billion sales programme, a 1 for 15 share bonus would cost the Government up to $400m. This would be on top of the $120m that the Government has indicated it expects to spend on middleman such as investment bankers and advertising companies, and the $100m annual increase to the Government's deficit due to foregone profits.

"It is ludicrous that the Government is just a couple of months away from selling the first of our energy companies yet it still won't tell the public how much it would cost", said Dr Norman.

"Either they are trying to hide the truth from New Zealanders or, just as worryingly, they don't know themselves

"It is becoming clear that there are huge undisclosed costs that further undercut the economic case for asset sales.

"A loyalty scheme could cost as much as $400m, on top of sales costs that the Government conservatively estimates at $120m. That's half a billion dollars spent on selling assets that Kiwis want to keep!

"Additionally, Budget 2012 shows the net loss of profits cutting a $100m a year hole in the Government's books.

"The plain truth is that asset sales don't make sense for New Zealand. That's why the vast majority of New Zealanders want the Government to drop this ideologically-driven policy," said Dr Norman.

Additional information:

Bill English's answer to written question 1733 (2012) showing 2%, $120m, sales costs

Budget 2012, Fiscal Strategy Report, page 7 showing fiscal impacts of asset sales