Guaranteed $2,000 of shares for all Kiwis

July 22nd, 2012 at 5:26 pm by David Farrar

John Key announced:

The Government will ensure New Zealanders will be at the front of the queue for shares in Mighty River Power, with Prime Minister John Key today announcing further details about the sale of shares in the energy company. …

“Accessibility to the share offer is also broadened with the minimum application size of $1000 for Mighty River Power shares, meaning a wide range of New Zealanders will be in a position to apply.

“Those New Zealanders seeking up to $2000 worth of shares will not have their offer scaled back. In other words, New Zealanders applying for up to $2000 worth of shares are guaranteed to receive the shares they apply for.

“Big institutions aren’t getting any guarantees, so this is another way we’re putting everyday New Zealanders at the front of the queue,” Mr Key said.

These are both good. A minimum package of $1,000 will allow many Kiwis to purchase shares – and if short of cash, they should follow Labour’s advice and borrow some money so they can buy the shares.

A guarantee that you can get at least $2,000 worth is also excellent. I’d recommend those families with enough cash or savings buy $2,000 in each of their kids names – can even be the start of a trust for them.

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46 Responses to “Guaranteed $2,000 of shares for all Kiwis”

  1. Nick K (1,243 comments) says:

    They should allow partial withdrawals of KiwiSaver to pay for them also. My daughter already has Ryman Healthcare shares (60% share price increase in last 15months or so), and now her portfolio will include MRP. This can only be good for our capital markets and savings.

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  2. Pete George (23,559 comments) says:

    The sun rose this morning and:

    Labour MP Clayton Cosgrove said it meant those who can’t afford shares will have to subsidise those who can.

    “Why should those who don’t plan to buy shares, for whatever reason, have their taxpayer dollars spent subsidising those who can?” Cosgrove said.

    And…

    The Greens said bonus shares were a cynical attempt to popularise asset sales.

    “The Government’s fiscally reckless plan to sell off these productive state owned assets will be made even worse by this cynical move to offer potentially hundreds of millions of dollars in bonuses to wealthy NZ buyers, said Green Party Co-leader Russel Norman.

    “There is still no detail on how much the loyalty scheme will cost, and it appears that the Government has not budgeted for the scheme,” he said.

    I thought Norman had aspirations for a Finance portfolio. ‘Loyalty’ shares still deal with the same overall value of the assets. They aren’t extra money that has to be found growing on a tree.

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  3. PaulL (5,981 comments) says:

    I think the point is that loyalty shares create a big administrative burden, as there are a lot of small shareholders.

    Of course, this is Labour and the Greens trying to have it both ways – they want small shareholders, but don’t want to pay for them. The bottom line is that they just don’t like the idea of the government ever selling anything, even something that will be more productive in private hands. Their vision of the future is ever increasing size of government, and any effort to make govt smaller, no matter how token, must be opposed.

    Sad really.

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  4. KH (695 comments) says:

    So if they can go this far to favour New Zealanders. Why don’t they go that further step and restrict ownership forever to New Zealanders? Keeping international finance systems happy, is not a useful objective in my view.

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  5. KH (695 comments) says:

    The way Cosgrove could help those he claims to worry about is for him to encourage them to put $10 in an interest bearing account. And when they can — another $10. This country will only get ahead with investment and that means spending less on consumption. And yes that is hard.

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  6. Pete George (23,559 comments) says:

    Many of the people Cosgrove says will ‘subsidise’ the share buyers can do it with their benefit, interest free student loan, Super and WFF subsidies.

    Except that it’s a nonsense claim anyway.

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  7. Spam (588 comments) says:

    So if they can go this far to favour New Zealanders. Why don’t they go that further step and restrict ownership forever to New Zealanders? Keeping international finance systems happy, is not a useful objective in my view.

    If I buy shares, what happens if I move overseas?

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  8. rolla_fxgt (311 comments) says:

    Is it just a coincidence that you can get $1000 in course related costs, and you can buy a minimum package of shares for $1000.

    Anyone want to take bets on how many course related cost claims are spent on shares?

    Could probably justify it for a business degree, but not many others.
    Even better since the money is interest free for the borrower. Pretty much the same as the govt giving the shares to the students.

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  9. mikenmild (11,247 comments) says:

    It’s all nonsense of course. Any restriction or qualifications on who can buy simply depresses to overall price the government will obtain from the sale.

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  10. Lazybum (259 comments) says:

    Where do I sign up? Me, wife and kids will buy $8K worth. That is a few months savings but I have money in the bank that is looking for a home.
    Norman is just another thick greenie who sounds compelling, but is full of shit.

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  11. Inky_the_Red (759 comments) says:

    As I read it the Nats want to bribe the people who can afford the shares. It seems that people who don’t have the cash (and those who think the situation is immoral) will pay for those who do.

    More distribute more to the greedy rich away from the poor.

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  12. mikenmild (11,247 comments) says:

    Hey, does the ‘guaranteed $2,000 of shares for all Kiwis’ mean that Mighty River Power is worth $8 billion or so?

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  13. Adolf Fiinkensein (2,903 comments) says:

    Poor bloody lefties. They don’t like the cold steel up’em.

    They’ve got some brainless bimbo on $141k per year who reckons she can’t afford to buy a house. Now there’s a taxpayer subsidy if ever I saw one. Who’d ever employ her in private industry where you actually have to do something useful?

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  14. chris (647 comments) says:

    There seem to be an awful lot of people out there who can afford large flat screen TVs, iPhones and the like, and yet we hear a lot of moaning about how people can’t afford $1k to buy some shares that should pay pretty good dividends. Certainly pays a better ROI than a TV or smartphone.

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  15. Pete George (23,559 comments) says:

    If I buy shares, what happens if I move overseas?

    I don’t see a problem, I presume nothing changes apart from your location. Hard to see them including a ‘moving after buying’ clause.

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  16. Pete George (23,559 comments) says:

    As I read it the Nats want to bribe the people who can afford the shares.

    No, they’re trying to encourage investing rather than speculating. There’s no bribes involved (the overall share valuation will be the same), just incentives to hold shares in New Zealand ownership.

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  17. PaulL (5,981 comments) says:

    Pete – if some people can buy shares, and others cannot, then clearly those who can are getting advantaged. Welcome to lefty logic. Of course, if I said that those who buy the shares are subsidising those who do not – since everyone will have their govt debt reduced, but only some people pay for shares, I’d equally be talking shit. It’s a waste of time engaging really, since there’s not a lot of logic being talked.

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  18. mikenmild (11,247 comments) says:

    Logic would be welcome here. Will the government’s overall fiscal position be better, or worse, after the the sale? Would the government be able to obtain a higher price for the asset without imposing conditions on size of ownership, etc?

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  19. jakejakejake (134 comments) says:

    How is giving free shares not a bribe?

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  20. Pete George (23,559 comments) says:

    How is it a bribe?

    If you buy a new TV and they give you a free remote control for it is that a bribe? Or is it just a built in part of the deal?

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  21. beautox (422 comments) says:

    Can you imagine what NZ would be like if Telecom was still owned by the government. 3 weeks wait for a SIM card?

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  22. Mary Rose (393 comments) says:

    >How is giving free shares not a bribe?

    Free?

    >How is giving free shares not a bribe?

    A bribe in exchange for what?

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  23. Seamonkey Madness (328 comments) says:

    Any word on the part of the legislation that will allow corporates/financial institutions, etc. to purchase huge numbers of non-voting shares and hence water down the percentage of dividend going to “mum and dad investors”?

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  24. Pete George (23,559 comments) says:

    Seamonkey Madness – non-voting shares in excess of 49% was scrapped – 49% maximum of any type of share isnin the final legislation.

    http://yournz.org/2012/06/18/mixed-ownership-model-bill-51-ownership-amendments/

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  25. mister nui (1,027 comments) says:

    milkymike said:

    It’s all nonsense of course. Any restriction or qualifications on who can buy simply depresses to overall price the government will obtain from the sale.

    Can you please explain to me how this depresses the amount raised in the IPO milky? Or are you just parrotting labour/melons/nz first lies?

    Actually, what will happen is that people who do not buy in the IPO and then buy after the IPO will have their holding devalued, when the bonus shares are issued.

    It would seem your understanding of economics is about the same as my 3 day old nieces.

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  26. trout (939 comments) says:

    The offer of bonus shares as an incentive to hold issue shares for 3 years is unfortunate and unnecessary. This Government has a knack of coming up with hairy ideas for sweetening policy with out thinking the matter through. Are the bonus shares to be issued free or at a discount? And how will that affect the shareholding proportionality. The scheme would have course have to apply to all shareholders who have held for 3 years (inc. the Govt.), not just the ‘mum and pops'; it will possibly apply to 90% of shares held. As such it is largely meaningless because the proposal does not add value to the company; it just makes shares on issue worth less.

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  27. mister nui (1,027 comments) says:

    I’ll also be buying shares for the whole family. I will also buy for my nieces and nephews, whose parents I know will struggle to. This will a nice little gift to the younger generation for later life – they’re currently being indebted by the superannuation payments of the boomers, so might as well do a swapsie me thinks.

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  28. mister nui (1,027 comments) says:

    Dead right trout, it means that there may not be as much liquidity in the shares, as there will be a large percentage not traded. It also means until the 3 years up, the shares will be trading at a discount.

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  29. krazykiwi (9,186 comments) says:

    Congrats on becoming an uncle mister nui :)

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  30. krazykiwi (9,186 comments) says:

    So let me get this right… the state, which has legislative authority over a competative market, is allowing every VOTER to lock away their capital in a company, which will in turn will need to compete to protect/enhance that capital. Any chance that capital flows into this sector will dry up as would-be investors see the government of the day flexing is muscles to protect VOTER interests?

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  31. UpandComer (536 comments) says:

    Lol after an epic day on the standard whilst on my 12 hour security shift I’ve just finished earning money to buy shares, this is a breath of fresh air. mmmmaaaaahhh

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  32. pq (728 comments) says:

    gosh Farrar we are over whelmed that the NZ NAT GOVT will sell us what we already own,
    I mean jolly gosh, your PM is so dead Farrar,
    we will not allow asset sales Farrar,
    try to get the picture Farrar

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  33. big bruv (13,886 comments) says:

    pq

    You have already lost that battle. Remember the election result?

    Asset sales are going ahead, the people gave the Nat’s the mandate.

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  34. mister nui (1,027 comments) says:

    ^^^^ And the lefty intelligentsia has arrived….

    Edit: Not you bruv, but the idiot above you.

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  35. V (719 comments) says:

    A financial adviser now are we?

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  36. Wayne91 (142 comments) says:

    PQ – “we will not allow asset sales Farrar,”

    Who wont allow it? the 84 people that turned up to a – well you couldn’t even really call it a protest – just mostly the same old “professional protesters”(paid by hard working tax payers money) that turn up to anything, except job interviews

    “Sell what we allready own” – at least this way New Zealanders can own AND make money from the shares so thats an added bonus really.

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  37. Mark (1,488 comments) says:

    I will buy also but only if the valuation is realistic. It is a bit premature to make that call just yet.

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  38. dime (9,972 comments) says:

    “and if short of cash, they should follow Labour’s advice and borrow some money so they can buy the shares.”

    BAHAHAHAAHAHA love it.

    Im gonna buy some. Then im gonna flick em ASAP. hopefully to a chinaman

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  39. mister nui (1,027 comments) says:

    You could give ‘em to a Chinese whore, for services rendered, Dime.

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  40. trout (939 comments) says:

    It appears that (and let’s face it this bonus scheme has not been thought through) the Govt. will withhold shares from issue so these can be given away in a loyalty scheme to selected shareholders in 3 years. So they are not issued by the Company. What a mish mash!. The Greens have a point when they say that the Govt. is giving away freebies at taxpayer expense. And of course the trading value of shares will be discounted (as mentioned above) over the next three years to take account of the market distortion and the likelihood of a flood of shares for sale at the end of the period. John Key of all people should understand that interference in the market creates anomalies.

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  41. alex (304 comments) says:

    Who the fuck has 2 grand in the bank? We’re in a recession.

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  42. emmess (1,428 comments) says:

    Who the fuck has 2 grand in the bank? We’re in a recession.

    If you have a family and don’t have at least that amount easily accessuble for emergencies, you are being rather irresponsible. (Not that buying shares is an emergency)

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  43. Manolo (13,755 comments) says:

    Who the fuck has 2 grand in the bank? We’re in a recession.

    What about 100 times that? :D

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  44. wikiriwhis business (3,996 comments) says:

    “Is it just a coincidence that you can get $1000 in course related costs, and you can buy a minimum package of shares for $1000.”

    This of course is because the Nats are terrified of third party representation now.

    The youth vote will go to the Greens. The adult vote will go to NZ First.

    Kiwi’s are so highly politically sophisticated because so much world agendas started with us and we watch the trends online.

    For many, as long as they have their rugby, racing and beer they are happy. This is why Winston was allowed so much progress in the racing industry…for the time being

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  45. UpandComer (536 comments) says:

    Trout – look to Master nui’s post above you as to why you are wrong.

    Russell should probably rethink any comments he has to make on market distortions, given that his parties fiscal policy boils down to him and metira ‘picking winners’.

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  46. alex (304 comments) says:

    @ Manolo – Congratulations. You are wealthy. Most of the country is not. Who really benefits from these sales?

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