Ordinary New Zealanders will be favoured “at every turn” of the Mighty River Power share sale which gets underway today, says Prime Minister John Key, who has pledged at least $2000 worth of shares for those who want them.
Labour leader David Shearer said Mr Key had so far been unable to explain how he would prevent more than 15 per cent of Mighty River shares going to overseas investors.
Green Party co-leader Russel Norman said the $1 million advertising campaign “shows National knows how unpopular this policy is … They’re doing everything they can to try and sweeten the deal”.
Ownership transferring to overseas investors and the dividend stream leaving the country is one possible outcome here, sure. But another VERY possible outcome is that the majority of ownership ends up in the hands of ‘ordinary New Zealanders’ who then lose all their money when Mighty River is mis-managed into bankruptcy. Solid Energy only collapsed a couple of days ago, and there’s nothing stopping Mighty River’s executives from borrowing crazy amounts of money, using it to pay out dividends for the first few years and rewarding themselves with spectacular bonuses and then walking away rich men when the debtors call in the receivers.
Indeed, that’s one of the rationales for the asset sale – it shifts some of the risk of failure away from the government and onto the shareholders, which is fine if the shareholders can manage that risk by monitoring the company and diversifying their investment portfolio – which funds like ACC, the Super Fund and the KiwiSaver providers will all do, but which ‘ordinary New Zealanders’ mostly won’t.
Given the proximity of these events – Mighty River float, Solid Energy collapse – it’s a little weird that the opposition aren’t more focused on the fact that the government is giving New Zealanders terrible investment advice that could cost them a lot of money. I guess the objection to the sale has always been in economic nationalist terms, so it would sound odd if they turned around and told kiwis not to invest in these assets. But it seems like someone should.