You will have heard of this ‘buy now, pay later’ plan that the Nats have to try to save the Meridian sale. Pay 60% of your shares’ price up front, the remaining 40% in 18 months. It’s an interest-free loan, funded by higher government borrowing. What we didn’t know is this outrageous fact: this taxpayer-funded interest-free loan will be extended to foreign banks. The Nats don’t know how much it will cost. The Parliamentary library says $60m.
Here’s an what happened in Question Time yesterday.
1. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister for State Owned Enterprises: What is the forecast cost to the Crown of the Government’s plan to allow buyers of Meridian Energy shares to pay for their shares in instalments and will the instalment scheme be open to overseas institutions?
Hon TONY RYALL (Minister for State Owned Enterprises) : Thank you for the opportunity to talk about the Meridian Energy share offer. It is on. As I advised the member in the House last month, there is no forecast cost for instalment receipts, because any such estimate would be affected by many factors, including the final price of the shares. To the second part of his question: yes, that has been known since last month, when the Government announced the instalment receipt structure for investors.
Dr Russel Norman : I seek leave to table an estimate of the cost of about $61 million, prepared by the Parliamentary Library.
Mr SPEAKER : The source of the document is the Parliamentary Library?
Dr Russel Norman : Yes.
Dr Russel Norman : Can the Minister confirm that if, for example, Goldman Sachs, based in the United States, was to buy Meridian Energy shares, Goldman Sachs would be allowed to access the interest-free loans in order to buy those shares?
Hon TONY RYALL : They are not interest-free loans, but certainly all investors will be able to use instalment receipts
Dr Russel Norman : Can he think of a more extreme case of a Government that favours the rich and the powerful over everybody else than the example of giving interest-free loans to offshore investment banks so that they can purchase shares in what is currently a company owned by the people of New Zealand?
Hon TONY RYALL : The Government has been quite clear on the reason why we have got these instalment receipts. We have also been very clear that, at float, this company will be owned 85 to 90 percent by New Zealanders. That is our goal
Ryall tried to dance on the head of a pin, saying that the ‘instalment receipts’ don’t amount to an interest-free loan, even though you get the whole ownership of the shares without paying for 40% of the value for 18 months. But the truth is there: if Goldman Sachs buys Meridian shares, you will help pay for their interest-free loan/instalment receipts. Apparently, this is to help facilitate Kiwi ownership.
Don’t think about it too hard, it doesn’t make any sense.
Oh, and regarding Ryall’s claim that the instalment scheme isn’t an interest-free loan, well Key said that is ‘essentially’ exactly what they are. Oops, I assume Ryall will be correcting his answers today, seeing as he’s also said “I always agree with the Prime Minister.