John Key doesn’t want to go ahead with plain packaging of cigarettes. The cancer sellers would sue. It could cost a few million to beat them in the international courts (me, I would just create a law of corporate homicide and nationalise their NZ assets). Key baulks at the cost, the risk. But something in the hundreds of millions for free shares to looters? Key reckons that’s a great investment.
The crazy thing is that Key has no clue what the bonus shares would cost. And surely it’s pretty vital when a) you’re planning to get back into surplus by a whisker in two years and b) your justification for selling these shares is supposedly that it is a smarter economic choice than borrowing – if you don’t know your net revenue from the sale, how can you make that argument?
And the costs are huge. Labour points out that National will have to keep aside shares not only for the looters’ bonus but also to have a buffer so that the companies can issue more shares and still have the Crown retain at least 51%. Labour points to a Treasury report putting the cost of saving 9% of the shares for the bonus and the buffer at around $1.3 billion.
Key says that the cost will be “less than half that” – so, what? $650m?
The Finance and Expenditure Select Committee, on the other hand says it would be $360m.
A Treasury paper says $250m to $500m.
And the Greens give the conservative low-ball estimate – where only a third of shares are bought by ‘mum and dad investors’ and there is one free looters’ bonus share for every ten they buy – and that’s $200m!
So, on the low-side, this looters’ bonus is a $200m policy. And for what? To try to attract a few marginal investors who wouldn’t have otherwise bought in or make a few hold on to the shares longer who would have flicked on quickly? The vast vast bulk of people who would get free shares under this policy are people who would have bought the shares and held on to them anyway. National is spending hundreds of millions of dollars for the sake of changing the decisions of a few thousand people.
When National was in opposition, they called 20Hours Free Early Childhood Education “poorly targeted spending”. Their logic was that the bulk of families getting it would have sent their kids to ECE anyway, so the government was subsidising them without changing their ECE decision, which they assumed was the point of the scheme (they didn’t consider that it would be a blessing for families previously scrimping to get their kids into ECE). Doesn’t that same logic apply to the looters’ bonus? Most of the people who would get the looters’ bonus don’t need a looters’ bonus to get them to do what the looters’ bonus is intended to make them do. So, why is National planning to pay them a looters’ bonus?
And why can’t National think of anything better to do with a few hundred million taxpayer dollars?
Oh yeah, because they’re the looters’ party.