Govt must front up on cost of ‘buy now, pay later’ scheme

Tuesday, 17 Sep 2013 | Press Release

John Key’s generosity seems to know no bounds when it comes to hand-outs of public money to multi-national corporations

The National Government needs to reveal how much its plan to let buyers of Meridian shares, including overseas investment bankers, defer payment on 40% of their shares for 18 months will cost the taxpayer, Green Party Co-leader Dr Russel Norman said today.

It has been confirmed in the Dominion Post today that the ‘buy now, pay later’ scheme (effectively, an interest-free loan) will be open to all investors in Meridian, not just New Zealand retail investors as was implied by the Government’s earlier statements. In response to questions in the House, government ministers have stated that they have sought no official advice on how much this scheme will cost the Crown.

An updated Green Party estimate puts the cost at around $55 million. The cost of the Meridian sale, including the ‘buy now, pay later’ scheme will come on top of the $124 million that National has already spent on the asset sales. The net foregone profits from Mighty River are costing an additional $2.3 million a week.

“John Key’s generosity seems to know no bounds when it comes to hand-outs of public money to multi-national corporations,” said Dr Russel Norman.

“Days after we found out that Mr Key personally called Rio Tinto to offer them a taxpayer-funded gift if they would stop obstructing his asset sales, we learn that he is giving investment bankers interest-free loans to buy shares in Meridian.

“Government ministers say that they didn’t even ask Treasury how much these interest-free loans will cost. The best estimate is around $55 million.

“Mr Key’s corporate welfare has reached grotesque levels. The same Prime Minister who says he can’t afford to pay cleaners a living wage is splurging around $55 million on interest-free loans to subsidise overseas bankers’ purchase of Meridian shares.

“These interest-free loans are an irresponsible waste of the public’s money in a desperate attempt to save his faltering asset sales agenda.

“On the one hand, we have Mr Key admitting that the asset sales proceeds will struggle to make the bottom end of the $5-7 billion range that he promised while, on the other hand, the costs of the sales keep mounting every day.

“It was always economically reckless to sell these profitable, strategic assets. With falling proceeds and climbing costs, this is looking more and more like asset-stripping by the corporate raider on the ninth floor of the Beehive,” said Dr Norman.

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