Labour spits over National's asset sale figures

MICHAEL FOX
Last updated 15:22 20/06/2014

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The Government says its controversial asset sales programme cost the taxpayer $120.6 million, less than expected, but Opposition MPs say it is a gross underestimate.

The sale of the four state-owned assets raised $4.67 billion, just within its target range, though this was revised down from an initial target of between $5b and $7b.

Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall released the figure today, saying the $85.5m cost was 1.83 per cent of the total raised.

The companies that were partially sold also incurred an additional $35.1 million in costs associated with the programme, bringing the total to $120.6m.

"In the context of a programme that raised almost $4.7 billion to be reinvested in new priority public assets, it represents good value for money for New Zealand taxpayers," the ministers said in a statement.

The cost incurred by the Government was made up by $12.6m spent on promoting the sales, $64.9m on contracting out services and Treasury costs of $7.9m, with the Government maintaining the total amount was low by international standards.

Ryall said more than 85 per cent of the shares had been sold to the public and strengthened New Zealand's capital markets and the Government had raised billions to spend on new public assets.

'A SLAP IN THE FACE'

Labour's state owned asset spokesman Clayton Cosgrove accused the Government of hiding the true cost of the sales.

"This is the final insult and slap in the face for the New Zealand taxpayer," he said.

The $85.5m figure excluded other costs such as the $30m given to Rio Tinto to ensure the Tiwai Point aluminium smelter remained open, the cost of the free shares offered as incentives for retail investors, pay rises given to directors as a result of the privatisation and the cost of the Waitangi Tribunal claim over water rights, he said.

"So none of that has been accounted for. If you add it up it's more like $500m," Cosgrove said.

He said the sales process had been a flop given the initial sales target of between $5b and $7b.

The figure showed the Government was trying "a sly way of hoodwinking taxpayers to say on top of all the money we wasted on this we haven't wasted as much as you thought".

Green Party co-leader Dr Russel Norman put the total cost at more than $640m, saying the Government was "being extremely tricky".

Norman put the cost of bonus shares and incentives paid for the sale of Genesis, Mighty River Power, and Meridian at $80 million, while the loss of dividends exceeded lower interest repayments by $145m. Norman said the sale proceeds were $378m below the book value of the assets.

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He also included the $9m spent on a referendum promoted by those opposed to the sales, including the Green Party, and said the bonuses paid to CEOs of those SOEs totalled $1m.

"Over a million people voted against the assets sales in the referendum," he said.

"Nearly everyone understood it was a bad idea. That National is not going into this election with an asset sales programme shows that even they understand it has been a failure," he said.

"New Zealanders will pay for these costs through higher power prices and the loss of services the dividend payments could have paid for."

- The Press

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