Some Solid questions on energy
It beats me why some people are so opposed to the sale of our state-owned enterprises. We're all being royally shafted by the current SOE model.
It's reporting season for our SOEs, and what have we learnt this month? The state-owned power companies have been gouging us for all they're worth - and Solid Energy is deeply in debt.
How deep? About $400 million, apparently. John Key has said the Government won't let Solid Energy fall over, so we can assume taxpayers are up for at least this much, probably more.
Meanwhile, Meridian Energy has just posted a half-year profit of $173m and a $100m dividend to the Government. Genesis Energy posted a $196m half-year result and handed $57m back to the Crown.
Given that almost all of that came from higher operating revenue - in other words, higher power prices - you and I just gave the Government a whole lot of extra tax.
And now we get to bail out Solid Energy after it paid out $23m in bonuses to top staff and a salary of $1.1m to ex-chief executive Don Elder, who walked away having sacked 400 people and overseen a plunge in profit of 175 per cent.
Nice work if you can get it.
New Energy Minister Simon Bridges is surprisingly reluctant to talk about any of this, and Key isn't that keen either. But I've got five solid questions I'd like answered on behalf of taxpayers:
1. If the Government has known since 2009 that Solid Energy was in trouble, why did it let things get so bad? It's no good quoting the SOE Act at us. The minister has the power to carpet the board chairman and demand changes. It's our money they're playing with.
2. Why did the Government allow Solid Energy to "invest'' in alternative energy? It's a coal company, for Chrissake. And blaming the former Labour government, as Key has done, is so last century. The statute of limitations has expired on that one, John.
3. Since when were SOEs allowed to act like merchant banks? Grid operator Transpower once entered into a questionable tax-avoidance agreement with an American investment bank involving funds being channelled through the Cayman Islands. Meridian is meanwhile building wind farms in Australia. I thought it was supposed to be generating electricity for New Zealanders? Pretty ironic considering power is cheaper in Australia than it is here.
4. Did Elder receive a golden handshake on top of his $1.1million salary when he left Solid Energy? If so, how much was it and did the Government either know about it or try to stop it? Again, don't quote the SOE Act. Both National and Labour have been very vocal on golden handshakes in the past when it suited them politically.
5. Why did the Government continue to accept large dividends from Solid Energy even when it knew it was in serious trouble? Isn't that just robbing Peter to pay Paul? And aren't we Peter?
I admit I'm no expert, but it looks to me as if taxpayers lose either way under our current SOE model. We either pay through the nose for our power with little or no government regulation on price or we watch poorly performing SOEs bailed out with our money.
I know the sale of SOEs has always been a political hot potato, but let's look at it rationally rather than emotionally. Why does the public need to own a coalmine? Or a power company? Or an airline?
Here's my suggestion: Sell the lot, but only after decent regulation to protect the consumer has been put in place. Here in New Zealand we pay high prices for monopoly services that are effectively government-owned.
Former energy minister Gerry Brownlee talked tough a few years back about taking on the power companies, but of course nothing came of it. According to a study by Victoria University researcher Geoff Bertram we have some of the highest power prices in the OCED. Is it any wonder, when the Government is both poacher and gamekeeper?
There's no reason I can see why taxpayers should be exposed to risks taken by wannabe venture capitalists or price-gouged by our own companies. Selling them off is the only way to create a level playing field and provide any real competition for the poor old consumer.
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