National runs interference on returns of SOEs
green-party
Fri Feb 10 2012 13:00:00 GMT+1300 (New Zealand Daylight Time)
National runs interference on returns of SOEs
Friday, 10 February 2012, 10:10 am
Press Release: Green Party
10 February 2012
National runs interference on returns of SOEs
Energy state-owned assets (SOEs) up for sale have been returning 14.3 percent on average over the last five years even after discounting the rate for Solid Energy’s one-off revaluation, the Green Party said today.
In answers to Parliamentary questions earlier this week, the Prime Minister criticised Green Party calculations about the SOE’s rate of return, arguing that the Green Party numbers were inflated because they didn’t include the revaluation of Solid Energy.
“We took the Prime Minister’s words at face value and took the one-off revaluation of Solid Energy out of the equation. Even then, the Crown is making average total shareholder returns of 14.3 percent from the energy companies it is planning to privatise,” said Green Party Co-leader Dr Russel Norman.
“The Solid Energy revaluation does not fundamentally change the fact that our SOEs are profitable and earning a good rate of return.
“When the Government’s average cost of borrowing is close to four percent, it’s clear that we’ll be much better off retaining the assets than selling them to private owners.
“It’s not smart economics to sell assets that earn three-and-a-half times more than the cost of capital tied up in them.
“The Government is using one-off revaluations to spin Treasury’s advice that they are selling off high-yielding assets.”
The Parliamentary Library recalculated total shareholder returns from Genesis, Meridian, Mighty River Power, and Solid Energy for the last five years removing the one-off impact of Solid Energy’s revaluation. Treasury regards total shareholder returns as one of the key measures of an SOE’s performance.
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“Even by his own numbers, John Key can’t economically justify his ideological commitment to asset sales,” Dr Norman said.
“An alternative plan to selling off the best of our last remaining SOEs is to refocus their largely domestic focus towards booming export markets abroad in renewable energy.
“We can create tens of thousands of new, clean technology jobs here at home if we’re smart.”
Link to Parliamentary Library’s total shareholder return calculations:
http://www.greens.org.nz/sites/default/files/parliamentary_library_soe_financial_data.pdf
The Green Party's alternative plan for our energy SOEs:
http://www.greens.org.nz/greenjobs
ENDS
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