Parliament

Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 

Mallard offers McCully briefing in govt accounting

26 September 2000 Media Statement

Mallard offers McCully briefing in govt accounting 101


Acting Finance Minister Trevor Mallard today poured cold water on Murray McCully's claims that the government plans to 'milk cash' from state owned enterprises for a social spend up.

Trevor Mallard said it is painfully obvious that Murray McCully is ignorant of both basic accounting principles and his own party's practice when they were in government. "McCully has shown himself up for not understanding the difference between capital investment and operational spending. However, I am happy to give him a special private briefing on basic government accounting.

"The Government made it very clear in the Budget Economic and Fiscal Update that we will consider reviewing of the capital structure of SOEs to align with commercial best practice. We also made it clear that any resulting capital would mean the Government would have to borrow less to build new schools, hospitals and prisons.

"This is not a sudden decision in response to any particular circumstances. Nor is it a shift in policy from previous governments. Indeed, former Finance Minister Bill English at one point guessed up to $1 billion could be pulled from SOEs," said Trevor Mallard.

"McCully's claim that the Government is seeking $180 million from TVNZ is a figment of his imagination. We are looking at a wide variety of options for the future shape of TVNZ and BCL and no decisions have been made yet."

Trevor Mallard said McCully's recent comments are the real mystery given the hundreds of millions of dollars that previous governments received from SOE special dividends over the past ten years. (refer attached table)

"Dividends are a mechanism whereby the capital structure of SOEs can be aligned with commercial best practice. The Government would be at fault if it did not investigate the payment of special dividends from time to time. Just last year, the previous government required the payment of a special dividend by TVNZ," said Trevor Mallard.

Trevor Mallard said reviews of capital structures are part of the Government's objective to run an efficient SOE sector. Appropriate capital structures allow SOEs to achieve their business needs, while ensuring their balance sheets are in line with good commercial practices. "For Mr McCully to call this interference simply shows up his ignorance in the way that both public and private sector companies use debt. To suggest that the government could use any released capital to fund social spending shows a complete lack of accounting knowledge. A change in capital structure will only affect capital provisions.

"During a review, it's up to the Board of each SOE to assess its capital structure, given the capital requirements of the business and appropriate gearing akin to industry norms. This is happening at the moment in relation to a number of SOEs and no specific proposals have been presented to the Government, " said Trevor Mallard.


ENDS

25/09/2000


SPECIAL DIVIDENDS
The following table lists special dividends from various State-Owned Enterprises over the last ten years.

State- Owned Enterprise
----------------90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99
New Zealand Post ::::::::: ::::::::: ::::::::: ::::::::: 42::: 40::: 85::: ::::::::: :::::::::
ECNZ-------------::::::::: ::::::::: ::::::::: 116::: 600::: 1173:: 158::: ::::::::: 2524
Meridian Energy ---::::::::: ::::::::: ::::::::: ::::::::: ::::::::: ::::::::: ::::::::: ::::::::: 81
Landcorp-------- ::::::::: ::::::::: ::::::::: 15::: 13::: ::::::::: ::::::::: :::::::::
Contact Energy--- ::::::::: ::::::::: ::::::::: ::::::::: ::::::::: 150::: ::::::::: ::::::::: :::::::::
TVNZ------------- ::::::::: ::::::::: ::::::::: ::::::::: ::::::::: 20::: ::::::::: ::::::::: 70

The numbers from the above table are in $ millions and were primarily sourced from annual reports. The list of special dividends is not exhaustive for example the Met Service has paid small special dividends over the period, and an additional $30 million was paid by TVNZ in 1999/00. However, the table is illustrative of past transactions.

In addition, Crown-owned companies have paid special dividends. For example, Housing New Zealand paid special dividends of $600 million in 1995/96 and $300 million in 199/98, and Auckland Airport paid $135 million in 1998/99.

As well as special dividends arising from capital structure reviews, special dividends can arise for a numbers of other reasons including the return of proceeds from an asset sale by an SOE, like the special dividend from Meridian Energy resulting from the sale of Cobb Power station. Other reasons for special dividends include the reconfiguration and establishment of new SOEs from existing SOEs, like the split of ECNZ to form Transpower in 1994/95, Contact Energy in 1995/96, and the three new SOEs in 1998/99. In these circumstances, the special dividends form part of a larger series of transactions whereby the Crown reinvests in the new SOEs being established.

ENDS

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

New Reports: Flood Risk From Rain And Sea Under Climate Change

One report looks at what would happen when rivers are flooded by heavy rain and storms, while the other examines flooding exposure in coastal and harbour areas and how that might change with sea-level rise.

Their findings show that across the country almost 700,000 people and 411,516 buildings worth $135 billion are presently exposed to river flooding in the event of extreme weather events...

There is near certainty that the sea will rise 20-30 cm by 2040. By the end of the century, depending on whether global greenhouse gas emissions are reduced, it could rise by between 0.5 to 1.1 m, which could add an additional 116,000 people exposed to extreme coastal storm flooding. More>>

ALSO:

 
 

Gordon Campbell: On The Commerce Commission Fuel Report

The interim Commerce Commission report on the fuel industry will do nothing to endear the major oil companies to the New Zealand public... More>>

ALSO:

Emergency Govt Bill: Overriding Local Licensing For The Rugby

“It’s pretty clear some clubs are having difficulty persuading their district licensing committees to grant a special licence to extend their hours for this obviously special event, and so it makes sense for Parliament to allow clubs to meet a community desire." More>>

ALSO:

Leaving Contract Early: KiwiBuild Programme Losing Another Top Boss

Ms O'Sullivan began a six-month contract as head of KiwiBuild Commercial in February, but the Housing Ministry has confirmed she has resigned and will depart a month early to take up a new job. More>>

ALSO:

Proposed National Policy Statement: Helping Our Cities Grow Up And Out

“We need a new approach to planning that allows our cities to grow up, especially in city centres and around transport connections. We also have to allow cities to expand in a way that protects our special heritage areas, the natural environment and highly productive land." More>>

ALSO:

Ombudsman's Report: Ngāpuhi Elder 'Shocked' By Conditions At Ngawha Prison

A prominent Ngāpuhi elder is shocked to find inmates at Ngawha Prison are denied water and forced to relieve themselves in the exercise yard... Chief Ombudsman Peter Boshier has released a report highly critical of conditions at the Northland prison. More>>

ALSO:

Promises: Independent Election Policy Costing Unit A Step Closer

The creation of an entity to provide political parties with independent and non-partisan policy costings is a step closer today, according to Finance Minister Grant Robertson and Associate Finance Minister James Shaw. More>>

ALSO:

School's In: Primary And Intermediate Principals Accept New Offer

Primary and intermediate school principals have voted to accept a new settlement from the Ministry of Education, which includes entrenched pay parity with secondary principals. More>>

ALSO:

IPCA On 'Rawshark' Investigation: Multiple Police Failings In Hager Searches Confirmed

The Independent Police Conduct Authority has found that the Police's unlawful search of Nicky Hager's property in October 2014 resulted from an unwitting neglect of duty and did not amount to misconduct by any individual officer... More>>

ALSO:

Broadcasting Standards: Decisions On Coverage Of Mosque Attacks

The Authority upheld one of these complaints, finding that the use of extensive excerpts from the alleged attacker’s livestream video on Sky News New Zealand had the potential to cause significant distress to audiences in New Zealand, and particularly to the family and friends of victims, and the wider Muslim community. More>>

 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels