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Taxpayers lose when public assets sold offshore

Taxpayers lose when public assets sold offshore

28 January 2011

Labour leader Phil Goff today released figures which show how National's sale of Contact Energy in 1999 was a bad deal for taxpayers but a great deal for foreign companies.

"Foreign-owned Edison made a lot of money out of the sale of Contact,” Phil Goff said. “It sold its 51 per cent stake in Contact for nearly $1.7 billion in 2004 when the whole company was sold for $2.3 billion in 1999.

"That's windfall money New Zealanders missed out on and foreign companies walked away with. There's only one winner out of privatisation and it's not the taxpayer," Phil Goff said.

"For John Key to claim selling our prized assets to foreigners will be good for the economy is nonsense and these figures prove that.

"Since it was sold offshore, Contact has paid out dividends of $1.5 billion to its private shareholders - that's more money that has gone offshore and hasn't been delivered back to the country,” Phil Goff said.

"Also, National made a big deal of selling Contact to ‘mum and dad’ investors in 1999 --- just as John Key claimed this week that these same mysterious investors would buy our power companies and Air New Zealand.

"But the figures I am releasing today show that was fallacy then and will be again if John Key gets his way.”

Phil Goff said the figures show:
o The number of shareholders fell 34,845 in just six months after the sale in 1999.
o The number of shareholders has fallen from 225,000 at sale to just 80,911 last year.
o The majority shareholder is Australian-owned Origin Energy with 51 per cent
o Just under 75 percent of shares are held by 20 companies



"These figures show that once a state asset is sold, foreign-owned companies quickly swoop in and take control, leaving New Zealanders out in the cold and out of pocket,” Phil Goff said.

"Other figures released today also show what a bad deal the sale of Contact was for New Zealand.

"Contact also charges amongst the highest prices in the country while directors' fees rose from $270,000 in 2003 to $993,000 in 2010.

"Contact is just one example of the failure of privatisation --- think Air New Zealand, TranzRail and Telecom. None worked for New Zealanders and left us in a worse position.

"Labour will stop National's privatisation agenda. Labour is committed to keeping Kiwi assets in Kiwi hands," Phil Goff said.

ENDS


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