David
SHEARER

Labour Leader

13 April 2012 MEDIA STATEMENT

Taxpayers set to lose bulk of dividend stream from asset sales

A so-called ‘minor policy decision’ will allow National to sell off more than half of the value our power companies generate despite its promise to keep dividends flowing back to Kiwi taxpayers, says Labour Leader David Shearer.

Labour has discovered that the Mixed Ownership Model bill and an accompanying Cabinet paper make it clear that in future the 51% ownership that the Government keeps talking about will only apply to voting rights, not to all shares that give access to dividends.

“This has major implications because it potentially means the bulk of the future revenue could be lost to foreign and corporate investors who could own the dividend-collecting shares.

“Theoretically, there is no limit to the amount of non-voting shares that could be issued and sold - diluting the dividend the Crown receives to a tiny proportion while meeting the Government’s promise to retain 51% of the voting rights.

“For example, if the Crown floated the company with 900 non-voting shares and 100 voting shares, the shareholding Minister would only be required to hold 51% of the voting shares, not 51% of the total stock.

“This essentially means it is possible that the taxpayer could end up as owners in name only with just a fraction of the profits. It is just one more reason why Kiwis risk ultimately losing the value and effective control of these precious national assets.

“In general, an ordinary share comes with voting rights and rights to dividends. However, by creating different classes of shares, a company can sell as many non-voting shares as they like, said David Shearer.

“This would undermine Treasury’s forecast of its predicted revenue stream flowing into the Government’s coffers.

“National should be honest with New Zealanders if this is what it intended and explain how it will now fulfil its promise that the majority of profits from these companies will remain in the control of Kiwis.”

ends

© Scoop Media