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Selling 3 Energy Companies In A Year Is Economic Negligence

Clayton
COSGROVE
SOEs Spokesperson

20 December 2012 MEDIA STATEMENT

Selling 3 Energy Companies In A Year Is Economic Negligence

The Government’s plan to sell three energy companies next year will flood the market and depress demand which will lead to low share prices and a bad deal for taxpayers, says Labour’s SOE’s spokesperson Clayton Cosgrove.

“National is now so desperate to sell its SOEs after the debacle of 2012 that it wants to foist all three onto the market next year. That is economic idiocy.

“The Government knows that there are only two windows to sell companies - that’s after the half-year and annual reports. Selling two major energy companies at once will flood the market.

“There simply isn’t the demand for three energy companies in the share market. Low demand means low share prices, which means the companies are sold off for a pittance. This is basic economics.

“With issues such as the future of the Tiwai Point aluminium smelter, the biggest electricity user in the country, up in the air, investors are already wary of the SOEs.

“The experts are dubious too. In September Brian Gaynor said: "It's a lot of shares in the same industry, you could probably do it if it was different industries, if it was an airport, if it was a port company, and if there was an electricity generator [to be partially-sold]."

“Selling our SOEs is a terrible idea in the first place. But flooding the market because your self-imposed timetable has slipped through your own incompetence is an insult to New Zealanders who take pride in their SOEs.

“Polls show 80% of New Zealanders are against the sales and over 300,000 people have signed the petition calling for a referendum. The Government must listen to the people and hold a referendum on asset sales.”

ENDS

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