4 April 2013

Asset sales led to higher directors’ fees and higher power prices

The cost of National’s asset sales has risen again with Mighty River Power’s board receiving extravagant pay rises, and it’s Kiwi households and businesses who will pay through higher power prices, Green Party Co-leader Dr Russel Norman said today.

The National Government has announced that it is giving Mighty River board members a 73 percent pay rise to $85,000 a year and a 53 percent raise for the Chair to $150,000 a year. A further $85,000 will be allocated for additional fees to directors for committee work. National’s justification for these increases is to match private directors’ rates ahead of the sale of Mighty River.

“National’s asset sales mean higher pay packets for electricity company directors, which will have to be paid for through higher power prices for Kiwi families and businesses,” said Dr Norman.

“So much for the promise that privatisation would deliver cost-efficiencies and savings. Mighty River isn’t even on the market yet and privatisation is already pushing up its costs.

“This is emblematic of the high cost/high profit model of privatised electricity companies, which sees private power companies charge consumers 11 percent more on average than publicly-owned ones.

“These latest costs come on top of the hundreds of millions dollars of taxpayer money that National is wasting on its asset sales agenda.

“The claim that extravagant pay packets for directors are necessary to get better performance out of Mighty River is rubbish. As an SOE, Mighty River won the Overall Energy Company of the Year and the Innovation in Electricity Award at the most recent Deloitte Energy Excellence Awards, beating out private sector competition with more expensive directors.

“Asset sales equal higher costs and higher power prices. Contact confirmed as much this week when it called for higher power prices so it could pay larger dividends to its private owners.

“New Zealanders don’t want asset sales and we can’t afford them. National should put its asset sales agenda on hold until the referendum is held and listen to the will of the public,” said Dr Norman.

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