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Genesis sale sends asset sales cost over 1/2 billion dollars

26 February 2014

Genesis sale sends asset sales cost over half a billion dollars

John Key’s inability to admit that his asset sales have been a complete failure has now cost the New Zealanders taxpayer over half a billion dollars, Green Party Co-leader Dr Russel Norman said today.

The cost of the asset sales programme – including Treasury and SOE costs, give-aways to share buyers, foregone dividends, losses on sale, and the Rio Tinto payout – stood at $486 million before today’s Genesis sale announcement. The direct sales for Genesis are likely to total a further $20 million plus tens of millions for the bonus share give-away, and potentially much more in loss on sale.

“With the half a billion dollars that John Key has flushed down the drain on his asset sales, we could have employed thousands of teachers and nurses,” said Dr Norman.

“New Zealanders told Mr Key loud and clear that they didn’t want the asset sales. He has no mandate to continue wasting their money on his failed privatisation obsession.

“National’s decision to sell as little as 30% of Genesis is an admission that they botched the earlier sales. It also raises the question of why they’re going ahead with this sale at all. New Zealanders have shown no interest in forking out to buy what already belongs to them in the previous sales and aren’t likely to line up for Genesis shares either.

“The bonus share give-away is an expensive taxpayer hand-out to a small number of wealthy investors and National doesn’t even know how much it will cost. The Mighty River Power give-away cost $25 million. That’s an irresponsible use of public wealth.

“Rather than wasting its time and the public’s money on selling our power companies, National should have been tackling the massive increase in power prices on its watch.

“In government, the Greens will end asset sales, put an end to the excessive prices that the power companies charge families and businesses, and offer families independence from the big electricity companies with affordable solar power,” said Dr Norman.

Asset sales costs to date:
Total: $486.3m – the Genesis sale will add tens of millions to this total
Treasury spending $71.9m (as of 30 December 2013)
Spending by the companies $28.6m (as of 30 December 2013)
Incentives $58m
• Bonus shares for MRP $25.0m
• Cost of Meridian incentive $33.0m
Foregone dividends $84.4m
• MRP Final 12/13 $49.0m
• MRP Interim 13/14 $35.4m
Rio Tinto pay-off $30.0m
Asset sales referendum $9.0m
Waitangi water dispute $0.9m
• Māori Council legal aid $0.6m
• Waitangi Tribunal costs $0.2m
• (Crown's costs included above under Treasury)
Bonus payment to MRP CEO $0.5m
Losses on sale $203m
• Mighty River $167m gain
• Meridian $422m loss
• Air NZ $52m gain

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