Clayton Cosgrove
SOEs Spokesperson

20 June 2014

Misleading costs the final insult on asset sales

Today’s claim by the Government that the cost of the asset sales programme was $120 million is just a lie, says Labour’s SOEs spokesperson Clayton Cosgrove.

“The Government and Treasury need to be straight up with the taxpayer on the costs of the asset sales which totals well over half a billion dollars. Treasury has ignored a whole series of costs and bonuses.

“National’s asset sales policy was a massive failure. At the last election John Key promised Kiwis the sales would raise between $5 billion and $7 billion. They ended up well short of that because they mismanaged the sales process and drove Solid Energy into the ground.

“The Government claimed that the costs of the sales would be no more than 2 per cent of the proceeds; however it has ballooned out to well over twice what they claimed.

“In their list of costs today, Treasury has omitted to include the bonus and free share schemes which cost $80 million, the $30 million subsidy for Rio Tinto, the increases to executive salaries, the foregone dividends and the losses on the sales .

“The Government needs to come clean on what the real costs to the taxpayer are. The asset sales programme has been a massive failure and misleading people over the costs is the final slap in the face for the public.”

Partial list of omitted asset sale costs and expenses
Bonus and Free Shares: $80m
• Bonus shares for MRP $25.0m
• Cost of Meridian incentive $33.0m
• Cost of Genesis bonus shares $22m
Foregone dividends: $147m so far
Rio Tinto subsidy: $30.0m
Bonus payment to MRP CEO, increased board and CEO salaries: At least $1 million (as supported by Bill English)
Losses on sale: $383m
• Mighty River $167m gain
• Meridian $422m loss
• Air NZ $52m gain
• Genesis $180 loss

ENDS

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