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Govt tricky on real cost of asset sales

Govt tricky on real cost of asset sales

The true costs of the Government’s asset sales are over $640 million, more than five times the $120.6 million National is claiming today, Green Party Co-leader Russel Norman said.

“The Government is being extremely tricky when it says Treasury’s cost for the asset sales was just $85.5 million plus the $35.1 million paid by the companies themselves,” said Dr Norman.

Among the other costs to get the sales away were:

• The cost of bonus shares and incentives paid for the sale of Genesis, Mighty River Power, and Meridian - $80 million

• A $145 million difference in the cost of foregone dividends and reduced interest costs

• $30 million paid by the government to stop Rio Tino closing the Tiwai Point aluminum smelter

• Over $378 million net loss of assets against book value

• Asset sales referendum $9 million

• Bonus payment paid to CEOs of SOE’s $1 million

“The asset sales were projected to bring in between $5 billion to $7 billion. Instead they realised $4.7 billion in gross terms and under $4 billion when all the costs are account for,” Dr Norman said.

“The interest received from sales is less than the foregone dividends – that’s plain bad economics.

“Over a million people voted against the assets sales in the referendum. Nearly everyone understood it was a bad idea. That National is not going into this election with an asset sales programme shows that even they understand it has been a failure.

"New Zealanders will pay for these costs through higher power prices and the loss of services the dividend payments could have paid for,” said Dr Norman.

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