Folly of asset sales exposed by Meridian windfall dividend

The folly of the National Government's asset sales was exposed today when Meridian Energy announced a windfall dividend which the Government will now only get half of, the Green Party said.

“Meridian’s windfall dividend underlines that selling good assets to cut debt is plain bad economics,” Green Party Co-leader Dr Russel Norman said today.

“These are dividends the Government should have.”
Meridian, now 49 percent owned by private interests, including substantial foreign interests, today announced a better than forecast profit for the year to June 30, including a 2 cents per share special dividend from the sale of excess land.

“The Crown will receive a windfall of $26.2 million but it would have been over $50 million had the Government not sold this superb asset,” Dr Norman said.

The better than forecast net profit of $229.8 million for the June year meant the power company would pay a final dividend of 6.82 cents per share, giving a total dividend of 11.0 cents, or $143.1 million for the Government.

“We are likely to see this story of foregone Crown dividends repeated many times, while the semi-privatised power companies will be under pressure to increase prices,” Dr Norman said.

“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.

“Meridian reported that electricity demand is flat, but households are still paying higher bills. The average power bill has risen 20 percent since National came to office.

“National’s solution has been to sell government power companies like Meridian - a lose-lose situation where companies will be pressured to return higher profits via higher prices, while the government will also lose the income stream from those companies.

“The Green-Labour NZ Power initiative will cut the average household’s bill by $300 and we will regulate the market to get people off the higher bill treadmill,” Dr Norman said.
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