9 May 2012

Asset sales don’t add up

New figures, which show that New Zealand has lost $21 billion in dividends since the sales of BNZ, Telecom, and Contact, prove that asset sales are a folly that we don’t need to repeat, Green Party Co-leader Russel Norman said today.

BNZ, Telecom, and Contact were sold for a total of $7 billion and have paid out $21 billion in dividends since privatisation.

“The lesson of past privatisations is that the lost profits always exceed the sale revenue and the Government ends up worse off in the long-run,” said Dr Norman.

“The same thing would happen again if the National Government sells our energy companies.

“These are highly profitable assets, which pay dividends well above the Crown’s cost of borrowing.

“A business wouldn’t sell these assets, why should the Government?”

The 2012 Budget Policy Statement shows the lost profits from asset sales would exceed the interest savings by nearly $100 million a year.

“The $100 million a year hole in the Government books caused by asset sales would have to be filled by more borrowing, tax increases, or cuts to public services.” said Dr Norman.

“Asset sales just don’t add up.

“Privatisation in the 1980s and 1990s was an economic and fiscal failure, and it will be again if National pushes ahead with its asset sales agenda,” said Dr Norman.

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