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Wednesday, February 8

National selling assets returning 18.5% on average

The National Party is planning to sell state-owned assets (SOEs) making an average total shareholder return of 18.5% over the last five years, the Green Party said today.

The astonishing figure was revealed by Minister for State-Owned Enterprises, Tony Ryall, in Questions for Oral Answer in the House today. Total shareholder return measures performance from an investor perspective and includes the combined return from dividends and growth in the value of the company.

"The National Government told Parliament that Genesis, Meridian, Mighty River Power, and Solid Energy returned 18.5 percent per annum over the last five years," said Green Party Co-leader Dr Russel Norman.

"When the Government's average cost of borrowing is close to four percent, it's clear that we'll be much better off retaining the assets than selling them to private owners.

"It's not smart economics to sell assets that earn four times more than the cost of capital tied up in them."

Mr Ryall immediately downplayed the total shareholder return figure saying it was unreliable due to one-off revaluations.

"The Government is pointing to one-off revaluations to undermine Treasury's advice that they are selling high-yielding assets," Dr Norman said.

"Treasury regards total shareholder returns as one of the key measures of a company's performance. Figures averaged over five years smooth the impact of one-off events like the revaluation of assets.

"What the Treasury figures don't show is that Genesis, Meridian, Mighty River Power, and Solid Energy have recently invested heavily in new plant and equipment, so future dividend payments and capital growth are likely to be even higher than the 18.5 percent of the last five years.

"This is not a good time to sell our highest performing SOEs.
The Green Party outlined their different plan for our energy SOEs in the run-up to the election.

"We would retain our energy SOEs and the huge returns that they are making," Dr Norman said.

"We would, however, refocus them towards booming export markets in renewable energy creating tens of thousands of new jobs here at home.

"It's not smart economics to sell cash cows overseas, like our energy companies, and lose the best chance we have to create new, clean technology jobs here at home."