About 12 months ago I wrote this post on the loss of dividends that would otherwise have been paid to the Crown because of National’s privatisation activity. I calculated the country had lost $360.7 million in dividends although there had been a saving in interest. And the country had also missed out on $485 million in the increase of the value of the shares.
I did another back of the envelope calculation today based on the latest company announcements. I am afraid that things are way worse. It looks like we lost $471 million in dividends not to mention further capital gains in the value of the shares we sold.
My calculations may be wrong. Back of the envelope calculations while watching Auckland v Canterbury even using Excel are not optimal. And I have not tried to understand any changes in capital structure and what consequences they may have had. But I think that the New Zealand nation has been royally rogered by the sale of the power company and Air New Zealand shares.
I repeated the calculations and the figures this year are worse. Far worse …
The results are:
My quick calculation is that since their sale the shares the Government sold have increased in value by $1.378 billion. Over the past two years we have lost that in capital increase and $831.7 million in dividends. We did receive $4.7 billion in sale proceeds although this is before the cost of selling the shares.
Overall in two years we have gained $4.7 billion less expenses but we have lost $1.4 billion in capital gains and $831.7 million in dividends. That is $2.23 billion or nearly half of the sale amount. And we were paying less than 5% interest on the debt the Crown claims to have retired.
To put it in perspective the amount lost in dividends alone could have paid for 17 flag referendums or built a sheep farm in a Saudi desert and bribed an influential member of Saudi society 41 times.
Each year barring some major change the comparison will get worse and worse. If our leaders are the financial geniuses they profess to be they would have kept the shares.