Is the Government bailing out Solid Energy using the Future Investment Fund or not?

Written By: - Date published: 2:15 pm, July 8th, 2013 - 18 comments
Categories: bill english, budget 2013, clayton cosgrove, Economy, john key, national - Tags: , ,

Solid Energy

Late last Friday during the man ban beatup and the finalising of the Sky City deal a further event occurred.  The Government released a stack of papers relating to the 2013 budget.

This morning on Morning Report Clayton Cosgrove was interviewed and commented that the Government had budgeted to spend $100 million to pay for Solid Energy’s creditors out of the Future Investment Fund.   Cosgrove has claimed that the release of the figure was because of a mistake of Bill English’s who had blotted out reference to the fund in one part of the documents but not another part.  He has criticised the Government because the announcement of this fund will mean that Solid Energy’s banks will know how much money the Government is willing to spend to keep Solid Energy afloat.  This mistake could cost the taxpayer big time.

The audio follows.

Clayton Cosgrove interview

Morning Report further reported that Bill English said that there is no commitment to pay the money yet.  The Future Investment Fund was being used because otherwise it would have to be borrowed and discussions with Solid Energy’s Banks was ongoing.

Bill English 

I have had a quick look at the papers.  Table 5 of the budget 2013 package which has the heading “Future Investment Fund Spending in Budget 2013” has an entry for already agreed investments which include Christchurch Hospitals Redevelopment, Irrigation Investment, Solid Energy recovery facilities and the National War Memorial Park with a total of $616 million for those items.  A break down does not appear but clearly some Future Investment Fund money is intended to be used to prop Solid Energy up.

There is also a figure in the Update on Budget 2013 Forecasts and Fiscal Strategy document showing a loss of $270 million described as “Solid Energy Impairment”.  The Performance Information for Appropriations chilling puts the value of Solid Energy at $66 million.

The Vote Finance Supplementary Estimates records what looks to me like two separate $50 million facilities for the period of 2012 to 2013.  I have not seen the Cabinet Paper that Cosgrove is talking about but I presume these are the facilities he is talking about.

TVNZ said that Key has insisted there had never been any discussion about paying for the bailout from asset sales.  The article contains the following quote from Key.

“Look at the end of the day there’s a whole range of views come out of Treasury about what should happen next but none I’ve seen is to take money out of the mixed ownership process.

“If the Crown has to make a capital injection if that’s what it decides to do with Solid Energy to try and resuscitate it, then yeah it can go and do that. But it’s not going to come out of the mixed ownership money.”

But this morning he changed his tune.  Stuff is reporting him as follows:

“I think he’s [English] saying that technically it was in the rules – it might be possible,” he said.

He said the allocation appeared to be “buried pretty deep” in the budget documents.

” I haven’t actually seen those myself – well I can’t recall them.

“All I can tell you is that that decision hasn’t been made because firstly it might be $100 million, and where the money would come from, whether we’d actually bail them out, they’re all very complex issues and those decisions haven’t been agreed.”

A chocolate fish to the person who can logically reconcile Key’s statements.

18 comments on “Is the Government bailing out Solid Energy using the Future Investment Fund or not? ”

  1. infused 1

    I hope it’s not bailed out.

  2. One Anonymous Knucklehead 2

    He’s a very accomplished liar, this Key character. Figures out the right thing to say, says it with certainty, and when the truth comes out, doesn’t skip a beat, just changes the story on the hoof. Can’t recall, a technicality, there were fifty thousand shares, yeah a hundred thousand shares.

    • Tim 2.1

      “Pathological Accomplishments: The story of the NZ National Party’s Survival”

      Published by Fran O’Sullivan Books, 2014

  3. Tom Gould 3

    Easy. When Key said they were not spending asset sales money on bailing out Solid Energy and English said they were, what English meant was that they aren’t and Key meant they are, which is proven by the fact that Cosgrove is just playing politics and scoring cheap points. And Labour bailed out the BNZ, so they started it. The fact is that Solid Energy is an SOE and so is half of MRP, so the issue doesn’t really arise anyway. Nothing to look at here. Next.

  4. Bunji 4

    John Key keeps promising the earth from asset sales proceeds but knows that there is no way the money will cover all his promises. It’s printing money, National Party-style.

    They have said they will spend it on Kiwibank, irrigation schemes, schools and hospitals, the rebuilding of Christchurch, KiwiRail, paying down Government debt, and building the City Rail Link, all of which totals $84 billion, but they keep adding more like this…

    Not bad for the $1.7 billion they’ve raised from asset sales so far…

  5. Bunji 5

    “I haven’t actually seen those myself – well I can’t recall them.”

    Our PM must model himself on Ronald Reagan, such is his amazing powers of recollection.
    This should be his theme tune:
    http://mrjohnclarke.bandcamp.com/track/cant-recall-alan-bond

    • karol 5.1

      Interesting that Key actually slips up and uses 2 stock spin lines at once.

  6. Tim 6

    “Is the Government bailing out Solid Energy using the Future Investment Fund or not?”
    – John Phil-Stein Key says NO
    – The superficially ‘inquiring minds’ of the MSM say NO (according to ‘reliable sauces – like press releases and gallery gossip)
    – Paddy Gower, bromancer Mediaworker sage, and his E-spinner say NO-O-O-O
    – Computer says NO

    Therefore: answer MUST be NO.
    Besides which their twitters are all aflutter and their facebooks (completely secure) have arrived at a consensus, and their self-accredited reliable ‘sauces’ have conclided – the answer is NO.

    The next most important issue is of course WHERE it’ll fit on tonight’s ONE Network News (YOUR News), or 3 Newsed and abused

  7. Blue 7

    “Yeah, but nah, but yeah. I don’t recall anything like that – I mean, shit, who ackshully reads the fine print? I don’t think I’d let Bill do that, but he just tunes me out sometimes so maybe. I mean, we’re using that fund to pay for fucking everything, basically. Look! Over there! It’s a male Labour MP! Better get on that before they go extinct, knowwhaddimean?”

  8. dewithiel 8

    @ Blue
    Nail on the head, hit!

  9. Yes 9

    This a snapshot of a whole lot of papers

  10. Ad 10

    Top work mickey.

    Good hit in a week of shearer misery.

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