Written By: - Date published: 7:20 am, January 17th, 2019 - 318 comments
Categories: Abuse of power, assets, capitalism, climate change, Deep stuff, democracy under attack, energy, Financial markets, global warming, john key, making shit up, national, national/act government, Politics, privatisation, Privatisation, same old national, sustainability, the praiseworthy and the pitiful, you couldn't make this shit up - Tags:
Remember the great power company privatisations that happened during the past National Government? Was that the best economic decision that a New Zealand Government ever made or was it a totally retrograde step that has left and will leave us all poorer?
The results are in …
This is a rewrite of earlier posts that I have done on the subject with some up to date analysis.
In 2014 and 2015 and 2017 I did very rough and ready calculations on what the sell off of shares in Mighty River Power, Genesis, Meridian and Air New Zealand conducted in 2013 and 2014 had cost us. The calculations are simple, add up the total dividend payments that are lost and work out the loss of capital value of the shares that were sold by comparing the sale price with the current market price.
The conclusion was that at some stage the privatisation was going to cost us more than it earned.
The current result? That the $4.7 billion that was raised by the asset sales has cost us $6.5 billion. We, as in New Zealand Inc, have lost $2.3 billion in dividend payments and the shares that were sold are now worth $4.2 billion more than when we sold them.
We should have kept the shares and banked the dividend income. We would have been much better off.
And the ongoing dividend stream will continue to be given to private entities. Things are going to get worse and worse and worse …
The results are:
As I said previously this may all end in tears if the stock market crashes and the sale may then look like it was a good idea. But it does look like an unmitigated disaster. As many of us said it would be.
The proceeds have all been spent. So we are left with no cash, a reduced dividend flow and a bit more than half of the value of the original shares.
There has been an attempt to justify the sale process and to suggest that the companies performance has improved because of the privatisation.
There are two problems with this. Firstly at the time Treasury told the companies to have a more commercial approach. The improved financial performance may have nothing to do with the privatisation. Correlation is not causation.
Secondly Meridian in particular has been in a holding pattern with power demand being stable rather than growing. It has been concentrating on making money rather than providing new infrastructure.
Because of climate change I would prefer that the electricity generators are less profitable and more sustainable. The mixed ownership model is obsessed with financial return and does not care about extraneous matters like survival of the human race.
The results clearly show that the last Government engaged in economic sabotage of our country. Or they preferred that private shareholders were enriched at the expense of the rest of us. I can’t tell the difference …