John Key has committed to giving up the National Party’s leadership (and, presumably, politics altogether) if he loses the next election. That didn’t stop him from committing the next National Government from reversing NZ Power and putting up electricity prices when it comes to power (what are we talking? 2020? 2023?).
It got me thinking about the people who are so keen to kill NZ Power in its cradle and why. I’ll be doing a series of posts on them and their motivations over the coming days.
Let’s start with the most constitutionally dubious.
Doug Heffernan is the CEO of Mighty River Power, currently a fully owned government agency with the misnomer ‘Mixed Ownership Model Company’. The man is a public servant, a taxpayer-paid employee of our government. In fact, he’s possibly the most well paid taxpayer-paid employee in New Zealand history.
Heffernan has been CEO of Mighty River since it was created when ECNZ was carved up in the culmination of the disastrous Bradford Reforms in the 1998. In that time he has been paid $15 million. His pay has nearly quadrupled to $1.5 million. This year, he’s getting an extra $500,000 to stay on past the sale (as if he’s going anywhere) and has reconfirmed for at least another year.
His pay is expected to rise even further after the sale. For reference, Contact’s CEO gets $1.5m too, plus half a million in shares. Heffernan will expect similar after the sale. And, once you’re being paid in shares, you have a huge financial interest in the share value climbing, no matter what.
In fact, if I’m reading the Offer Document correctly, Heffernan can buy up to $750,000 shares in the float, most of them paid for by Mighty River (ie gifted to him by me and you). Of course, he wants a big surge in the float due to over-subscription as institutional investors buy out retail investors. It would make him a butt load of money. And that will only happen if lots of ‘mums and dads’ and lots of corporates think Mighty River is a good bet.
NZ Power is a direct threat to the health of Heffernan’s bank accounts. It will cut Mighty River’s profits by about two-thirds – with a similar effect on the share price. It will mean that its directors will have to cut their clothe, and their over-blown executive pay packets.
So, no wonder Heffernan, the most highly paid public ‘servant’ of all time, took the extraordinary and unconstitutional step of commenting on political parties’ policies. He called NZ Power ‘socialist‘ (as if that’s a bad thing) because it means lower power bills for you and me, which means less pay and lower share values for him.
Remember, when Doug Heffernan pops up to say that he doesn’t think it’s a good idea for you to pay less for power that he has made millions off the current broken system and stands to make millions more if we stick with National’s broken system. Doug Heffernan’s bank accounts will be a lot more healthier if you keep on paying too much.