Headline: Mighty River sale leaves $2.3m a week hole in Government’s books
So much for the supposed business acumen of the National Party; they sold an asset that’s returning four times the Crown’s cost of borrowing
Mighty River Power’s financial results show that National has increased the Government’s net deficit by $2.3 million a week by selling a profitable public asset, even after accounting for the reduced cost of Government debt, Green Party Co-leader Dr Russel Norman said today.
Today’s financial results show that Mighty River Power recorded a shareholder equity gain of $167.7 million and issued dividends of $168 million in the 2012/13 financial year. Total Shareholder Return is the change in shareholder equity plus dividends, which equates to a 11.1% return for MRP. Yet the average Government 5-year bond borrowing rate was only 2.9% for the same year. Thus, the net position of the Government, accounting for reduced Crown borrowing costs, as a result of selling 49% of Mighty River is $2.3 million a week worse, or $121.7 million for the full financial year
“So much for the supposed business acumen of the National Party; they sold an asset that’s returning four times the Crown’s cost of borrowing,” said Dr Norman.
“Today’s result show that Treasury was right: asset sales increase the Government’s fiscal deficit. The Government is losing over $2.3 million each week on foregone net profits due to the Mighty River sale. That’s on top of the $66 million that the sale process itself cost the taxpayer.
“The cruel irony is that those New Zealanders who listened to National’s expensive ad campaign and invested in Mighty River have also lost money as the share price has fallen.
“The only people who seem to be profiting from National’s asset sales are the stock-brokers, the lawyers, and the ad-men who are clipping the ticket, and the big institutional investors.
“Asset sales just don’t add up. That’s why the overwhelming majority of New Zealanders are so strongly against them.
“National could save whatever remains of its tattered economic credibility by listening to New Zealanders and cancelling the remaining asset sales,” said Dr Norman.
Additional information:
|
Mighty River Power return |
$m |
|
Shareholder equity, 30 June 2012 |
$ 3,014.0 |
|
Shareholder equity, 30 June 2013 |
$ 3,181.7 |
|
Equity return |
$ 167.7 |
|
Equity return % |
5.6% |
|
Dividends |
$ 168.0 |
|
Dividend return % |
5.6% |
|
Total Shareholder Return |
$ 335.7 |
|
Total Shareholder Return % |
11.1% |
|
Average 5-yr bond rate 2012/13 (source: Treasury) |
2.9% |
|
Net TSR % |
8.2% |
|
Net TSR |
$ 248.29 |
|
Net TSR on 49% |
$ 121.66 |
|
Net TSR on 49% per week |
$ 2.33 |
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