Contrasting asset sale dividend claims

Greg Presland did some “back of the envelope calculations” on dividends on assets part owned by the Crown in Imagine if National had not sold the shares in our companies 2015 version.

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:

  • Meridian paid a total dividend of 18.23c a share compared to last year’s result of 13.01c per share.  If the shares had not been sold the dividends that would be paid to the Government would total $229 million this year not to mention $163.4 million last year.
  • Mighty River Power’s profit went down but it still paid a dividend of 19c a share.  Dividend loss to us, $128 million and last year $91.2 million.
  • Genesis Energy increased its dividend payout to 16c per share compared to last year’s payout of 13c per share.  Dividend loss to us last year was $61.9 million and this year is $78 million.
  • Air New Zealand had a bumper year and announced a total dividend of 16c per share.  The value of the shares National sold increased by $186 million and the dividend loss this year was $35 million.

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.

Brian Gaynor looks at some different numbers at NZ Herald in Air NZ privatisation has paid off for taxpayers:

There is a widely held belief that the partial privatisation of state-owned assets is a complete ripoff, that taxpayers are being taken to the cleaners.

This opinion was expressed in a letter to the Weekend Herald following Air New Zealand’s recent profit announcement. The reader wrote: “Just a few years ago, the taxpayer bailed out the airline to the tune of $900 million. Wouldn’t it be lovely to run a company that when you make a profit, management takes credit and if you make a huge loss, the taxpayer bails you out. It is now time to repay its profits to the taxpayer.”

These comments are totally inaccurate, as an analysis of Air New Zealand – as well as Genesis Energy, Meridian Energy and Mighty River Power – illustrates that taxpayers have achieved fantastic returns from the Crown’s shareholdings in a number of NZX-listed companies.

That’s quite a different story. On Air New Zealand:

In September 1996, Air New Zealand acquired 50 per cent of Australia-based Ansett Holdings and in February 2000 it acquired the remaining 50 per cent.

Ansett went bust in September 2001 and Air New Zealand was in serious financial difficulty.

The company reported a loss of $1425 million for the June 2001 year, and in October 2001 the Crown agreed to put $885 million into the ailing carrier. This comprised a $300 million loan, in the form of convertible preference shares, and the purchase of new shares for $585 million. The convertible preference shares were switched into ordinary shares in 2005.

In 2004, Air New Zealand had a rights issue at $1.30 a share and the NZ Government purchased a further $150 million worth of new shares.

What has the Crown received in return for its $1035 million Air NZ investment?

• It has collected total dividends of $765 million.

• It received $365 million for the sale of 221.3 million shares in November 2013 which reduced its shareholding from 73.2 per cent to 53.1 per cent.

Thus, the Crown has received a cash return of $1130 million for its $1035 million investment. In addition, its remaining 582.9 million Air NZ shares were worth $1446 million at Thursday’s closing price of $2.48 a share.

It is inaccurate to claim that taxpayers have been shortchanged by Air New Zealand and its management team when the Crown’s total investment of $1035 million is worth $2576 million. This includes dividends received, the proceeds from shares sold and the value of its remaining shares.

The Air New Zealand investment has had an extremely positive outcome for taxpayers.

And on the more recet part asset sales:

The Air New Zealand investment has had an extremely positive outcome for taxpayers

Another issue is the partial privatisation of Genesis Energy, Meridian Energy and Mighty River Power and whether taxpayers have had a positive outcome from this strategy.

One of the major arguments against the sharemarket listing of these electricity generators was that the Crown would lose 49 per cent of its dividend income if it sold 49 per cent of these companies.

The figures in the accompanying table tell a different story.

The Crown will receive total dividends of $440 million from the three electricity generators for the year to June, when they are all 51 per cent owned by the Government, compared with $485.8 million two years ago when they were all 100 per cent tax-payer-owned.

Thus the Crown has received $4308 million from the partial sale of these companies yet its dividend income has fallen by only $45.8 million. This is a remarkably positive outcome for taxpayers.

The reason for this is that companies usually lift their performance after an IPO, mainly because they are subjected to far more scrutiny. It is somewhat similar to a football team performing much better in front of 50,000 fans compared with at a training run with only a few coaches.

For example, Genesis Energy has gone from one shareholder to more than 55,000 shareholders, Meridian Energy from one to nearly 49,000 and Mighty River Power from one shareholder to in excess of 100,000.

The combination of a large number of outside shareholders, directors and senior management owning shares, and greater scrutiny by these shareholders and the media means that partially privatised companies are likely to perform much better than 100 per cent Crown-controlled entities. As a consequence, they also tend to pay higher, more sustainable dividends.

Gaynor concludes:

It is patently clear that a sharemarket listing and 51 per cent Crown ownership has been a win-win situation for taxpayers and investors in Air New Zealand, as well as the three electricity generators.

That’s quite different to Presland’s back of an envelope claims.

Green hypocrisy on priority of referendums

Last term the Greens spent a lot of time, effort and money campaigning on promoting a referendum on asset sales. This was a costly exercise in futility because the Mixed Ownership Model legislation had already passed through Parliament.

Costly to the tune of $6.7 million dollars, for what was little more than an extended taxpayer funded campaign for the Greens.

Talking of cost the Greens (with Labour and NZ First) also effectively sabotaged the partial asset sales with potentially hundreds of millions of dollars being lost to the country – see Greens/Labour sabotage could cost MRP float $400m (that is for one sale alone).

In contrast this term the Greens are campaigning against referendums that will give New Zealanders the chance in a lifetime to choose an alternate flag and then to choose whether they want to change to it or not.

Two referendums to ensure we the people have a chance to decide.

Plus an inclusive process that has resulted in over ten thousand design submissions. Many people have put a lot of time and thought and effort into contributing.

But because it suits them this time the Greens oppose the cost of two  referendums that aren’t futile, referendums that give people a real choice.

New Green leader James Shaw was opposing the flag referendums in Parliament yesterday – see the transcript 4. Prime Minister—Flag Referendum

Shaw questioned John Key’s priorities – he wasn’t in Parliament last term when the Greens prioritised in using millions of dollars of  taxpayer money to campaign against asset sales last term, and possible costing the country millions of dollars.

James Shaw : Given that climate change submissions outnumbered flag submissions by 15,000 to 2,300, does he think that changing the flag was the right priority for him to personally champion?

Shaw was promoting a Green sham, trying to equate number of submissions with level of support. Key pointed this out.

When it comes to climate change, the member is right. There were 17,023 submissions received by the Government, but actually most of those were stock standard ones.

They were pro forma and they were prompted by the Green Party. In fact, there were only 1,485 submissions that were unique.

If we go to the flag—something of interest because it was the member’s primary question—he may be interested to know that there were 146,000 views of the New Zealand flag history video, that 6,000 people visited workshops and information stands, and that there were more than 850,000 online visits and about 2.7 million views of the flag gallery.

And there have been over ten thousand flag designs submitted – most of them individual efforts, may of them substantial personal efforts.

Greens seem to want democracy and don’t mind about the cost of democracy when it suits them, but not when it doesn’t fit with their own agenda.

They put a priority on a costly and futile referendum last term. And they put a priority on financially sabotaging asset sales.

But they oppose the Government working on multiple issues concurrently, including climate change and flag change.

Are Greens for or against giving New Zealanders a chance in a lifetime opportunity to decide on an alternate flag design, and then choose if they prefer that or the current flag?


Is the Green Party for or against referendums?

UPDATE: I posted the above flag on Twitter and @metiria responded:

Pete you do remember we campaigned for a referendum on asset sales and won it?

I’ve asked her if she supports the flag referendums and will post a reply if I get one.

Got one now:

If the flag is going to change it shld be by referendum not govt decision. But its not my priority for spending now.

So she supports the concept of flag decision by referendum but apparently won’t support the planned flag referendums if I read that right.

I’ve prompted her to clarify: ” I’m not asking about priorities, I’m simply asking if you support the flag referendums”.

support the use of a referendum for this decision. I dont support the timing of it or the use of so much money.

So that sounds like she doesn’t support the flag referendums but was happy to have our money spent on her own last term.

Final asset sale referendum results

The final result shows only minor changes.

Citizens Initiated Referendum 2013

Final Result

17 December 2013
The Electoral Commission has released the final result for the Citizens Initiated Referendum on the question:
“Do you support the Government selling up to 49% of Meridian Energy, Mighty River Power,
Genesis Power, Solid Energy and Air New Zealand?”
Votes Number of Votes
Percentage of Total
Valid Votes
Yes 442,985 32.4%
 No 920,188 67.3%
Informal 4,167 0.3%
Total Valid 1,367,340 100%
The number of invalid votes cast was 1,585.Voter turnout is 45.07%. Turnout is calculated by taking the total votes cast of 1,368,925 (being total
valid and invalid votes) as a percentage of the total number of voters enrolled as at 21 November 2013 (3,037,405).

Referendum Results by Electorate

Final Government response to referendum: 100 per cent don’t give a s**t

Don’t ditch CIR, fix it

A Dominion Post editorial is highly critical of Citizen Initiated Referenda after the Green and Labour hijacking. I agree that the asset sale referendum was a Waste of Money.

To listen to Labour and the Greens one would think the Government had no choice but to begin buying back state assets following the referendum on state asset sales.

According to Labour leader David Cunliffe the people “clamoured” to have their voices heard and they have “spoken” against the partial sales of Mighty River Power, Meridian Energy and Air New Zealand.

According to Green party co-leader Russel Norman the referendum has shown the prime minister is out of touch with mainstream New Zealand.

There is only one problem for Mr Cunliffe and Dr Norman. The referendum on state asset sales was not the first held under the Citizens Initiated Referenda Act 1993. It was the fifth.

…except that on each previous occasion a citizens-initiated referendum was held, the government of the day also ignored its outcome.

The asset sale petition and referendum was too cumbersome, too expensive, too late to make any difference. Easy to ignore.

The citizens-initiated referendum experiment should be abandoned. It is an unnecessary add-on that has contributed nothing but cost to the political system.

I agree that CIR are a failed experiment. Designed by politicians to be impotent, then ironically hijacked by politicians.

But giving up and abandoning is not answer.

What we should do is replace CIR with something that is effective – and not controlled by politicians or Parliament.

Something that is fast enough to express public opinion before legislation is debated and decided in Parliament. A system of public information, debate and opinion measurement that can contribute to MP knowledge of public opinion. If it is timely it will have more influence.

The citizens-initiated referendum experiment should be abandoned. It is an unnecessary add-on that has contributed nothing but cost to the political system.

I agree that CIR are a failed experiment. Designed by politicians to be impotent, then ironically hijacked by politicians.

But giving up and abandoning is not answer.

What we should do is replace CIR with something that is effective – and not controlled by politicians or Parliament.

Something that is fast enough to express public opinion before legislation is debated and decided in Parliament. A system of public information, debate and opinion measurement that can contribute to MP knowledge of public opinion. If it is timely it will have more influence.

Labour and Greens harvesting emails

Labour and Green Parties harvesting petition email addresses for wider political purposes is raised in a Standard post, where activists  from both parties try to defend it – Muppets.

Did Mike Williams just suggest (about 19 minutes in) that the Greens and Labour Parties utilise the email addresses they gathered from the petition against asset sales in their election campaigns?! I sincerely hope he wasn’t channeling an idea that has any traction within the Labour Party machine.

Just to be absolutely clear on this. I did a lot of political activism in the past. And sometimes that involved gathering people’s email addresses or whatever on petitions and so on. Any thought of using those contact details to canvas on other matters, or even associated matters, was rightly so off the cards as to be unthinkable. If there is a desire to use collected contact details, then the simple inclusion of a tick box for permission to contact should be included on any form. Otherwise…no. Don’t do it. It’s that simple.

The only surprise is this is a surprise to some. It’s been talked about since early this year – Asset petition a data source for political spam? and also on Whale Oil yesterday – The Green Party Data scammers: Look at their Guidelines where it was pointed out:

We want to stay in touch with supporters about the campaign and other Green Party activities. That’s why we ask for email, address and phone. Contact info is optional, email is best.

Amongst the comments is some good advice:


I encourage everyone who believes their information has been misused in this way to lodge a complaint with the Privacy Commissioner.

Also remember to tell the world you’ve done so. Bad publicity is an effective weapon against politicians; make sure you use it.

Apart from it possibly being illegal as it is contrary to the Privacy Act this would be deceitful use of the asset sales petition.

However a Labour Party activist claims a very extravagant interpretation:

Te Reo Putake

Hate to inject some reality into this discussion, but the petition form asks signers to provide their phone and email address if they want to “keep up to date with the campaign”. A phone call from Labour, the Greens or Grey Power during election year for that purpose would obviously be lawful.

An obvious update would be either party announcing they intended to buy back the assets or some similar measure.

So, no privacy breach as long as it’s relevant to the campaign.

That opens up the possibility of weaselly workarounds of the law. “The campaign” was the campaign to gather signatures for the petition. Unless Te reo Putake is suggesting it was always intended as a long running political campaign using the petition and referendum for taxpayer funding.

And a Green Party activist also tries to make excuses:


What’s more, all emails a person receives from the Greens in response to signing a petition have the following options:

Unsubscribe from this email list

Change subscriptions and update your details – subscribe to email newsletters and more

Unsubscribe from all emails

So at any time a person who opts to go onto the Green database through signing a petition can unsubscribe from receiving all emails, or particular types of emails from the Greens (or can add particular additional types of emails they want to receive if they wish).

Harvesting and then providing an opt-out option after spamming is not acceptable, as a Green supporter says:


“So at any time a person who opts to go onto the Green database through signing a petition”

but unless that situation was stated up front all they did was sign a petition – thats the problem

Im a solid green voter but i detest ANYTHING turning up in my email that i didnt ask for. Even from those i support

like others have said – all it needs is an opt in check box – “do you want to receive further communications from the green party”.

It shouldnt be an opt out later situation


Toad. If I sign a petition, it means that I’m signing a petition. And that’s it. The signing isnot a license for the holder of the petition to contact me on either that or other mattersunless they have explicitly sought and received my permission to do so.

As I said in the post, I’ve collected signatures and details on a number of occasions. Usually the petition was simply to give people the feeling they were doing something in support of whatever the cause was…ie, it wasn’t really of any consequence or help.

Anyway, I can say with absolute confidence that most people who sign a petition want the signing to be the beginning and end of their involvement. (This from the %age of ‘buy in’ when a ‘buy in’ option was put on forms and pointed out to people)

But sure, feel entitled to pester people as you seem to indicate is your ‘right’ having gained contact details. It’ll blow up in your face.


The petition form’s only nod to the Privacy Act was a note saying “To keep up to date with the campaign please provide your email and phone number”. Which suggests strongly that use of the information collected should be limited to the actual referendum campaign, not the wider political campaigning of the petitioner or political parties doing the collection.

Responses are very concerning:

Te Reo Putake

Nope, it’s all part of the same campaign, Bill. One of the ‘other strings’ you have forgotten is the just completed referendum. The next string is the election campaign. If you signed the petition and gave your details, you have consented to be contacted about asset sales. That’s the fact of the matter.

Te Reo Putake

Referring to I/S’s narrow understanding of what the word campaign means doesn’t help. The anti asset sales campaign continues unabated and the use of the contact details for the purpose for which they were provided is not only sensible, it’s vital.

The would mean parties could call it an endless campaign and endlessly abuse the intent of the Privacy Act. That will annoy a lot of people.

No Right Turn has also blogged on this calling it (correctly) Grossly unethical:

To point out the obvious: this is a screaming violation of Privacy Principle 10, and possibly Privacy Principle 11 if you take the collecting agency as Roy Reid, the formal petitioner, rather than the parties who provided the footsoldiers. And it is grossly unethical. Quite apart from that, its also stupid, burning both potential supporters and their activist base (who may not be too keen on having their hard work perverted to violate people’s privacy).

As for what to do about it, firstly people have a right of access to information held about them by agencies – so if you gave the petition campaign your email address, you can always check with Labour to see if it has somehow migrated its way into their fundraising and supporter’s databases. And if the information is used, then I recommend lodging a complaint with the Privacy Commissioner.

You should also publicise that complaint over social media (or, if you feel like it, by emailing a press release to Scoop – but social media is probably enough, because people like me will retweet it if we see it, and journalists will pick up an easy story like this).

Political parties are (sensibly) afraid of bad publicity, and this is the best stick we have to enforce ethical behaviour on them. Sadly, it looks like we may have to use it.

Not a good look if this is the official Labour view on it:

Te Reo Putake

Yep, you’re starting to get it! As long as they are contacted about the asset sales, then its not an issue at all. And given how big a deal asset sales is to most kiwis, just about every phone call and email from the left is going to mention it.


Asset sales referendum ra-ra ho-hum

The assets sales referendum results is quite predictable, with about two thirds voting no. This is similar to opinion poll results.

Green and Labour party campaigners were targeting a No vote in excess of those who voted for National in 2011 but didn’t make that so their self congratulations have been ra-ra ho-hum.

David Cunliffe: The people have spoken – National must listen

The people of New Zealand have spoken and voted overwhelmingly against asset sales – it is now time for John Key to listen to them, says Labour Leader David Cunliffe.

“Kiwis have clamoured to have their voice heard on asset sales. More than 310,000 thousand backed the petition and now 1.3 million have voted. Over 67 per cent or almost 900,000 have said no to asset sales.

“The numbers are clear. Kiwis don’t want their assets sold. John Key must listen and call off the Genesis sale now. National’s claimed mandate to sell the assets has now disappeared.

Russel Norman:

The Opposition is calling it an overwhelming victory, while the Government says it’s nothing more than a costly stunt that’s ended in disappointment.

The cake was cut at the Green’s party well before result was announced – which came at about 8pm.

“This sends a very clear message to John Key to stop the asset sales madness,” says Green Party co-leader Russell Norman.

– Asset sales referendum results announced

Being non-binding it was always known to be a futile exercise beyond political point scoring and extended taxpayer funded campaiging.

Key numbers:

  • 2/3 voted No
  • 3/5 assets part sold
  • 1/5 assets unsaleable
  • 1/5 assets – sale subject to financial conditions

National have said they will go ahead with the Genesis float. I have always said that selling too much in one market sector in an election term time frame was flawed.


Citizens Initiated Referendum 2013

Preliminary Result

13 December 2013
The Electoral Commission has released the preliminary result for the Citizens Initiated Referendum on the question:
“Do you support the Government selling up to 49% of Meridian Energy, Mighty River Power,
Genesis Power, Solid Energy and Air New Zealand?”
The preliminary result is based on the number of votes counted as at 7pm, Friday 13 December 2013.
The final result will be available by 5pm, Tuesday 17 December 2013.
Votes Number of Votes
Percentage of Total
Valid Votes
For the response Yes 432,950 32.50%
For the response No 895,322 67.20%
Informal Votes 4,068 0.31%
Total Valid Votes 1,332,340 100.00%
The number of invalid votes cast was 1,062.

Voter turnout is 43.9%. Turnout is calculated by taking the total votes cast of 1,333,402 (being total
valid and invalid votes) as a percentage of the total number of voters enrolled as at 21 November 2013 (3,037,405).

Preliminary Results by Electorate

Preliminary Results in Excel Format

Preliminary Results in PDF Format bb

Referendum imbalance

Voting in the asset sale referendum closes this Saturday. So far about 1.2 million votes have been returned.

There has been a major imbalance in promotion, all No and no Yes. One side wants to make something big out of it, the other side wants to bury it.

The result is widely expected to strongly favour the No vote. This is partly because opinion generally leans that way.

And the Green and Labour parties are very actively campaigning for a No vote. They are treating it like a mini election, with hoardings, advertising, direct promotion from MPs and extensive social media campaigning. This is backed by left leaning blogs.

In contrast virtually no one is promoting the Yes vote. It is seen as futile.

Knowing they will ‘win’ easily the No promoters are trying to make a victory out the number of votes they can get. They are targeting a vote in excess of the number of votes National got in the last election – 1,058,636.

If they achieve this they will claim that National didn’t have a mandate to part sell the assets. But it will be too late, most of the sales programme is complete.

And everyone knows the referendum will be ignored by the Government. Timed leading into Christmas and the holidays National no doubt hope the referendum will quickly be forgotten. Greens and Labour will try to extend their campaign into election year and the expected Genesis float will give them something to campaign around, but by the time next year’s election campaign kicks off asset sales are likey to be just history.

Unless Labour campaigns with the Green proposal to buy back assets. Would that be an election winner? Or flogging a dead horse?

Asset sale referendum – Yeah, Nah

The asset sale referendum will run from 22 November to 13 December. I’m going to Yeah/Nah it and vote both yes and no. This will be recorded as a spoiled vote, which I think is appropriate for a futile and expensive exercise in opposition party political posturing.

X   Yes        X  No

I supported National’s right to implement their flagship policy so two years ago I could have voted Yes to this.

Like just about everyone I don’t support selling Solid Energy so I could vote No now. But that vote would be distorted by opposition parties who are claiming it would mean I oppose the asset sales and think they should be stopped. It’s too late to stop most of them.

The referendum asks a question about whether someone supports asset sales or not, not whether they want the programme stopped. So the result of the referendum is irrelevant to the asset sales programme.

I also strongly oppose the principle aim of the referendum – from the start over eighteen months ago it has been used as an extended campaign tool by Greens and Labour. They knew it would be futile in stopping any asset sales. They are using it to sustain a taxpayer funded inter-election political campaign. It’s cynical abuse of the purpose of Citizen Initiated Referenda.

Government legislation has a parliamentary process, this cannot be dictated to by a petition and referendum that takes up to two years to take place. If a CIR was able to halt and overturn Government policies and programmes it would make our Parliament a farce.

The asset sale referendum is a foolish futile farce.

So I will vote Yeah/Nah to register my protest at this misuse and abuse of our democracy.

Referendum irrelevant to Air New Zealand sell-down

The announced sell-down of 20% of Air New Zealand shares has been slammed by opposition party leaders, criticisng the timing with the asset sale referendum about to be held.

David Cunliffe:

“This is an arrogant, out-of-touch Government desperate to get the sale done before the public has its say.”

Russel Norman:

“It’s a deeply cynical and desperate measure but a Government that knows there’s a referendum about to happen.”

I don’t know how sensible the timing is from a business and share-market point of view is except that Air New Zealand shares are at a record high which sounds like a good time to sell.

I don’t know if the Government has timed the sell-down to deliberately coincide with the referendum, if that was a primary factor in the timing it would be cynical and stupid.

But the referendum shouldn’t be an issue. It is irrelevant to the asset sale programme, it shouldn’t and won’t make any difference to whether the MOM sales programme continues or not. Like all Citizen Initiated Referenda everyone always knew it could and would be ignored. Cunliffe and Norman knew this.

Cunliffe and Norman know that Government will not pause or halt sales because of the referendum.

They are using the referendum as a political campaign weapon. That’s all it has ever been.

Their posturing is desperate and cynical politics.

Government programmes and parliamentary legislation can’t be scheduled by and dictated by the eighteen month timeframe of a Citizen Initiated Referendum.

Labour-Green-Conservative coalition?

Colin Craig says he will work with any parties on common policies.

One of Craig’s biggest policies is to have binding referenda. And he wants to roll back the ‘anti-smacking’ law.

Craig also opposes the asset sales. It would follow that should the upcoming referendum vote against asset sales then Craig would support the Greens in rolling back the asset sales. And rolling back the convention centre?

We could end up with a Conservative-Labour-Green government, especially if the CCCP get’s in at the expense of NZ First – if they can work out their clash on the smacking law.

Craig will at least promote binding referenda so we can have Government by party political agenda petitions and referenda.



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