Labour’s dividends from energy sector
September 14th, 2009 at 4:45 pm by David FarrarI now have some more info on Labour’s reaping of profits from energy SOEs, and contrasting that to Phil Goff now decrying a $236 million dividend.
I blogged earlier that over the last five years, the SOEs made $3.27b after tax. Going back for their full nine years, the figure is $4.47 billion.
I also have the dividend figures. So this is the money actually paid out to the Government, and excludes profit that was retained for investment purposes etc in new generation.
- 2000: $255m
- 2001: $236m
- 2002: $290m
- 2003: $148m
- 2004: $154m
- 2005: $250m
- 2006: $949m
- 2007: $428m
- 2008: $383m
- Total: $3.09b
So its okay to take a $949million dividend payout in 2006 but wrong to take dividends a quarter that amount in 2009.
Again I’m not saying that the level of dividends is right at the moment, but when you raked them in during times of massive surpluses, it is a bit rich to do a sudden mea culpa and say that they should be much lower during a time of huge deficits.
Related posts:
- Power Company Dividends
- Charles Chauvel on power profits
- Do as we say, not as we did
- The dividends of falling crime
September 14th, 2009 at 5:10 pm
One more thing for Goff to apologise for….
This is classic, it’s bad when National do it…. Goff is a bigger muppet than I gave him credit for.
Vote:September 14th, 2009 at 5:12 pm
DPF
Ooops, I forgot. The raping the consumers got under Labour was a result of the failed policies of the 90′s. Now of course National have been in govt for almost a year and they should have made changes to correct this. Pfffft – That capital “L” for Labour really is for Looser when Goff is in charge.
Vote:September 14th, 2009 at 5:15 pm
Good stuff Farrar, you gotta keep ‘m honest. I bet FilkOff hadn’t expected to be pulled on his comments that quickly….
Vote:September 14th, 2009 at 6:00 pm
…and the sad thing is, Labour probably squandered every friggin’ cent of it.
Vote:September 14th, 2009 at 6:21 pm
David
In your earlier post you referred to “the six state owned energy companies”. Which companies do you mean? I count four: Meridian, Mighty River Power, Genesis and Transpower. And Transpower is technically a transmission company, so debatable whether it should be included. The only other “energy” company owned by the state is Solid Energy, which is a coal mining company.
What’s your sixth company?
[DPF: ECNZ]
Vote:September 14th, 2009 at 6:49 pm
The sad thing is that Labour supporters believe their Party managed the economy well during their 9 year stay. The truth is they squandered the biggest tax take in the country’s history. As we now realise not years of growth but years of highly speculative spending and a consumer boom based on a housing bubble. Ye reap what ye sow. I will never forget my stomach turning in disgust listening to Cullen tell us how the “cupboard was bare” and giggling like a school girl when he did it.
Vote:They di not cause the global crisis but we are in a lot worse shape than we should be – cheers Labour.
September 14th, 2009 at 6:56 pm
If is wasn’t for the “wicked reforms” of Max Bradford there would not be this kind of money for the Labour Party to spend. Labour Governments milk every tit they can find to pay for their extravagance in Government. The money HAS to come from somewhere. They oppose every attempt to bring spending under control, they propose new spending. So their milking of the power companies is just classic. And yet they moan about the price hikes, have some useless bureaucrat called an Electricity Commissioner, have a photo opportunity with Helen Clark lamblasting the GREEDY electricity companies. But they take the coin and hope people do not notice.
Vote:September 14th, 2009 at 7:00 pm
I know I’m thick but why do SOEs pay tax ? . Isn’t it just a money go around and at the end of the day most is hauled back into government coffers anyway. Or is the total figure taken by government such an embarrassment that tax has to be taken out to make the figures more palatable to the poor bastards that actually paid for the SOEs to start with ?
Vote:September 14th, 2009 at 7:03 pm
Actually Phil Goff admitted this was a mistake on the part of the previous government in his conference speech yesterday.
[DPF: Yes he did, but the point I am making is that is just all so easy to do now one no longer has to balance the Crown accounts. You get judged by your actions as much as your words, and Labour had the highest surpluses in history, yet still had massive dividends from power companies]
Vote:September 14th, 2009 at 7:04 pm
The worst things is that Labour embedded these windfall gains into transfer payments through working for families and student support. Now we can’t afford them, and they are beggaring the economy.
Vote:September 14th, 2009 at 7:05 pm
kaya
Cullen was telling lies then as well, the cupboard was chock full of old unsellable railway junk and unopened demands for payment from ACC.
Vote:September 14th, 2009 at 7:07 pm
rochellerees
Can you quote the bit where he specifically referred to this or are you quoting some omnibus “mumble mumble – could have done better” clause?
Vote:September 14th, 2009 at 7:10 pm
If I can be bothered later I’ll track it down. I haven’t see a written version, I was sitting in the audience listening to the speech. There was a whole section on power prices.
Vote:September 14th, 2009 at 7:19 pm
Burt:
I’d say Rochelle is referring to this section in Goff’s speech:
Of course, a close reading of the words shows that Goff is apologising for high power prices, not for receiving dividends from the energy sector (although the implication, I suppose, is that the government’s high dividend expectations resulted in high power prices). So I’m inclined to say it’s a “mumble mumble – could have done better” clause.
And what does “We will not demand excessive dividends coming back into state coffers above what is needed for investment in new generation” actually mean? Isn’t it the generation-retailer – not the government – that actually invests in new generation capacity?
Vote:September 14th, 2009 at 7:31 pm
What are they to do? Not pay the dividends?
The SOE act requires SOEs to pay a 10% (?) dividend to the Government
The problem with electricity generation they are not all the same and can never be. Hydro and wind are nearly free to produce. However when lake levels are low they still are low Meridian still have to pay a dividend even if they have to buy more expensive power from Huntly.
The obvious sensible answer is for just one generator which makes steady profits and varies dividends depending on factor like
- weather
- level of capital investment in new plant
BTW the high 2006 dividend was from Meridian Energy who sold there Australian Assets for a huge profit or $652m. This does not relate at all to to the ridiculously high New Zealand Power Prices.
refer http://www.meridianenergy.co.nz/AboutUs/Reports/
Vote:September 14th, 2009 at 7:35 pm
Anyone and everyone who wants to has until 5PM Wednesday to respond to this
http://www.med.govt.nz/templates/StandardSummary____41689.aspx
Vote:September 14th, 2009 at 7:39 pm
Inky_the_Red
That 10% dividend is set by and can be changed by……
Vote:September 14th, 2009 at 7:44 pm
Burt,
If Labour reduced the dividend requirement then many here would be claiming a subsidy to SOEs leaving Infratil (TrustPower) and Origin (Contact) at a disadvantage.
Vote:September 14th, 2009 at 8:03 pm
Inky:
Actually, what the SOE Act says is this (s 13(1)(b)):
The companies named in Schedule 2 include (non-exhaustively): Genesis Power; Meridian Energy; Mighty River Power; and Transpower.
Now there are some procedural safeguards in place for shareholding Ministers: they must have regard to Part 1 of the SOE Act (statutory principles); they must consult the board first; and they must table a copy of the notice in Parliament.
So, back to Goff’s speech, perhaps Rochelle could explain which Labour Ministers, specifically those who were shareholding Ministers, Goff was apologising for? I don’t see any names mentioned in his “mumble mumble – could have done better” speech.
Vote:September 14th, 2009 at 8:13 pm
inky_the_Red
So Labour policy was based on what would be acceptable for people who comment on kiwiblog?
Just admit it – you are running interference and making a mockery of Goff’s “mumble mumble – could have done better” to boot. With friends like you Labour has no need for enemies.
Vote:September 14th, 2009 at 8:22 pm
I am not defending Labour.
Brownlee was claiming earlier this year that the generators were not making enough to cover the government’s investment. He has since appeared to changed his mind
Max set up this ridiculous competing electricity generating nonsense. Labour kept it it, now Stephen Franks and his mate claim it still works – just need some minor tinkering. see http://www.med.govt.nz/templates/StandardSummary____41689.aspx
They even claim that the prices are mostly justified
Well the fact of the matter is that electricity prices have increased 3 times the rate of general inflation Labour and National both stink from this disaster of an experiment.
I have no idea why Labour kept the structure that the Nats set up to flog off NZ’s electricity infrastructure to the highest bidder.
Labour was gutless on electricity for their entire 9 years. It seems likely the Nats will flog Meridian off in their next term. After that happens kiwis will have lost control of assets built up by generation of our people. When meridian goes the government will never have control of electricity in NZ again.
Vote:September 14th, 2009 at 8:24 pm
The green commie facists have officially lost the plot:
http://www.thestandard.org.nz/condoms-and-democracy/#comment-159269
Nutbar city.
lprent
September 14, 2009 at 2:28 pm
That’s what I get for relying on Farrar’s culture war dog whistles for my information
Foolish. He always spins it and uses inaccurate language.
Besides it was a small debate. But then DPF likes to flash the boobs around on his site, so it comes as no surprise that he takes a small debate about dicks and inflates it.
Perhaps for his next moderation policy for the sewer he could try a free condom policy – to their mothers…
Vote:September 14th, 2009 at 8:31 pm
RainbowGlobalWarming:
The irony is that (based on my empirical observation of The-Double-Standard) if a commenter posted anything like that about Labour or the Greens, the same LPrent or perhaps Irish Bill would ban them quick-smart. It’s all for the greater cause, you see. Labour good-National bad(TM) and all that.
Vote:September 14th, 2009 at 8:33 pm
Inky_the_Red
So when the “monopoly” that keeps the price high is finally broken – then we will actually have competition!
Vote:September 14th, 2009 at 8:37 pm
Nomestradamus,
Are he trots out is tired and worn-out double speak about the standard being a collective vehicle for individual voices only using much more anally retentive and passive-aggressive verbage.
Vote:September 14th, 2009 at 8:41 pm
sp correction.
Nomestradamus,
Or the spiel he trots out is tired and worn-out double speak about the standard being a collective vehicle for individual voices only using much more anally retentive and passive-aggressive verbage.
Vote:September 14th, 2009 at 8:43 pm
Burt,
Vote:how does selling meridian to the Chinese end a monopoly?
September 14th, 2009 at 8:48 pm
Inky_the_Red
You don’t get this do you. When the majority supplier maintains a 10% profit irrespective of market conditions it holds the price up allowing the others to follow. I’m no expert on this but having said that, I’m also not the one who thinks it was OK for the govt to maintain a fixed margin over a public utility irrespective of the pain it caused consumers.
On the subject of the Chinese owning it, I understand that’s fine if they own it in it’s entirety because it’s only Canadians owning a minority share that can cause issues.
Vote:September 14th, 2009 at 8:57 pm
Good lord, the hypocrisy of Labour continues. They are so proud of such things as Working For Families and other government spend up schemes – making so many of the population beneficiaries. But suddenly want to forget how they raped and pillaged the country to get those funds.
At the end of the day there is only so much money to go around particularly if you stifle economic growth. SOE dividends are only a small part of the overall Labour plan to look wonderful by taking money from us by one (no many) means and then to go it back to us by benefit – thats right they call that targeting.
Maybe they should apologise for making so many people beneficiaries and then they should try and understand the real reasons why this occurred. Unlikely when they are distracted instead (probably salivating) with the thought of giving away condoms.
Vote:September 14th, 2009 at 9:02 pm
When Contact was owned by the yanks (Edison Mission) their CEO complained that the SOEs were keeping the price of electricity too low. Businesses try to maximise profits, so no matter who owns Meridian they well try to do that.
The other thing they won’t be interested in is investing in new generation, cost money and won’t match the same returns as building nothing, so supply not increase as fast. When Contact energy was privatised they close a plant (Whirinaki) and export the power plant.
Meridian, who despite there many faults, did invest in increased capacity.
Yes on the subject of state ownership, ACT believe the NZ government should own nothing, however would be happy for foreign governments to own the whole country.
Vote:September 14th, 2009 at 9:28 pm
Inky_the_Red
Your colours are showing again. How much of that $4.47b has been reinvested in infrastructure? Come now, it’s not just nasty corp Americans that didn’t increase supply now is it…. But I understand it’s OK when the govt behave like nasty corporates because it’s the govt and they had a red flag so they were good. Nasty Americans just took the profit – bad.
I agree the govt should not be running business, owning infrastructure is different to running business – but lovers of big govt are unable to separate the concepts of funding and provision. This is a problem of ideology – nothing more nothing less.
Vote:September 14th, 2009 at 9:33 pm
Sorry I quoted the facts,
Vote:September 14th, 2009 at 10:26 pm
Inky_the_Red
$4.47b was taken as profit after deductions for reinvestment etc. OK, I’m missing something about you position you are quoting the facts because I was talking about taking profit for …. ummm something other than reinvestment – at the expense of the
Vote:cash cowsconsumers. Did I miss something ??September 14th, 2009 at 10:46 pm
The $4.47n includes Contact Energy which is about a third of that figure, it is the largest Genretailer. Privately overseas owned owned
If we look at the $3b dividends raised above, firstly $652m was assets sold in OZ. as I mentioned before.
Meridian value their fixed assets at 6.5b. If this was the real cost of the assets then the dividends are almost reasonable. However in 1999 those same fixed assets were $1.6b, the increase is due to
1. investment in Manapouri, new twater tunnel
2. A few new windfarms
3 investment in Manapouri (new more efficient Turbines)
4 Revaluation of assets in 2003 (increased $0.6b)
5 Revaluation of assets in 2006 (increased $1.8b)
6 Revaluation of assets in 2007 (increased $1.4b)
Somehow Meridian have managed to revalue assets by nearly $4 billion dollars, why scarcity. Would it matter if they were an SOE or private company – No
Should they have – of course not.
What are the options?
1 – Sell everything to the highest private bidder – for them to rip us off
2 – Let the government owned SOEs rip us of
3- Introduce some control to prevent either ! or 2
I prefer option 3
Labour prefers option 2
Act thinks Option 1 is the only option
National would love option 1 but promised not to do that in this term.
But I’m glad you think that businesses shouldn’t pay dividends.
Vote: