Tony Ryall misleads Parliament | The Jackal

14 Mar 2013

Tony Ryall misleads Parliament

Today, Tony Ryall misled the House of Representatives by claiming that coal prices were high when National requested the board of Solid Energy increased debt to ensure more dividends were paid to the government. He also claimed that coal prices were the highest ever between 2009 and 2011 and the collapse happened after they requested that increase in debt, which is an outright lie!

Here's one of the video:

The Minister for State Owned Enterprises made those false statements because National was coming under considerable fire for making that stupid request to the board of Solid Energy to increase debt, which ballooned from $13 million in 2009 to $313 million in 2012, at the worst possible time.

Ryall is echoing a misleading statement made by Solid Energy's management to the Commerce Committee, when a financial review (PDF) of Solid Energy was conducted in 2010/11. Here's what the Commerce Committee was told:

Dr Don Elder is the chief executive and John Palmer is the chairman of the board.

Financial performance 

In 2010/11 Solid Energy generated total revenue of $828.662 million and recorded a net after-tax profit of $87.2 million, an increase of almost $20 million on its 2009/10 result.  
Future revenue 

We noted that Solid Energy projected $1 trillion in potential earnings from a predicted 10 billion tonnes of coal. Solid Energy said this estimate represented the potential revenue from all coal-based products, such as fertiliser, and that it might prove to be conservative. We asked what coal price it used in this calculation. We noted that predicted returns assumed that the current price of fossil fuels would be maintained or increase. Solid Energy said returns were calculated on prices from the last several years; it believed they were very unlikely to fall, and were very likely to rise substantially.

However international coal prices were clearly not indicating that Solid Energy should increase its debt levels when National requested them to on 28 May 2009.

Here's a graphic that shows coal prices had fallen dramatically just before Bill English made his request for increased dividend returns from Solid Energy by increasing debt.

Click image to enlarge