Govt's competition check sparks accusations

HAMISH RUTHERFORD
Last updated 11:56 10/12/2013
Bill English
Fairfax NZ
BILL ENGLISH: "We've got to manage our way through a period where some investors think anything could happen."
David Parker
JOHN HAWKINS/Fairfax NZ
DAVID PARKER: "Any time the big end of town gets into trouble, this government rushes to their aid."

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Labour is accusing National of rushing to the aid of big business, after Finance Minister Bill English signalled a health check of competition regulation.

In an interview with Fairfax published yesterday, English said New Zealand's regulatory regime will be placed under internal scrutiny following a period where some investors voiced concerns about the investment environment.

Admitting that a series of "disconnected" events risked creating a perception that New Zealand was an unsafe place to invest, he said there would be a "check" of whether regulatory settings were up to standard.

"We've got to manage our way through a period where some investors think anything could happen," English said.

The Commerce Commission's decision to cut the price of copper broadband connections, which had caused Chorus shares to halve in value over the last year, had "raised questions" about predictability.

"We need to scrutinise our regulatory regimes, make sure they are recognisably world standard, and then communicate that to investors as much as we can," English said.

"I don't think we need to do anything too sweeping...Most assessments of our regulatory regime put it pretty high up among developed countries."

Labour Finance spokesman David Parker said there was nothing wrong with reviewing the way independent institutions worked, with his party proposing changes to the rules governing the Reserve Bank of New Zealand.

However he claimed the Chorus issue was largely the making of the Government.

"Any time the big end of town gets into trouble, this Government rushes to their aid," Parker said this morning.

"The problem that the National Party has caused here is that their attacks on the Commerce Commission decision gave false hope to Chorus that they would overrule it, only to find they didn't have a Parliamentary majority."

In recent weeks there have been comments from offshore investors about New Zealand's political risk.

Last week international investment bank Goldman Sachs warned clients to reduce their exposure to New Zealand, partly because the market was overvalued, but also because of comments from Labour and the Green Party on regulation.

London-based fund manager Jason Pidcock, who manages a fund worth more than $8.5 billion, claimed investing in New Zealand was as risky as investing in Pakistan. His fund owns shares in Chorus, Meridian and Mighty River.

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English dismissed the claims, but admitted New Zealand might have taken its reputation for granted and had to "relentlessly" communicate with the world to prevent the complaints from becoming the prevailing view.

"We're getting a few knee-jerk responses, but it's a bit like food safety. You're better to be ahead of it, rather than let the perception build up," he said.

"We value predictability and certainty about the way our market works and the way the Government works.

"When people say it's starting to look unpredictable we need to do a check because we know from the rest of the business scene that predictable policy works - it does help give people confidence to get them investing."

The check would not be conducted while the Government was working through issues relating to broadband pricing.

"When the path there is clearer we can take a wider view," English said.

The issues thrown up by the Commerce Commission decision were more unsettling than those created by the Waitangi Tribunal over asset sales, he said,

The Supreme Court had accepted that the Government could pursue its asset sales programme because its wider Treaty negotiations showed the sales would not prejudice its ability to settle claims.

Investors did not have a problem "wrestling with unique issues, as long as there's a reasonable amount of certainty about how they're dealt with" English said.

The same usually applied to Government policy, so long as the rules were clear.

"Investors don't so much argue with your policy, so much as they want certainty that it's going to be somewhat rational, and that the impact of it can be predicted."

- Stuff

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