National and ACT show some principle

Omigod! I'm astounded. Following Rodney Hide's excellent condemnation of the announcement to let anyone and everyone have access to Telecom's local line network, I listened online to Maurice Williamson doing the very same on Morning Report. Well done Maurice, making some of the points I have already made. PC has done a good summary of Telecom's share drop, 10% of value in a day and his updated post of much of the commentary.

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Other responses are:

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NZ First naturally supports it, as Winston has been one of the biggest Telecom-bashers in recent years, courting the "we paid for it" populist vote. Again Winston thinks "The Government must also ensure that this does not only deliver benefits to big city New Zealand, but that those same services reach all the way down to the country roads" so he wants you to subsidise farmer access to broadband - that isn't cheap, since the Kiwishare has forced Telecom to subsidise farmer access to local lines for ages from the line rentals of city businesses and residents.

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Greens support it - as any chance to bash Telecom is welcome, although Nandor even said "Current prices aren’t bad" great chance to regulate then. Nandor reckons it will allow virtually free international calling. Well that hasn't happened anywhere, and in many countries it is due to loony protectionist governments maintained statutory telecommunications monopolies - you know, the sort that the left defended until Telecom was privatised.

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Local Government New Zealand, representing 86 organisations specialising in thieving from the public (local government) supports the move. It thinks rural communities will benefit, which is astounding.

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The Alliance retards foaming at the mouth are clamouring "it's not enough", wanting the government to renationalise Telecom and then service will be cheap and high quality - hmm like it was for decades under the Post Office. Keep taking the medicine guys.

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TelstraClear's CEO is sitting thrilled that lobbying government has increased his company's value far more effectively than investing in infrastructure or winning customers over with better service and lower prices (which anyone who has been a user of Telstra Clear's local Wellington service in recent years will note has been declining significantly). Remember before LLU was seriously on the agenda, Telstra Clear was going to build a brand new local access network for all of residential metropolitan Auckland, Hamilton, Tauranga and Dunedin, and expand the Wellington network to Porirua. Cheaper to lobby to use other people's infrastructure than to build your own of course.

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Russell Brown is thrilled because he believes Telecom is ripping him off, and believes attaching equipment to Telecom's exchanges under LLU is high quality "investment" in telecommunications - but then we always knew he was a leftie :)

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IHUG, like other competitors says the handbrake is off - although it has provided a competitive satellite based and wireless based broadband service for some years. Again, no need to invest further in your own infrastructure.

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Business New Zealand is wary, and is taking a wait and see approach.

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Business Roundtable is damning of LLU, and makes the cogent point that the argument that "everyone else does it" is the same argument that other lobbies, like farming, once said about subsidies and protectionism. A great quote from the press release is:

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“Measures like forced unbundling have been described as infrastructure socialism (“what’s yours is mine”, by government decree). By allowing competitors access to incumbents’ networks on non-commercial terms, the short-term competition they create is parasitical, not the dynamic competition we need from incentives to invest in new and enhanced infrastructure."

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You see, those supporting LLU seem to be doing so for three differing reasons:

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1. It is expected to deliver faster, cheaper broadband services because Telecom is refusing to provide those services, or resale the ability to provide those services to competitors (this I believe is the David Farrar reason);

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2. Everyone else does it, so we should too (the sheeple reason);

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3. Telecom are bastards who have been "ripping us off for years", capitalist scum, "we paid for it", put the boot in, rah rah rah keep the red flag flying (the Greens and I suspect the reason at least a good third of the public will support it).

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The second argument is fatuous, if we took that approach, telecommunications in New Zealand would have been a regulated monopoly or duopoly until the late 1990s. Australia opened up its market in 1997, most of western Europe between 1998 and 2000, New Zealand in 1989. NZ has a completely open postal market, almost every other country (Sweden, Finland, Argentina and the UK excepted) grants a statutory monopoly to its state owned (and relatively inefficient) postal operator.

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The third argument is facile - Telecom was sold by the elected government of the day (Helen Clark and Michael Cullen were Cabinet Ministers at the time), and the proceeds were used to pay off debt "that you borrowed" or to avoid borrowing more for services "that you wanted". You don't own Telecom unless you buy shares in it - get over it.

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So what about the first? Is Telecom not providing faster broadband because there is insufficient demand? Is it not providing cheaper broadband because it is unprofitable? Are competitors not investing in infrastructure because the clear message from government is that Telecom's will be there to use instead? Has Telecom been acting anti-competitively and if so, why have no competitors taken it to court under the strengthened heavy handed Commerce Act?

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When I was in telecommunications policy, one of the clearest messages was that setting up a regulator (which did not exist until 2000/2001) would change incentives in the industry from focusing energy on investment, innovation and commercial negotiation to lobbying and counterlobbying, with the regulator NEVER ever pleasing everyone. Lobbying is cheaper than investing in infrastructure - you just need to have half a dozen well paid suits willing to bang on at politicians, bureaucrats and the media about how hard done by your company is, and how mean old Telecom is ripping everyone off - but your company is the paragon of altruism and will save the day.

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That has simply been proven right.

Theft of property rights to benefit overseas multinational

Well I'm back in the UK, and the NZ Herald and Stuff reports Clark, Cullen and Cunliffe have decided to effectively nationalise Telecom's local loop in order to benefit, primarily, the balance sheet for the majority Australian Federal Government owned Telstra Clear.

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Of course it isn't nationalisation per se, more fascism - when you retain the semblance of private property, but the state dictates what you do with it to the extent that you don't have effective control over what you ostensibly earn. All those who wanted a cut of the pie and who didn't want to put their own money into Telecom will have won - assuming that the Greens (who despise private property unless it is the petty personal belongings North Korean type property) and either Winston First or Peter Dunne support the proposed legislation.

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What is ridiculously bizarre is that the package claims to "encourage the development of alternative infrastructure". Why bother, when the government has forced Telecom to make it let you use its network? Well, Telstra Clear has an answer to that - NOBODY but Telstra Clear can use its network, and if you are a Telstra Clear local line phone customer, then woe betide you trying to get a better deal on national, international or landline to mobile calls with another company - Telstra Clear guards its property rights fiercely - even though it has around 30% of the Wellington market and over 50% of the Kapiti Coast market. Vodafone, no doubt, will be concerned - having spent many hundreds of millions on developing its competing network - it has become too successful to be beyond the beady eyes of a regulator.

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Of course David Farrar is pleased - like any lobby group is pleased when the government rolls out the trough taken from someone else so they can dip their snouts in the booty of state interference - like farmers on SMPs or manufacturers under tariff protection - the internet community thinks:

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1. It will do better from this deal than if companies were left to invest off their own back; and

2. It is moral to confiscate property rights when you are unwilling to pay for them.

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I am particularly disappointed David never responded to my reply to the Internet NZ submission. On the one hand he promotes tax cuts , time and time again and a smaller state, on the other he is like other lobbyists, out to get what they can from the government. More tax money to force people to pay for broadband infrastructure is perhaps the most nauseating example. Why should non-users of broadband pay for infrastructure that, frankly, is mostly used by businesses and middle to higher income households? Ohh its the sacred internet - silly me, it's an exception.

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Like I said, those who wanted to provide local high speed internet access had several options open to them:

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1. Build their own networks (Telstra Clear, Walker Wireless, Vodafone all have done this to a greater and lesser extent);

2. Negotiate and pay Telecom (or another local access provider) to provide services on a resale basis;

3. Buy some shareholding in Telecom to share the "windfall profits" it apparently has been reaping from providing service that critics call inadequate and overpriced (wonder why people bothered using it);

4. Offer to buy the local loop from Telecom or enter into a deal to own it in partnership (yes it would cost money, but what's money when it is for the so called "good of the country").

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David is getting some fisking from some on his blog about this and some of his responses don't stack up, such as:

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"LLU is not exactly a socialist invention of the far left. It is near universal in the OECD and in fact the OECD itself (which is usally seen as quite right wing) backs unbundling and has been very critical of our telco environment."

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You see, if rightwing governments implement socialist policies (and have no bones about it, forcing a private company to provide physical access to its network at a price determined by the state is socialist - there is nothing "free market" about it), then they are not socialist!! Maybe a bit like Rob Muldoon and Think Big or price freezes? Just because it is near universal in the OECD does not mean it is right - it is near universal in the OECD to fund roads on a purely political basis, but that isn't right either.

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So, we wait and see how Telecom's share price responds - of course the Greens, Labour and David Farrar wont give a damn if 10% of the NZ sharemarket value is wiped out overnight - just those evil money grabbing Telecom shareholders with their fangs and horns, sucking the blood out of children (read broadband users) to pay for their lavish lifestyle (read retirement savings of elderly couples).

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This is simple a government enforced transfer of wealth from Telecom shareholders to Telstra Clear shareholders (51% Australian government - yay!), IHUG, Slingshot and other wealthy competing telco shareholders. That is it.

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Slingshot is owned by Annette Presley - an entrepreneurial second hander as I once described her in my post on her record in the telecommunications industry. The consumer's friend - the producer's enemy. Not PC has described her as the face of theft - he isn't wrong.

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Rodney Hide has to his credit damned this move and Trevor Loudon agrees. I Hate Socialism likes socialism on this one, confusing invasive regulation with deregulation - he needs to do a bit of research. I bet the National Party is now debating about whether to criticise Labour's policy, because National policy when it was in government was to oppose regulation - or to support it, and look like it is the friend of the consumer. I am sure David Farrar is in the midst of all that too!

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One thing to remember - Helen Clark, Michael Cullen and David Cunliffe create nothing - if you relied on them for telecommunications - you'd get nothing. They are politicians - they don't produce, they only regulate, take and redistribute.

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So watch and see - maybe you'll get cheaper faster broadband, maybe you wont. Certainly Telecom will be worth less, as will the sharemarket overall - certainly hundreds of thousands of New Zealanders will lose asset value from this step, and a handful of investors in other companies will gain some, along with the Australian Federal Government.

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This government helped another Australian company boost its asset value as well - Qantas - by not granting Singapore Airlines the right to buy 49% of Qantas's biggest competitor (the then privately owned Air NZ/Ansett) which meant Ansett went under and Air NZ was severely cauterised, and ready to collaborate rather than compete. So is the Clark/Cullen government a great friend of Australian shareholders?

Qantas and Air NZ to codeshare trans-tasman

As an opponent of anti-trust laws, I don't have a problem with privately owned airlines in an open market getting together. Although Air NZ and Qantas would not have done that had Dr Cullen let Air NZ be 49% owned by Singapore Airlines in the first place, that is now history. Unfortunately Air NZ is now predominantly state owned - and so it is at best, unclear, whether this collusion between Qantas (which so clearly has the political backing of the Australian Federal Government, as it shut out competition for Qantas on one of its most profitable routes) and the state carrier should be allowed.

However, I can laugh at one point - the claim by the airlines that this is good for consumers. Check these claims:

* Air New Zealand customers currently have the choice of 134 Tasman departures per week. Under the proposed codeshare with Qantas this would increase by 63% to 218 departures.

Well, actually customers can choose between all of the airlines. Nobody is forced to use one airline - at best the claim that you can earn frequent flyer points/airpoints dollars on more flights is true.

* Better schedule spread (access to 63 % more flights a week across the Tasman).

OK, there are less flights - are the remainder going to happen at hours that people don't want that much??

* Greater range of connecting options and enhanced seamlessness of service.

You both have deals with each other for connecting to each others' domestic networks already.

* Potential for new destinations and improved frequencies.

So the new route to Adelaide happened because?? You're reducing frequencies - so what is that about?

* Cost savings from extraction of capacity (removal of two aircraft from the Air New Zealand fleet and one from Qantas) will allow sustainability of low fares.

Yes, though there will be less low fares- you use those to try to fill all those half empty planes.

Oh well, as a libertarian I don't advocate the government stop it - but it isn't much good for consumers, particularly those flying from Wellington since only Air NZ and Qantas fly from Wellington to Australia. Meanwhile, remember that this wouldn't have happened had it NOT been for government interference in the first place- why should Dr Cullen have held up Singapore Airlines' investment in Air NZ in 2001?

In New Zealand

OK, I'm here. Can't comment on Air NZ's new Premium Economy Class because I used up my gold airpoints upgrade vouchers to go in the new business class mmmmm - duvets and pillows and flat beds. Rather nice entertainment system fully interactive - not the variety as in Singapore Airlines or Virgin Atlantic, but better than Qantas. Food was excellent and in greater quantities than last time, and I could sleep in the bed, although it was a little hard it compares well with BA's Club Class.

Ahh New Zealand, land of the parochial soooo:

Things I have missed

Family and friends
Empty clean beaches, countryside, roads
Cheap good fresh fruit and veges
Good edible bread easy to get
More fish than haddock and cod that is easy to get
Sun and blue skies
Relatively good service
Lack of crowds

Things i have not missed

Nauseatingly patriotic navel gazing provincialism, as if New Zealand as an entity is important - it just exists and people there have to do things good to be noticed. Just because it is NZ made means nothing unless it is good.
Nasal drawling accents (LA Air NZ lounge I sat beside a blonde woman with the worst accent I've heard in ages - loud, nasal and SO glad she didn't sit upstairs).
Boy racers.
High taxes on alcohol.
Anally retentive customs (you really think most illegal drugs used in NZ come through passengers at airports?)
Low value currency getting lower (good for me for now).
The preponderance of the stupid prickery using the roads (whereas in London they are homeless or riding buses).
Newspapers with large sections dedicated to parish pump pointlessness and bugger all analysis or incisive comment, and virtually no choice of newspapers.
Television virtually devoid of intelligence, unless it comes from foreign channels and awash with cultural cringe.
Radio largely devoid of intelligence (BBC World Service and BBC Radio 4, as leftwing as they are, are like undergraduate tutors compared to National Radio's adolescent students).
The subculture of welfare, drug addiction, crime, abuse and irresponsibility rampant in certain segments of society - and the political tolerance of it (yes I am very aware of it in the UK too, but it is a different but equally troublesome nature).
The perverse criminal justice system that puts a drug trafficker in jail for years, but lets women who beat up kids out in half the time.
The obsession with the road toll - but unwillingess to confront the cause - stupid driving.

OK that'll do, I don't enjoy sitting in front of a computer more than I have to :)

Transmission Gully needs more subsidies

That's right folks - not only was the Hearing's Committee (reported as if it was Godlike) wrong about there being enough money for this billion dollar boondoggle, not only does it have a benefit/cost ratio of less than 1.0 (meaning it produces less benefits that costs), not only does a toll only recover around 15% of the cost of the road (which means if the toll was high enough to pay for it, nobody would use it - showing how little users really want it), not only does Porirua City Council and Kapiti Coast District Council oppose rating the main beneficiaries of the road to pay for it, BUT

apparently (I say apparently because I don't trust the Dom Post much on these, since they got it wrong several times before as I described here and here) Dr Cullen has suggested a regional petrol tax to help pay for it.

This is a fundamentally flawed proposal, despite David Farrar's socialist faith in this think big project, for several reasons:

1. A regional petrol tax means ALL motorists from Masterton and Otaki to Miramar and Island Bay pay for a road that only SOME use. Wairarapa residents might ask why people in Levin don't have to pay, whereas more of them will use it than Wairarapa people.

2. A regional petrol tax means motorists that fill up north of Otaki or in the South Island don't pay to use the road as much as a grandmother driving in Island Bay to the shops.

3. A regional petrol tax means all trucks, buses and diesel and LPG cars don't contribute, since it doesn't apply to road user charges or LPG (and don't even try to apply it to them - RUC is often bought centrally by fleet operators and there is no way of knowing where kilometres bought in advance are being used, and 80% of LPG tax is refunded for non-road users - try having a regional tax on a tax that is mostly refunded)

4. There is no regional petrol tax at present, the last one, introduced by the 1990-1996 National Government was abolished because the oil companies found it administratively simpler to apply to ALL petrol sales nationwide, and hand the Auckland and Wellington Regional Councils the estimated revenue (so motorists in Invercargill paid a tax that was largely meant to apply to only Auckland and Wellington). The only way to change that would be a complicated administration system to account for petrol delivered within regional boundaries, and that means service stations close to boundaries either win or lose.

Now, the DomPost failed to report that the Wellington Regional Land Transport Committee has voted in favour of Transmission Gully - but, and it is a big but - there are still several hurdles left.

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Transit's board has to agree to the appropriate approach, and may decide against Transmission Gully, or decide in favour, or decide in favour, but in the meantime cannot neglect the current route (which it can't). I think it will do the latter - retain its commitment to Transmission Gully as the long term solution, but apply for fundable economic projects on the current route. The median barrier along the coast is one, an interchange at Paekakariki is another - Pukerua Bay Bypass perhaps another. Even then, Land Transport New Zealand needs to approve funding - Transit doesn't do this - something that politicians that helped set up this system (Peter Dunne and Maurice Williamson) tend to ignore in the rhetoric and which most journalists can't be arsed thinking about (they only report anyway).

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The simple point is - the money for Transmission Gully is not there - it does not stack up as a project of anything other than low national priority because it has bad economics, and the users are unwilling to pay, even the councils cheerleading it wont raise a dollar of their ratepayers' money to pay for it (meaning they wont risk their political lives on the issue - there is no risk in demanding others pay).

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So why should you be forced to pay for a road that you aren't going to use or benefit from? and if you are going to use it or benefit from it, then why wont you agree to pay more towards it? Agree to pay the $24 toll that would be required, or go tell the grandmother driving in Island Bay to the shops why she should pay more in petrol so you can go on holiday to Taupo 10 minutes faster?

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You might ask why supposed supporters of the free market like ACT and National, think this is ok. Even Maurice Williamson, who as Minister proudly refused to get involved in decisions on particular projects, because he believed projects should be decided on their merits by people able to weigh them all up objectively is now reported as guaranteeing the Penlink project in Rodney District will get funding approval if National is elected. Roll out the pork barrels.