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.

Light blog

I’m off to New Zealand and Australia for the rest of the month, so will write here eratically during that time. The weekend in Switzerland was wonderful, Switzerland has the plus of being clean, polite, comfortable and efficient, and the minus of often being closed and rulebound.

I miss certain food, space, good tap water, family and friends - but I don't miss the tall poppy syndrome, the Kiwi navel gazing "thinking we're really important" and the insipid political correctness. Oh well, I wish you well and look forward to seeing a few of you in the next few weeks.