Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Principled Debate On Qantas/Air NZ Called For

Business Roundtable Calls For Principled Debate On Qantas/Air New Zealand

The chairman of the New Zealand Business Roundtable, Rob McLeod, called today for an end to knee-jerk reactions to the proposed partial sale of Air New Zealand to Qantas and instead for a principled debate.

Mr McLeod said that in the Business Roundtable's view the key principles involved were as follows:

€ The government should not be involved long-term in the risky business of owning an airline. Internationally, governments are exiting the airline business. There was no need for the government to end up as a majority owner of Air New Zealand last year if it had acted promptly on the company's proposals for recapitalisation. The cost to taxpayers has been huge. It should sell down its interests at the earliest opportunity.

€ Air New Zealand should be allowed to determine its business strategy on a fully commercial basis without political interference. It is operating in a difficult and highly competitive international environment. It is easy to see the drawbacks of an alliance with Qantas but Air New Zealand's board and management have a duty to pursue the best feasible options to ensure the viability of the company. They should be allowed to exercise their commercial judgment, subject to all relevant regulations, and should be held accountable for their decisions by their shareholders. The company is perfectly entitled to propose a partial sale to Qantas. Any final proposal will have to be approved by shareholders, including the government.

€ At this point the government's role should not be to supplant commercial decision making but to ensure that regulations governing the airline industry in New Zealand are in good shape and that all relevant law is enforced. In this way there should be a presumption that any alliance approved by regulatory authorities is in the national interest.

€ This means, firstly, that the government should examine whether it is imposing any unjustified barriers to entry and competition in relevant markets (domestic, trans-Tasman, long haul) and, if so, remove them.

€ Secondly, the full set of tests under the Commerce Act should be applied. These will be tough to meet. Clearly there will be some lessening of competition but the issue for the Commission will be whether other national benefits outweigh such costs. The airlines obviously believe they do, and they should be allowed to put their case. Other interested parties can do the same. The Commission can approve or decline the proposal, or apply conditions to it. The analysis involved will be complex and political parties should not be pre-judging the outcome. The Commission has statutory independence in order to protect such decisions from political influence.

"Judged in the light of these principles, the government is acting correctly in not pre-empting decisions by the Commerce Commission and its Australian counterpart", Mr McLeod said. "However, the current proposal exposes its conflict of interest as a majority owner of the airline and a regulator in the national interest. The proposal does involve a dilution of the government's shareholding in the company but it should be planning a full exit strategy."

Mr McLeod said that the National Party did not appear to be taking a principled approach to the issue. "Important business issues should not be determined on the basis of hits on a website. It is irresponsible and damaging to New Zealand's business reputation to be seeking to pre-empt the decisions of a statutory watchdog. National's stance is more reminiscent of its interventionist past than its recently stated support for free enterprise, limited government and respect for the rule of law."

Mr McLeod said that the reactions of other opposition parties also seemed to lack a principled basis. "This does nothing for public understanding, our relations with Australia, or New Zealand's reputation as a stable business environment. It is time for due process to be followed and for rational rather than emotional reactions to an important and complex issue", Mr McLeod concluded.

© Scoop Media

Business Headlines | Sci-Tech Headlines


I Sing The Highway Electric: Charge Net NZ To Connect New Zealand

BMW is turning Middle Earth electric after today announcing a substantial contribution to the charging network Charge Net NZ. This landmark partnership will enable Kiwis to drive their electric vehicles (EVs) right across New Zealand through the installation of a fast charging highway stretching from Kaitaia to Invercargill. More>>


Watch This Space: Mahia Rocket Lab Launch Site Officially Opened

Economic Development Minster Steven Joyce today opened New Zealand’s first orbital launch site, Rocket Lab Launch Complex 1, on the Mahia Peninsula on the North Island’s east coast. More>>


Marketing Rocks!
Ig Nobel Award Winners Assess The Personality Of Rocks

A Massey University marketing lecturer has received the 2016 Ig Nobel Prize for economics for a research project that asked university students to describe the “brand personalities” of three rocks. More>>


Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>


Half A Billion Accounts, Including Xtra: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>


Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news