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

 


EY Report Shows No Need for Copper Tax or Govt Bailout

14 DECEMBER 2013

EY Report Shows No Need for Copper Tax or Govt Bailout

Today’s EY Australia report vindicates the Coalition for Fair Internet Pricing’s view that neither a copper tax nor a taxpayer bailout is necessary to resolve the ultra-fast broadband (UFB) issue.

“This report is good news,” a spokesman for the coalition, Paul Brislen, also chief executive of the Telecommunications Users Association of New Zealand (TUANZ), said today.

“It proves that the government’s flagship UFB initiative can be built on time and within budget with a straightforward capital raising – and without a copper tax, barmy ideas like slowing broadband speeds to dial up, or any other old-fashioned state interventions or taxpayer bailouts.

“The report indicates that a capital raising by Chorus Ltd of around $500 million would solve all alleged problems with building the UFB after new fair prices for copper broadband and voice services come into force on 1 December 2014.

“Ms Adams is to be commended for commissioning this report and releasing it with plenty of time before the NZX and ASX open on Monday.

“It is the first solid, independent information on Chorus’s financial situation to be made available since the Commerce Commission announced last December the new fair prices it had determined under Steven Joyce’s Telecommunications Amendment Act 2011.”

Mr Brislen said the coalition would accept for the time being Chorus’s claims that the new fair copper prices would reduce its monopoly revenue by $1.07 billion through to 2020, although it remained sceptical the impact was so high.

He noted that Prime Minister John Key had previously rubbished early estimates the impact could be as high as $600 million and economists Covec had calculated the value of the copper tax to be no more than $449 million between 1 January 2015 and 31 December 2019.

EY Australia makes clear in its report it simply accepted Chorus’s claims of a $1.07 billion funding gap.

“The coalition will be studying these numbers more carefully in the days ahead, but even if the shortfall is as much as Chorus now claims, EY Australia says that much of it can be addressed through changes to dividend policies and debt headroom,” he said.

“Our initial view is that were Chorus to raise around $500 million in new equity, it could fill its alleged funding gap without recourse to the more barmy ideas to enhance revenue, such as reducing broadband speeds to that of the old dial-up services.

“Especially in the context of the booming New Zealand economy next year, raising $500 million in new equity for what is a growth stock is undoubtedly doable.”

Mr Brislen said the report not only vindicated the coalition’s arguments that a copper tax was unnecessary but also Mr Joyce’s landmark Telecommunications Amendment Act 2011, the Commerce Commission’s implementation of that Act and Ms Adams’ decision to commission EY Australia to review Chorus.

“The government has no stronger supporter of its UFB initiative than the Coalition for Fair Internet Pricing,” Mr Brislen said.

“We look forward to working with the government to play whatever constructive role we can in fast-tracking both the building and take up of the new UFB.”

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Crown Accounts: NZ Government Deficit Smaller Than Expected In First Half

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>

ALSO:

Fruit & Veg Crackdown: Auckland Fruit Fly Find Under Investigation

The Ministry for Primary Industries (MPI) is investigating a find of a single male Queensland fruit fly in a surveillance trap in the Auckland suburb of Grey Lynn... MPI has placed legal controls on the movement of fruit and some vegetables outside of a defined circular area which extends 1.5km from where the fly was trapped in Grey Lynn. More>>

ALSO:

Scoop Business: Westpac NZ Reaches $2.97M Swaps Settlement

Westpac Banking Corp’s New Zealand unit has agreed to pay $2.97 million in a settlement with the Commerce Commission over the way the bank sold interest rate swaps to farmers between 2005 and 2012. More>>

ALSO:

Going Dutch: Fonterra Kicks Off $144M Partnership With Dutch Cheese Maker

Fonterra Co-operative Group, the world’s largest dairy exporter, has commissioned a new dairy ingredients plant in Heerenveen, in the north of the Netherlands, its first wholly-owned and operated ingredients plant in Europe. More>>

ALSO:

Scoop Business: NZ Retail Sales Beat Estimates

New Zealand retail sales rose more than expected in the fourth quarter, led by vehicle-related transactions, food and beverages, adding to evidence that cheap credit and a growing jobs market are encouraging consumers to spend. More>>

ALSO:

Delivery Cuts Go Ahead: 'Government Money Grab' From NZ Post

"It's a money grab by the Government as the shareholder of New Zealand Post" says Postal Workers Union advocate Graeme Clarke about the changes announced by NZ Post. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news