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Ignorance Is No Excuse

ACT Commerce Spokesman Stephen Franks said Government regrets about the failure of the Australian Stock Exchange campaign to take-over the New Zealand Stock Exchange show frightening ignorance of the importance of the securities industry.

“Marian Hobbs promoted the Bill to ‘mutualise’ and privatise the Exchange. The Minister of Commerce Paul Swain bubbles for harmonisation with Australia. They think it shows they are commercially ‘with it’ and ‘global’.

“At the least New Zealand could have expected its government to be neutral. We should have had an analysis of the effects of the proposal. We haven’t seen one. The Bill contained no safeguards against self-interested voting by Australian-controlled brokers.

“New Zealanders have no knowledge of any steps taken to establish that the proposal was at full value, on a contestable basis.

“The Ministers unknowingly broke the most common sense rules in the industry. Any broker will tell a listed company contemplating a merger or other major transaction to ‘test the market’. Proper value is rarely established without a contestable process. The information released by the Exchange so far does not show any contestable process.

All New Zealanders have a stake in a proper evaluation. Australia may be the worst to sell our Exchange to, if we want to avoid ending up a ‘branch office’ country.

An alignment with a competitor of the ASX would more likely sustain and grow a vibrant financial sector in New Zealand. Having an Australasian competitor would be to the advantage of Australia as well. Wellington affiliation with another group should ginger up Sydney, just as Vancouver Exchange keeps Toronto on its toes.

We have seen no public policy assessment of this privatisation. I am sure that demutualisation is desirable. But not on terms that could overwhelm the New Zealand members without conflicting Australian interests. So we should be pleased to see a halt called at this stage.

The Ministers who have been so encouraging to the Australians are amazingly complacent. There is no evidence that they understand enough even to ask their advisors to consider these matters before regretting the failure of the Australian take-over.


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