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"Why Act Opposes The Qantas/Air NZTakeover

Friday 29 Nov 2002 Press Releases -- Transport


Speech by Richard Prebble, ACT NZ Leader To North Shore ACT Electorate Refinery Café, Unit 5, 162 Mokoia Rd, Birkenhead Date 7.30 pm, Friday 29 November 2002

It is a pleasure to be asked to speak at this North Shore dinner because it gives me a chance to thank you for your wonderful support during the election.

ACT ran the best campaign. Only six months before the election we were polling at just 3%. Commentators were claiming that ACT was broke and predicting our demise.

A student who is doing his MA on the media coverage of the last election advises me ACT received the lowest TV coverage of any party with MPs in parliament, just 4%. Labour the most. The Greens, NZ First all got more coverage than their final result deserved and of course Peter Dunne was the worm's candidate and in the last crucial 10 days received over 10% of the available TV coverage.

ACT's final result of 7% and nine MPs was achieved under the radar, because our supporters delivered our message into 700,000 homes.

Now, of course, the same commentators who claimed we were broke now claim we spent too much.

At least it was our money - not like the two old parties whose campaigns are paid for by the taxpayer and free TV while ACT is effectively excluded from the airwaves.

ACT is a new party. There has never been a party like ACT in this country and political scientists tell me that we are the only classical liberal party in any parliament in the world.

We liberals believe that rights belong to the individual not the state. That individuals have the freedom to make their own choices. With these choices comes the responsibility to be accountable for the consequences of our actions.

We believe that citizens have the right to vote, have free speech, to own property, make contracts, be equal under the law, and as that great liberal charter the US constitution puts it, the right to pursue happiness.

ACT alone in parliament stands four square for these principles.

The media has difficulty in knowing how to label ACT. There is a perception that ACT is a right wing adjunct to the National party, that we are a sort of National on steroids.

Not so. We are a liberal party. National is a conservative party. The conservatives, in so far as they have a programme, oppose what Labour proposes, and National's record is to then move leftward and adopt Labour's policies.

The problem with the conservative as Hayak famously observed is that they do not have an alternative to our present direction.

Let me ask you. Can you name three policies National was campaigning on last election?

So far as I could tell National was in an auction with Labour on who could pay teachers more.

Only ACT was pointing out that paying bad teachers as much as good, introducing the incredible paperwork of the politically correct NCEA and the dumbing down of standards was the reason for teacher dissatisfaction.

ACT has an alternative vision for education. An education system where every parent has the right to choose the school best suited to their child. Schools where there are external exams to ensure that we have standards and we aim for the highest international standards while leaving no child behind.

National has no big idea like ACT's. Conservatives fear ideas and change.

National has been as willing to use a cohesive force of the state to prevent change as the socialists are to promote change. The most far-reaching attack on property rights - the Resource Management Act was introduced by Labour and passed by National.

Both parties refuse to accept the greatest conservation force is private ownership.

ACT and National are together fighting the OSH bill that will impose $500,000 fines on employers. But the original OSH bill was passed by a National government. National's real objection to the bill is that it is Helen Clark who is passing it.

National does not really share our liberal belief in the market; our belief that the market is self-regulating, and in the market's remarkable ability to solve problems.

National's record of interfering in the market to remove competition is, especially in agriculture, if anything greater than Labour's.

Both ACT and National are opposing the proposed takeover by Qantas of Air New Zealand, but if you listened to the reasons, from very different positions.

National's seem to be just crude Nationalism, the sort of Aussie bashing you see at a rugby game.

We in ACT have a number of objections based on our liberal principles.

We do not believe that government should do for citizens what the citizens can and should do for themselves.

Government should not be in business. The state is hopeless at business. The private sector record is far superior. The World Bank, the OECD and many other economic institutions have made respected studies of the more than one trillion dollars worth of privatisation in over 100 countries in the last 15 years. Every study concludes that the private sector, anyway you measure it - customer service, lower prices, wealth creation - has outperformed state ownership.

So ACT starts by saying Labour has no right to spend $800 million of taxpayer's money on an airline.

This Qantas deal traps the taxpayer in as a passive investor.

ACT's third objection is that the Qantas/Air New Zealand deal creates a monopoly and destroys the market.

If the deal does deliver to the shareholders better returns, it is only at the expense of the travelling public.

The lesson of free enterprise is that it is competition and choice that drives quality and performance. Over time a monopoly inevitably leads to a lowering of service and an increase in price. The monopoly profits are not necessarily obtained by the shareholder. When Air New Zealand had a domestic airline monopoly, the airfares were among the highest in the world and the service was awful, even though the policy of government as owner was to provide good service and low prices.

I am the last owner of Air New Zealand as a monopoly. When I became Minister only 10% of aeroplane flights took off on time. I made Board changes, issued instructions and 12 months later only 10% of flights took off on time. The unions had captured the monopoly profits. Air New Zealand as a monopoly could not even pay the government a dividend. Then I let in Ansett compete and overnight, Air New Zealand flew on time.

Air New Zealand's management as a monopoly will be no more successful today at providing quality service at low prices than the management last time the airline had a domestic monopoly. It needs more than good intentions. What is required is a competitive environment.

Not only should the Qantas deal go to the Commerce Commission but government agencies like the Ministry of Commerce, Consumer Affairs and Transport should be appearing and giving evidence against it.

The Qantas/Air New Zealand takeover is a test of our regulatory system. If the Commerce Commission is robust there is no way this deal will be approved.

I have spoken with those who invested in Ansett New Zealand when that airline also had a partnership with Qantas. They tell me Qantas said all the things it is saying today about it being an alliance and not a takeover. Then Qantas insisted on Ansett New Zealand using the Qantas computer system, Qantas reservations, the Qantas way of making meals, cleaning aircraft, in fact everything in the Qantas manual. Qantas in the end left them with nothing.

When the chairman of Air New Zealand says that the Koru on the tail of Air New Zealand will remain, he does not know how right he is - that is all that will remain.

The proposal that Qantas domestic continue to fly, but its schedules, pricing and service be determined by an Air New Zealand management, whose decisions have to be approved by a Qantas director, shows how anti-competitive this proposal really is. All this means is that Qantas /Air New Zealand will control all the gates, all the lounges and all the luggage carousels at the domestic airport terminals so making an impossible barrier for entry for competition. Air New Zealand does not publish easy to read accounts, but, if it is correct that the airline since September 11 has lost money on its international services, it follows it is making very high profits domestically.

This deal locks in these huge profits.

Those who believe in the market, in free enterprise and competition cannot support the Qantas takeover. So on Tuesday you can rely on ACT to make the case for free enterprise.

ACT is a party of principle. The ACT MPs are totally reliable. We are staunch. We never waver in our support of liberal principles. Even our critics agree that it is ACT that provides the intellectual rigour to parliamentary debate. We are the party that the government is forced to listen to.

ACT does provide fresh ideas and practical workable solutions. Never underestimate our influence. ACT is proof of the power of an idea.

Our voice in parliament is heard because of your efforts. We do have the best members of parliament because we have the best party members, which is where I started. I, and I think so does the country, thank you for electing such an incredible group of MPs that I have the great honour to lead.

For more information visit ACT online at or contact the ACT Parliamentary Office at

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