By Bernard Hickey
Finance Minister Bill English has flagged a 'health check' of regulatory certainty around the power and telecommunications industries after weeks of growing stock investor discontent about the regulatory outlook.
English rejected a suggestion it was a rebuke for the Commerce Commission after its decision to regulate wholesale copper broadband prices NZ$10/month lower put the Government's Ultra Fast Broadband rollout in jeopardy.
"No it's not meant to be that at all, it's just that you have seen a fairly significant impact from a regulatory decision on Chorus. I think it is in the interest of consumers and investors that our regulatory regime is reasonably predicatable so we just want to make sure that we do have a reasonably predictable regime," English said.
He said the Chorus decision was part of the picture, as was a Labour/Green proposal for a single buyer in the electricity market, which has been cited as factor driving the share prices of electricity generators down 11% since the proposal was announced in April. The wider NZX 50 has risen 6% over the same time.
"These things are not connected, but could create a picture of New Zealand having an uncertain investment environment. We would prefer it to be predictable," English said.
International unease
JB Were, which is closely connected to global investment bank Goldman Sachs, told its clients on Friday to reduce their exposure to the New Zealand stock market because the market was over-valued relative to overseas stocks, interest rates were rising and investors faced new regulatory risks with a potential change of government in a November 2014 election. Newton Asian Income Fund manager Jason Pidcock said last week that New Zealand was becoming as politically risky as Pakistan, David Hargreaves reported.
English said the comments from international investors were not the most important thing.
"The most important thing is that we have a predictable environment because what we have learnt in the last 4 or 5 years is that you can build business confidence which turns into jobs and better incomes. We just want to make sure we stay on the right track. We are not looking at some sweeping changes. We just want to do a check that we are on track and both consumers of our services and investors know that," he said.
English acknowledged private feedback from investors to the government.
"I have had a bit. I would't say a lot, but I think it is important to get on top of these things and not let a perception build up just at a time when the perception of New Zealand is very positive for investment and for incomes and jobs."
'Not clipping regulator's wings'
"I haven't said we are clipping the wings of a regulator. I haven't said we were reviewing the regulator, in fact I think I specifically said we weren't," he said.
"We are not reviewing the regulator, but we do need to have a look at our rules so that we don't have an environment where individual decisions can have such a bit impact on a company, or can put at risk technology that would be good for consumers and good for the country," he said.
"I have just said we want a check, we want to do a check that our legislative frameworks are right in the sense of encouraging certainty and predictability about regulatory decision and investments because in the long run consumers are best served not by some sort of wild west, they are best served by a resonable amount of certainty that means that investors will put their money into new technology and better ways of doing things so consumers get better services."
English did not make clear what form the review would take or how legislation might change. The Government was forced to abandon thoughts of changing telecommunications laws after minor parties, United Future, ACT and Maori, all said they would not support the Government over-ruling the Commerce Commission.
"I haven't been precise about it. I can't be precise about it," English said, adding however that the Overseas Investment Act would not be part of the 'check'.
Genesis float still on
English rejected any suggestion the Genesis Energy float scheduled for the first half of 2014 would be delayed by the regulatory 'check'
Labour reaction
"The problem that the National party has caused here is that their attacks on the Commerce Commission decision gave false hope to Chorus that they would overrule it, only to find that they didn't have a parliamentary majority, and in fact it is the hysteria that the National Party has contributed to here which has seen the extreme reaction in respect of Chorus share price."
(Updated with Labour reaction)
8 Comments
This government is a mess. They claim to believe in lighthanded regulation, but they can swing from back-room deals with Casino's, to full-on bailouts like SCF, and now this Chorus debacle. They are so utterly inconsistent they have practically no chance of getting my vote back. And now the markets are starting to get spooked. Nice one Bill.
Do not expect more from an ex currency trader and an ex farmer with little if any financial training.
On the other hand Labour and the Greens could possibly do worse but they would have to try very hard to do a worse job. Almost impossible for them to achieve, I believe.
Well, we will soon be short of information to know whether the servants are civil or otherwise after Stats NZ executes a rugged staff downsizing project.
Statistics New Zealand is planning to cut a quarter of its senior managers as new Chief Executive Officer Liz MacPherson sweeps a broom through the government agency. Read more
"The most important thing is that we have a predictable environment because what we have learnt in the last 4 or 5 years is that you can build business confidence which turns into jobs and better incomes."
Or another way is that the foreign investors know they have a pricing monopoly...for a good length of time.
Really its about chorus and how our overseas "image" of being an easy pillage is being damaged.
regards
So Mr Pipcock is correct after all....we are like Pakistan...
1.when the rich guy shout that he is loosing money our Goverment rushes to change the rules for the rich guy's benefit...
2. When the US Goverment says "get Kim Dotcom" We send in Helicoptors and a swarm of Armed Police to arrest one fat guy, his tiny wife and 5 kids.....
3. When House Builders lose money because demand turn bad, our Goverment and Reserve Bank cancell the new rules that they just implemented 2 month before....
4. When poor people are homeless because of Earthquake damage, the Goverment sit tight and say "let the market solve the problem" ....
5. When Nelson Mandela died, our Head of Goverment say "I forgot which side I was on" regarding Aparthied....
Which sums up what this Goverment stands for.
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