Falafulu Fisi asks an excellent question to the previous post on Auckland Airport:
“Aren’t both Auckland Airport & Telecom private companies? Why would you want to say that the government is an interventionist regarding the CPPIB attempt to buying shares in the Auckland Airport but not saying the same thing about Telecom?
I am a defender of property rights, and the state has no right at all to meddle in the affairs of private businesses such as Telecom or Auckland Airport. That decision to sell or not to sell is entirely up to the rightful owners (ie, the Airport Shareholders) and not those Commissars in Wellington .
That was a great question, but I feel I am being entirely consistent here.
I am a fan of Govnerment intervention when the market is so inefficient and the company is out of control that the other stakeholders (beyond shareholders) are under threat, and unable to do anything about it due to monopoly power.
I’ve been wandering around NZ this week and frankly the broadband situation is beyond a joke – it is shameful crime that has left us in the dark ages of the internet.
There is a very well run dot com that I visited yesterday that is unable to even hold phone calls over Skype to the UK or USA as their connection keeps dropping out. This means increased costs, but even more importantly, that they are not part of the global internet business community that lives, wheels and deals on Skype. (Try putting together a 6 way phone call using traditional services at a moment’s notice.)
Now their customer base is almost entirely overseas, but they should be able to operate from NZ. But despite Wellington’s other advantages they would be not without cause if they uprooted and headed for the first world.
Government intervention into Telecom is the only way that the primary stakeholders (customers and the economy) could get the service that the country needed. There were plenty of warnings, but the head was stuck firmly in the sands of short term profits.
There are plenty of other monopolies and duopolies in NZ that understand how to play the game when you own a market. You set your prices well below monopoly prices, you are great to your customers and you know if you step out of line then the ComCom and the Government will be all over you.
Auckland Airport has not exhibited poor behaviour – they are running a good business, and are even upgrading the domestic terminal. An equivilent case for intervention would be if they put prices up, ran the terminals into the ground (and so spoiled NZ’s image and tourism numbers) and milked the dying cow.
All that is proposed for Auckland Airport is a change of ownership, which has no material impact on the relationship between the corporation and it’s stakeholders. It’s not as if the new owners are going to roll the airport up, put it on the back of a ship of unusual size and transfer it to a field outside Toronto. This intervention is uncalled for from the customers that use the airport, and to compound it has a negative effect on FDI for NZ.
Where is Infratil while this is going on? They are conflicted – on the one hand they own Wellington Airport and would love a piece of Auckland, so they should keep quiet. However on the other hand they own
Preston Prestwick (edit – thanks Tylersdad) Airport South of Glasgow in Scotland, and they should be deeply protesting our Government’s ham-sized fists which will make it much harder for them to buy other foreign airports in the future.