Russell Brown's HARD NEWS

9th February 1996

Copyright © 1996 Russell Brown

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And ladies and gentlemen, happy days are here again, the skies above are clear again. Let's sing a song of cheer again ... and all vote National. Yes, the Prime Minister delivered his State of the Nation speech this week and wouldn't you know it, it was a campaign speech. Vote for us because things are really neat and we can make them neater.

It is the privilege of government to be able to turn the customary executive summary into a promotional pitch - but it also showed the hazards of election year. It's rather easier to cruise along mid-term and allow the good news to leak out of various orifices in the body politic than it is to own up to the whole shootin' match. We're the guys who got you that super new credit rating from Standard & Poors ... and oh, we're also responsible for Uncle Bert's dialysis entitlement being cut in half and any or all of the sundry cock-ups in the education sector. Tax cuts, anyone? With sugar?

Even so, I was suprised at how unconvincing Bolger looked on television, answering questions about the economic miracle. When you can't completely ace someone so ill at ease with the medium as Helen Clark, you probably need to go back for a couple more training sessions with the young men in the sharp suits. But this is his problem. Bolger looks best when he can be presidential - play the diplomat and leave the sordid waste of politics to the politicians. He can't do that in a campaign - and the silly little schoolboy of yore started to peek out from around the edges of the presidential aura. National has a long, long way to fall before it comes down to the range of the other parties, but this was an interesting little encounter with reality.

Reality for the United Party is, of course, the spectre of a tall bloke in a black hood carrying a big, sharp sickle. Electoral death faces the would-be power-brokers unless they can attach themselves to a larger entity like one of those little fish with the sucky mouths. Hence their generous offer to form a coalition with National. The National Party's response this week was, er, "Pardon?". United went on to explain that if National agreed not to stand a candidate against Clive Matthewson and dished up a cabinet post for a United MP, they could be friends and the government could revel in United's 0.5 per cent of popular support. The words "increasingly desperate" come to mind.

This was, of course, also the week of Waitangi Day. After last year's shambles at Waitangi, the "official" celebrations took place within the walls of government house, with an invite-only crowd. The Prime Minister subsequently declared the bash to be a raging success. Well, he would, wouldn't he? In truth, the exclusive celebrations appeared a very sterile exercise indeed. On the other hand, the trend towards individual celebrations of cultural diversity around the country was a good one.

Meanwhile, up at Waitangi itself, the protestor problem was handled with quite some clumsiness. The assembled throng made moves in the afternoon to enter the Treaty grounds. The police were detailed to stand on that famous bridge and stop them. Bad option. Rather than being faced with the consequences of their own intrusion - would they knowingly trample on the mana of the northern kaumatua, which was most surely at stake? - the protestors were given some police officers with whom to play Aunt Sally. That made it very easy. They could engage in some jostling and punching at no risk to their credibility and thus get on the news.

Doug Graham, the Minister of Treaty negotiations, almost as an afterthought this week announced a significant and useful initiative. The government would look specifically at Maori land which had been taken for Works purposes and, well, never given back. This is much better than the grand, doomed design of the Fiscal Envelope. On that score, I would strongly recommend that anyone who's interested read Wira Gardiner's new book, Return To Sender: What Really Happened at the Fiscal Envelope Hui. If you've ever struggled to make something of the opacity of Maori political life, then you'll enjoy and learn from this book. Cheers, Wira - I'll read your book on the Maori Battalion next.

On a similar course, we have a new Race Relations Conciliator - Dr Rajan Prasad. Yes, he's of Indian extraction - and that fact testifies to the maturity of the office and the increasing cultural richness of us as a nation. Apart from anything else, he will surely be better than the hapless John Clarke.

Now, let us move on to New Zealand Telecom, which this week declared an all-time high quarterly profit of $182.2 million. Multiply that by four and you get a very big number. Indeed, by a number of measures, it is too big a number. Telecom's return on equity is out of the ball park, its redistribution of earnings is demonstrably greater than its willingness to invest in infrastructure and so on.

So what to do about it? The Alliance has a plan. This, is should be noted, sets it apart. The government, thrice hypnotised by ideology, tax receipts and the sheer political clout of such a large corporate, declines to acknowledge a problem. Labour doesn't appear to be able to get a policy together at all. And the Alliance? BZZZZT!! Sorry, wrong! Thanks for playing anyway.

Jim Anderton, having already suggested that we could all have completely free domestic telephone services - no monthly charges, nothing - is now indicating that he regards that as policy. Well, firstly, what entitles us to something for nothing? Just who is going to pay for it? The man in the moon? Telecom's lock on domestic services doesn't necessarily furnish it with much of its profit - it may even act as a loss leader for the rest of its services.

Supposing we were to mandate free services or a peppercorn monthly rental. Does anybody really think Telecom will roll over and beg? The first thing it would do would be to utterly abandon service to the residential market. So you want a new phone connection? Sorry, we don't make a dime out of that, so you might have to wait a month or three. Got a problem with your phone? Ditto. Want a number? Sorry, we don't run directory services any more, no money in it. So does the government also undertake to dictate the nature and level of Telecom services? Oh sod it, let's just renationalise shall we?

Next up is price controls, administered by some new government agency. Sounds good? Only until you consider that Telecom managed to use the vestigal wing of price regulation, the Kiwi Share, to keep Clear out of the local services market for nearly five years. The Kiwi Share also made sure that domestic prices would never fall, because it gave Telecom the right to raise prices exactly in line with the Consumer Price Index - which it has done, without fail, at every opportunity. I'm not saying that we could have done without the Kiwi Share - only that price control mechanisms have more complex effects than some people would have you believe.

The sector in which prices have fallen - a lot - is in distance calling, both national and international. Did that happen because a politician said so? No. It happened because there was competition in that market and the rip -off of distance charging had a little of the winf taken out of it. The Alliance has promised to encourage competition, but, hang on, the domestic sector wouldn't bring in any money, so no company in its right mind would enter that market. Or is the free line mandate to apply only to Telecom? But then why would consumers choose a competitor when Telecom was required to deliver domestic services free or extremely cheap? Perhaps we should subsidise new entrants with some of Telecom's profits? My, this gets complicated, doesn't it?

Look, the reason Telecom is able to stifle serious competition and turn huge profits is that owns nearly all of the access network. This is a huge advantage. It uses its own network at cost and charges everyone else wholesale, at best. If it can't extract its dollar at one point in the chain, it takes it out of another. In our lily-livered regulatory environment, it also gets to makes the rules. Even the Commerce Commission admits that.

So what do we do? Make Telecom sell off bits of its network? Bit late for that. And the Kiwi Share, which is specifically designed to govern a near-monopoly network operator, would get in the way. No, there should be regulation - and even price control - but not at the level where the Alliance is proposing it. We need an interconnect regime.

Rather than Telecom deciding what it will charge for other service providers to use its hardware, there should be a clear set of principles to establish a fair price and, if necessary, prompt arbitration by a specialist body. This would apply to other service operators too, who could build bits of network knowing that it will be more attractive for Telecom to pay a fair price for the use of it than to build around it. At the moment, Telecom can lay infrastructure, secure in the knowledge that it can price anyone else out of using it and thus maintain its monopoly. For so long as Telecom infrastructure is available to Telecom services cheaper than it is to anyone else's services, we'll have a monopoly.

The other issue here is number portability - one set of numbers, please, and no tricky access codes if you wish to change to a cheaper or better service provider. Why do you think Clear is stuck at 20 per cent of the tolls market? Because it's manifestly inferior? Of course not - it's because you have to think first and dial those extra digits. How different it might be if you had to dial an extra digit for Telecom tolls as well.

I'm sorry if this is all a bit dense, but it's a weird business. And populist tosh like dangling free phone connections in front of the electorate annoys me.

On to lighter matters - and step up David Hartnell. The inaugural express Report was pretty impressive - and I hope as the programme mature that its producers can raise the rent. Those bursts of blipverts every three minutes surely won't be necessary for long. The show's newspaper roots show here - the information end is excellent, the production could spread its wings a little more. The example here is Britain's Out on Tuesday (and a number of other days, as it went on), which became top-quality prime-time TV in its own right. But Hartnell - what a star! His saucy bulletins from the entertainment world may just become the hippest thing on telly.

And from there to sport. The Australians don't want to go to Sri Lanka for the cricket World Cup and I don't entirely blame them. It's a volatile place at the moment and, well, death threats are death threats. Our lads should be all right - assuming they can keep out of trouble. A policemen found two Kiwis and a Zimbabwean smoking something funny at the Basin Reserve, during the one-dayer there. Was it ... DRUGS?! Nope. It was, um, Turkish cigarettes, which just smell funny. I've been to Turkey and I never smelled any cigarettes which smelled that funny. Still, the police accepted the explanation, which raises some interesting possibilities. Get caught having a toke? No problem.

"I'm sorry officer, but you're wrong. This isn't a Class C prohibited drug - it's just ... Coromandel cigarettes!"


    ==  ==      Russell Brown
  [ @ / @  ]                      
     /        ________________________________________
    (_)         "The views expressed on this programme
    ____)       are bloody good ones." Fred Dagg, 197?

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