Anderton has last chuckle

Acting Prime Minister Jim Anderton kept a straight face at yesterday's post-cabinet press conference, but inwardly he must have been chuckling.

Here was a man who fought tooth and nail against privatising two of the nation's biggest transport assets - Air New Zealand in 1988 and Tranz Rail in 1993.

Now, the Government is considering stepping in to keep Tranz Rail's network intact as the struggling company prepares to sell huge chunks of itself to the highest bidder. And Air NZ may ask for a Government cash injection of up to $700 million to ease its financial pains.

Mr Anderton would not be drawn on how he viewed Air NZ's possible approach - that would have to wait for a concrete proposal - but he could not resist a poke at his adversaries of the new right.

"[Air NZ's] options are the options that any private sector company has. It's somewhat ironic that these corporations were privatised to make them much more commercially reliable, market driven and efficient. The suggestion those corporations should be coming back to Government and asking for money is somewhat ironic in my view."

He said the Government would look at any proposal, its costs and benefits, and consider it carefully.

Air NZ's chairman, Sir Selwyn Cushing, says any equity the Government ploughs in would be paid back as the airline returned to full financial strength and negotiations were undertaken to relax the ownership restrictions which govern traffic on many routes.

But although he is confident the airline can weather its short-term problems, as one senior Asian airline strategist said recently: "Any airline that tells you it can forecast more than three months out has got a better crystal ball than we have."

Air NZ shareholders have seen the value of their investment halved in less than two years, but that is a risk they chose to take. Any taxpayers wanting a piece of the national carrier (whose fortunes are in any case dominated by its bigger Australian subsidiary Ansett) are free to buy shares. Or, if they are feeling especially patriotic, they can send the company a cheque.

A cynic would suggest Sir Selwyn is flying a kite. If a proposal does make it as far as the Government, the airline has nothing to lose. If it is turned down, that gives the company extra leverage for asking the Government to lift the 25 per cent ownership cap on wealthy and eager investor Singapore Airlines. You don't like that, so how about this?

Tranz Rail, unlike Air NZ, may not be asking for money to bail it out of a jam, but the Government will still have to cough up if it wants to maintain a national rail network, paying to keep unprofitable regional lines open.

At least the Government has some control over Air NZ's future through its ownership of a Kiwi share. No such mechanism exists with Tranz Rail, which meant the company was able to break up its network without consultation.

Transport Minister Mark Gosche says decisions on financial assistance are some way off, and also involve discussions with regional government.



Of more immediate concern for both parties is the sale of the Auckland rail corridor. A Tranz Rail spokeswoman said yesterday that the company remained keen to start price negotiations but the next move was up to the Auckland Regional Council and the Government.

If Mr Anderton and his colleagues come to the party for Air NZ and Tranz Rail, it will be hard to resist a "told you so" to their ideological foes.

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