Gaynor on Wednesday: Airline's flightpath must go beyond route to the Beehive

By BRIAN GAYNOR

Air New Zealand

Are the important decisions over Air New Zealand going to be based on political considerations?

Over the weekend, market researcher UMR Insight conducted a poll which included several questions on Air NZ.

Interviewees were asked whether they would support the Government allowing Singapore Airlines to own up to 49 per cent of the national flag carrier; whether they would approve Qantas taking a major shareholding; and what would be their attitude to the Government injecting hundreds of millions of dollars into the airline.

UMR Insight has a long-standing relationship with the Labour Party, and has been responsible for a large proportion of its polling research.

Polling is a widely developed political tool but it would be a disaster if major decisions on Air NZ were based on political considerations instead of the best interests of the airline.

Carter Holt Harvey

It is hardly surprising that Carter Holt Harvey employees pictured in the annual report have big cheesy grins. The document reveals that 640 of them are now paid $100,000 or more, compared with 499 in the March 2000 year.

This is partly explained by the group's continued expansion in Australia and the requirement to attract well-qualified employees. But Carter Holt is caught in the downdraft of the Australasian and international economies and escalating salaries are not being reflected in shareholder returns.

Since 1997, the number of employees on $100,000 plus has risen from 200 to 640 yet earnings have been static, the dividend has been cut from 10 to 4 cents a share and the share price has fallen from in excess of $3 to $1.68.

The annual report warns that there is little prospect of an early recovery.

On Monday, Franklin Resources said it had reduced its shareholding in the company to just below 5 per cent. This is a continuation of a trend in which the big United States-based value investor has sliced its holding from 160 million to 87 million shares.

Carter Holt's annual meeting will be held in Auckland on July 25.

Nufarm

Nufarm's decision to delist from the NZSE after 85 years is a big blow to the local market just before its demutualisation.

In January 2000, the group shifted its incorporation from New Zealand to Australia, changed its name from Fernz to Nufarm and moved its primary listing to the Australian Stock Exchange (ASX).

Share trading activity has progressively moved across the Tasman and in the last 30 business days turnover on the ASX has averaged 128,800 shares compared with 41,900 on the NZSE.

Last week Nufarm learned that it would drop out of the S&P/ASX 200 Index following a reduction in its liquidity. The company is trying to shift its share trading across the Tasman and improve its ASX liquidity so it can rejoin the index.

This is a big gamble as many of its NZ shareholders are expected to sell out and it will be a relatively small company on the ASX.

In the unlikely event that Nufarm's sharemarket rating improves as a result, it could have serious implications for the NZSE.

Tax reform

The McLeod taxation review committee proposal to tax an individual's home equity was given short shrift by most politicians but the topic deserves a fuller analysis.

One of our economy's biggest problems is the fixation with bricks and mortar and the reluctance of individuals to invest in productive enterprises. New Zealanders have residential borrowings of $62 billion and $44 billion invested in the managed funds sector whereas Australians have residential mortgages of $A272 billion ($340 billion) and managed fund investments of $A622 billion.

The strong priority for bricks and mortar on this side of the Tasman reduces the amount of funds available for the productive sector. This is reflected in the sharemarket, which has a total value of $43 billion whereas the total capitalisation of the ASX exceeds $A700 billion.

New Zealand will not pull out of the economic doldrums unless individuals are prepared to reduce their love affair with houses and give a much higher priority to risk- oriented productive investments.

eVentures

The next stage in the continuing saga of eVentures is scheduled for Auckland this afternoon when the company holds its annual general meeting.

Chairman Craig Heatley will address shareholders from the other side of the world via video link. Simon Vodanovich, who was appointed as an alternative director to Mr Heatley last week, will chair the meeting. The company is trying to organise a phone link from Britain with Mr Heatley so he can take part.

Mr Heatley recently told shareholders operational activity at eVentures had ceased. Does this mean the company is in hibernation until the chairman has completed his extended overseas holiday?

Surely shareholders, who have lost over 50 per cent of their original investment, are entitled to a greater hands-on commitment from their chairman and controlling shareholder?

* bgaynor@xtra.co.nz