NZ emphatic in wanting to go it alone

By FRAN O'SULLIVAN


New Zealand business has delivered a resounding thump to a proposal for a single transtasman competition watchdog.

In submissions to the Australian Government's Productivity Commission, which is studying the competition regime on each side of the Tasman, New Zealand business organisations and blue chips such as Telecom and Fletcher Building claim a joint regulator would lead to a loss of sovereignty.

While most New Zealand submissions stop short of recommending against further moves to integration, many warn against the risks of regulating for the lowest common denominator, higher administrative costs and reduced competition between regimes to get best practice.

Major Australian companies such as Qantas and Telstra, which have been thwarted in their New Zealand ambitions, want greater integration of the two countries' competition regimes and a single regulator to adjudicate issues.

But neither the New Zealand Commerce Commission nor the Australian Competition and Consumer Commission believes a single regulator is necessary until there is further economic integration.

Prime Minister John Howard's overwhelming victory in Saturday's Australian election means the single-market agenda to further harmonise competition, banking and accounting rules will proceed.

But underlining the 27 submissions received by the Productivity Commission by Friday's closing date is a clear split along country lines which will take a strong dollop of political leadership to overcome.

On this side of the Tasman, the Business Roundtable warns against regulatory capture of the two competition bodies and misguided "groupthink".

The Roundtable says a focus on Australasian welfare, rather than the economic welfare of each country, would be a major step and "not one that would be easy for sovereign nations to justify".

Business New Zealand maintains there are no glaring instances where the operation, administration and enforcement of Australian and New Zealand competition and consumer protection laws impede an integrated environment.

Among the stronger New Zealand submissions is one from Wellington businessman Lloyd Morrison's private company. HL Morrison, a strong opponent to the Qantas-Air New Zealand alliance, opposes the thrust of the Productivity Commission's paper and "substantially all policy options", saying "harmonisation is a synonym for takeover and loss of sovereignty".

Fletcher Building, which is headquartered in New Zealand and listed on both sides of the Tasman, also believes it is important for the New Zealand market to be regulated by people who are familiar with it.

"New Zealand recently abolished appeals to the Privy Council based in part on the view that there is a need for those who sit on our highest court to be people who understand and are involved with New Zealand society, culture, business and history and regulatory makeup when applying or interpreting law ... the same policy should apply with respect to key regulators."

The commission's study does not include industry-specific regimes such as telecommunications or electricity. But three major telecommunications companies, Telecom NZ, Australia's Telstra and Vodafone NZ, have each used the opportunity for points-scoring.

Australian Government-backed Telstra wants a common telecommunication regime, suggesting Telecom's monopoly over broadband usage is hindering the economic development of New Zealand.

Telecom says the current study must not be used as a "Trojan horse".

Vodafone NZ questions how likely it would be for Australia to want to adopt some of New Zealand's regulatory practice. "The practical policy decision is not likely to be what are the best elements we can draw from each regime, but, rather, should New Zealand adopt Australian regulation and if so by how much."

From the Australian perspective, where total investment in this country has jumped $20 billion since 2001 to reach $51 billion, there is a strong desire for greater commonality.

Among those urging greater integration are the Real Estate Institute of Australia, which wants to extend its ACCC-agreed guidelines here, and the Australian banks, which want a "one-stop shop" approach to streamline the regulatory response to commercial issues.

Some controversial issues have surfaced in submissions:

* Shipping companies claim New Zealand's port companies are "abusing market power" and making excessive returns through "over-pricing" on non-contestable services. The Captive Port Customers Group - which represents the NZ Shipping Federation, Golden Bay Cement, Southern Cross Stevedores and PanPac Forest Products - says the New Zealand regulatory regime is inadequate to protect port users. It wants a review of port companies' market power and pricing and a regime aligned with Australia's tougher restrictions.

* The NZ Retailers Association, which represents companies with combined sales of $50 billion, is concerned about market dominance by property-owning mall operators such as Westfield. It wants an "unconscionable conduct clause", such as in the Australian Trade Practices Act, to be adopted here. It is also concerned about the shipping companies bumping up prices.

* The Australian Securities and Investments Commission wants a joint crackdown on international cold-calling scams. It says scammers operating from "boiler rooms" usually located in Southeast Asia cold-call potential investors using high-pressure techniques to sell shares in start-up US companies.

The Productivity Commission was directed by Australian Treasurer Peter Costello and Commerce Minister Margaret Wilson to put "all options on the table" when it began its six-month study in July.

"This includes having common competition and consumer laws and a single transtasman enforcement agency," said the ministers.

The commission - which delayed its draft report until after the Australian election - will hold roundtables on both sides of the Tasman before forming its final report.


Transtasman Study