Lobby group wants Air NZ debate

By BRIAN FALLOW

A diverse group is trying to persuade the Government to delay its decision on the proposed Air New Zealand-Qantas alliance until there has been a national debate.

It calls itself Debate Air New Zealand and has a website, www.debateairnz.co.nz, which lists about 80 supporters.

A spokesman, Wellington physician Dr Ian Prior, told a press briefing yesterday: "Very few people have a clear idea of what is being proposed. People believe it is going too quickly."

The Government is due to announce two decisions by Wednesday. One is whether, as the holder of the Kiwi Share, it considers the proposal in the national interest .

The other is, as the majority shareholder, whether it approves the proposal "in principle".

Another of the group's spokesmen, former Wellington mayor Mark Blumsky, said that to say a decision was just "in principle" tended to evoke a "Yeah, right" reaction.

The first of the group's concerns is the speed with which the Government is making its decisions.

Within 10 days of the the Kiwi Shareholder (Transport Minister Paul Swain) giving his approval, Qantas has to make the first tranche of its investment, some $100 million for capital notes equivalent to 4.99 per cent of the expanded capital.

But both Swain and Air NZ chief executive Ralph Norris deny that that part of the deal is driving the timing of the Government's decision.

"We are in a very strong cash position, so it's not that we need the money," said Norris.

The airlines did not want to invest further time and effort in what would be a protracted Commerce Commission process, with all the disclosure that involved, only to have the Government reject the deal at the end on national interest grounds, he said.

The Government accepted that argument.

Swain said that, given the Government had to make a decision at some stage, it had concluded it would be best to give some indication early on. "People can always argue for more time. And the converse is that if the decision is no, then clearly that will be the end of the matter."

The group's second concern is the opacity of the process.

The public will have no opportunity for input into the Government's decisions. Officials' advice will not be made public, and therefore cannot be challenged, before the decisions are made.

Nor is it clear that the information the Government has sought from parties will be made public. Commercial sensitivity is liable to be invoked.

Swain said there would be be ample opportunity for public submissions to the Commerce Commission, if the proposal went that far.

Another of the group's concerns is that the criteria outlined for the national interest decision are narrow and would be easily satisfied.

The criteria are: maintenance of effective control of Air NZ by New Zealand nationals; preserving its ability to exercise New Zealand's air rights in other countries; preserving its unique New Zealand identity; providing effective channels for international tourism and travel and a "durable" air services network; and preservation of New Zealand-based employment.

The criteria do not include the interest of consumers; competition issues are left to the Commerce Commission.

But economist Brian Easton noted that in the Fonterra case the merger was taken out of the commission's hands.

"When a proposal is so large, the only people competent to make the decision about whether it is in the public interest or not are people we elect for that purpose. In other words Parliament."

Swain said the decision to bypass the commission in the Fonterra case had drawn criticism.

The Government was elected to make decisions in the national interest and it would be accountable for this one, whatever it turned out to be.

The commission has to decide whether the anti-competitive effects of the merger are outweighed by its public benefits.

Easton said that normally in such cases the evidence put to it of public benefits tended to be based on optimistic assumptions rarely fulfilled after the event. There was no penalty if they were not met.

"That is why there is a need for a properly resourced, independent counsel, to assist the commission by putting the public benefits of the merger applicants under the most rigorous scrutiny."

Otherwise the commission was both investigator and judge, he said.

But Swain said that was how authorisation processes always worked, adding that the resources of the commission had been expanded.

He also rejected the group's concern that a Government decision in favour would overshadow or limit the commission.