Dialogue: Watch out for commissar under new telecom rules

By MURIEL NEWMAN*

For the past 15 years, New Zealand governments, both National and Labour, have accepted that the business sector is the engine of economic growth. It is the business sector that provides jobs, economic growth and skills training.

However, in the seven months of this Government, a Government-knows-best attitude has become all too prevalent.

The first step saw the renationalisation of ACC, which will result in increased costs for many businesses and lower levels of employment.

The Employment Relations Bill is now being forced through Parliament despite widespread concern that it will reintroduce industrial unrest and jeopardise business productivity and profitability.

Later this year, the Government intends to push ahead with the Commerce Amendment Bill, which will see businesspeople presumed guilty until they can prove themselves innocent.

Last week, however, the Government-knows-best approach moved to new heights with the release of the draft report of the ministerial inquiry into telecommunications.

The report was disturbing in a number of ways. It proposes a new Government regulator to police the behaviour of businesses in what is undoubtedly one of the most successful sectors of the economy - the information and telecommunications industry.

This agency will have the power to make decisions about what can be sold, at what price and to whom.

What's more, its decisions will not be able to be appealed against in courts of law. Normal conventions of natural justice and common law will not apply. In that sense the proposed regulatory agency really is a communications commissar.

The telecommunications sector is one of the major drivers of wealth-creation and worldwide economic growth. New Zealand is already performing better than the average OECD country on price, access, digitisation, Internet use, e-commerce and investment a head.

Given the importance of the knowledge economy to the future employment opportunities of New Zealand workers, we cannot afford to burden the industry with additional regulations imposed by a new bureaucracy.

In addition to the assumption that businesspeople need constant policing, a more outrageous aspect of the draft report is the introduction of a levy or tax so the industry itself pays for the commissar's creation.

Another major concern is that the introduction of any new Government regulator spawns regulatory creep, whereby the regulator generates new work for itself by creating new rules.

Already the draft report suggests ominously that the communications commissar could turn its attentions to Sky TV and digital television.

As we all know, New Zealand businesses have to compete in the international marketplace. The days of passing on increased costs to customers are virtually gone. Customers can now go elsewhere if they don't receive quality service at a reasonable price.

Therefore, it is vitally important that wherever possible our business sector is freed from the shackles of state intervention and the excessive costs of new regulations. Even the telecommunications disclosure regulations introduced by the National Government last year added an estimated $3.4 million in regulatory costs to the industry.

Regrettably, the ministerial inquiry draft report indicates the Government intends to forgo the light-handed regulatory regime so admired by industry players throughout the world, and reinstate heavy state control.

If overseas experience is any guide then we must think twice.

Australia's heavy-handed regulation has been a costly failure.

One empirical study cited by the Institute of Economic Research estimates that $1.27 billion a year is lost in Australia through regulatory delays in implementing voice messaging, and up to $50 billion through delays in the allocation of cellular phone frequencies. New Zealand is too small to absorb that kind of regulatory overhead.

A recent study by Victoria University concluded that internet access prices in New Zealand were 25 per cent below those of Australia. The main reason for this is the competitive nature of our marketplace. Efficient companies thrive and inefficient ones fall by the wayside.

The marketplace can be a tough environment for businesses but that is what drives lower prices and higher-quality products and services. The consumer is the winner in an environment in which competition is the chief regulator.

In contrast, the Government is gradually increasing its interference in the market economy - the provider of jobs for the working people it purports to represent.

A cynic might suggest that the communications commissar has more to do with the Alliance settling old political scores at the expense of economic progress than with liberalising the telecommunications sector.

Irrespective of motive, the new rules and regulations supported by the Government's ideologues will, in the long run, weigh down the business sector and make it increasingly difficult to respond to consumer demand.

If this trend continues, enterprising New Zealanders will think long and hard before risking their savings in business investment.

New Zealand is more reliant than most on its export performance. A large economy with vast mineral resources might, for a while, be able to absorb high compliance costs and still compete. New Zealand does not have that luxury.

We need urgent action to put the economy back on a sound footing. The costs of getting into business must be lowered and chief among these are tax and regulatory charges.

The Government could make a positive start by rejecting a new bureaucracy at the heart of the information and telecommunications sector. Instead, it could embark on a programme of urgent reform that will free the enterprising spirit of initiative and investment, upon which this great nation was built.

* Dr Muriel Newman is the Act communications spokeswoman.