Amy Adams is having a bad week.
Today the Axe the Copper Tax campaign is being announced. The Government is proposing to prevent the cost of copper broadband connections to retail users being reduced to the fair price determined by the Commerce Commission. It is estimated that around $600 million will be transferred over the next six years to the shareholders of Chorus from the users of copper broadband through this change. Chorus, which has the contract to build 70% of the new fibre network, paid $95 million to shareholders in the last financial year by way of dividends so this subsidy is significant.
And the reason for this particular episode of corporate welfarism?
Chris Barton in the Herald recently said this:
Deutsche Bank predicted a share price over the next year of $2.29 (significantly lower than Chorus’s listing price of $2.94) and cut its dividend forecasts for Chorus for 2015 to 18 cents per share, down from 25.5 cents previously. Deutsche also noted Chorus was facing some “$500 million of estimated unbudgeted costs associated with the greater than forecast cost of supplying UFB connections between the network and consumers’ premises.
Get that? In a competitive tender Chorus mucked up the figures and bid too low and the Government is willing to overcharge us so that Chorus’s shareholders do not miss out. Why don’t the Government get staunch on the issue and tell Chorus it signed a contract, rather than allow us to be overcharged so that Chorus’s shareholders do not miss out.
The coalition behind the campaign is an interesting amalgamation of user groups and commercial entities including InternetNZ, TUANZ, Covec, CallPlus, Slingshot, Orcon, Greypower, NZUSA, Rural Women, the Unite Union, National Urban Maori Authorities, Te Huarahi Tika Trust, and even Kiwiblog. This is probably the first campaign that the Unite Union and Kiwiblog have ever been jointly involved in!
This announcement is on top of earlier bad news about the Government’s proposed RMA changes.
As reported by Eddie these are under threat. I blogged about these earlier and noted the proposed changes to sections 6 and 7 of the RMA would seriously weaken the protective principles of the Act. The ethic of stewardship for the environment would be removed, the maintenance and enhancement of amenity values would no longer be a consideration and the maintenance and enhancement of the quality of the environment disappears as a principle. A new principle is proposed to be added. If passed the effective functioning of the built environment, including the availability of land to support changes in population and urban development demand, will be a major consideration when making decisions under the RMA.
Amy Adams seems to think that the changes will not harm the environment. But when legal heavyweights such as Geoffrey Palmer and law firm DLA Phillips Fox dispute this I know whose opinion I would trust.
Hats off to the Maori Party and to Peter Dunne (did I just say this?) for signaling that they will oppose these changes.
All in all this is a bad week for Amy Adams. May she have many more like it.