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Crony Capitalism and Chorus

Written By: - Date published: 9:37 am, October 2nd, 2013 - 50 comments
Categories: capitalism, dpf, john key, same old national - Tags: ,

John Key Nat Billboard Corproate vote

The Axe the Copper Tax campaign grinds on ominously for the Government.  What is especially ominous is that on the pages of the New Zealand Herald and the National Business Review and amongst the ranks of some of the Government’s most loyal supporters there is informed comment that threatens to embarrass the Government deeply.

As Chris Barton has pointed out in an excellent article in the Herald the Axe the Copper Tax campaign has drawn an interesting dividing line.  On the side of the angels are normally staunch right wingers such as Matthew Hooton and David Farrar ready to take the fight to John Key and National.  Perhaps Hooton should comment on the honesty of some of Key’s comments on the issue.  Because there are something distinctly disturbing comments that he has made about the issue.

For instance Key previously said two things the veracity of which has been challenged.  Firstly he said that there is a chance Chorus will go broke if the Commerce Commission decision about the cost of copper is allowed to stand and secondly he said that the Commerce Commission misunderstood the law.  These comments have already been discussed but as time goes by and more detail becomes apparent you have to wonder why Hooton has not been stirred into a lather and questioned the accuracy of what the Prime Minister has said.

Key was reported as saying to TVNZ last month “[b]asically if the Commerce Commission ruling stands there’s a chance Chorus will go broke, in which case the Ultra Fast Broadband (UFB) won’t be rolled out”.  Barton is right to point out that if this was a risk there should have been a notification by Chorus to the Stock Exchange and no such notification has occurred.  And when David Farrar doubts that this will happen this you think that it should be checked out a bit more carefully.  Farrar has blogged:

But the reality is that Chorus would not go bust under the draft determination. They do not say they will. The market analysts do not say they will. Yes the draft determination will adversely impact their profitability and dividends, and that is bad for Chorus shareholders like myself. But that is one of the risks of investing in regulated monopolies.

Even Ross Patterson, former Telecommunications commissioner and current adviser to Chorus has said about the claim “[i]t doesn’t tally with Chorus …” and “Chorus has never said that.”

The claim presumes that Chorus’s problems relate only to the Commerce Commission draft determination.  This totally ignores that Chorus has admitted that it underestimated the costs of the UFB roll out by $300 million.  Deutsche bank thought it was more like $500 million.  Either figure suggests that Chorus’s under estimate of the roll out cost is more of a threat to the company’s finances than the Commerce Commission decision.

Patterson also cast doubt on Key’s other statement that the Commerce Commission was “interpreting the law incorrectly” and that the Government was “going away to have a look at that.”  Key should discuss this with Amy Adams.  Because in her speech introducing the Telecommunications Act discussion document she said:

“Let me make it quite clear that this process is not about whether the Commerce Commission was ‘right’ or ‘wrong’ in its determinations … [t]he Commission quite rightly followed the prescribed process mandated under the Act and came up with the positions they did.”

Key did not resile from his position when questioned on this issue in Parliament.

The latest area of possible inaccuracy is Key’s response to the Covec Report which he described as being fundamentally flawed.  The coalition Vodafone has had Covec’s findings reviewed with another firm of consultants, Network Strategies.  Its conclusion is that the Covec Report was “flawed” in that while the approach it adopted was sound, it had underestimated the potential benefits for Chorus.  The $600 million estimate of benefit for Chorus was considered to be conservative.

The critics of the Copper Tax are not hairy armed trade unionists demanding the end of the capitalist system.  They are large Telcos, prominent members of the National Party, and  hardened pro free market IT veterans who understand the IT system and just want something that is as cheap as possible and as fast as possible.  They support free markets and a level playing field.

Key should be very afraid.  He is risking his reputation on increasing costs to ordinary Kiwis so that a large corporate can profit.  A more classic example of crony capitalism would be hard to imagine.

50 comments on “Crony Capitalism and Chorus ”

  1. Ad 1

    +1 Mickey. Reminds me of the GCSB Bill in its crossover capacity. I was very surprised Joyce got away with the arm twisting. My bet is Key folds on this.

  2. AmaKiwi 2

    Crony Capitalism is brilliant until you discover you are not the crony who is getting the government’s capital.

  3. AmaKiwi 3

    I love that moko.

    • I hate it and wish The Standard authors would not use it. FFS there are plenty of images of scumkey without denigrating others.

      [Apologies Marty Mars. The image has been changed – MS]

      • marty mars 3.1.1

        Kia ora Mickey – I appreciate it may just be my sensibilities and I am not trying to reduce the attacks on that liarkey. Please don’t change anything because of what i think but if you see my point and agree it is on the line then cool. Kia kaha e hoa!

        • mickysavage 3.1.1.1

          Kia ora Marty.

          When you made the comment I recalled that you had said it before. The graphic is really strong but potentially offensive to progressives and Iwi, so I was happy to change it.

  4. ghostwhowalksnz 4

    Thats TWO hits for Chorus from their cronys in government.

    First was getting the bulk of the fibre rollout, then second , was getting a jacked up price for the end users

  5. Red Rosa 5

    Amy Adams finding out the hard way about playing with the big boys.

  6. framu 6

    While a bit sad, its pretty damn funny to watch the free market cheerleaders biffing out their own ideology so quickly

    of course – if your product is suffering slow take up due to people choosing to stay with a cheaper product, the answer is to artificially jack up the price!

    pure underpants gnome stuff

  7. infused 7

    Not a bad photoshop.

  8. You know, no matter how often you repeat it, people arent eating up the labour party mantra of “Labour is about real Newzealanders, national is for wall street bankers”

    • richard 8.1

      Do you think anyone cares what your opinion is?

    • mickysavage 8.2

      Just wait for the Roy Morgan this afternoon Brett …

      • Brett Dale 8.2.1

        micky:

        What will the trends be showing though?

        • ghostwhowalksnz 8.2.1.1

          Remember the poll showing a very high level of distrust for Key personally…

          Or do you only remember stuff that pleases you

          “The pollsters said many voters rated him a straight-shooter and good or excellent leader, but a significant number thought he was arrogant, smarmy and out of touch.”

        • ScottGN 8.2.1.2

          Trends in the Roy Morgan polls have been pretty obvious for a while now. Support for Labour/Greens is edging up towards majority government territory and support for National is edging downwards towards the Opposition benches.

    • ScottGN 8.3

      You know, no matter how often you deny it, National is increasingly vulnerable on this issue of corporate welfare.

    • Tracey 8.4

      You don’t actually know that, you are hoping. You may be right, you may be wrong.

  9. Tracey 9

    The problem is that folks like Brett still believe National is making life better for them and therefore the majoirty.

  10. Matthew Hooton 10

    I think you make far too much of my, DPF’s the Herald’s, and the NBR’s opposition to this proposal. When something as appallingly Muldoonist as this is proposed by any government, that government should expect to be opposed by everyone across the political spectrum, except for those who will do well out of the subsidy. In a way, it is not much of a big deal.

    • mickysavage 10.1

      I’m confused Matthew. Is it appallingly Muldoonist or not a big deal?

      • Matthew Hooton 10.1.1

        Policy is appallingly Muldoonist and a major deal. But me, DPF, NBR, Herald etc opposing it is not much of a big deal because we would always oppose something like this.

        • One Anonymous Knucklehead 10.1.1.1

          …unless someone paid you enough.

        • Tracey 10.1.1.2

          Yet all strangely acquiescent about TPPA, GCSB…

          we would always oppose something like this.”

          And you are qualified to speak on behalf of the other three entities you mention;

          a. in your own mind;
          b. when they pay you to
          c. when you are desperately trying to regain credibility
          d. all of the above

        • emergency mike 10.1.1.3

          “But me, DPF, NBR, Herald etc opposing it is not much of a big deal because we would always oppose something like this.”

          So you’d speak out agin this even if you weren’t getting paid to? What a guy. Also I like how you speak for DPF and the Herald and etc as if you are a coordinated team.

        • Rhinocrates 10.1.1.4

          because we would always oppose something like this.

          Are you trying to imply that you have principles? You know, not simply an ideology (which is simply a set of defaults), but “beliefs” that are sincere and your own and not for sale?

          Pull the other one, it has bells on.

    • One Anonymous Knucklehead 10.2

      Gets paid to tell lies.

      Imagines that means his opinion has value.

    • Tracey 10.3

      Blah BLah BLah – contract to oppose Blah BLah BLah as long as invoice is paid BLAH BLAH BLAH

    • QoT 10.4

      That’s a blatant lie. I’ve been involved in opposing Muldoonist policies before and no one can remember ever seeing you there.

      • mickysavage 10.4.1

        😀

      • emergency mike 10.4.2

        Nice shot QoT! The onus is now on Hooten to produce the timesheets to prove you wrong.

        Even if he does, I reckon there will still be ‘unanswered questions’ regarding his past opposition to Muldoonist policies.

      • fender 10.4.3

        😀

        C’mon sHooton, ya pants are on fire.

  11. Tangee 11

    What happened to the UMR poll?

    • One Anonymous Knucklehead 11.1

      From memory it was an internal Labour Party poll that Garner claimed to have the results of.

  12. Tracey 12

    No update on the family illness?

  13. BrucetheMoose 13

    The Government was “going away to have a look at that.”
    This seems to be Key’s latest deflection to sly out of the hard questions when queried on the details relating to his government’s decisions. The used the exactly same ploy in Christchurch when asked about the reason why he felt the government insisted on challenging the judge’s view that the Red Zoning process was unlawful and unjust towards affected property owners that took their case to the high court and won. When asked by the judge to discuss why he thought the decision was wrong Key refused to elaborate, and when asked on radio why he felt it necessary to appeal the decision, out comes the “we’ll be going away to have a look at that”, with no real answer to the matter. Perhaps a visit to the optometrist might be in order for Johnny, what with having trouble seeing things there and then on the hard issues.

  14. Penny Bright 14

    I look forward to the Labour Party picking up and endorsing an ACTION PLAN to help stop ‘corrupt crony capitalism’.

    Help yourselves.

    http://www.pennybright4mayor.org.nz/wp-content/uploads/2013/08/ANTI-CORRUPTION-WHITE-COLLAR-CRIME-CORPORATE-WELFARE-ACTION-PLAN-Ak-Mayoral-campaign-19-July-2013-2.pdf

    Kind regards,

    Penny Bright

    • Not another Sheep 14.1

      17. Make it unlawful for politicians to knowingly misrepresent their policies. [Full Stop]. Drop the “prior to election” if the “transparency” clause (3) is to stand.

      Who would ‘police’ such a plan, Penny? Punishments?

      Already ‘politicians’ infringe on an expected “Code of Conduct”, crony dealing, lying..and are ousted in the media yet they appear to go unscathed; still there in Parliament doing the deals.

  15. Whatever next 15

    Just following Milton Friedman’s doctrine, which Key seems to be very keen on….

  16. johnm 16

    “Key should be very afraid. He is risking his reputation on increasing costs to ordinary Kiwis so that a large corporate can profit. A more classic example of crony capitalism would be hard to imagine.”

    “Deregulated capitalism did not create the Mecca prophesied by libertarians and neoliberals, but instead instability, insecurity, and the dissolution of the middle class. Those who mistakenly believed that markets are self-regulating failed to realize simple truths that govern the real world: 1) selfishness, greed, and evil always exist, 2) private power is no better than public power, and 3) power abhors a vacuum.

    When the government is not powerful enough to restrain greedy self-serving private interests, those private interests co-opt and assimilate the government – in effect becoming the government. The result is an oligarchy of crony capitalism, not a libertarian free market. If markets are not embedded in society so that they serve a social purpose for all, they will be monopolized by private interests, leading to instability and insecurity. “

    • Draco T Bastard 16.1

      +1

      Who are you quoting?

      • johnm 16.1.1

        Hi DTB
        I’m quoting from : http://www.thefailureoflaissezfairecapitalism.com/go/the-failure-of-laissez-faire-capitalism/

        ” A Must Read – Sam Baxter
        There are very few voices in the West today with the independence, courage, critical thinking and analytical abilities necessary to see through the phantasms of organized deceit which have been perpetrated by powerful private interest groups and their servants in government, academia and media, and expose the simple truth. Dr. Paul Craig Roberts is one such voice, and The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is a big serving of realism.

        Deregulated capitalism did not create the Mecca prophesied by libertarians and neoliberals, but instead instability, insecurity, and the dissolution of the middle class. Those who mistakenly believed that markets are self-regulating failed to realize simple truths that govern the real world: 1) selfishness, greed, and evil always exist, 2) private power is no better than public power, and 3) power abhors a vacuum.

        When the government is not powerful enough to restrain greedy self-serving private interests, those private interests co-opt and assimilate the government – in effect becoming the government. The result is an oligarchy of crony capitalism, not a libertarian free market. If markets are not embedded in society so that they serve a social purpose for all, they will be monopolized by private interests, leading to instability and insecurity. ”

        One of the reviewers of the above book

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