LISTENER SEPTEMBER 7 2019GE
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“It’s fine,” hissed the stranded KiwiBuild cat. “It’s
just great up here, waiting for 10,000 new houses.
Loving it! Now, bugger off.”
“Of course I don’t need a cuddle and an ‘iddle
twip down the wadder’,” snarled the Auckland
Light Rail cat. “Okay, a boring old bus to the airport
might end up being quicker than light rail, for a
fraction of the cost – but hey, I’m sure that’s a viable
business case I can see down there ... if I squint ...”
Ministers can live up these allegorical gum trees
for months, until, as with once-Housing and still-
Transport Minister Phil Twyford, they come to
resemble koalas basking in their natural habitat,
unaware how endangered they are.
It’s the sort of faux-ascent prime ministers should
avoid, but Jacinda Ardern has determinedly hugged
the Moral High Tree of Petrol Pricing to herself.
Having declared last year that drivers were being
“fleeced”, she’s now vowing to reduce prices fol-
lowing the release of the Commerce Commission’s
petrol-market study. Tough decisions are expected,including to crowbar open the three-
company monopoly on wholesale
infrastructure to make access and
expansion easier for the smaller play-
ers. Funnily enough, wherever the
wee Gulls and Waitomos open shop,
prices tend to fall.
To mandate the sharing of whole-
sale infrastructure with new entrants
who’ve had no part in developing
it is deregulation, new regulation or
a damned impertinence and theft,
depending on which way you chew
your pencil. It’ll be a confronting
new benchmark in state interven-
tion in private business. Though
thoroughly politically justifiable on
market-competition grounds, the
pending changes will set some very
sharp corporate teeth on edge. Petrol
is by no means the only fleecy sector,
and new state militancy in enforcing
market competitiveness will cause
wider alarm.JUST THE START
The changes for petrol will take
months to debate and enact, and can
be guaranteed to generate hostility
and Jeremiah choruses, but not neces-
sarily timely price drops at the pump.
Just the release of the commission’s
study caused Z Energy’s
share price some gyp, and
it’s likely that, as this debate
matures, all the fleecy sec-
tors will come under new
shareholder pressure as
well. Investors have enjoyed
good returns from most ofthe quasi-cartel and duopoly sectors
- electricity, supermarkets, building
products, banks – and will not meekly
submit to lower dividends.
For petrol is just the start of the
commission’s new “market study”
power to lay bare opportunistic sec-
toral padding. The market watchdog
can command all cost and revenue
data and determine where profit
margins are excessive. Market purists
deplore the very idea of “excessive”
profits, but in a small market such as
this, it’s common for a few players
to dominate entire sectors – as in
petrol – meaning they can load their
margins at will. The commission can
now analyse sectors’ cost pressures,
reinvestment needs and the like and
assess what are fair retail markups
and what are just, in the vernacular,
taking the piss.
Still, Ardern could have chosen
a better first quarry. Unlike other
markets, petrol’s biggest discretion-
ary price-padding is larded on by the
state – including thumping new taxes
under this Government. That rather
hypocritical overlay has complicated
debate on petrol pricing, despite most
political parties being on the same
page. National leader Simon Bridges
first put retailers on notice for exces-
sive margins four years ago whenI
n the cat-v-dog maelstrom of Parlia-
ment, Oppositions are often derided
for barking at every passing car. But
governments have an even sillier
tendency: to run with kittenish
exuberance up every lofty tree, only to
get stranded and suffer endless indignity
when the metaphorical fire brigade turns
up to help them down.
POLITICS
The new state militancy in enforcing market competitiveness.
Unleashing the watchdog
JANE
CLIFTON
It’s a gas: Jacinda Ardern and
Simon Bridges.Investors have enjoyed
good returns from
most of the quasi-cartel and duopoly
sectors.