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Government keeps distance in exchange debate

By Phil Boeyen, ShareChat Business News Editor

Wednesday 10th January 2001

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The Government is continuing to have a hands-off approach to the proposed Trans-Tasman stock exchange merger despite increased opposition to the move.

Just before Christmas Wellington stockbroker Ian Waddell began a "Stop the Takeover Campaign", citing concerns about New Zealand's economic sovereignty, jobs and business infrastructure if the merger goes ahead.

In light of the opposition Finance Minister Michael Cullen has reiterated his view that the merger is a matter for NZSE to determine.

"On balance I think the arguments favour merger, but I don't really want to get into the detail of the debate because ultimately the decision rests with the private sector."

A private bill on NZSE demutualisation is due to be introduced to the House this year, and Mr Cullen says it will go through the normal select committee consultation process, including submissions from members of the public.

One of the concerns raised by the idea of a merger is that New Zealand will see companies shift to Australia either for tax reasons or to gain exposure to a greater group of investors.

Mr Cullen says he does not think such company emigration across the Tasman is particularly likely, although he admits he is interested in seeing details on the possible tax revenue implications if more Kiwi companies cross the ditch.

"I will be asking the IRD to report to me on the tax revenue implications of the merger, but for informational reasons rather than because the Government plans to take a policy position on the issue. Again, I believe this is a decision for the private sector."

The Finance and Revenue Minister says he is also aware that the "triangular" tax issue - under which New Zealand shareholders in Australian based companies do not get recognition for tax paid on New Zealand earnings - is of concern to many investors.

"My Australian equivalent and I have asked officials to work together to develop options that would address this issue, " says Mr Cullen.

Meanwhile Ian Waddell has had a strong response to his "Stop the Takeover Campaign", receiving around 70 faxes in support of the cause, but he is not planning to push the issue any further at this stage.

"Our main aim was to get people discussing the issue and we've achieved that," he says.

The ASX and NZSE were supposed to make public their progress on the issue late last month, but said in December that they are now working to finalise the initial phase of the discussions in the first quarter of this year.

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