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Lobby groups muddle the thinking

By Peter V O'Brien

Friday 13th June 2003

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Developments on two apparent unrelated fronts suggest several organisations need to sort out muddled thinking.

The first came three weeks ago when the Major Electricity Users Group (Meug) was rapt at the government's decision to appoint a regulatory commission for the electricity industry. Other industry participants were less enthusiastic.

The Meug members include several companies with fervour for a market forces economy in other areas affecting their businesses' operations. The tune changed when higher costs affected profitability.

Generators, line companies and retailers were unable to agree on a self-regulatory regime, a system usually praised as a jewel of free markets' advantages over the dross of government intervention.

All parties, including the government, downplayed the fact that individual retail consumers will face increased power bills to pay for the new system.

Debate over the Tranz Rail issue was the other example of muddled thinking. The "Rail Freight Action Group," which includes ­ surprise, surprise ­ companies also involved in Meug, favoured partial rationalisation of the railway. Its support seemed to be based on a desire to have regular rail access for its products on well-maintained permanent way (tracks).

The permanent way became a mess on both freight and passenger routes in recent years, so some authority had to resolve the problem.

There is a view the government should stay out of a Tranz Rail rescue, even if the company were to go into receivership. It is market forces-oriented simplicity, ignoring political and financial reality.

The non-intervention view was extraordinary when it came from the Act New Zealand party, which seemed to favour private enterprise either solving the difficulties or going to receivership.

Act leader Richard Prebble's party believes in the efficiency of private ownership. Its view had no status in Tranz Rail's case, given the company's record and deterioration of assets if any receivers worked through sale options.

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