Category Archives: Opinion

Air Affair Needs Pre-Flight Check

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You have to give credit where it’s due. Air New Zealand’s spin doctors have had a delicious time making their engagement with Virgin Blue sound like a huge bonus for customers. Unfortunately the reality of the situation is somewhat different. Our national airline’s lusty desire for consummating a union with Virgin may sound like a match made in heaven but it should not be allowed to get airborne without a proper pre-flight inspection.

The two airlines plan to merge and rationalise all their trans-Tasman operations in order to compete more effectively. With Qantas and its low cost offspring Jetstar making rapid inroads into market share and a host of other carriers dumping excess capacity in the region the blue team are taking a beating. It makes perfect economic sense for the airlines to work together, but there is no upside for passengers – especially those from Wellington, where ANZ and PBN already face little opposition. 

No matter what spin the airlines put on the alliance proposal, there are only two possible outcomes for consumers if it proceeds – fewer flights and higher prices between New Zealand and Australia. That is the sole objective because it is the only way the airlines can get revenue per seat to a sustainable level. The net result is that eventually one brand will cease to exist. Given that Air New Zealand is entrenched, it is likely to be Pacific Blue that dies. This will also reduce competition on the domestic scene. That would be a shame because both companies are highly innovative and have excellent customer service standards.

In any event New Zealand’s domestic market has never been able to sustain more than two airline brands historically and somebody will blink eventually. Then the era of cheap airfares will be over, at least for a while. On the other hand Singapore’s Tiger Airways is waiting in the wings – so to speak, although with its appalling customer service record it is questionable whether Tiger’s arrival would be either beneficial or long-lived.

There are however two possible benefits of the proposed alliance to consider. Firstly, Air New Zealand gains access to Virgin’s domestic feeder traffic and marketing machine. That would be a plus for the New Zealand tourism industry and a long awaited return to the Australian market since Air New Zealand’s near death experience with its misjudged acquisition of Ansett back in 2000. Secondly, with more A320s on the way, Air New Zealand will have more capacity irrespective of its partnership status. There may be scope to launch some kind of new low cost option to address this section of the market and placate the regulators.

There is a certain inevitability about all of this, so it’s important that any deal gets properly examined. Australia handles such proposals through the Australian Competition and Consumer Commission, but in New Zealand it will likely be a Cabinet level decision. Considering that the New Zealand government is the majority shareholder in one of the applicant companies, that would seem to be a slight conflict of interest. Hopefully a compromise can be hammered out that both ensures the viability of airline services and protects competition in the market.

Funding Allocation Begs Questions

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The Pacific Island community was reeling last month after the shock suspension of popular community radio personality Efeso Collins. The gagging came shortly after Collins expressed reservations over an uncontested government funding deal worth almost $5 million offered to a previously unknown economic development trust entity called Pacific EDA. Now the government is scrambling to distance itself from the whole mess, but the story just won’t die.

Collins made an empassioned statement during his regular spot on Radio 531pi recently, calling for more transparency but was then dumped by the station management. The text of his comments has been made available on the Pacific Eyewitness blog. Pacific EDA received a direct Ministerial allocation of funding in the 2010 Budget, contrary to advice given by officials at the Ministry for Pacific Island Affairs. Radio 531pi parent company National Pacific Radio Trust receives government funding and is chaired by Tino Pereira. The CEO of the Pacific EDA is one Anthony J M (JR) Pereira. Coincidence? No, the men are brothers and were both directors of Pacific EDA when the company first formed.

The affair reeks of political patronage and has been aggravated further by the fact that a journalist appears to have been prevented from doing his job because of vested interests. These efforts will come to nought however because Collins’ friends have ensured the case has been widely aired in the New Zealand Herald and in other media forums online. Collins rightly asks why an organisation with three employees should receive such a vast sum to essentially perform programmes that already exist within other organisations.

So, will this funding create more jobs and improved outcomes for Pacific Islanders? Will there be a demonstrable return to New Zealand in general? Those are very good questions. Questions that will no doubt be further explored by the media and the government in the weeks ahead.

Two Dimensional Culture Devalues Society

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A couple of issues currently being debated in the New Zealand media suggest why as a nation we struggle to think outside the box. It also illustrates how we are failing miserably to deal with a selfish and deeply ingrained culture of alcohol misuse that continues to plague our society.

Proponents of street racing in Christchurch have suggested that the best way to keep intoxicated young drivers off the street is by providing a burn-out pad adjacent to a residential suburb away from the city centre. The disadvantages of this idea will be immediately apparent to local residents who will be required to endure hours of engine revving, tyre squealing and the stomach churning stench of burnt rubber associated with this mindless “sport”. Construction of a burn-out pad therefore simply legitimises what is already a highly anti-social form of behaviour.

At the other end of the country there is much public hand-wringing and a media feeding frenzy over the lack of progress to develop the Auckland waterfront into “party central” in time for the predicted influx of visitors to the Rugby World Cup (RWC). But nobody has yet questioned whether there exists a real need. A quick survey of Princes Wharf and surrounds reveals dozens of existing bars and restaurants, many of which seem to be struggling to attract any custom at all outside of the traditional boozy weekend nights. Surely the basis for “Party Central” already exists. On the other hand, given the rugby playing community’s poor track record in treating alcohol responsibly, perhaps the Police would prefer all of the RWC drinkers to be corralled into a large centralised holding pen, as is being suggested.

The most disturbing aspect of these two debates is that the focus seems to be on providing a solution that caters for and indeed promotes boorish behaviour as a cultural norm rather than addressing the prevailing values in wider society. In a nation that seems overly self-obsessed with a two dimensional culture of sport and binge drinking, will we ever truly be able to nourish and grow an environment of creativity and innovation?

Fraud Cases Reveal a Rotten Core

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There were two fraud cases before the Courts in New Zealand last month, both involving high flying women executives. The different ways in which each offender was dealt with says a lot about our civic institutions and soundly illustrates the suffocating effects of an engrained regimen of political correctness that ensures style succeeds over substance.

Lynn Fiebig was a socialite and failed restauranteur who was appointed fundraising manager at IHC, an organisation that advocates for and provides care to people with intellectual disabilities. During her tenure she stole $500,000 to fund her own lifestyle. She was sentenced to three years imprisonment for this crime. Mary Anne Thompson was a senior civil servant who fooled her peers into believing she had a PhD when she did not. Thompson’s only defence was that she thought the qualification had been awarded. She must have had a memory lapse because walking up on stage to collect your scroll is not something you forget in a hurry, I can assure you.

Thompson’s offence may seem trivial in the context of her 15 years of sterling service in our fine public sector, especially in light of the glowing epithets from figures such as the State Services head. But her offending resurfaced after another investigation into how she improperly handled an immigration application from a Kiribati based family member, whilst employed as head of the Immigration Service. Why did nobody smell the stench?

Thompson must have seemed like a god-send to the middle class, white, male elite that make up Wellington’s most senior mandarins and who were eager to promote diversity within the public service. They desperately wanted to believe, but unfortunately she led them on a merry dance, despite warnings from a human resources consultant who had twigged to the fraud early on. During the course of her employment under false pretences as a senior public servant, I estimate Thompson must have collected well over $2 million in salary. Last week she received a trivial fine of $10,000 after pleading guilty. Neither of the two women are likely to be in a position to repay what they owe to society; in fact there is every chance that Thompson will manage to resurrect her career eventually.

Perhaps the saddest aspect of these two cases is that it will make it just that much harder for genuinely qualified, intelligent and commited women to ascend to positions of responsibility in the public sector. It also reminds us how entirely subjective the justice system is when it comes to addressing white collar and non-violent crime.

Science Funding Fix Obscures ICT Opportunity

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It has taken almost a year, but the government is finally addressing the mechanisms and priorities around the funding of research, science and technology in New Zealand.

The government’s policy approach to funding science research hinges on maximising the economic and social benefits, building international linkages whilst protecting the natural environment. Better utilising the “scientific value chain” seems to be the chief driver behind the funding shake-up. Science leaders have long complained that they spend too much time doing paperwork and competing for funding, when their time is better spent doing actual science.

The draft policy document indicates that sectorial funding priorities will largely be governed by the interests of existing Crown Research Institutes (CRIs). That is not a bad thing, but it underlines what we have suspected for quite some time – ICT is no longer seen as a primary driver of value-added economic growth, despite its obvious importance as an enabler.

ICT is now bundled within “high technology industries”, although it is not clear what proportion of this funding will be dedicated to information technology. In fact “transformational manufacturing” seems rather to be the focus for this area. It seems odd that the government would allocate $1.5 billion to a broadband rollout without a simultaneous commitment to strengthening ICT research and commercialisation in order to capitalise on the opportunity.

You can read about and make submissions on the proposed policy here.

Local VC Laments Science Funding Deficit

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I enjoyed Fiona Rotherham’s recent article in Unlimited magazine featuring the scientist who is inventing red-fleshed apples. But local venture capital investor Stuart McKenzie’s comments in the same article about the lack of science investment are a chilling reminder that New Zealand continues to underperform in terms of raising capital for technology commercialisation.

Hitching our economic success to agriculture is a sensible strategy in some respects, given our natural assets; but it should not be the only strategy. Agriculture alone cannot improve our economic fortunes; especially since the added value component remains tiny. Considering the deleterious effects of pastoral greenhouses gases and waterway pollution from farm run-off; if we are to enrichen New Zealand with more knowledge intensive businesses there simply must be a diversity of approaches.

Even more troubling is that there is a perfect storm brewing. As local VC funds begin to mature it is not entirely clear where the new funds will emerge from. Existing venture capital funded projects are looking for their next funding rounds to take those businesses to the next level. So, in the current economic climate, investors are naturally more inclined to look after the projects already on their books. It is harder than ever to get a true “start-up” company funded.

The government has set an aspirational goal of catching up to Australia by improving economic productivity, but it has confused business productivity with GDP per capita. Productivity is not the problem. The problem is we need to be exporting knowledge not farm commodities. Securing sufficient capital to commercialise and scale up our portfolio of intellectual property is the only way to achieve this.

BB Build Begs Benefits

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It is certainly a relief to finally see some leadership from the government in terms of their expectations around the broadband rollout. But in 5-10 years time when the project is finally complete will we have found a way to leverage this huge investment of public funds?

Industry ginger groups are being politely optimistic about the plan but it remains to be seen for how long the honeymoon lasts. Telecommunications is a highly political arena with many vested interests. Indications that the Crown Fibre Holding company will remain a Crown entity rather than a commercial state owned enterprise are certainly encouraging however; because the last thing we need is the new network being flogged off to an incumbent player or other foreign controlled interests at some point in the future.

But what are we going to use high speed broadband networks for once they are built? One would like to think that there will be more lofty social benefits than facilitating faster access to pornography, violent online games and moronic TV shows. Of course despite all the clamour by telcos and their equipment suppliers for a bite of the apple, we have never yet seen a properly articulated explanation of exactly what the social and economic return will be.

That aside, there is a wonderful window of opportunity for the government here. Surely we now need to provide an innovation challenge to stimulate the development of novel online services? Imagine how many creative new start-up companies could be kick-started. It seems glaringly obvious, but this aspect of the plan appears to have been somewhat overlooked as the government instead heavily promotes cowshit and tourism as our economic saviours.

There is another issue that has been overlooked as well. Until New Zealand gets access to better bandwidth and some decent competition on networks across the Pacific,  improving domestic connectivity is likely to have only a limited overall effect on economic growth.

Govt Aims to Improve Science Dialogue

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The Prime Ministerial advisor on science, Prof. Peter Gluckman is hoping to facilitate a better dialogue both within the science community and between scientists and the New Zealand government. He may have an uphill climb ahead of him.

In a recent radio interview Gluckman made it clear that his brief was simply to provide advice and to act as a translator to both government and public on science issues, it was not his role to become involved in politics. But when pressed on the subject of why the National government killed both the Fast Forward initiative and the R&D tax incentive scheme, he refused to comment. This suggests that (at least in public) he will be obliged to moderate his tone on some topics.

Professor Gluckman said better scientific literacy was required across the whole of society because we were having to deal with more complex issues such as climate change and the ever increasing impact of technology on our personal lives. He also indicated that it was his view that the science funding system was overly competitive and that this was dampening creativity; perhaps foreshadowing some much needed change in this area.

Prime Minister John Key recently gave a speech on economic direction. It was clearly signalled that, in terms of science research, the government is now primarily interested in supporting the agricultural sector as a bridge to greater economic prosperity. Unfortunately that confines us to a future of increasing pastoral pollution, high carbon output and enslavement to commodity prices that continually devalue in real terms.

But Gluckman agrees with his colleague Paul Callaghan that science must remain “an integral part of the innovation system” and that we need more high tech companies like Navman, Rakon and Weta Digital. If we are to improve economic productivity then science needs to connect with business, both within New Zealand and abroad, he stated. It will be interesting to see if he can similarly persuade the Prime Minister.

Le B’astard!

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French rugby representative Mathieu Bastareaud brought shame and embarrassment to my city and my country last week with his serious assault allegation. Although the truth has now emerged about his drunken idiocy there seems little likelihood of proper redress.

Of course if any ordinary member of the public made a false complaint to Police they would immediately be up on a charge. But the local Police and NZ Rugby Union, who “diligently” investigated the claim, made sure the touring French team were well beyond our shores before they released their findings – and its not like it is an offence worthy of extradition. So it is very unlikely there will be any legal recourse in the case.

Mercifully, rugby receives relatively little media bandwidth outside of Australia and New Zealand (contrary to popular belief here), so I’m unsure how much international coverage this incident actually received. Perhaps then it is a moot point. But the fact that a number of highly placed individuals colluded to protect the errant player and the arrogance shown by some involved has led to a few analogies being drawn with another infamous insult involving a certain rainbow coloured vessel.

Perhaps that analogy is a little harsh. After all we have plenty of examples of our own immature, drunken sportsmen getting into trouble whilst on tour. Nothing new there. What continues to rile me is that our society tolerates this kind of behaviour even at the expense of national reputation. It is the kind of slur a small, geographically distant nation can ill afford.

Worth-Less

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I really wanted to begin this week with something positive. But the bad news just keeps coming for this government. Last week’s sordid fiasco over alleged impropriety on the part of Cabinet Minister Richard Worth was the latest in a long line of stuff ups stemming from bad decision-making around political appointments.

First there was the ill-advised addition of Christine Rankin to chair the Families Commission, then poor Melissa Lee got thrown to the lions in the unwinnable Mt Albert electorate. Now the resignation of a Cabinet Minister. It raises questions about the political judgement surrounding the original appointments and about the level of talent that the Prime Minister has at his disposal.

I actually posted a comment on Twitter in mid-April predicting that Richard Worth would be “gone by lunchtime”. Although it had become self evident that he had an unhealthy predisposition towards self-destructive behaviour, even I was surprised how rapidly the end came for him. As for Rankin, I’ll give it 12 months before she exits with another nice golden handshake amidst a cloud of controversy. Nice work if you can get it. 

I have a little more sympathy for Lee however. I admire that she is an Asian woman that has succeeded with her own business in the male-dominated world of media. I also think her media colleagues were a little unfair in talking up the back story from the disgruntled former employee. To make matters worse, she has also been saddled with the near impossible task of attempting to wrestle Helen Clark’s former seat from Labour. It will certainly be a character building experience and perhaps that was the rationale.

The problem for the rest of the country is that whilst the traditional media are salivating over this tedious daily reality TV fest, there are far more important tasks at hand that are not getting proper coverage, like exploring why the government is not fully addressing research, science and technology commercialisation and entrepreneurship as a basis for the economic recovery.