Estimates of Copper Tax “Conservative” Says Peer Review

COALITION FOR FAIR INTERNET PRICING
MEDIA RELEASE
MONDAY 30 SEPTEMBER 2013

Estimates of Copper Tax “Conservative” Says Peer Review

The Coalition for Fair Internet Pricing is pleased that one of the government’s top economic analysts has backed its conservative estimate of the cost to Kiwi households and businesses of the proposed copper tax.

A Network Strategies’ peer review, commissioned by Vodafone, finds that “Covec has adopted relatively conservative assumptions in its analysis” of the copper tax and that they would “tend to under-estimate the size of the transfer to Chorus”. It says “the fundamental logic behind the approach adopted by Covec is sound”.

Network Strategies advises the New Zealand Ministry for Business, Innovation and Employment, the New Zealand Commerce Commission and the Australian Productivity Commission on telecommunications issues. Its report is available online at http://www.digitl.co.nz/1002/covec-chorus-independent-review.

The Covec analysis, released last week, estimated the government’s existing proposals for copper pricing would cost Kiwi households and businesses between $390 million and $449 million between 1 January 2015 and 31 December 2019. The analysis went on to report that the latest demands by monopolist Chorus, which owns the copper network, would take the total cost to Kiwi households and businesses to $979 million.

Telecommunications and IT Minister Amy Adams slammed the Covec study, saying it involved “hyperbole and scare tactics based on fiction”. The coalition rejected this criticism, saying the minister’s comments were “unfortunate”, and has today invited her to withdraw her comments based on the Network Strategies report.

A spokesperson for the coalition, Sue Chetwin, also chief executive of Consumer NZ, said there could be no doubt the government’s proposed intervention would transfer wealth from Kiwi households and businesses to Chorus, compared with what is being recommended by the independent regulator, the Commerce Commission.

“When a government intervenes in a market to impose higher costs on consumers than the independent regulator says is fair, in order to transfer wealth to a monopolist with a government contract, those higher costs are a tax,” Ms Chetwin said.

“We say that prices in monopoly industries should be set by an independent regulator, such as the Commerce Commission, and not by politicians who may have other interests.”

Ms Chetwin said the coalition was surprised by the degree of political pressure now being applied to its members to stop criticising the government’s proposal.

“This, after all, is meant to be a proposal about which the government has sought feedback, yet potential and existing members of our coalition continue to have highly unusual approaches from government officials designed to pressure them into supporting the copper tax proposal,” she said.

“It suggests to us that this is not a genuine consultation exercise at all but merely a public relations exercise to soften up the public for legislation to over-ride the Commerce Commission.”

Ms Chetwin said that created legal risk for the Crown.

The Coalition for Fair Internet Pricing was founded by Consumer NZ, InternetNZ, and the Telecommunication Users Association of New Zealand (TUANZ) and is supported by CallPlus and Slingshot, the Federation of Maori Authorities, Greypower, Hautaki Trust, KiwiBlog, KLR Holdings, National Urban Maori Authorities, New Zealand Union of Students’ Associations, Orcon, Rural Women, Te Huarahi Tika Trust and the Unite Union.

ENDS

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