Ware 'wanton' economic govt thuggery

How much can you trust newly-elected governments that are seeking to overturn the policies of their predecessors?

Companies might want to bear this in mind should they take part in the broadband initiatives of the Australian and New Zealand governments.

In Australia, Tony Abbott and the Coalition still oppose the National Broadband Network (NBN), but I expect that they will honour the contracts and make huge compensation payouts should they break any.

In New Zealand, however, we see ominous threats from the opposition Labour Party, angry that our broadband plan could leave Telecom with too much power.

Senior Labour MP Trevor Mallard has threatened that if Labour wins our November general election, the party might change the broadband contracts and not pay any compensation.

This has led Mallard and Labour to rightfully be accused of "wanton economic thuggery" by Don Brash, the leader of the ACT Party, which is part of the National-led government.

"The relevant businesses should be entitled to expect [the law] to be honoured and to proceed on the basis of it, free from the spectre of having the rug pulled from under them by political caprice and retrospective vandalism," he said.

Labour says it has consistently opposed certain aspects of the broadband project, adding that the telcos are going into it "with their eyes wide open" to any prospective changes that Labour might introduce.

The party "reserves the right" to make them, it adds.

Indeed, Labour made similar threats in April.

Last year, Mallard also warned mining companies who mined on certain parts of a conservation estate — a policy the New Zealand government was considering at the time — that, if elected, Labour would close these mines without compensation.

Clearly, we see a party of government ready to flagrantly disregard the law of contracts, something of vital importance when telcos and others are shelling out millions. Mallard's comments will make investment in New Zealand more uncertain and risky.

As Brash says:

"How does Mr Mallard expect investors in any area of the economy to engage in business if the rules under which they do so are to be so blatantly subject to his whim? Has he stopped to consider the effect his bluster might have on our fragile economic recovery and thus the wellbeing of working men and women Labour claims to represent?

"The threats about retroactive increases in fines for breaches of requirements are especially insidious. Mr Mallard may just as well have erected a sign at Wellington airport saying, 'Invest here at your peril. If we get in, all bets are off.'"

Fortunately, for Telecom and others working on New Zealand's ultra-fast broadband project, Labour is in no position to carry out its threats. It's deficit in the polls is positively Gillard-ian!