Saturday, March 18, 2006

Editorial: Gang patches nothing to do with councils

Britain's largest shopping complex, the Bluewater in Kent, got a notable response last year when it banned youths wearing hooded clothing. Virtually overnight, the number of shoppers rose by 23 per cent. Some people clearly relished the removal of what they viewed as an intimidating presence. Other British shopowners, suitably encouraged, were soon extending the ban to the wearing of baseball hats. Now a ploy with some similarities is being proposed in Wanganui, where the city council wants to ban gang patches in public places.

"Hoodies" and gang colours are uniforms of a sort, providing the wearer with all the attractions that entails. Most of all, the choice of clothing delivers an anti-social message and a sense of bravado. It provides what Wanganui Mayor Michael Laws described, quite aptly, as the "strut factor".

But there are differences between the bans. One was initiated by shopowners trying to protect their customers and their reputation. The other sees a local authority moving into largely uncharted territory in seeking to impose what amounts to a dress code. The distinction is important. As is the fact that, with the exception of Paisley in Scotland, no British local authority has sought to mimic shopowners by banning the wearing of hoodies in a town centre.

There are good reasons for the reticence, reasons that have led other New Zealand local authorities to step back from such a move. Some feared they may be exceeding their powers; others pointed to the freedoms and articles of non-discrimination incorporated in the Bill of Rights Act.

There is, in fact, an unsettling dimension to local councils' involvement in such issues. Determining what people can wear is hardly normal fare for them. Already, some Wanganui councillors are sensing precisely why limits have been placed on local-authority powers. They have qualms about how wide-ranging this ban would be. They might also ask that if clothing can be added to an orbit normally reserved for mundanities such as footpaths and waste water, what could be next.

Local councils, rather than pass bylaws of doubtful merit, effectiveness and legality, would do better to wholeheartedly back the police response and press for a more effective Government reaction. They should be supporting initiatives like that of the Whakatane police, who have reinforced their own ban on the wearing of gang patches and regalia by bringing prosecutions for disorderly behaviour that is likely to incite violence.

The Government, for its part, should be allotting more police, especially intelligence specialists, to the problem, instigating a more co-ordinated approach nationally, and enacting stronger legislation in terms of gang assets and the carrying of weapons.

It should also be recognised that those who lash out at clothing and regalia are, to some degree, tilting at windmills. The fear of youth crime in Britain, which underpins the bans on hoodies and baseball caps, far outstrips reality.

And patches and Harley-Davidsons are becoming something of an anachronism in a gang world that has reduced its public confrontations and focused on the lucrative business of making and distributing methamphetamines. Metaphorically, leathers are being traded in for business suits, a uniform more amenable to the middle-class consumers of the gangs' drug industry.

In the final analysis, even the most astute of approaches is unlikely to eliminate gangs. Equally, youths will always express their sense of alienation through rebel clothing. This should never justify situations in which mainstream society feels unduly intimidated. Where this occurs, it must be tackled.

That, however, is not a place where prudent local authorities would wish, or should have, to go.

John Armstrong: Labour hasn't got off the hook yet

The Labour Party may have escaped prosecution for alleged overspending of its election expenses, but the political damage has already been done.

National has blasted the police decision as a "cop-out". But it is difficult to see how much more damage Labour would have sustained had the matter gone to court.

Sure, Labour has avoided the further embarrassment of having to front in court. But it has been deprived of an opportunity to defend itself and argue its behaviour has been no worse than other parties who also used parliamentary funds for blatant electioneering. It has also been denied a platform from which it had hoped to shed more light on the links between National and the Exclusive Brethren sect.

However, the removal of an irritant off the immediate political agenda is also something of a minor victory for Labour. National can no longer wallow quite so deeply and so enjoyably in the mess Labour had created for itself. There will be sighs of relief in the Beehive about that.

But Labour needed a moral victory, rather than a let-off.

The public has already delivered its own verdict on Labour's raiding of its parliamentary leader's fund and using taxpayers' money to produce and distribute its pledge card: guilty, whether prosecuted or not.

Labour is not helped either by yet another police decision that will have people pondering why Labour politicians and party officials seem to avoid prosecution, while others - the police and the Prime Minister's driver in the speeding motorcade case - do not.

Given other political parties breached Parliament's rules, the police believed it unfair to single out Labour for punishment. Instead, they have fired a warning shot that there will be no more breaches of the rules. But there will be people who will want to see a conspiracy in all this.

However, Labour will be judged more seriously on its willingness to clean up its act and end a rort on the taxpayer.

Labour should stop muttering about how unfair all this has been. It should stop making veiled threats about bringing in official state funding of political parties if it is denied access to parliamentary funds to sell its policies. It needs to display leadership and corral other parties in Parliament into rewriting the rules so that none of them can willy-nilly use those funds as a handy treasure chest to boost their spend up on election advertising.

The good news is that if Labour does not show leadership, the Auditor-General will.

John Armstrong: Hodgson has big shoes to fill

The managers of the country's 21 district health boards would have had something of a double take when they read the letter they got from their new minister just before Christmas.

At first glance the letter, which listed his priorities for the public health sector, was typical of Pete Hodgson's slightly idiosyncratic manner, which has him being very polite, almost deferential to the person he is addressing.

He talked of filling "big shoes" - a reference to Annette King who held the health portfolio for the previous six years, a remarkable tenure in one of the Cabinet's most demanding and thankless jobs.

He urged the DHBs to "please continue to do well what you already do well". He made big mention of "relationships", saying these were "rich and important" and that they built trust and were "self-evidently valuable".

Then came the sting. "Financial transparency and a sensible 'no surprises' policy are two good examples, and they bind all of us, me included."

What Hodgson was really saying was "I expect you to be straight with me. I don't want to find out about your problems through the news media".

By the time they had translated the rest of the letter, the managers would have got the message. The Government no longer had "expectations" that deficit-prone DHBs will show fiscal rigour. The new minister considered that simply to be a given - a point rammed home by him setting "cost-effectiveness" as one of his priorities.

Hodgson seemed to have adopted the old Theodore Roosevelt maxim: Speak softly and carry a big stick. Or, in his case, at least sound as if he is carrying one.

Publicly, Hodgson has been emphasising "different minister, same policies". He has deliberately held back putting his own stamp on the portfolio by means of a major policy speech until he feels the time is right.

That point is not far off. As he says in the letter, a new minister inevitably means a change in style. That is not the only thing changing in health.

Hodgson has taken over the portfolio at a critical juncture.

Having poured money into the health sector like confetti, Labour now needs bangs for its bucks.

Mounting fiscal pressures combined with Michael Cullen's warning that recent increases in the health budget cannot be sustained have forced ministers to undertake various expenditure reviews, to control ever-escalating costs in the short-term and confront the major one in the long-term - New Zealand's ageing population.

Two months away from the Budget, Hodgson will say only that next year's increase for health will be between 5 and 10 per cent. It is enough to say the sector will not get as much extra cash as it has been getting, but neither is Labour slamming on the brakes.

However, in a sector where demand for ever more expensive treatments is insatiable, the slow squeeze will still induce pain - especially as DHBs face wage pressures driven by staff shortages and last year's generous nurses' settlement.

King's success in the portfolio is put down to her emphasis on building relationships and trust - echoed by Hodgson in his letter to DHBs.

That plus having the money to oil wheels that did squeak kept the lid on trouble - and health off the political agenda.

But that is also changing.

So far, the fight is only a skirmish - as evidenced this week when National confronted Hodgson with figures suggesting there had been no increase in hospital operations over the past five years despite Labour spending more on non-urgent elective surgery.

But slowly and methodically, National is opening a sustained offensive on a front it has long neglected.

National felt for a long time that it was best not to make too much fuss about health and give voters time to forget its cuts in real spending during the 1990s and the failed experiment with market-based solutions.

Before the election, the shadow health portfolio was held by Paul Hutchison, who was ranked No 23 in a caucus of 27.

National did not bother releasing its health policy until halfway through the election campaign.

But post-election, Don Brash and his advisers determined that National had to broaden its overall attack on Labour.

National also detected the public was starting to question whether Labour's reforms had made any difference when it comes to the bottom-line of getting treatment in a reasonable period of time.

The health portfolio went back on the frontbench and into the hands of the increasingly influential Tony Ryall, thirsting for the challenge of a large portfolio.

His 15 years-plus experience as an MP and a former minister shows. In grasping the complexities of health, you can lose touch with your wider audience.

An Opposition MP can hit the target only for everyone else to miss the point.

Instead of applying a hit-anything, blunderbuss-type approach, Ryall has both narrowed and sharpened National's attack.

National is now asking the $4 billion question: where did all of Labour's extra money go?

The most politically sensitive measure of that is the number of elective surgical procedures carried out each year in public hospitals. Ryall is out to "debunk the myth" that those have increased significantly under Labour and waiting times have correspondingly been slashed.

The data is plentiful - and varied enough to support and demolish claim and counter-claim.

But lacking the numbers of those getting surgical procedures as out-patients, Hodgson struggled to be convincing in Parliament this week as he and Ryall traded statistics on in-patient discharges from hospitals.

Hodgson was also caught out late last year when Ryall flourished a document which Hodgson had not seen listing those who would be eligible for doses of Tamiflu in the event of a bird-flu epidemic.

These are the hiccups of a minister handling a new portfolio rather than someone drowning in one they have held for years.

Nevertheless, Hodgson's remark that the public health system scores 5 1/2 out of 10 for performance is not one King would have uttered.

When it came to winning over those inside and outside the sector, she possessed the persuasive combination of being seen as tough-minded yet warm-hearted.

Hodgson comes across as more cold-blooded - somewhat academic, somewhat detached and somewhat prickly. But this demeanour hides canny political instincts which have made him one of Labour's shrewdest tacticians.

In some respects, Hodgson has been under- used as a Cabinet minister, sometimes being given a string of lesser portfolios rather than a single major one.

Despite slip-ups in the energy portfolio, he still has to be regarded as a safe pair of hands.

He is more than qualified to fill King's shoes. But clearly he intends being his own man.

Fran O'Sullivan: Players in queue behind Clark-Cullen old firm

Michael Cullen is not going to step down as Deputy Prime Minister just because the nation's news media (including the Herald's leader writers) think it's time Labour started thinking about nominating a possible successor to Helen Clark - refreshing both the Labour Government and Cullen.

If anything is ever likely to persuade Labour's key workhorse to dig his toes in for another year or so, it is the thought that when he does stand down - as he must eventually do - that decision will be seen as him marching to the media's tune.

Not his own, nor the Labour caucus, nor, dare I say it, his formidable wife, Annie Collins - she whose voice cut through the ether like a bandsaw when she telephoned in the New Year to remonstrate she did not want her husband to make this parliamentary term his last, as I had written on the basis of one of the good doctor's quick verbal asides.

I've found Cullen pretty equable in my dealings with him this year, if not sharing my view that "bold means bold" when it comes to the type of transformative tax policies needed to get New Zealand rocking economically.

Cullen is not going to stand aside until Clark tells him it's time to shuffle off and prepare himself to be Parliament's Speaker in the event she gets a fourth term. Or, move along so Clark can offer his head to keep a potential leadership challenger at bay in the same way Cullen got his deputy job in the first place

There's no sign that any of Cullen's potential successors as Deputy Prime Minister - Cabinet ministers Phil Goff, Trevor Mallard or Steve Maharey - want to blunt their own leadership aspirations by signalling they want to become Clark's No 2 too early.

She still has the power to "give or deny." That said, the old Clark-Cullen firm is not as impregnable as it once was.

Goff is probably the most politically accomplished of Clark's potential successors. His domestic profile is not as high - or patchy - as Mallard's. Neither is it as bland as Maharey's.

But Clark's attempts to rejuvenate her third term Cabinet from within have been handled less than adeptly and led to some rather unnecessarily bruised egos, including Goff's.

Clark felt sufficiently confident of Goff's continued support - or dismissive of his potential to upset her apple cart - that she offered NZ First leader Winston Peters his prime foreign affairs portfolio as the price of power after the September election.

She then threw Goff a bone by giving him Jim Sutton's Trade Negotiations portfolio, after she persuaded the latter not to offer himself for Cabinet selection. But things quickly got - and still are - rather toey.

Clark tried to persuade Sutton to retire by offering him the "fantastic" job of ambassador to Washington. He decided to stay put because his partner has a good job in Wellington.

So a compromise was forged where Sutton would go to the Hong Kong world trade talks as Trade Negotiations Minister in December, then step down.

Just before Christmas, Clark tossed Sutton a bone by saying he could stay on as a Trade Negotiations Minister for a while as concentrated work was needed to keep New Zealand's interests foremost in Geneva.

Sutton would go up to Davos in January for a gathering of influential trade ministers on the outskirts of the World Economic Forum.

This was too much for Goff, who went in Sutton's place after remonstrating to Clark that he wasn't about to lose the centrepiece of his new portfolio.

Mallard is the interesting one. He is fast picking up a substantial portion of Cullen's economic beat as an Associate Finance Minister, a role he shares with Goff, which will help him prepare for a chance at the deputy's slot if Clark goes on for a fourth or fifth term as Prime Minister.

But Mallard needs to rub off his rough edges. He shares an unfortunate anti-American image - like failed Australian Labor leader Mark Latham - which he will need to remedy.

He also needs to prove himself as an economic dry (as Clark and Cullen are at heart) if he is to retain the confidence of the business community.

Maharey is the darling of the left - but not seen as an election winner.

But it could get messier if Clark continues trying to rejuvenate her side this term.

Labour still wants to persuade the so-called "old-stagers" who lost their electorate seats in September - Sutton, Dover Samuels, Russell Fairbrother and former Senior Government Whip Jill Pettis - to stand down midterm so new blood such as lawyer Charles Chauval and unionist Leslie Soper can come into Parliament as the next on Labour's list.

There's another factor to consider. If MPs like Sutton and Samuels are pushed out, Goff's constituency for a possible run for deputy is lessened.

Both are members of the loose centre-right faction within caucus which has dwindled despite the recent selection of Shane Jones as a list MP.

When it comes to what really matters in Clark's power equation there are few others in whom she could comfortably place so much trust as Cullen. Clark has some grooming to do before she can safely promote a successor - for either of his big jobs.

John Roughan: Commissar Carter controls the country's richest asset

Chris Carter, Minister of Conservation, turns out to be sole commissar of the coastline. The costly public proceedings of an independent court and its considered decision count for nothing beside his arbitrary power.

After the Whangamata marina veto many are wondering, how could this happen?

Carter and fellow ministers cannot explain it. They say National wrote the ministerial power into the Resource Management Act 1991. National's keenest environmentalist then and now, Nick Smith, looks perplexed.

Quite a lot happens in Parliament without many of the elected members knowing much about it, as anybody who has worked there can attest.

The Resource Management Act, like the NCEA, was one of those big, boring projects that rumble up from the public service and spend so long in gestation that everybody assumes they have survived critical attention at some stage.

They can be in force for years before some of the institutional idiocies become apparent. And even once apparent they can have an in-built resistance to change.

Chris Carter and friends are not going to give up command of the coastline quickly - especially if coastal conservation lore is at last to be challenged.

After Whangamata, Carter thinks "the public needs to have a conversation about the coast".

So do I, though probably not the conversation he has in mind. But let's have it.

He says: "It's really important to lay out some environmental bottom lines. For New Zealanders especially the coastline is really important.

"And what we are very clear with Whangamata is that there is a deep vein of discontent. Are we going down the right path about what we do with the coastline ... ?"

This is the mind that can overrule courts.

The coast is not just "really important"; it is probably this country's richest asset from every point of view: scenic, residential preference, tourism and the economy.

It is not just really important, it is vital to lay out more than environmental bottom lines. This Government used to talk vaguely about triple bottom lines. It would be interesting to see the coastline's balance sheet.

My guess is it would give the lie to the conservation lore that the natural coastline is steadily disappearing under the pressure of development.

Every time I read articles that lament the disappearing coast I wonder if I live in the same country.

Go for any distance outside the cities and you see an uncluttered coastal landscape, great sweeps of farmland, mudflats, estuaries and bays, lonely sand dunes and lovely beaches - with not a soul enjoying them.

I like the loneliness but I like life too. And I worry, really worry, that we are severely reducing the country's economic potential by listening to this mythology that the coast is under threat.

Driving from the North Shore every day I try not to glance at Ngataringa Bay. I came to Auckland just as that epic early environmental battle was turning decisively against the developer who wanted to build a classy residential reclamation on the mudflats.

I was young, starting out with a newspaper that liked to campaign for fashionable causes. The Shore was my beat and Ngataringa Bay was the biggest story on it. I'm ashamed to admit now that I fell in line.

The developers were the villains of the story, the protectionists the heroes. I was always surprised that the developers' public relations agent, Cedric Allen, was unfailingly pleasant and helpful.

But then, the greenies were the same. Big, bearded Mike Pritchard and the earnest Stephen Mills were a pleasure to deal with.

I was never quite sure whether their concerns were more about the prospect of rich people moving into a modest neighbourhood than the dubious beauty of the bay.

But no matter, the day they won a majority on the Devonport Borough Council the development was dead. Thereafter the story was about the council's efforts to extricate itself from a contract at minimum cost.

Even in those days I sometimes looked at the aborted plans for a marine suburb, built on reclamations encircling trapped water, each house with its own jetty, and suppressed a certain regret.

I rarely went anywhere near Ngataringa Bay, but when I did the doubts were particularly hard to stifle. The place was, and still is, an ugly muddy waste, hardly a bay at all for most of the tide. It is a backwater the Waitemata would never have missed.

Some years later a marina was built off the end of Bayswater which visually protrudes on the harbour far more than Robbins Holdings' reclamation would have done.

All of that is water under the bridge, but it seems a salutary lesson now in how wrong-headed things can be.

I don't know the Whangamata marina site and have no view on its effects on the local iwi's shellfish beds or the direction of the surf-break.

But I trust the Environment Court to assess those objections much more dispassionately than the Minister of Conversation.

If a National minister had overruled an Environment Court finding against the marina he would be accused of a sellout to business, just as Carter is accused of pandering to Labour's constituencies. It is the nature of politics, and the reason politicians are not normally given judicial power.

Nothing about the coast warrants a political veto over decisions of a non-partisan court. The foreshore and seabed are public domain, but that is all the more reason to ensure that its development does not depend on the political breeze.

Paul Thomas: Sport still uplifts nation

Are New Zealanders unduly preoccupied with sport? The reason I ask is that lately there seems to have been a flurry of opinion pieces in our newspapers and magazines in which the writer declares his or her loathing of sport, especially rugby, as if sounding a call to arms.

And of course visiting journalists who can't be bothered testing outdated stereotypes continue to portray us as a nation of morose, if not suicidal, dullards for whom - yawn - rugby is a religion.

Far be it from me to question how others choose to fill their space, but I detect an element of striving for effect and an absence of spontaneous outrage here.

The image that springs to mind is that of bickering neighbours trying to keep a territorial feud alive long after the local council has imposed a fair and equitable solution.

Consciously or not these writers place themselves in a line of direct descent from the tiny, beset groups of intellectuals, culture vultures and Bohemians hunkered down with their flagons of Huapai dry red in the cultural wasteland that was post-war New Zealand.

Those people had cause for complaint. The country obsessed about rugby in winter and kept an eye on the cricket over summer, and to declare an indifference to sport was to invite the question, "What are you?" Those who asked it usually supplied the answer, which was a commie or a poofter or both.

But contemporary New Zealand bears little resemblance to that monochrome society.

To take one example, back then there was understandable resentment that monopolistic state television devoted much of its summer scheduling to cricket. Now, very little sport is on free-to-air television, and I'm told that Sky offers a subscription package that excludes the sports channels.

And while there may be quality control issues, one can't complain about the range or accessibility of cultural activity and expression. Indeed, our cultural participation rate must be among the highest in the world.

In other words, it's not hard to avoid that which offends you, a point frequently made during the censorship debates of the 1960s and 70s.

Having said that, these anti-sport pieces do remind us that, for all its popularity with the masses, sport hasn't been embraced by what could be loosely termed our intelligentsia: academics, opinion-shapers, style gurus, media personalities, the arts community and all those boys and girls who are just too cool to be true.

This, I suspect, is partly the legacy of those Bohemians and partly the result of New Zealand rugby's long and shameful liaison with South Africa in the apartheid era.

In 1960, 150,000 New Zealanders signed the "No Maoris, No Tour" petition before the All Blacks went to South Africa, so the rugby community couldn't say it wasn't warned. But rugby and its political supporters had to learn the hard way, in the form of civil strife and a divided nation.

Yet despite rugby's mulish refusal to face up to the reality of apartheid, exposing itself to the charge of racism, the paradox is that the game has been and continues to be one of our most successful examples of multi-culturalism in practice.

Few people pinned their colours to the South African mast as emphatically as Colin Meads. Now that he has achieved iconic status and has a gruffly avuncular presence in the TV ad breaks, it is hard to imagine him saying this after protesters forced the abandonment of the Springboks-Waikato match in 1981. "I wish those guys had to wear a sign on their chest saying 'protester'. I'd like to kill two or three of the bastards."

Even though he lost his bearings, Meads was undoubtedly right when he argued that rugby people like him typically had a lot more to do with Maori than the mainly white, mainly middle-class protesters.

The same applies today. Our leading rugby teams, including the All Blacks, are models of multiculturalism. One wonders how many of the white, middle-class intelligentsia who disdain rugby and extol the virtues of multiculturalism have as many Maori and Polynesian mates as the average Pakeha rugby player.

And, in passing, one also wonders how many white, middle-class liberals have diverted their boys towards soccer to prevent them coming into contact - in the physical sense - with their more robust Polynesian contemporaries.

Perhaps it's all part of growing up, and in due course our intelligentsia will appreciate the fundamental democracy of sport and its capacity to draw communities together and uplift the nation.

The American writer Don DeLillo, a lifelong New York Yankees fan, devotes the first 50 pages of his monumental novel Underworld to a spellbinding set-piece weaved around a famous baseball game in 1951.

When it's over and the euphoric crowd is dispersing, a commentator stands in the outfield trying to put the drama and magic of an epic ball game into some sort of context. "Russ thinks this is another kind of history. He thinks they will carry something out of here that joins them all in a rare way, that binds them to a memory with protective power. Russ wants to believe a thing like this keeps us safe in some undetermined way."

Paul McIntyre: Media silently digests plans for deregulation

Australia's big media groups have gone eerily quiet after a big bang earlier in the week when the Federal Government finally flagged detailed plans to deregulate the A$12 billion industry as early as January.

The headline items in the proposed overhaul include the lifting of foreign media ownership limits, the abolition of cross media rules forbidding common ownership of radio, print and TV assets in one capital city market, and the introduction of multi-channelling for the commercial broadcasters in which they can air different content on their second high-definition digital channels.

There's plenty to discuss in the proposals, but media groups are uncharacteristically silent on what they think of the Government's ideas, mainly because Communications Minister Helen Coonan has threatened if she can't get widespread agreement from the media on what needs to change, the rules will stay as they are.

The biggest private gripe so far is from non-TV network media owners over the continuing protection of free-to-air TV networks.

No fourth TV licence will be issued until at least 2012 and spectrum allocations for new media applications such as mobile phone TV will only be allowed if they do not resemble current TV broadcasting. Moreover, any company seeking to launch internet TV initiatives will be prohibited without a licence if they too look too close to existing TV network programming.

"If somebody wants to set up a broadband television channel [which resembles free-to-air TV], that is the sort of thing where we regard it as appropriate to have a licence," Senator Coonan said this week.

But in trying to fend off criticism over the Government's protection of broadcasters, Senator Coonan signalled that the cosy TV oligopoly will end in 2012.

But just how sweet the Government is with the free-to-air TV owners - the Packer/PBL-controlled Nine Network in particular - was seen this week when for perhaps five hours on Wednesday the prospect of public broadcaster, the Australian Broadcasting Corporation (ABC), airing ads on its radio and TV networks looked very real.

That was before Prime Minister John Howard got wind of the momentum and promptly starved the thing of oxygen. Howard's rationale for rejecting ads on the ABC had little to do with a purist anti-commercial vein for public broadcasting. Rather, it was the revenue impact it might have on his friends in commercial TV land that appeared to concern him.

Estimates by media analysts such as Fusion Strategy put potential ABC TV ad revenues at A$520 million using a "fully commercial" model - that is, about 14 minutes an hour of ads. On a "semi-commercial" basis, ABC TV could pull A$240 million annually.

There remains significant Government backbench support for the ABC to take advertising, but Howard's comments stalls things. "I think the ABC does a good job," he told ABC Radio on Wednesday. "I'm a supporter of the public broadcaster and I don't myself think this possibility of advertising on the ABC is going to amount to anything. I'd be very surprised if that were to occur.

"And there is an argument that there's a limited pool of advertising dollars and if they are spread further around then it makes the position of the commercial TV stations, well, it alters their position, because they don't get any public funding. But if they have to compete with the ABC, well that has implications, doesn't it?"

Senator Coonan fell quickly into line, despite hinting earlier about the ad possibilities on the ABC. "People need to take a cold shower. I have killed that idea stone dead."

One of the biggest challenges for the Government and industry in the proposed regulatory changes is switching off the analogue TV signal by 2012 - an effort which requires Australians to convert 14.5 million analogue TV sets.

Richard Inder: Port raid is really just a bit of jersey pulling

Rivalry between the South Island's largest cities does not really amount to much.

Even when Otago and Canterbury face off in the NPC, the insults the teams trade are as much part of the game as what happens on the field - a genteel opportunity to defame, libel, ridicule and insult.

However, after Port Otago made its dramatic raid on rival Lyttelton Port's share register last week, one could be forgiven for thinking otherwise.

The move - an acquisition of a 10.1 per cent stake for $24 million - has more than a grain of logic.

The stake thwarts 69 per cent shareholder Christchurch City's $214 million bid to take full control of the port and then sell a near half-share to Hong Kong giant Hutchison Whampoa. And it gives Port Otago - 100 per cent owned by the Otago Regional Council - a seat at the negotiating table.

This is a real power. Under the NZX listing rules, Christchurch City and Hutchison, having agreed to form a joint venture, may be treated as related parties.

Any attempt to push ahead with their plans in spite of Otago may need to be put to shareholders - a vote from which Christchurch City would be excluded. And with 10 per cent, Otago has a chance to block the move.

However, in spite of this, the acquisition still looks like an Otago back's desperate jersey-pulling in the closing minutes of a game.

It is difficult to see what else Port Otago can offer its northern rival. Hutchison's intentions are pretty clear. It wants to make Lyttelton the South Island's main container port and link it with its international network of 41 ports in 20 countries.

In the short term, it would make gains by importing its technology, using its clout with suppliers to get good deals on equipment and by bringing its international experience to bear on protracted problems such as the port's troubled labour relations.

It would also use its strength in negotiations with international shipping lines. Sure, the South Island generates an insignificant stream of container traffic in a world context, but it could use concessions in one part of the world to extract concessions here - such as space on a wharf in Shanghai in exchange for a regular visit to Lyttelton.

Meanwhile, in the longer term, a revitalised Lyttelton could set up container-marshalling points all over the South Island and use the newly revitalised rail network to feed into Lyttelton, cutting Port Otago and Bluff's South Port out altogether.

Lyttelton is next to the largest centre of population and is already the exit port for a vast range of exports.

Otago could be a feeder port for Lyttelton, but rail transport between the two would be more efficient than loading and unloading ships.

It is also doubtful the Commerce Commission would sanction a merger between the South Island's largest ports. Meanwhile, bringing in Port Otago will only add complexity - political and economic.

Why engage the party you mean to destroy?

Paddy Austin, chairwoman of Christchurch City Council's commercial arm, said as much this week: "There was no provision for a third partner with [Hutchison] in the terms of the current agreements."

Result: A stand-off.

The future is unclear.

Otago is now sitting on a loss of $2.6 million (the difference between the $2.35 it has paid for Lyttelton's shares and the $2.10 on offer from the Christchurch City Council). That could become much greater if Hutchison walks away.

The burghers of Otago may regard this as a cost of staying in the game, but it will take some explaining.


Got Carter

So farewell Carter Holt Harvey. Billionaire Graeme Hart has the forestry giant in the bag and was yesterday celebrating the end to the seven months of hostilities with his 80-year-old mother.

Now comes the the small matter of the clean-up.

Owning more than 90 per cent of the shares, Hart can compulsorily acquire what's outstanding. However, he has to get to 92.85 per cent of the shares on issue if he is to take out the minorities at the $2.75 offer price.

The details are arcane, but take it as read that if he fails to reach this critical threshold by Tuesday, the close of his offer, he will probably extend the bid for up to 30 days in the hope of mopping up the remainder.

Beyond this period, and assuming he does not reach the critical 92.85 per cent threshold, he has to name the takeover price and have it validated by an independent expert.

Then, if shareholders with more 10 per cent of the outstanding capital object to the price, they can request the Takeovers Panel to name an independent valuer to set a binding price.

Hart has lifted his offer from $2.50 to $2.75 to take his shareholding from 85 per cent to more than 90 per cent. But the bet on holding out this time is not as obvious.

Two appraisal reports have reached a valuation within a cooee of each other, so the odds on a significantly higher figure are not great. Moreover shareholders have to consider the costs of getting the cash now against the risks of getting the same or even less at some indeterminate time in the future.

Brian Gaynor: Calan saga a classic conflict of interest

Recent developments concerning Calan Healthcare Properties Trust give New Zealanders yet another reason to shun the sharemarket.

The sale of the trust's management company to ING illustrates that there are two distinct investors as far as listed trusts are concerned: The shareholders of the management company and trust unitholders.

The management company usually skims off most of the cream while unitholders, who effectively own the assets, have limited rights and are often treated as second-class citizens.

The fundamental problem with trusts is that they are controlled by a separate management group. Unitholders have no interest in or control over these management companies. This can lead to conflicts of interest and lack of transparency.

Unitholders are represented and protected by a trustee rather than a board of directors. The individuals listed in a trust's annual report are directors of the management company, not the trust.

Directors' fees are often paid by the trust even though these individuals represent a separate entity.

The biggest problem with trusts is the potential conflict of interest between management companies and unitholders.

When Calan Healthcare Properties Trust listed on the NZX in 1999 the management company's remuneration structure was:

* An annual fee equal to 0.75 per cent of the gross value of the trust.

* An incentive fee equal to 10 per cent of the average annual increase in the gross value of the trust up to, but not exceeding, 1 per cent of the value of the trust. Thus, the annual fee could not exceed 1.75 per cent of total assets.

In addition, the management company is reimbursed costs incurred leasing tenancies and the acquisition, development, custody, ownership and disposal of assets. These costs have been substantial and have sparked heated debate at annual meetings.

The trouble with this fee structure is that it encourages the management company to put more emphasis on asset growth than earnings.

Calan cannot be accused of this because its growth has been relatively anaemic since listing. Between the June 1999 and June 2005 years, total assets rose 16.6 per cent to $217.9 million and net earnings 8 per cent to $10.5 million. Although overall asset growth has been minimal, a number of purchases, sales and developments have generated extra revenues for the management group.

A takeover offer can create a major conflict of interest between a management group and the unitholders of a trust.

Under section 18 of the Unit Trusts Act 1960, a management company can be removed when 75 per cent vote in favour of this motion at a meeting of unitholders. This means that a management group faces dismissal when a bidder reaches 75 per cent ownership, particularly if the offeror also operates a management company.

Under Calan's trust deed, the manager's compensation for loss of office is an amount equal to the base fee it received in the previous financial year. As far as Calan is concerned, this was $1.6 million in the June 2005 year.

Thus if a takeover offer for Calan was successful, the management group would receive $1.6 million on termination of office but, if the bid failed, the management entity could be sold for a much higher price.

On January 26, the day after ING Property Trust launched a stand in the market to acquire up to 9.7 per cent of Calan Trust at $1.25 a unit, Bruce Davidson, the chairman of the management company, said the management company had been in discussions with another ING entity about a "possible transaction".

Davidson did not disclose whether this transaction involved the trust, the management group or both.

He said that the other ING entity had withdrawn from these discussions and a committee of independent directors of the management company had been appointed to look into ING's stand in the market.

The management company did the right thing by appointing a committee of independent directors, but who had been negotiating with ING in the first place? Any negotiations undertaken by major shareholders of the management group could have created a conflict of interest because the best interests of their company and the trust do not necessarily coincide.

After ING Property Trust launched a full bid, the independent committee of the management committee appointed Ferrier Hodgson to prepare an independent appraisal. This concluded that Calan Trust units were worth between $1.41 and $1.55 compared with the assessed value of ING's takeover offer of $1.21 a unit.

The report outlined the governance structure of the trust but it failed to mention that ING could gain control by withdrawing the takeover offer and buying the management company instead.

The independent directors recommended that unitholders reject the offer. One reason given was: "Calan's specialist skills and experience in management of healthcare properties may not be available to Calan unitholders if they accept the offer."

No one seemed to anticipate that the management company could be sold to a third party and the healthcare expertise lost to unitholders even if the takeover was unsuccessful.

On March 9, ING Property Trust said it was withdrawing the takeover offer for Calan Trust but, at the same time, ING Property Trust's manager was buying Calan Healthcare Properties Ltd (Calan's management company). The sale price was not disclosed and there was no indication whether Calan's "healthcare expertise" would be moving to ING.

On the same day, Martin Lyttelton, one of the major shareholders in Calan's management company, said discussions had been held over the past 12 months to sell the management entity. He later disclosed that pricing and terms had been agreed in December 2005 but this had been withdrawn when ING Property Trust stood in the market.

Why didn't Lyttelton reveal this sale agreement to his fellow directors or Ferrier Hodgson? If he did tell these parties, why didn't they pass the information on to unitholders?

The sale of the management company unleashed a wave of anger and frustration among investors that has not been seen for a long, long time. Unitholders could not believe that the directors of the management company would advise them not to sell (units were trading on the market at $1.28 to $1.29 at the time) while shareholders of the management group were negotiating the sale of their company at the same time.

Market speculation is that the management entity was sold for $7 million to $8 million (some estimates are as high as $20 million), well above the estimated $1.6 million it would have fetched if the takeover offer had been successful.

Four shareholders invested $136,000 in the major management entity and should realise at least $7 million to $8 million.

By comparison, more than 5000 investors have contributed $146 million of equity to Calan Trust since 1994 and this is now worth only $165 million.

The Calan Trust saga illustrates once again the massive deficiencies and inadequacies of the Unit Trusts Act 1960 and the second-class status of investors under this statute.

One of the primary objectives of securities law reform should be to repeal this act. It seems pointless for the Government to try to encourage savings and investment through tax changes and the KiwiSaver scheme when it does not remove statutes that create huge conflicts of interest and enable promoters to make massive profits at the expense of public market investors.

Disclosure of interest: Brian Gaynor is a strategist and analyst at Milford Asset Management.