Huge merger costs for council agency, Regulator mulls Auckland power price spikes, Airport faces earnings risk

In today's NBR Print edition: How much is too much to merge council controlled organisations? Auckland Council thinks $750,000 is acceptable to bring together Waterfront Auckland and Auckland Council Property to form Panuku Development Auckland. 

Most of the money went to external consultants, although councillor Cameron Brewer says there were perfectly capable senior staff to lead the merger. Mr Brewer says the worry now is mission creep. He says after promising ratepayers it would concentrate on surplus council land, Panuku Development Auckland is now looking at getting into property development. Sally Lindsay reports.

An Electricity Authority proposal that could increase power prices in New Zealand’s biggest city by 4.5% is flying under the radar. Tim Hunter argues part of the reason is that the authority has cloaked its scheme in complexity and dullness but the idea is still crazy. The details involve changes to the way Transpower charges for shifting electricity up and down the country on the national grid. The authority says the current pricing structure will lead to poor investment decisions and should be changed to a model with an element of user pays. The scheme creates winners, such as Pacific Aluminium, and losers, such as the people of Auckland, Northland and Westland. Controversy rages, quietly.

Auckland International Airport’s profits are taking off, propelled by a healthy tourism industry. But analysts warn earnings may be threatened in coming years, depending on where the Commerce Commission decides to set the ‘fair’ rate of return. This review of the so-called weighted average cost of capital was prompted by the High Court in 2013, which said current rates may not be enough to control excessive profits made by regulated companies, and lowering these would increase savings to consumers. If the Commerce Commission decided to set the rate in the low 50th percentile, the airport’s valuation could go down 11c a share, Calida Smylie reports. 

The Australian Securities and Investment Commission is scaling back an apparent probe of former Blue Chip boss Mark Bryers’ business affairs across the Tasman. The regulator has this year been considering allegations former Blue Chip boss Mark Bryers has been illegally managing a group of companies in Sydney. The Talos Accounting Group has since collapsed, owing at least $A6.8 million, but despite “allegations of impropriety” against Bryers, ASIC is now saying it “does not believe” there are further steps it needs to take. Hamish McNicol reports.

Changes in economic behaviour, which are still baffling the policy makers, lie behind yesterday’s interest rate decision by the Reserve Bank. “Behaviour this side of the global financial crisis is different from behaviour the other side,” economist Donal Curtin says. “And no one has quite worked it all out yet.” That is one reason the Reserve Bank got last year’s interest rate hikes wrong – and also why the government is hinting at a lower tax take over the coming year. Rob Hosking and Jason Walls cover monetary policy.

NBR Special Report: Spotlight on Hawke’s Bay

All this and more in today's National Business Review Print edition. Out now.