Labour would cancel Crown fibre contracts without compensation

A future Labour government could rewrite Telecom’s ultrafast broadband (UFB) contract, without paying compensation, Act leader Don Brash said today.

Mr Mallard , and Labour communications spokeswoman Clare Curran, both vehemently opposed the Telecommunications Amendment Bill during its committee-stage debate last week – a session most notable for last-minute changes that allowed for the foreign sale of Telecom’s retail business.

During the committee-stage debate on the new UFB legislation, Labour also tabled an amendment that would have increased the fines that Telecom might have to pay for breaching separation or "line of business" requirements in the bill from $10 million to $100 million.

"Anyone entering into an arrangement based on this legislation has got to know that it may not last,” Mr Mallard added.

A constant theme of Labour's attacks on the bill has been that Telecom has behaved badly in the past (including a recent $12 million fine for manipulating the wholesale price of business broadband services between 2001 and 2004), so need to be put under close tabs during the UFB project. The party sees regulatory oversight weakened under the Telecommunications Amendment Bill.

“This is wanton economic thuggery,” said Dr Brash.  “Whatever the merits or demerits of the bill – and there are two ACT MPs opposed to it – when and if it is passed it will become law.  The relevant businesses should be entitled to expect it 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.

“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? 

“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.’

Although Act seems united in its derision of Mr Mallard, the party has been at sixes and sevens over the Telecommunications Amendment Bill.

All Act MPs voted for the first reading, but two of the five (Sir Roger Douglas and Heather Roy) peeled off to oppose the legislation at its second reading (see full voting break-down here).

The committee-stage was ahead of the bill’s third and final reading.

Telecom shares (NZX: TEL) were up 0.63% to $2.395 in early afternoon trading. The NZX50 was up 0.42%.