PM Making Air NZ Decisions on the Run

Wednesday, September 26 2001 Richard Prebble Press Releases -- Commerce

Helen Clark's advice to Air New Zealand shareholders not to sell, puts the government at risk of legal action, ACT leader Richard Prebble says.

"Should the government now not pump money into Air New Zealand, shareholders may well have a legal claim for compensation, for negligent advice," Mr Prebble said.

"The Prime Minister appears now to believe that the government should start bailing out shareholders with taxpayers' money.

"There is clearly a national interest in keeping the planes flying. But why does the government think it has a moral right to spend taxpayers' money helping two Singapore-based companies ' BIL and Singapore Airlines - who between them own 70 percent of the airline and must take some share of the blame for its predicament?

"Maybe the government has had advice that its dithering over previous requests to re-capitalise, which undoubtedly torpedoed the board's plan to save Ansett, may have already legally compromised the Crown's position.

"Ms Clark's statements don't appear to be carefully thought-through. They will create further uncertainty as to who is responsible for the government's decision-making. Legally, the Minister responsible for Air New Zealand is Mark Gosche, the Transport Minister. But he seems to be an ineffective passenger, with his officials sidelined.

"The market had thought the Finance Minister and his office, including former trade union economist Peter Harris, were co-ordinating officials. Dr Cullen issued a statement saying the $550 million package was the limit of the government's involvement and the government would not take up shares.

"But yesterday we had the PM giving assurances to shareholders, and what amounted to a "don't sell" notice.

"The only credible way of interpreting the PM's statement is that the government has rejected putting the airline into statutory management and decided instead to issue a blank cheque, effectively underwriting the present shareholders. My colleague Stephen Franks will comment on serious legal implications.

"The PM's statement reinforces the view that she is making decisions on the run, without the benefit of considered advice. As a former Finance Minister, I'm aware of a strong injunction from officials to Ministers never to give advice to shareholders on their investments," Mr Prebble said.

ENDS

For more information visit ACT online at http://www.act.org.nz or contact the ACT Parliamentary Office at act@parliament.govt.nz.

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