12.04.2000 - By MICHAEL FOREMAN 

                 Mounting Telecom 0867 Internet connection 
charges
                 have forced an Auckland ClearNet business user to
                 switch to the Telecom-owned service provider 
Xtra. 

                 Brian Falkner, of Albany-based Internet developer 
BJC
                 Services, said he began to receive connection bills 
from
                 Telecom late last year even though he was a 
ClearNet
                 customer. 

                 "At first, when the bills were just a few hundred 
dollars,
                 it was just an inconvenience. When we started 
getting
                 charged $500 or $600 a month we realised that we 
had
                 a serious problem." 

                 Like many small businesses, BJC uses a residential
                 telephone service so its Internet connection with
                 ClearNet is subject to a 2c a minute charge from
                 Telecom, as no 0867 interconnection agreement 
exists
                 between Telecom and Clear. 

                 Mr Falkner said as an Internet company, BJC was
                 online for most of the day. Its last Telecom 
statement
                 included $764 for a month's Internet connection
                 charges, which have amounted to about $2000 to 
date. 

                 Clear reimburses its customers in such cases, but 
with
                 toll call credits rather than cash. BJC's credit with 
Clear
                 also stands at roughly $2000. 

                 Mr Falkner said he had no chance of using this 
credit,
                 which was not transferable. 

                 "If we had let it run, by the end of the year we 
would
                 have owed Telecom $8000 and had $8000 credit 
with
                 Clear." 

                 After consulting with ClearNet, Mr Falkner said he 
was
                 left with no option but to change. 

                 "We've just moved to Xtra. We had no choice," 
said Mr
                 Falkner. "It went against the grain because we 
would
                 have preferred to stay with Clear." 

                 Mr Falkner believed many small businesses were 
in a
                 similar position. 

                 "We are the ones who are getting hit," he said. "I 
can't
                 believe Telecom has done it for this reason, but it's 
the
                 effect it's having." 

                 Clear spokesman Ross Inglis admitted that users 
who
                 were online for more than 40 hours a month were 
likely
                 to receive credit in excess of their bills. 

                 "We understand that a high-end user might not 
find a
                 credit against their account entirely satisfactory. 
For
                 that reason we expect some to go to other ISPs
                 [Internet service providers] and we understand that
                 decision." 

                 Telecom spokesman Glen Sowry said BJC had not
                 been forced to go to Xtra as there were more than 
80
                 ISPs to choose from. 

                 He said Telecom had invited Clear to join the 0867
                 scheme in January, offering to maintain the 
revenue
                 Clear was getting under the interconnection setup
                 between them. 

                 This base figure would be indexed to increase at 
the
                 expected growth rate of the Internet - 70 per cent 
per
                 year. 

                 "We believe it was a fair and equitable offer.
                 Unfortunately Clear rejected it and their customers 
are
                 suffering the consequences."


                 12.04.2000 - By JOSIE CLARKE 

                 WestpacTrust admits it has lost customers with its
                 latest round of fee rises. 

                 Spokeswoman Jane Anderson said "a number" of
                 customers had closed their accounts, complaining 
that
                 a new $2 fee for paying their credit card bill over 
the
                 counter was unfair and that they felt penalised for
                 paying off debt. 

                 The bank scrapped the fee last week and regretted 
it
                 had not explained the charges well enough to
                 customers or outlined ways to avoid them. 

                 "We hate losing customers. We hate to lose any
                 business," said Ms Anderson. 

                 "Customers perceived it as a charge for paying off 
their
                 debt. We saw it as a charge for using the branch. 
They
                 said, 'That's not fair.' We listened and decided to
                 withdraw it." 

                 The bank still plans to introduce a range of new 
fees
                 from May 1, including an extra $10 for late 
payment of a
                 credit card. There will be a $5 charge to start a 
direct
                 debit and $4 to change it. 

                 For telephone banking, customers will pay 50c for 
each
                 call made after the first six each month. 

                 Ms Anderson said customers were aware they 
could
                 avoid the remaining new charges, and seemed to
                 accept them. 

                 However, a pressure group led by Labour MP 
Graham
                 Kelly has met WestpacTrust in a bid to persuade 
the
                 bank to withdraw the charges. A second meeting is
                 scheduled for Monday. 

                 The group has also lobbied Finance Minister 
Michael
                 Cullen to reconsider WestpacTrust's contract as 
the
                 Government's banker. 

                 Mr Kelly said if his group did not get anywhere 
with its
                 negotiations, he would raise the issue more 
seriously
                 with Dr Cullen. 

                 He said the charges impacted unfairly on some of 
the
                 bank's poorest customers. A significant number of 
them
                 were beneficiaries who had been Trustbank 
customers
                 and who stayed with the bank when it was bought 
by
                 Westpac in April 1996. 

                 "WestpacTrust fails to realise that there has been a
                 change of Government and that there is a deep-
seated
                 resentment about these charges, and they take a 
risk
                 that this could explode nationally if we do run a
                 campaign," Mr Kelly said. 

                 Ms Anderson said the meeting contributed to the 
bank's
                 decision to drop the $2 credit card fee. 

                 The bank already had initiatives for various groups 
in the
                 community, for example, fee-free banking for
                 superannuitants who had their benefit direct-
credited. 

                 "The meeting highlighted to me that WestpacTrust
                 could do a better job of explaining some of those 
things
                 to our customers."

                 $141m raid changes balance of air power

                 12.04.2000 - By ROB O'NEILL 

                 Singapore Airlines crystallised the future shape of 
the
                 Australasian airline market yesterday, mounting a 
$141
                 million raid to win 8.3 per cent of Air New 
Zealand. 

                 That shows how serious Singapore Airlines is 
about
                 taking at least a 25 per cent share in New 
Zealand's
                 national carrier, the highest share a single foreign 
airline
                 can hold. 

                 To achieve that level it needs further Government
                 approval to lift its stake and acquire Brierley
                 Investments' 16.7 per cent B-class shareholding. 

                 Business Herald sources suggest Brierley will get 
a
                 similar price to the $3 offered in Singapore 
Airlines'
                 stand yesterday, valuing its B shares at $282 
million. B
                 shares can be held by foreigners while only New
                 Zealanders can hold the A shares. 

                 Meanwhile, according to Air New Zealand and 
Brierley
                 Investments chairman Sir Selwyn Cushing, Qantas 
had
                 yet to seek Government clearance to buy any Air 
New
                 Zealand shares as of last Friday. 

                 Qantas made its interest in Brierley's Air New 
Zealand
                 B-class shares known late last month. Yesterday's
                 activity, however, left the Australian airline a rank
                 outsider in the battle for Brierley's B-share stake. 

                 Also out in the cold, it seems, is Virgin Atlantic, 
without
                 Singapore Airlines as a partner to launch Virgin 
Express
                 domestic air services into Australia. 

                 Singapore Airlines owns 49 per cent of Virgin 
Atlantic. 

                 Qantas chief executive James Strong said the 
company
                 had heard of a parcel of Air New Zealand shares in 
the
                 market but had not intended to purchase in that
                 manner. 

                 He gave no indication Qantas was withdrawing 
from the
                 fight, however, saying the saga "would take many 
turns
                 before finalisation." 

                 Just after 10 am yesterday, less than a day after
                 receiving the required Government go-ahead, 
Singapore
                 Airlines' brokers told the Stock Exchange it had
                 acquired a 6.6 per cent tranche of Air New 
Zealand B
                 shares. This was achieved through a reverse tender
                 which closed at 8 am yesterday. 

                 The broker, ABN Amro, then stood in the market 
until
                 10.30 am to pick up a further 9,583,632 B ordinary
                 shares at $3 each to reach the 8.3 per cent target. 

                 Sir Selwyn was beaming, describing the situation 
as
                 "full of opportunities." 

                 "I would have to be extremely happy," he said. 

                 "It's another step to precisely where I wanted to be 
last
                 year." 

                 He said there was no change in Brierley's position 
on its
                 B-share stake. Finalising the acquisition of Ansett
                 Australia was now the company's priority. 
Regulatory
                 consents for that acquisition are still pending from 
the
                 Australian Foreign Investment Review Board, as is 
final
                 settlement with News Corp. 

                 Sir Selwyn yesterday indicated that the Singapore
                 Airlines move would not put pressure on Brierley 
to
                 favour it in future negotiations. However, at the
                 shareholders' meeting in Auckland last week, 
which
                 approved the Ansett buyout, he indicated a 
preference
                 for the Asian carrier. 

                 "That is the most favoured outcome," he said, "if 
only to
                 take advantage of the huge opportunity in Ansett
                 Australia and also give enormous strength to 
Ansett and
                 Air New Zealand going forward." 

                 One institutional investor who chose to largely 
decline
                 Singapore Airlines' $3 offer yesterday was AMP 
Asset
                 Management. 

                 "We have sold some shares, not a lot," said AMP's
                 equities manager Stephen Walker. 

                 "We are on record as saying we think the shares 
are
                 worth considerably more than the current price, 
perhaps
                 $4 to $5." 

                 Mr Walker said the resolution of ownership now
                 proceeding was very positive for Air New 
Zealand. 

                 "It's not only what Singapore Airlines brings to Air 
New
                 Zealand, but the clarification it brings to the 
Australian
                 market." 

                 Yesterday Air New Zealand B shares reached a 
high of
                 $2.90 before closing up 20c at $2.75.



                 Judge reserves i4free decision

                 12.04.2000 - By CHRIS BARTON 

                 Justice Potter reserved her decision in the bitter 
dispute
                 between Telecom and free internet provider i4free
                 yesterday, while Clear moved on a new injunction. 

                 Clear was unsuccessful in getting its injunction 
heard
                 with i4free's in the High Court at Auckland 
yesterday,
                 but will meet Justice Potter today to work out a 
time
                 she can hear its pleadings. Clear is seeking to force
                 Telecom to honour its number portability 
agreement and
                 not to pick and choose which services - such as
                 0867-prefixed numbers - it connects. 

                 Clear will also seek to join i4free in the 
substantive
                 hearing to decide whether 0867-prefixed internet 
calls
                 can be readdressed to Clear's network. The case 
will
                 decide, too, if Telecom's actions in cutting off 
i4free's
                 numbers and restricting its access, as well as 
refusing
                 to allow call readdressing to Clear, are 
anticompetitive. 

                 Meanwhile, i4free faces another anxious wait 
while
                 Justice Potter decides, possibly by the end of this
                 week, whether to continue the injunction, granted 
a
                 week ago, until the case is heard. That injunction
                 requires Telecom to ration internet access to all 
internet
                 service providers through its Airedale 4 exchange 
if the
                 exchange becomes overloaded. 

                 Counsel for i4free, Jim Farmer, QC, asked the 
court to
                 extend what was now in place until the hearing, 
which
                 he believed could take place as early as September 
if
                 Telecom cooperated. 

                 He pointed out that Telecom would have an 
incentive to
                 cooperate if the injunction, which restrains it from
                 restricting i4free's access - and in the process 
provides
                 2c a minute interconnection revenue to Clear - was 
still
                 in place. 

                 Telecom's lawyer, David Williams, QC, doubted 
the
                 case would make it to trial this year, citing 
problems in
                 getting a lay member to sit with the trial judge and 
the
                 likely extensive list of expert witnesses, including 
some
                 from overseas. 

                 Mr Farmer argued that a lay member was not
                 mandatory in a Commerce Act case and that use of
                 numerous expert witnesses often wasted the court's
                 time. 

                 He also sought to expand the injunction to include
                 0873-prefixed numbers, which are used by 
Telecom Xtra
                 and other internet providers on the network, 
because
                 they are also managed by Telecom's intelligent 
network.
                 If competitive parity was to be maintained, Mr 
Farmer
                 argued, both 0867 and 0873-prefixed numbers 
should be
                 subject to call management if Telecom's network
                 became overloaded. 

                 He was concerned, too, that Telecom might refuse 
to
                 give i4free more new numbers to prevent its 
growth. 

                 Should that occur, he asked for a further clause 
giving
                 i4free the right to give 24 hours' notice to file for 
further
                 variations to the injunction. 

                 It emerged yesterday that while Clear derives 
about $1.5
                 million a month in interconnect revenue from 
Telecom,
                 the flow in the other direction is very much in 
Telecom's
                 favour - some $73 million a year. 

                 Much of Telecom's submissions focused on the
                 meaning of the phrase "used by you on link 
connections
                 to the Telecom network," which Mr Williams 
argued
                 showed i4free was in breach of its 0867 contract. 

                 He also argued that Telecom's actions could not be
                 anti-competitive because it was acting to protect 
its
                 network, stopping customers who were not 
meeting
                 their contractual obligations, and removing 
unnecessary
                 costs - just as any company in a competitive
                 environment would.

- Price pact hinders
                 access to internet

                 12.04.2000 - By RICHARD BRADDELL 

                 "It's dance-around-the-maypole time for me," the
                 previous Government's communications minister,
                 Maurice Williamson, enthused when Telecom and 
Clear
                 announced they had agreed on principles for
                 interconnection late in 1995. 

                 If unedifying, the spectacle of a Morris-dancing 
Mr
                 Williamson is nothing as awful as the unequal and
                 deeply flawed agreement finalised in March 1996 
that is
                 the father of the dispute between Telecom and 
internet
                 aspirant i4free. 

                 To understand why it was so bad calls for 
examination
                 of its pricing structure. The basic principle of
                 interconnection is that the telephone company 
which
                 delivers a call to another network pays the 
recipient to
                 complete it. So if Clear delivers a call to Telecom, 
it
                 pays the latter, and vice versa. 

                 Calls between two local networks might be 
expected to
                 roughly balance out. But even if they do, the 
present
                 interconnection agreements leave Telecom well 
ahead. 

                 In the first year, Telecom is paid twice as much 
per
                 minute of each call delivered as it pays the new 
entrant.
                 And it is only in the fifth and final year, in Clear's 
case,
                 that the amounts are equal. Clear and Telecom 
would
                 now pay each other 2c a minute on peaktime calls. 

                 But the agreements also give Telecom another 1c a
                 minute, apparently to cover its Kiwi share 
obligation to
                 operate in remote and unprofitable localities. 

                 One consequence is that, because new entrants
                 effectively pay Telecom three times more at the 
outset
                 than they get for the same service, they have every
                 reason to take time getting into business until the
                 revenue streams move closer to parity. 

                 And if the interconnection environment has been a
                 dampener on competition, it has also ensured that 
the
                 industry remains as fractious as ever. 

                 Within months of signing, Telecom and Clear 
were
                 again at each other's throats in a dispute over
                 non-payment. It will take years to resolve and will 
be
                 decided on the application of obscure economic
                 principles to competition law. 

                 The latest row between Telecom, i4free and Clear 
is
                 more straightforward. It will turn on the 
effectiveness of
                 two contracts - Clear's number portability and
                 interconnection agreements with Telecom - and 
their
                 ability to circumvent Telecom's unilaterally 
imposed
                 0867 regime, which would deprive Clear of
                 interconnection revenue on internet calls. 

                 Clear seems to be on strong ground. The trouble is 
that
                 the number-portability arrangements it has 
invoked are
                 very network inefficient and Telecom's cry that 
they
                 could have serious consequences to its network 
may
                 not be ill-founded. 

                 For all that, if i4free and Clear win, the problems 
are
                 largely of Telecom's making and it does not 
deserve to
                 be let off the hook easily.



                 Joy and anger greet tariff freeze

                 12.04.2000 - 

                 WELLINGTON - Manufacturers have welcomed 
the
                 Government's decision to freeze tariffs for five 
years, but
                 farmers are unhappy. 

                 Bruce Goldsworthy, of the Employers and
                 Manufacturers Association (Northern), said New
                 Zealand's "headlong pursuit" of free trade over the 
past
                 decade had gone too far. 

                 "It was so rapid it took us far ahead of our trading
                 partners, many of whom are reluctant to honour 
their
                 commitments to reduce barriers to trade, whether 
tariffs
                 or other one-sided restrictions. 

                 "Our market is one of the most open in the world, 
and
                 as we have little to offer overseas trade partners 
we have
                 lost the power to negotiate better reciprocal access 
for
                 our goods." 

                 Acting Commerce Minister Trevor Mallard said 
the tariff
                 freeze, confirmed on Monday, would protect jobs 
and
                 was in line with the tariff schedules of New 
Zealand's
                 major trading partners. 

                 Tariffs on clothing and footwear had been due to 
drop
                 from 19 to 15 per cent, while falls of 2 percentage 
points
                 had been scheduled for whiteware, paper products,
                 plastics, prepared foods, furniture and carpets. 

                 "We do not see any point in New Zealand leading 
the
                 world in this way," said Mr Mallard. "We will 
consider
                 tariff changes where there are clear benefits to 
New
                 Zealand." 

                 The decision meant there would be no more 
unilateral
                 cuts, but did not prevent limited cuts as part of free
                 trade agreements with other countries. Such a deal 
is
                 being negotiated with Singapore. 

                 But Opposition trade spokesman John Luxton said 
it
                 would now be more difficult to meet Apec's Bogor
                 commitment to have no tariffs by 2010. 

                 The decision has angered farmers. Federated 
Farmers
                 vice-president Tom Lambie described it as another 
blow
                 to the competitiveness of the export sector and a 
blow
                 for consumers, who could have expected annual
                 household savings of $1000 from the complete 
removal
                 of tariffs. 

                 "In effect, the Government is telling existing 
businesses
                 that they are going to be taxed at higher levels than 
was
                 previously planned in order to fund industry 
development
                 and employment elsewhere."


                 Lenesca Morrow plans to break into the US 
cosmetics market. Herald
                 Picture / Martin Sykes

                 Chemist tackles the beauty giants

                 12.04.2000 - By LIBBY MIDDLEBROOK 

                 A New Zealand company is tackling the giants of 
the
                 cosmetics industry with a new range of skincare
                 products formulated, developed and branded by a
                 26-year-old Auckland woman. 

                 Lenesca Morrow, a qualified chemist, has 
developed
                 more than 40 skincare treatments. 

                 After thousands of trials - and the complete loss of 
her
                 social life - she has received a $300,000 order 
from a
                 Rotorua distributor for her Rave spa therapy 
skincare
                 treatments, cementing her future in the competitive
                 cosmetics industry. 

                 "I couldn't quit now even if I wanted to," said Ms 
Morrow,
                 who has borrowed more than $100,000 from her 
parents
                 and the bank to pay for her business venture. 

                 "A lot of old-style cosmetics companies like 
Elizabeth
                 Arden are doing a lot of advertising to push their
                 products, so we're going to have to be pretty smart
                 about how we do things." 

                 Ms Morrow has delayed plans for a lipstick range
                 because of high start-up costs, but says she will 
spend
                 at least $20,000 on advertising this year to 
promote her
                 products. 

                 She has designed her own logos, advertising and
                 packaging to cut costs. 

                 But income from her low-priced cosmetics 
company, Y2
                 Cosmetic Corporation - due to be launched soon - 
will
                 pay for advertising and promotions for her second
                 company, Rave Cosmetics. 

                 Ms Morrow hopes to appoint an Australian-based
                 distributor soon, and expand into the United States
                 during the next five years.



                 12.04.2000 - 

                 WELLINGTON - Commodity prices softened in 
March
                 after five months of steady gains, as lamb, butter 
and
                 aluminium prices fell. 

                 ANZ Bank, which measures prices in world and 
New
                 Zealand dollar terms each month, yesterday said 
its
                 world commodity price index fell a provisional 0.7 
per
                 cent in March. 

                 The index that tracks prices in kiwi dollar terms 
fell 0.9
                 per cent. 

                 "This easing follows five months of significant ...
                 improvement. The ANZ world commodity price 
index
                 stands 11.8 per cent higher than in March 1999," 
the
                 bank said. 

                 The bank also revised up its February world price 
index,
                 citing an increase in fish prices. 

                 Prices in New Zealand dollar terms hit a record in
                 February after the kiwi dollar started sliding. The
                 currency began the year at around 52.5USc and 
had
                 slumped to 49.12c by the end of January. 

                 It has recently recovered on positive economic 
signals
                 and Standard and Poor's decision to reaffirm New
                 Zealand's credit rating rather than downgrade as
                 expected. The kiwi closed locally at 49.8USc
                 yesterday. 

                 ANZ said the March price dip in kiwi dollar terms
                 reflected this slight appreciation of the New 
Zealand
                 dollar against its key trading partners. 

                 The Trade Weighted Index, which measures the 
kiwi's
                 value against main currencies, was at 54.97 around 
5
                 pm yesterday from 53.51 at the start of March. 

                 The weaker the kiwi, the higher the payments to
                 exporters when foreign currency earnings are 
converted.

                 However, the bank said the New Zealand dollar 
index
                 was still at historically high levels and was 20.9 
per cent
                 above its level in March 1999. 

                 "Significant falls in the price of aluminium, lamb 
and
                 butter were behind the decline in the commodity 
price
                 index. Wool prices also fell slightly," ANZ said. 

                 Prices for most other commodities were stable,
                 although apple prices were substantially higher 
and beef
                 prices were also firmer.



                 12.04.2000 - By LIBBY MIDDLEBROOK 

                 Seafood companies are likely to earn more in 
European
                 markets this year after a reduction in tariffs on 
frozen
                 hoki imports. 

                 European fisheries ministers this week agreed to 
lower
                 tariffs on 20,000 tonnes of frozen hoki imports 
from
                 around the world until the end of the year. 

                 New Zealand produces most of that hoki, and 
Seafood
                 Industry Council spokesman Alastair Macfarlane 
said
                 the country's annual $100 million hoki export 
business
                 would benefit by at least $4 million by 2002. 

                 "The European decision will significantly reduce 
the
                 costs of tariffs faced by New Zealand's growing 
seafood
                 trade to Europe," he said. 

                 "The European tariff quotas are a recognition that
                 Europe must import seafood to feed consumer 
demand.

                 "High tariffs only end up in high prices for 
consumers,
                 which is to no one's advantage." 

                 European officials are expected to further improve
                 access for seafood imports next year, cutting the 
duty
                 on hoki to about 3.5 per cent on unlimited 
quantities. 

                 Trade Minister Jim Sutton and Fisheries Minister 
Pete
                 Hodgson said the yearly negotiation of a tariff rate 
quota
                 would soon be a thing of the past. 

                 "Our industry will soon be able to export to the EU 
as
                 much as it can sell."



                 12.04.2000 - By RICHARD BRADDELL 

                 WELLINGTON - ACC Minister Michael Cullen 
has
                 closed the gate on any private sector insurers 
wanting
                 business under the accredited employers' scheme 
when
                 workplace accident insurance returns to an ACC
                 monopoly in July. 

                 "An important concept behind the scheme is that
                 employers will have responsibility for and a direct
                 financial interest in the safety of their own 
workplace,"
                 Dr Cullen said. 

                 "They must agree to have no other insurance 
covering
                 accidents, and they cannot reinsure or contract out 
of
                 their agreed responsibilities." 

                 ACC is to begin a national roadshow next week,
                 presenting "partnering programme briefings" to 
give
                 details of the new relationship between ACC and
                 employers. 

                 The accredited employers' scheme was approved 
by the
                 Cabinet this week. 

                 Dr Cullen said it would give employers a direct 
financial
                 interest in workplace safety and injury 
rehabilitation. 

                 Employers can choose between full self-cover or a
                 partnership discount plan. But while private 
insurers will
                 be excluded, scope exists for third party providers 
in
                 areas such as rehabilitation, if employers have 
personal
                 involvement in a claim's progress. To be eligible
                 employers must meet a list of qualifications 
including
                 having experience in managing occupational 
health and
                 safety.



                 12.04.2000 - By SIMON CARLAW 

                 Several political parties signalled last year that 
they
                 would repeal the Employment Contracts Act if 
elected. 

                 The issue became significant in the lead-up to the
                 election since it demonstrated a clear difference
                 between the policies of the Government of the 
time and
                 those of other parties. 

                 Since then, each side to the debate has rallied its
                 supporters. "Facts and figures" have been 
produced and
                 on occasions wholly emotive arguments have been
                 presented. Much of the resulting heat has centred 
on
                 such issues as employment, wage growth and
                 productivity. 

                 The Manufacturers Federation is not neutral on the
                 issue. We support retaining the act, primarily 
because
                 of the competitiveness it has delivered, which has 
in
                 turn enabled producers of goods and services to 
survive
                 in a small and fragile open economy on the edge of 
a
                 global marketplace. 

                 It is not, however, my intention to present the case 
for
                 improving, not changing, an effective framework. 
Rather,
                 it is important to establish facts on which an 
informed
                 and reasoned debate can proceed. 

                 The figures I draw on here are from Statistics New
                 Zealand data. 

                 A considerable amount of the argument has 
focused on
                 whether the act has grown job numbers or whether 
it
                 has led to greater unemployment. I would defy 
anyone
                 to justify a simplistic yes or no answer to that 
question.
                 Employment growth is a product of several 
interrelated
                 factors such as monetary and fiscal policy settings 
and
                 broader economic reforms, rather than any one
                 particular factor, such as the act. 

                 Facts show that between the end of 1991 (after the 
act
                 became law as opposed to when the National
                 Government took office towards the end of 1990) 
and
                 the end of 1999, total employment grew by 21.8 
per
                 cent. Full-time employment grew by 19.4 per cent 
and
                 part-time employment grew by 30.7 per cent. 

                 Between 1985 (when the Labour Force Survey 
was first
                 introduced) and December 1991 (just after the act
                 became law) total employment declined by 6.8 per 
cent.
                 Over the same period full-time employment 
declined by
                 12 per cent and part-time employment increased 
19.6
                 per cent. 

                 The economic climate helped job growth after 
1991.
                 Equally, before 1991 full-time employment was on 
the
                 decline, while part-time employment increased
                 significantly. 

                 The reverse side of the coin cannot show that the 
act
                 contributed to a rise in unemployment or a 
shrinking of
                 the workforce. 

                 Between 1985 and 1991, unemployment rose by a
                 staggering 186.3 per cent. Between 1991 and 1999 
it
                 declined by 42.4 per cent. This was achieved along 
with
                 an increase in the participation rate (the percentage 
of
                 the working-age population in employment) and 
despite
                 a growth in the working-age population. 

                 It has been suggested the act has led to a decline in
                 the quality of employment. 

                 The same statistics suggest otherwise. The greatest
                 growth in part-time work occurred over the period 
from
                 1985 to 1991, not after the introduction of the act. 

                 The growth in this area since 1991 can be 
attributed at
                 least in part to the higher number of students 
staying at
                 school or beginning tertiary studies. Surely this is
                 desirable? 

                 Some say the act has enabled a fall in real wages - 
it
                 has not. Overall nominal wage growth has 
matched the
                 growth in consumer price inflation over the period 
the
                 act has been in force. The statistics used to 
measure
                 wage growth record the pre-tax rate and therefore
                 neither reflect the positive impact on take-home 
pay of
                 changes in effective tax rates over this period, nor 
the
                 impact of the 1995 and 1998 tax cuts. 

                 What we have seen is wage differentiation 
between the
                 skilled and unskilled. This is not due to the act. It
                 reflects a greater demand for those with specific 
skills,
                 and the real issue perhaps is how to increase skill
                 levels in the work force. 

                 Has New Zealand's productivity declined 
compared to
                 that of Australia as a result of the act? Again, it is
                 simplistic to attribute a lack of productivity to one 
piece
                 of legislation. Monetary policy, the broader 
economic
                 reforms and improved competitiveness also have 
an
                 impact. 

                 Also, productivity data quoted in the media is 
flawed for
                 a number of reasons. The data is unable to reflect 
the
                 major restructuring which has taken place in the
                 manufacturing sector as import protection has been
                 stripped away. 

                 A further factor that has distorted productivity 
figures for
                 the 1990s is growth in activity such as marketing. 
Such
                 activity is labour-intensive, and reduces 
productivity
                 statistics, but it also creates employment and
                 increases our global competitiveness. These 
factors
                 have served to under-represent the true level of
                 productivity by at least 1 per cent a year. 

                 Using the measures of employment and
                 competitiveness, Australia fares much worse, with 
its
                 higher unemployment rate and a comparatively 
poorer
                 performing manufacturing sector. 

                 The figures speak for themselves. The act is not 
the
                 bogyman some would have us believe. 

                 Nor, for that matter, is it possible to lay the 
economic
                 successes of the 1990s at the door of the act alone. 

                 On balance, it needs to be seen as a critical 
element of
                 a broad package of economic measures which 
have led
                 to increased employment and greater 
competitiveness. 

                 It follows that the legislation intended to replace 
the act
                 must be judged on its ability to make a similar, if 
not
                 significantly greater contribution in these areas. 

                 * Simon Carlaw is the chief executive of the
                 Manufacturers Federation.



                 Cool head balances e-hype

                 12.04.2000 - By KARYN SCHERER 

                 At the age of 35, Matthew Darby knows he is seen 
by
                 some as too young to head a publicly listed 
company. 

                 But in the so-called new economy, when eager 
young
                 things with dollar signs in their eyes dream of 
retiring at
                 40, Mr Darby could also be seen as past his best-
by
                 date. 

                 So it is refreshing to see the Christchurch-based 
head
                 of fledgling technology company EstarOnline 
show a
                 healthy scepticism for both the mania and disdain 
that
                 surrounds technology stocks around the world. 

                 "One of the big things with the US over the last 
three
                 years is the e-commerce thing has been hyped up
                 because of the opportunity," he concedes. 

                 "The opportunity hasn't gone away, it's just that 
there's
                 been some silly floats, that's the reality - people 
are
                 throwing their money at ridiculous ideas." 

                 Some people might question what makes 
EstarOnline
                 any different. 

                 Founded by Mr Darby and a couple of close 
friends just
                 18 months ago, the company's main business 
activity is
                 an internet-based CD store called CDstar which so 
far
                 has captured less than 1 per cent of the $128 
million
                 music market in this country. 

                 Set up with just $1.6 million of capital, the 
company is
                 now seeking another $10 million from investors, 
which
                 could see it list on the stock exchange just after 
Easter.
                 It does not plan to make a profit until 2004. 

                 While Mr Darby concedes that sales so far are 
tiny, he
                 stresses that he and his friends have big plans. 

                 They also have some expert help, with a board
                 hand-picked by Deutsche Bank, including the 
former
                 head of IBM in New Zealand, Basil Logan, and 
the
                 general manager of Telecom's mobile phone 
business,
                 Lorraine Witten. 

                 At the end of last year, CDstar expanded into 
Australia.
                 It plans to launch in Canada next month and is also
                 eyeing Asia. 

                 Mr Darby admits the company has some catching 
up to
                 do. 

                 Between September and December last year, it 
notched
                 up just $100,000 worth of sales. Its two major
                 competitors in Australia - ChaosMusic and Sanity 
-
                 managed $2.5 million worth of online sales 
between
                 them over the same period. 

                 Most of the money EstarOnline hopes to raise 
from
                 investors will be spent on marketing, mainly in
                 Australia. 

                 Undeterred by the Tourism Board fiasco, it has
                 appointed Saatchi & Saatchi as its global 
advertising
                 agency - a decision Mr Darby admits was swayed 
by
                 the fact that New Zealanders Kevin Roberts and 
Peter
                 Cullinane hold key positions within the agency. 

                 Nevertheless, Mr Darby's biggest fear is that the
                 company will get labelled as a CD retailer. 

                 In fact its biggest potential, he believes, is likely to 
be
                 its back-end system, including proprietary 
software
                 designed to handle vast amounts of goods. 

                 The company is also keen to spread its wings in 
other
                 technology areas, but he is unable to talk about any
                 further deals at this stage because of stock 
exchange
                 regulations intended to protect investors against
                 unsubstantiated hype. 

                 Instead, Mr Darby stresses the company's low
                 overheads, which he believes compare favourably 
to its
                 international competitors. 

                 In fact, EstarOnline's operational costs are 
currently just
                 over $1 million a year - a sum Mr Darby insists is 
frugal
                 given the scale of its ambitions. 

                 "The good thing about our marketing costs is 
they're not
                 fixed costs like rentals and staff, so over time our
                 marketing costs will come back in relation to sales.
                 That's the huge value of the internet." 

                 In almost the same breath, he concedes that
                 internet-based retailers will not always be able to
                 compete on price. He agrees that in the United 
States,
                 price is already starting to become less of an issue. 

                 "Price is a motivator at the moment because that's 
the
                 way that people perceive the internet - as cheap. 
It's
                 not. It's not cheap to set up and operate and it's not
                 cheap to run and it should not be cheap to buy. It
                 should be convenient and competitive and that's 
what
                 our aim is." 

                 One point CDstar is likely to emphasise heavily in 
its
                 advertising is its ability to deliver faster than many 
of its
                 competitors. Because it has local supply contracts, 
it is
                 generally able to deliver its products within four 
days.
                 Because most of its rivals use US-based contract
                 fulfilment companies, delivery can take up to three
                 weeks. 

                 While CDstar can offer only the same range of 
CDs as
                 local stores, compared to the much bigger range
                 available in the US, Mr Darby is convinced it's the 
right
                 strategy. 

                 Not only does it give CDstar an advantage over its
                 competitors, it could also prove a bonus once GST 
is
                 introduced across the Tasman in July. 

                 At present, Sanity and Chaos customers generally
                 avoid paying a 20 per cent wholesale tax when 
their
                 CDs arrive in the country. 

                 But they may not be able to avoid GST - meaning 
both
                 companies will either have to put up their prices, 
or
                 absorb the difference by reducing their margins. 

                 Whether or not this proves to be the case, Mr 
Darby is
                 unconcerned by the fact that all three companies 
will be
                 fighting over what could eventually prove to be 
less than
                 10 per cent of the total music market. 

                 "With growth of 20 per cent a year in that market, 
there
                 is room for three players to compete quite 
happily." 

                 While CDstar is seeking a compliance listing on 
the
                 Australian stock exchange, it hopes to keep its 
roots on
                 this side of the Tasman. 

                 He points to hugely successful companies such as
                 Jade and Cardinal as evidence that Christchurch is 
as a
                 good a home as any in the fast-moving world of
                 technology development. 

                 "We are a very clever country and here's a real
                 opportunity to pool our resources and take things 
to the
                 world," he enthuses. "It's so exciting - I believe 
that this
                 is New Zealand's new economy. There's so much 
going
                 on in New Zealand. It could easily be the major 
sector
                 for us but the biggest problem we have is that
                 e-commerce is so new that no one can really form 
an
                 opinion on it yet."



                 12.04.2000 - By BRIAN FALLOW 

                 WELLINGTON - Opposition revenue 
spokeswoman
                 Annabel Young has set up a Website for people 
who
                 want to talk tax. 

                 The Tax Think Tank site is intended to be more of 
a
                 sounding board than a soap box. 

                 The aim, Ms Young said, was to provide a 
mechanism
                 for feedback from tax practitioners and taxpayers 
on tax
                 policy legislation coming before the House. 

                 "It is a way of saying to tax practitioners, 
'Someone
                 says this is a concern. Is it a concern to the rest of
                 you'?" Ms Young said. Contributors can ask for 
their
                 names not to be used. 

                 It would also provide some opportunity for input 
into the
                 formative stages of National's tax policy. 

                 "We need to ask: 'What do you think if we went 
down
                 this line? What are the consequences we might not
                 have thought of'?" 

                 Designing a robust tax system that would still 
work in
                 10 or 20 years' time would require facing up to the
                 impact of globalisation and trade via the internet, 
Ms
                 Young said. 

                 Among the site's links is one to the Institute of
                 Geological and Nuclear Sciences - "so that people 
can
                 check whether that was a tax bombshell or a real
                 earthquake."



                 12.04.2000 - By ROB O'NEILL 

                 Three New Zealand internet innovators have met
                 success in international markets, winning export 
dollars
                 and promises of more direct foreign investment. 

                 Ericsson closed a $6 million deal with Telecom 
Poland
                 for its HiS (Home Internet Solution) technology,
                 developed in Napier. HiS exports topped $40 
million in
                 the past year. 

                 "The revenue earned on this innovation allows us 
to
                 continue investing in further product and service
                 development," said Brian Phillips, Ericsson's New
                 Zealand solutions manager. 

                 Ericsson's head office in Sweden funded the
                 development of HiS and may now look to further 
its New
                 Zealand investment. Mr Phillips said HiS had been
                 tested in a number of countries and significant 
business
                 was expected. 

                 It provides PC users access to the internet and
                 telephones simultaneously using one line by taking 
data
                 traffic off the voice network. 

                 Although not currently available in New Zealand, 
HiS
                 can run on existing telephone lines, at around four 
times
                 the speed of a typical modem. 

                 The internet connection is always on, so the user 
does
                 not have to dial up for access. The Napier team has
                 gone on to the second phase of HiS design. 

                 Mr Phillips said Telecom had tested HiS and was 
taking
                 a further look at it. It was also being tested in 
Malaysia
                 and sales were pending there. 

                 Ericsson's presence in Napier is the result of it 
buying
                 Hatfield Industries in 1983. 

                 Christchurch software developers South Pacific
                 Information Services and Phasis have been 
successful
                 with their TurboPress web-publishing product. A
                 Singaporean publisher is the first buyer of the
                 application, developed with the assistance of
                 Technology New Zealand. 

                 The two development companies have formed a 
joint
                 venture, WebCentre, which has been floated 
privately to
                 market TurboPress. 

                 Christchurch's Pulse Data International has allied 
with
                 Microsoft to build the world's first Windows CE 
portable
                 computer for the blind.



                 Raid ups CanWest's share of NZ media

                 11.05.2000 - By KARYN SCHERER 

                 Media group CanWest Global Communications has
                 made a further foray into New Zealand's rapidly
                 consolidating radio industry, snapping up a 19.9 per
                 cent stake in the country's second-largest radio group. 

                 The Canadian company, which already owns TV3, TV4
                 and the More FM radio network, confirmed yesterday
                 that it had paid just under $20 million for a slice of
                 RadioWorks, formerly known as Radio Pacific. 

                 The stake was bought off-market from fund managers
                 NZ Funds Management and Arcus Investment
                 Management, formerly known as Spicers. 

                 CanWest has indicated it is keen to spend another $25
                 million to get a controlling interest of 44.8 per cent and
                 will make a stand in the market today and tomorrow,
                 offering $8.25 a share. 

                 The lightning raid yesterday appeared to catch
                 RadioWorks by surprise, although the industry has for
                 some time regarded the move as inevitable. 

                 RadioWorks' strength is in the provinces, while the More
                 FM Group has concentrated on the four main centres. 

                 RadioWorks' board revealed yesterday that the raid
                 came just one day after it decided to approach
                 CanWest about a possible merger. 

                 It also indicated it believed CanWest's offer was too low,
                 even though it represents a 23 per cent premium on
                 RadioWorks' previous closing price of $6.70. 

                 To back its assertions, it released preliminary results
                 showing its bottom-line profit for the year ending March
                 was likely to be up 41 per cent on last year. It also
                 noted that the company was budgeting for another
                 strong performance over the next year. 

                 The move comes as radio managers are due to meet in
                 Christchurch tomorrow for the industry's annual
                 conference, and is widely seen as an attempt by
                 CanWest to strengthen its position ahead of the
                 possible release of new FM frequencies next year. 

                 While CanWest played down the possibility of
                 cost-cutting, RadioWorks had no such qualms,
                 revealing its board had already identified up to $5 million
                 worth of possible savings. 

                 RadioWorks chairman Derek Lowe was reluctant to
                 comment further, saying he needed to talk to CanWest
                 about its plans. 

                 "[CanWest Radio chief executive Brent Impey] may
                 have one strategy and our management may have
                 another, so those are things that now have to be worked
                 through." 

                 Mr Lowe said he had yet to decide whether to reduce
                 his 5 per cent stake in the company, which he has been
                 boosting over the past two years. 

                 The Totalisator Agency Board, which was previously
                 RadioWorks' single largest shareholder, plans to meet
                 today to decide what to do. 

                 The purchase is CanWest's third major buy in New
                 Zealand since it stepped in to rescue the ailing TV3 in
                 1991, and is subject to approval by the Overseas
                 Investment Commission. 

                 It bought the More FM group, which includes the More
                 FM, Breeze and Channel Z brands, in 1997. 

                 Adding RadioWorks to its stable will give it around 42
                 per cent of the radio advertising market. 

                 The country's largest radio group, The Radio Network,
                 which is part-owned by Herald publisher Wilson &
                 Horton, is believed to have just over 50 per cent. 

                 Radio Network chief executive Kevin Malone said the
                 deal came as no surprise. 

                 "It's just a continuation of the deregulation that started
                 in this country 10 years ago ... It doesn't change a
                 whole lot what we do on the air and in the street. 

                 "It actually narrows our focus. Now there's two owners
                 instead of three, it means we only have to keep our eye
                 on one other person."



                 11.05.2000 - By GEOFF SENESCALL 

                 The New Zealand Stock Exchange is believed to be
                 holding merger talks with exchanges in Singapore and
                 Canada as well as Australia. 

                 The decision to investigate alliance opportunities is
                 understood to have followed a report by Boston
                 Consulting on options for the New Zealand exchange. 

                 Helping fuel speculation about the exchange's intentions
                 was the recent visit to New Zealand of the chairman of
                 the Australian Stock Exchange. 

                 There are also suggestions that a much wider game is
                 being played. Just last week, the Frankfurt and London
                 stock exchanges announced they will merge and other
                 European exchanges say they are considering similar
                 action. 

                 Reports on Bloomberg suggest the Australian exchange
                 is seeking government approval to raise its ownership
                 restrictions so it can seek international alliances. It
                 apparently approached the London exchange prior to its
                 merger announcement. 

                 On the home front, the issue about the relevance of the
                 New Zealand market is continually debated. Highlighting
                 this was an announcement earlier this month of
                 migration to Australia of one of New Zealand's largest
                 corporates, Lion Nathan. 

                 The chairman of the NZSE, Eion Edgar, is keeping his
                 cards close to his chest. He declined to confirm who
                 the exchange was talking to other than there were three
                 parties, one of which was Australia. 

                 Any deal was months away, he said. "I would like to
                 think we will be well advanced by the end of the year." 

                 Mr Edgar stressed that the stock exchange board could
                 only make recommendations. 

                 "At the end of the day the members will decide if it is
                 right or wrong. It will only work if we can show it can add
                 value." 

                 Mr Edgar said there was an enormous number of issues
                 to work through before anything could be done,
                 particularly in areas such as takeover legislation and
                 corporate law. 

                 The exchange would act only with the support of
                 government, he said. 

                 New Zealand was a low-cost operation - around that of
                 Australia, Mr Edgar said.. 

                 So any deal would have to have compensating benefits.
                 "You would only do this if you can add value. 

                 "If you can increase the capital formation and the
                 liquidity of the New Zealand market then it makes
                 sense." 

                 News that the NZSE is talking to other exchanges has
                 caught a number of its members off guard. While talk of
                 merging with another exchange has been an ongoing
                 issue over the past four or five years, only a select few
                 were aware that formal talks had commenced. 

                 As of June 1999, the exchange had 273 members
                 across 40 broking houses.

Balancing act fails to wow
                 audience

                 11.05.2000 - By GREG ANSLEY 

                 You don't often hear Australian Prime Minister John
                 Howard talking about sex appeal. But this is what
                 Tuesday night's Budget was supposed to have had in
                 spades, stunning the doubters and taking their minds off
                 a surplus that danced out from behind the smoke and
                 mirrors. 

                 It was all in the timing. 

                 "Sex appeal is often tied up with surprise," Mr Howard
                 said yesterday, "so let's understand that." 

                 Unhappily for Mr Howard, the surprise was sprung on
                 the Government, a week out from a Budget designed to
                 cruise Australia through the GST and a slowing
                 economy into an election next year. 

                 Someone leaked the news that the Budget surplus
                 would be $A2 billion-odd higher than the $A500 million
                 starting point announced by Treasury last November. 

                 This in turn would allow Treasurer Peter Costello to
                 dump the Timor tax, a one-off, 12-month surcharge for
                 Australians earning $A50,000 and above, to have been
                 imposed from July to cover the cost of peacekeeping
                 operations in East Timor. 

                 Goodbye budgetary sex appeal - and hello to an entirely
                 new issue for the Government. 

                 For all the other measures contained in Mr Costello's
                 fifth Budget, nothing has so absorbed critics and
                 commentators as the Treasurer's surplus. 

                 With tax cuts associated with the GST sucking $A12
                 billion from revenues, plus serious expected shortfalls in
                 dividends from Telstra and the Reserve Bank, there was
                 little in the normal run of management that Mr Costello
                 could do to produce a sizeable surplus short of some
                 extremely unpopular measures. 

                 The Treasurer's salvation came in February, when the
                 auction of a comparatively small chunk of spectrum
                 raised a staggering $A1.3 billion, and a subsequent
                 auction in Britain exceeded predictions tenfold. 

                 But commentators rapidly decided that spectrum was a
                 state asset no different to Telstra or the like, and should
                 not be added to the bottom line. The surplus was thus
                 an illusion. Mr Costello, they said, had plucked it from
                 thin air. 

                 Yesterday, Mr Costello and Mr Howard went on the
                 offensive. 

                 Auctioning spectrum, they argued, was merely granting
                 licences to broadcast, a Government function whose
                 proceeds had been added to Budget bottom lines since
                 radio began regular transmission in 1923. 

                 Under IMF and Australian accounting standards, for
                 example, the sale of a Government building cannot be
                 included, but the rent paid on it can, because it is a
                 non-financial asset. Mr Costello said that the same
                 applied to spectrum: it was in essence rent, and
                 therefore fair game. 

                 Australia has yet to be convinced.



                 11.05.2000 - By BRIAN FALLOW 

                 WELLINGTON - The Law Society has thrown its weight
                 behind criticism of the Employment Relations Bill's
                 definition of employee. 

                 The definition is extremely wide and will cover almost all
                 independent contractors, even those who are truly
                 independent and in business on their own account, the
                 society says in its submission on the bill. 

                 By implication, it also takes issue with Labour Minister
                 Margaret Wilson's contention that under the bill no one
                 is forced to change their employment status, pointing to
                 provisions for class actions on employment status. 

                 And it says that if the bill proceeds as it stands,
                 someone could be an independent contractor for tax
                 purposes while entitled to the protections of an
                 employee. 

                 This lack of consistency is likely to cause uncertainty
                 and an increase in litigation. 

                 The Law Society argues that widening the ability to
                 classify independent contractors as employees creates
                 a risk that businesses will no longer choose to engage
                 independent contractors, denying both firms and
                 workers the opportunity to have flexibility in their work
                 arrangements. 

                 Ms Wilson said in Parliament that it was not unknown
                 for lawyers to disagree and she did not agree with the
                 Law Society's interpretation. 

                 The bill's definition of an employee was considerably
                 narrower than the common law definition, she said. 

                 Ms Wilson also implied that the legal profession had an
                 interest in drumming up work for itself. 

                 Clause 154 of the bill allows a union, a labour inspector
                 or any member of a class of people to apply to the court
                 for a declaration as to whether that particular class of
                 people are employees under the bill. 

                 That is likely to introduce delays, the society argues,
                 and in the meantime parties will face uncertainty as to
                 what their rights and obligations are. 

                 It recommends a transitional period during which
                 existing independent contractor agreements will remain
                 valid. 

                 Employers should also be able to seek such
                 declarations. 

                 Ms Wilson said the clause " was intended to ensure
                 that people with few resources were not denied an
                 opportunity to have their employment status
                 determined. 

                 "The intention is they seek the assistance of the labour
                 inspectorate or union or an authorised representative to
                 assist them in getting a declaration as to their
                 employment status." 

                 The society says that the bill does not make clear how
                 the definition of employee will affect the Accident
                 Insurance Act or the Income Tax Act. 

                 "If the bill goes ahead in its current form the test
                 adopted by the Inland Revenue Department will be
                 clearly different from the tests set out in the bill, as the
                 latter specifically states that `less weight' must be given
                 to what is stated in the contract." 

                 The society says that to avoid uncertainty and
                 increased litigation the bill's definition of employee
                 should either be amended so that it is consistent with
                 tests the IRD uses, or the bill should clearly state how it
                 will affect the tax act and the Accident Insurance Act. 

                 Revenue Minister Michael Cullen reiterated on Tuesday
                 that contractors' tax status would not be directly
                 affected by the bill. 

                 "At a later date there may have to be some
                 consideration of whether there should be two definitions
                 of employee. But this would only be done after wide
                 consultation, with full consideration given to any tax
                 consequences." 

                 Looming tax law to stop employees avoiding the top tax
                 rate by diverting income to a company trust or
                 partnership was not an attempt by the Government to
                 bring more people into the employee group and deny
                 them deductions. Income-related deductions would not
                 be affected, Dr Cullen said.



                 11.05.2000 - By BRIAN FALLOW 

                 WELLINGTON - The Real Estate Institute has
                 welcomed Government assurances that real estate
                 salespeople will not have their employment status
                 changed by the Employment Relations Bill. 

                 Labour Minister Margaret Wilson, replying to a question
                 from National employment spokesman Max Bradford,
                 said real estate agents were covered by their own
                 legislation, which provides for them to expressly agree
                 with their employers to be independent contractors. 

                 "It is not the intent of the Employment Relations Bill to
                 over-ride this legislation or to stop real estate
                 salespeople from agreeing to be independent
                 contractors. 

                 "The appropriate measures will be recommended to the
                 select committee to reflect this intent," she said. 

                 A similar assurance has been given to sharemilkers,
                 who are covered by the Sharemilking Agreements Act. 

                 Ms Wilson said it was a general principle of statutory
                 interpretation that the specific over-rode the general. 

                 "If they are covered by a particular piece of legislation
                 then that is what would prevail in the circumstances. 

                 "But if people want that stated, it is not doing any
                 harm," she said. 

                 "We have already given Federated Farmers assurances
                 about that ages ago."



                 11.05.2000 - By RICHARD BRADDELL 

                 WELLINGTON - An electronic portal targeting $3 billion
                 a year in public sector buying expects to transact
                 business-to-business e-commerce as well, soon after
                 its launch in August. 

                 SupplyNet, which is half-owned by GSB Supplycorp
                 with the balance held by Quixel and Advantage Group,
                 aims to cut purchasing costs through an electronic
                 marketplace that matches public sector buyers with
                 their private sector suppliers. 

                 While government and local bodies buyers will be the
                 initial targets, private sector suppliers are expected to
                 begin using it for their own purchasing almost
                 immediately. 

                 SupplyNet will leverage GSB's expertise developed in
                 handling $750 million in annual public sector
                 procurement and will rely on the XML web document
                 language to enable suppliers to offer catalogues of
                 goods on the internet. 

                 GSB derives its name from the Government Supplies
                 Board, which was taken private in 1992 and is now
                 owned by a group of private investors. 

                 The Eric Watson-related internet investment company
                 Quixel Capital will own 30 per cent and Advantage
                 Group, with 20 per cent, will provide web solutions and
                 technical support. 

                 The chief executive of both Advantage and Quixel, Greg
                 Cross, said SupplyNet would be one of the first portals
                 in the world to offer business-to-government
                 e-commerce. 

                 "The public sector in New Zealand, as in every other
                 country, is responding to the urgent need to adopt
                 electronic procurement models in order to cut costs and
                 save taxpayer funds," he said. 

                 GSB claims to bring together more than 2000 buying
                 organisations and 1000 suppliers, most of which are
                 small and medium-sized enterprises. 

                 It has 900 ongoing supply contracts. 

                 However, the new venture's success will owe much to
                 its ability to generate other revenue streams. 

                 In keeping with Metcalfe's law, a maxim which states
                 that the value of a network rises according to the square
                 of its users, it will seek to bring other users and
                 services on board. 

                 Profit margins, which will be based on transaction
                 charges, may not be huge. 

                 GSB currently charges between 0.5 and 1 per cent on
                 its $750 million in transactions. 

                 Rates have not been disclosed for the internet portal,
                 but it is targeting recurring revenue streams from
                 transactions, commissions generated from auctions and
                 income from subscriptions from organisations not
                 wanting to invest in their own hardware. 

                 The platform is supplied by Silicon Valley-based
                 Commerce One, which has developed the system in
                 conjunction with Microsoft.



                 11.05.2000 - By FIONA ROTHERHAM 

                 The Major Electricity Users' Group says any dramatic
                 increase in electricity prices this weekend during the
                 planned shutdown of the Maui field will be an abuse of
                 market power by generators not reliant on gas. 

                 The 70-hour shutdown of the Maui pipeline starts early
                 tomorrow morning, forcing the shutdown of four gas-fired
                 generation plants. 

                 At this stage, it appears there will be sufficient
                 electricity generated to "scrape through" the outage.
                 But there is little spare capacity above estimated
                 demand and a risk of North Island power cuts if any
                 failure occurs. 

                 Transpower, operator of the national grid, can order lines
                 companies to shed load if required. 

                 Some generators have predicted the spot market price
                 for electricity will leap. 

                 Electricity is traded by each generator bidding prices
                 into the wholesale market on a half-hourly basis. The
                 spot market reflects what price the buyers and sellers
                 are prepared to pay at various points nationwide. Of
                 late, these prices have been volatile. 

                 Major Users Group chairman Terrence Currie said
                 consumers did not expect to be exploited by their
                 energy suppliers bidding opportunist prices into the
                 price-setting process. 

                 The association's members account for up to 28 per
                 cent of total electricity consumption. 

                 The cost for most of these big users is directly linked to
                 the spot price. 

                 Some will have at least part of their demand covered by
                 forward hedge contracts while others have contracts
                 allowing them to shed load once alerted that the spot
                 price has gone above a certain level. 

                 Mr Currie said some domestic consumers had signed
                 contracts with new suppliers where their monthly bill
                 was directly linked to the spot price plus the retailer's
                 margin. 




                 11.05.2000 - By LIBBY MIDDLEBROOK 

                 New Zealand's largest fishing company, Sealord, has
                 expanded its global fisheries network after investing
                 millions in a new Argentine deep-sea fishing company. 

                 Sealord, based in Nelson, has signed a joint-venture
                 agreement with Argentine fishing company Pesel to
                 take advantage of the country's underdeveloped hoki
                 fishery. 

                 Sealord chief executive Phil Lough said the two
                 companies had set up a deep-sea fishing entity called
                 Yuken with around 150 staff and four vessels. 

                 The deal is understood to have cost Sealord $15 million.

                 Mr Lough said Pesel was an ideal partner as the
                 company had been active in the local fishery for
                 decades and could provide staff, vessels and five fishing
                 licences for the new venture. 

                 Pesel also wanted to take advantage of Sealord's
                 catching, handling and processing techniques for
                 deep-sea fish such as hoki. 

                 "It's [Argentina's] the missing pieces of the jigsaw in
                 terms of our global business," said Mr Lough. 

                 "It's just a logical move, it's so much our core
                 business." 

                 Sealord, which holds about 23 per cent of the New
                 Zealand fishing quota, also holds quota in Australia,
                 Namibia and Chile. 

                 Mr Lough said Sealord was encouraged to invest in the
                 Argentine fishing industry following a move by the
                 Government to sustainably manage its hoki fishery
                 under a quota system. 

                 The country's hake industry was recently crippled by a
                 reduction in the total allowable catch because of
                 unsustainable commercial fishing. 

                 Sealord staff will be moved to Argentina to train local
                 staff while Pesel and Sealord will jointly manage the
                 marketing of Yuken's production. 

                 Sealord is jointly owned by the Waitangi Fisheries
                 Commission and Brierley Investments. Brierley is trying
                 to sell its 50 per cent stake, although the Government
                 has rejected all overseas bids for Brierley's holding.



                 11.05.2000 - By GEOFF SENESCALL 

                 Guinness Peat Group's share price has remained in the
                 doldrums despite the company's attempt to breathe life
                 into the market with its new convertible notes. 

                 Yesterday its price closed at 131c despite the 161c
                 value placed on the notes. 

                 Brokers generally agree that the notes are good value
                 for shareholders. While GPG holders might not be yield
                 players, the share price is at a sufficent discount to
                 make the notes attractive. 

                 One of the problems with the issue, brokers say, is that
                 in true Sir Ron Brierley fashion the issue is complicated
                 and therefore difficult for shareholders to grasp. 

                 But time is running out. They have until next Tuesday to
                 decide. One GPG director, New Zealand boss Tony
                 Gibbs, is currently considering swapping some of his
                 holding into the new convertible loan notes. 

                 Mr Gibbs said: "This offer represents a genuine attempt
                 to provide value for shareholders given the share price is
                 depressed." 

                 Essentially GPG is making the offer - for up to 40 per
                 cent of its shares on issue - open to all shareholders.
                 Shareholders could swap up to 100 per cent of their
                 shares but anything over 40 per cent will depend on the
                 level of take up of the notes. 

                 With a 50p face value, the notes are equivalent to
                 NZ161c, which compares to yesterday's closing price of
                 131c. 

                 The notes have a five-year life. Every year holders can
                 either redeem 20 per cent of their notes for cash or
                 convert them back into shares at pre-determined prices.

                 The first tranche is convertible into shares at 50p (161c)
                 rising 5p (16c) every year. 

                 However, these prices are adjusted for any future
                 unannounced bonus issues or capital reconstructions. 

                 Brokers say this cash option gives downside protection
                 while the share conversion allows holders any upside in
                 the share price. 

                 If in a year the share price was 130c, note holders could
                 opt for the cash, 161c at today's exchange rate. 

                 If the price goes above 161c they can opt for shares. 

                 The notes will also be separately listed so holders can
                 exit them if they wish. However, brokers do say there is
                 a risk the notes may suffer from low liquidity 

                 Interest on the notes will be paid twice yearly, in June
                 and December. 

                 The note offer is also good for GPG, brokers say. Every
                 share that the company buys back at a discount to its
                 net asset value adds to that value. Brokers estimate
                 GPG's asset value to be around 200c.


                 falter

                 11.05.2000 - 

                 WELLINGTON - Aquaria 21's ability to continue
                 operating could be undermined if proposed asset sales
                 do not proceed as planned, the company's auditors say.

                 In their report on Aquaria 21's financial statements for
                 1999, auditors KPMG say: "If the proposed sale or an
                 alternative does not proceed or is significantly delayed
                 and the group and company may be unable to continue
                 in operational existence for the foreseeable future,
                 adjustments may have to be made to reflect the fact
                 that assets may need to be realised at amounts other
                 than those at which they are currently recorded . . . and
                 the group and company may have to provide for further
                 liabilities that may arise." 

                 Aquaria 21 director and company secretary Ron Lunken
                 said the company had a back-up deal in place. 

                 "We are negotiating with Oceanis directly so if this one
                 does fall over with Bliss ... we would just do it without
                 them [Bliss]." 

                 Mr Lunken also said that Aquaria had "a liability for
                 $US5 million due in June but that has been dealt with
                 since that audit report." Last week, Aquaria 21 revealed
                 the planned sale of its Shanghai aquarium to Australia's
                 Bliss had come unstuck. Aquaria 21 shares closed
                 down half a cent at 7.4 cents yesterday



                 11.05.2000 - 

                 WELLINGTON - ElderCare New Zealand has
                 conditionally agreed to buy 67 per cent of Ranworth
                 Healthcare, the country's largest brain injury
                 assessment and rehabilitation service provider. 

                 The deal, worth about $4 million, involves $2.8 million in
                 cash and three convertible notes totalling about $1.2
                 million. It is expected to be settled on May 25. 

                 A listed retirement home and healthcare provider,
                 ElderCare is 66 per cent owned by Auckland
                 entrepreneur Eric Watson's investment company Cullen
                 Investments. 

                 ElderCare chief executive Alan Clarke said the
                 acquisition fitted the company's strategy of acquiring
                 care-based operations with expansion opportunities.



                 11.05.2000 - By DITA DE BONI 

                 About the same time the gold glitter was being brushed
                 off the stage, and Michael Hurst was hanging up his
                 genie suit, creative directors in the advertising industry
                 were nursing hangovers and wondering in unison why
                 print ads had done so dismally at this year's Axis
                 awards. 

                 Of a total of just over 100 bronze, silver and gold awards
                 dished out on Monday night, only seven of those went
                 to pure print advertising campaigns. Five of that seven
                 were confined to one category - food, beverage and
                 lifestyle ads in magazines; one went to business
                 publication positioning and one to a magazine
                 campaign. 

                 Newspapers won no medals, and claimed only one
                 highly commended in the nine categories. Of the
                 awards for print ads, none were gold. 

                 Some in the industry say it is a case of simple TV
                 versus print snobbery by the judges; others say print
                 ads in New Zealand are simply not up to par. The fact
                 remains that in 20 years of Axis awards, print attempts
                 have almost never done well in the final round of judging.

                 Creative director at Mojo Partners, Lachlan McPherson,
                 says there is some truth to the idea that print is the
                 "poor cousin" of television advertising. 

                 "Creative people often overlook print in the clamour for
                 TV fame - it's that, `Look, Mum, I'm on tele' factor," he
                 says. 

                 Mojo entered print work on behalf of clients Coca-Cola
                 and Warner Music. Mr McPherson says despite the fact
                 his agency would have liked some higher form of
                 recognition, "we live by these kinds of decisions." 

                 "Our Coca-Cola [print work] did well in Australia so it's
                 really a case of different judging criteria, perhaps. 

                 "I would also say that last year, branding tended to be
                 left to television while print ads concentrated more on
                 retail messages, which are much harder to keep `clean'.

                 "You need to fit an expanded story and lots of offers in
                 [retail messages], whereas the ads that do the best in
                 shows tend to be very simple in concept." 

                 James Mok, joint creative director at Generator, says it
                 is hard to comment on the print awards at Axis without
                 it sounding like a case of sour grapes, but says his
                 observation would be that the judges were far too tough
                 on print and far too easy on television. 

                 "I was surprised at the degree to which print awards
                 were ignored - they didn't honour any. There were in fact
                 more awards given in the soundtrack category than all
                 of print put together - it's bizarre." 

                 Generator entered print awards from clients BMW, Sony
                 and Red Bull. Mr Mok says he was disappointed the
                 agency did not garner some metal. 

                 "Everyone feels like it's a kick up the bum. But people
                 who work in print shouldn't feel bad. 

                 "Yes, it's nice if your peers agree that you did great
                 work but at the end of the day, we're all striving to do
                 effective ads, and the Axis doesn't necessarily
                 recognise effectiveness." 

                 He says it could be that clients are giving creative
                 directors increasingly complex propositions. 

                 Meares Taine's Roy Meares, who is also the convener
                 of judges for Axis, proffers the view that New Zealand's
                 creative strength is in television. . 

                 "New Zealand was one of the first countries to get
                 complete coverage of television, and as a consequence,
                 television is used by almost all clients from large ones
                 to small. 

                 "It's the magic medium and we do well in it." 

                 Again, the issue of the glamour television is strong. 

                 Creative types tended to gravitate towards TV projects
                 because it was like making a movie. 

                 "Print has always been an incredibly weak category.
                 New Zealand is on the map for world class creative,
                 certainly, but those campaigns tend to be television
                 ones - Bugger, Dear John and Crunchie and the like." 

                 What does Mr Meares suggest would help the
                 situation? 

                 He offers the example of a "brilliant" typographer, Len
                 Cheeseman, who was hired at great expense by
                 Saatchi Wellington to improve the agency's abysmal
                 print work. 

                 "Len really lifted Saatchi's print offering by about 800 per
                 cent, and I would suggest maybe agencies should do
                 everything they can to attract top talent to their
                 agencies." 

                 In fact, Saatchi Wellington did not win an award this
                 year for print either (it did win a highly commended for
                 its New Zealand Post and Brasserie Flip print ads). 

                 But Mr Cheeseman did use his skills to win the agency
                 a gold for typography for the New Zealand Symphony
                 Orchestra's edgy electronic offering, The Riot of Spring. 

                 "My message to print creatives would be `don't be
                 discouraged'. If they really lift the game and produce
                 great print it will stand out ... well ... like doggies'
                 testicles."



                 11.05.2000 - By DITA DE BONI 

                 It seems there are two types of electricity consumers -
                 the apathetic and the confused. 

                 Confusion has come from the different names adopted
                 by electricity retailers and lines businesses in the
                 aftermath of the industry's fracture 18 months ago. If the
                 lack of self-motivated provider-changing is anything to
                 go by, apathy is affecting the remainder of energy
                 consumers, who still think they are paying their power
                 bill to the big Government agency that handles those
                 types of things. 

                 But the game of creating market share in electricity is
                 set to sizzle. One retailer that has decided to overhaul
                 its entire branding and marketing strategy for the fight is
                 Auckland stalwart Mercury Energy. 

                 The former Mercury Energy was divided into two
                 companies in the great electricity schism of 1998. The
                 lines business was sold to Vector, while Mercury
                 Energy retained the retail side of the business under the
                 new ownership of Waikato's Mighty River Power. 

                 Thankfully, one of the first things Mercury has decided
                 to do in its branding overhaul has been to simplify the
                 bills sent to consumers. They will now carry only the
                 name Mercury Energy which, research has shown, has
                 loyalty with the residential customer base. 

                 The Greek God Mercury with the lightning bolt has been
                 retained as a logo. It has been around since 1922 when
                 the company was part of the former Auckland Electric
                 Power Board (AEPB). 

                 "We had to think long and hard about keeping that
                 name, considering the baggage that Auckland's power
                 crisis gave to the name Mercury," said Mighty River
                 marketing and sales manager Angela Armstrong. 

                 But, she said, "research strongly supported sticking
                 with the name." 

                 The company only now feels ready to justify claims from
                 a new ad campaign after a year of no advertising. By
                 appropriately named Auckland agency Generator, the
                 ads outline five different "value-added" services the
                 retailer provides. 

                 Andrew Stone, managing director of Generator, said
                 many consumers of commodity products like electricity
                 did not think deeply about the services they used every
                 day, and had to be made to see utilities like any other
                 product. 

                 "The key to success in this type of marketing is, among
                 other things, to ensure the organisation delivers or
                 exceeds customer expectation." 

                 Mercury's competitors have turned up the heat in the
                 past year, soliciting Mercury clients through schools
                 and other community organisations. It has been
                 whispered that some salespeople are claiming certain
                 companies, including Mercury, no longer exist.
                 Naturally, all retailers emphatically deny doing so, but
                 there is no doubt the gloves are off and it is a "scramble
                 to get the high-end consumer," said retail general
                 manager John Foote. 

                 The company did not want to advertise its services until
                 it fixed long customer call waiting times and problems
                 with the new billing system, he said. 

                 He agreed the company's 270,000 customers were
                 often waiting long spells to be answered at the call
                 centre, but "we are now answering calls in under one
                 minute on average, and our call centre is operating at
                 full capacity." 

                 Both Mr Foote and Ms Armstrong agreed that the real
                 race between the energy retailers like TransAlta,
                 Contact, Genesis and Trustpower was not the actual
                 base price to customers but the added services each
                 provided. 



                 11.05.2000 - By DITA DE BONI 

                 Lion Breweries yesterday confirmed it would begin
                 production of Stella Artois in Newmarket shortly, with
                 the domestically brewed product to be available from
                 early next month. 

                 The brewer said the new business would mean few
                 changes to its production line, as its premises already
                 met the approval of Stella officials and was capable of
                 batch brewing the premium lager. 

                 Marketing director Lee Hill said Lion had decided to
                 brew locally because of the product's popularity, which
                 has grown 50 per cent in the past year. 

                 Mr Hill said another reason had been the beer's 6-8
                 week journey by boat from Belgium, where it currently
                 comes from. 

                 "As well as the journey time, we also had a lead time
                 for the product of up to 12 weeks. Now we have control
                 from start to finish. 

                 "The product will be the same, only fresher." 

                 Belgium-based Interbrew sent senior company officials
                 to brief the industry in Auckland, with chief marketing
                 officer and ex-New Zealander Paul Cooke saying only
                 four other countries have local brewing rights to the
                 product - Australia, Italy, Sweden and the UK. 

                 Key ingredients will continue to be sourced from
                 Belgium, including the Saaz hops and unique yeast. 

                 Competitor DB Breweries said on Monday that the move
                 by Lion to produce Stella locally was good news for the
                 local brewing industry and premium beer drinkers. 

                 DB invested more than $13m in 1994 to build a
                 Heineken fermentation facility to the requisite standard
                 in Auckland, importing "everything but the water."


                 Manufacturing giant Fisher & Paykel has done well as business
                 confidence has slid. Picture / Fotopress

                 F&P shines as profit jumps 194 per cent

                 09.06.2000 - By LIBBY MIDDLEBROOK 

                 Fisher & Paykel Industries, a mainstay of New Zealand
                 manufacturing, signalled yesterday that it was finally
                 delivering on its promises. 

                 The country's largest home appliance maker reported an
                 after-tax profit of $54.4 million for the year to March 31,
                 a 194 per cent improvement on last year's $18.5 million.

                 A market analyst said it was the first time for a number
                 of years that the Auckland-based company, which
                 operates whiteware, finance and healthcare businesses,
                 had actually delivered on its promise. 

                 "It's a nice, clean, quality result. It's one of the first
                 times during the past decade that they've delivered the
                 goods. 

                 "In recent years they've tended to disappoint the
                 market." 

                 Fisher's chief executive, Gary Paykel, said the
                 company's improved performance was largely driven by
                 a two-year restructuring programme, which reduced its
                 1998-99 result from $35.1 million to $16.6 million as a
                 result of abnormals. There were no abnormals this year.

                 He called the result terrific, and noted strong sales had
                 been recorded despite a fall in business confidence. 

                 The company's healthcare business had also made
                 strong market share gains in the United States, he said,
                 and its whiteware division was performing well due to
                 increased efficiencies. 

                 The company's new distribution business in regions
                 such as Europe was also minimising operating costs. 

                 "We're really pleased with the result. It has been driven
                 by our restructuring, bringing the company back to
                 healthcare, whiteware and finance, and divesting
                 ourselves of various non-core businesses." 

                 Fisher sold Cellnet and Panasonic in 1998. 

                 It produced an operating surplus before unusual items
                 and tax of $83.6 million, a 59 per cent rise on the
                 previous year's $52.7 million result. Earnings per share
                 were 46c, a 187 per cent improvement on last year's
                 16c result. In March, the company paid a final dividend
                 of 40c, as part of its new dividend policy, from 33c the
                 previous year. 

                 Sales increased only marginally, by 7.9 per cent to
                 $833.2 million, for the 1999-2000 year from $772.1
                 million the previous year. 

                 Healthcare was the company's star performer, its
                 turnover for the 12 months rising 21 per cent to $143.3
                 million from $118.7 million in 1999, largely generated by
                 gains in overseas markets. 

                 Fisher estimates the division's international revenue and
                 earnings will continue to grow at similar levels to the
                 past three years. 

                 Whiteware, which has been a drag on profitability in
                 recent years, produced revenues of $624.7 million, an
                 18 per cent rise on last year's $529.5 million result,
                 flowing from strong market share in Australia and New
                 Zealand. 

                 Mr Paykel was also pleased with the performance of the
                 finance arm, which generated a 4 per cent rise in
                 revenue to $50.5 million from $48.6 million the previous
                 year. 

                 Net earnings were $6.8 million. 

                 "We expect to better the group profit we've done this
                 year and I'm confident we will do that [through]
                 increased efficiencies, healthcare continuing to grow
                 and increased market share in existing markets." 

                 He would not be drawn into discussion on the
                 company's future as a single listed company. 

                 Fisher said last month that it had hired Deutsche Bank
                 for a strategic review of the company's operations,
                 which includes spinning off its divisions into separate
                 companies. 

                 The review is due to be completed by the end of the
                 year. 

                 Fisher's share price closed up 11c at 689c.



                 Dissident acts over options

                 09.06.2000 - By GEOFF SENESCALL 

                 Dissident Brierley Investments shareholder Bruce
                 Sheppard has lodged formal complaints about 15 million
                 options granted to the company chairman, Sir Selwyn
                 Cushing. 

                 Letters detailing claims that breaches occurred in
                 issuing the options have been sent to exchanges where
                 Brierley shares are listed, including New Zealand,
                 Australia and Britain. 

                 The complaint has been passed on by the local
                 exchange to the market surveillance panel. The British
                 exchange has also forwarded Mr Sheppard's letter to
                 the UK Listing Authority. 

                 The options were granted to Sir Selwyn at Brierley's
                 annual meeting in Auckland on November 11. They were
                 offered to him as part of his remuneration package when
                 he became chairman in November 1998. 

                 Mr Sheppard, who gained notoriety at the annual
                 meeting by wearing a Tommy hat and peppering the
                 company with questions, said his decision to take
                 action six months after the options were granted
                 followed a failure to obtain satisfactory answers about
                 their validity. 

                 "I was basically faced with the dilemma of letting the
                 matter drop, which was the easy thing to do, or laying
                 complaints for other authorities to follow up what, in my
                 opinion, appeared serious breaches of the listing rules." 

                 Mr Sheppard's letter alleges the 15 million 45c options
                 were not validly granted "because the appraisal report
                 submitted by Brierley to its shareholders was defective
                 on a number of counts." 

                 The report, by Dr Brent Wheeler, in assessing the
                 options to be fair suggested that the Brierley share price
                 was about 45c around November 1998, when in fact the
                 price was around 50c. According to Mr Sheppard, Dr
                 Wheeler had believed the Brierley price had been below
                 45c at the time the options were granted and this
                 assumption coloured the flavour of his report. The price
                 differential prejudiced shareholders by $750,000, the
                 letter says. 

                 It also says that Dr Wheeler stated the options allowed
                 for a "repricing or an adjustment for all significant and
                 foreseeable changes to the capital structure of Brierley."

                 These comments had proved to be incorrect, Mr
                 Sheppard says. 

                 No adjustment has been made to Sir Selwyn's options
                 despite an 8.28 per cent reduction in Brierley's ordinary
                 stock as a result of a share buy-back programme. The
                 buy-back was announced at the same November
                 meeting Sir Selwyn's options were granted. 

                 Mr Sheppard estimates that the effect of this on the
                 shareholders would amount to a further $558,900 at a
                 strike price of 45c a share. 

                 "The material errors in Dr Wheeler's report constitute a
                 breach of Listing Rule 6.2.2 on the basis that the
                 appraisal report is manifestly inadequate in the
                 circumstances." 

                 The letter also points out that the acting chairman at the
                 November meeting, Sir Ron Brierley, admitted that the
                 report appeared to be wrong, supporting this breach. 

                 Despite this, he went on and put the resolution to the
                 meeting. 

                 Mr Sheppard believes the resolution was lost on the
                 floor but was carried by proxy votes unaware of the
                 errors in the report. 

                 Mr Sheppard alleges that the resolution to grant the
                 options was therefore not validly passed by
                 shareholders. 

                 This resulted in a further alleged breach in Listing Rule
                 7.3.1. 

                 Sir Selwyn has declined to comment on the matter.

Catches in care of our
                 waters

                 09.06.2000 - By LIBBY MIDDLEBROOK 

                 Fishermen seem to give more thought to the bait
                 hanging from their hooks than the industry gives to the
                 sustainability of the entire catch and its environment. 

                 While commercial fishermen work under a
                 well-managed quota system, plucking tonnes of fish
                 from the ocean, critical research into the marine
                 eco-system is lagging. 

                 Environmental experts estimate that within 10 years the
                 future of the commercial industry can no longer be
                 guaranteed due to insufficient knowledge of the marine
                 environment. 

                 The industry's annual research funding contribution
                 remains below $20 million. 

                 This level of support means there is little chance of
                 important work being done into the state of many
                 stocks, and the overall effects of commercial fishing. 

                 The industry is now fundamental to the economy. 

                 It contributes more than $1.3 billion in overseas
                 earnings and employs thousands from Northland to
                 Stewart Island. 

                 With sustainability in doubt, it is difficult to comprehend
                 the industry's reluctance to channel more funding into
                 basic marine research, covering anything from the
                 impacts of trawling on the seabed to the effects of urban
                 developments on the ocean. 

                 Not surprisingly, it comes down to an argy-bargy over
                 who should foot the bill. Few seem to have the right
                 answers. 

                 Fishing operators, who remain reasonably quick to fund
                 research that has a short-term impact on their
                 business, such as into fish stocks, say that basic
                 marine research is largely for the public good rather
                 than simply being in commercial interests. 

                 One industry leader said companies could not afford
                 additional research in the past and did not see the
                 benefits of it now. 

                 Environmentalists argue that funding basic marine
                 research is a responsibility of the industry. 

                 It can damage the environment by trawling on the
                 seabed and over-fishing valuable species such as
                 orange roughy. 

                 Greenies also say the industry is making poor
                 decisions about sustainability because of lack of
                 knowledge. 

                 While debate over funding drags on, little more
                 information is being collected about our precious marine
                 resource. 

                 A robust debate is needed on how the public and the
                 industry should split the cost. 

                 Perhaps some thought could be given to a levy from
                 recreational fishers. 

                 Our Exclusive Economic Zone is the fourth largest in
                 the world and 15 times bigger than the country's land
                 mass. Cared-for oceans are crucial to New Zealand's
                 social and economic development.


                 Clear's billboard on an Auckland building engaged attention. Herald
                 File Picture

                 Telecommunications inquiry to work
                 backwards

                 09.06.2000 - By RICHARD BRADDELL 

                 WELLINGTON - The Government's telecommunications
                 inquiry will have to view the market as it will be in five
                 years and work backwards to regulatory solutions that
                 will enable it to get there, says Clear Communications'
                 legal counsel, Peter Waters. 

                 Based with Sydney law firm Gilbert and Tobin, Mr
                 Waters has previously worked for Cable & Wireless
                 Optus in Australia. 

                 Mr Waters said though much was made of convergence
                 of services in telecommunications, if the regulatory
                 environment was unsatisfactory, the full potential of
                 convergent telecommunications services could not be
                 unleashed. 

                 He envisaged a market in five years' time, in which
                 "intelligence" would move from the centre of
                 telecommunications networks to their edges, and into
                 the handsets used by consumers. 

                 A truly convergent telecommunications market would
                 enable consumers to move between wireless and fixed
                 services and between different network suppliers as
                 their needs dictated. 

                 But to achieve that, much more open and sophisticated
                 interconnection agreements were needed, along with
                 regulatory recognition that Telecom would remain
                 dominant, despite arguments that technical innovations
                 will rapidly open competition in local services. 

                 Mr Waters said incumbents around the world were
                 using "babble" about the rapid pace of innovation to
                 obscure their market power, but the reality was that
                 technical innovation was not going to erode local loop
                 dominance nearly as fast as claimed. 

                 Mr Waters said the past 10 to 15 years had been spent
                 arguing about narrowband voice interconnection,
                 whereas the market was now heading in the direction of
                 broadband services. 

                 But though voice's share of network traffic was rapidly
                 being overtaken by data, it would remain the dominant
                 revenue source, no matter how it was bundled with other
                 services. 

                 Mr Waters likened the incumbent's network to the
                 Microsoft situation where its control of personal
                 computer operating systems, the computer equivalent of
                 a telecommunications network, resulted in yesterday's
                 order that Microsoft be split in two. 

                 In telecommunications, network dominance enabled the
                 incumbent to control the speed at which new
                 technology was introduced to the market, he said. 

                 But Mr Waters rejected allegations that Clear wanted to
                 export Australian-style heavy-handed regulation to New
                 Zealand, observing that the Australian approach had
                 resulted in a system that was "overbuilt." 

                 He said there were two approaches to regulation; the
                 first a behavioural one that punished improper actions,
                 the second, structural and incentive based. 

                 One example of the second approach would be to
                 separate the wholesale side of Telecom's business from
                 the retail, and force it to provide wholesale services to
                 competitors on a non-discriminatory basis. 

                 Though the second approach was less rule-bound and
                 demanded a less aggressive regulator, a regulator was
                 still needed to manage situations where the market did
                 not work, he said. 

                 "[Companies] like Clear don't want picture postcard
                 agreements with exact pricing, but they do need tools
                 to even up the regulatory balance."



                 09.06.2000 - By RICHARD BRADDELL 

                 WELLINGTON - Power consumers are on the move,
                 backed by tough new compliance rules which put the
                 heat on retailers to allow smooth company switching. 

                 The largest-ever number of electricity consumers
                 switched retailers in May, two months after new rules
                 for transferring customers came into effect. 

                 More than 19,000 customers switched, up from 6164 in
                 April and only the second month in the competitive retail
                 market's 14-month history in which customer switches
                 have gone into double digits. 

                 Lengthy delays, often of several months, and bungles in
                 which customers changing supplier have been cut off
                 have been among the issues considered by the
                 Government's electricity inquiry. 

                 But in April new rules came into effect and, from
                 yesterday, a compliance regime backed by hefty fines. 

                 From now on, electricity retailers who fail to switch
                 customers to a new supplier within two working days
                 and provide meter readings within 23 working days can
                 be brought to account. The rules have been established
                 by the Maria governance board, which governs
                 electricity switching. Overseeing them is M-co, a
                 company charged with administering the electricity
                 market. 

                 "It's likely that there has been a bit of a backlog as
                 companies wait for the new rules. But 19,335
                 customers choosing to change retailer is a clear sign
                 that companies are really getting their act into gear
                 around the switching process," M-co chief executive
                 Philip Bradley said. 

                 In competitive markets overseas, around 5 per cent of
                 customers have typically chosen to "churn," or change
                 suppliers. 

                 Despite the New Zealand market's bumpy start, after 14
                 months 6.7 per cent of the 1.6 million consumers have
                 chosen to go to another retailer.



                 09.06.2000 - By DANIEL RIORDAN 

                 Fisher & Paykel chief executive Gary Paykel has joined
                 the chorus of business leaders critical of the
                 Government's decision to sacrifice promised tax breaks
                 on research and development (R&D) spending and
                 plump for grants instead. 

                 His comments come as business leaders across the
                 Tasman tell Canberra that R&D tax concessions of 125
                 per cent are not enough for Australia to remain
                 competitive. 

                 "It is very disappointing, particularly for the larger-size
                 companies who pour the money into R&D to employ
                 New Zealanders and to earn offshore dollars," Mr Paykel
                 told the Business Herald after the company's profit
                 announcement yesterday. 

                 "In healthcare, out of 450 staff, 100 are involved in R&D.
                 [The Government's decision] sends a poor message ...
                 Grants are very subjective and very bureaucratic. That's
                 been our experience in the past but we'll reserve
                 judgment until we see how this Government handles
                 that." 

                 Fisher & Paykel's competitors in Australia are among
                 those complaining that their Government's 125 per cent
                 tax break should be raised to 150 per cent because its
                 value has been eroded by Australia's lower company tax
                 rate. 

                 Australian media reported yesterday that a business
                 advisory group had told Prime Minister John Howard
                 R&D tax breaks were "a major flagship for innovation." 

                 The group is understood to have accepted that the
                 Government will not restore the previous 150 per cent
                 tax break, but is investigating other possible tax
                 incentives for research investments. 

                 These include a tax credit scheme which would deliver
                 benefits to small start-ups not yet making a profit and
                 therefore not eligible for a tax break, an "innovation
                 bond" loosely modelled on the former infrastructure
                 bond scheme, and an indexation scheme which would
                 reward firms for raising their R&D efforts.



                 09.06.2000 - By DANIEL RIORDAN 

                 Shareholders of miner-turned-e-commerce investor
                 Spectrum Resources have given the company's new
                 direction the green light. 

                 About 50 shareholders attended yesterday's special
                 meeting in Auckland. 

                 They unanimously approved the company's $2 million
                 acquisition of vertical software provider WEL Technology
                 from WEL Energy, though $750,000 of the price is
                 conditional on WEL Tech clinching before August 31 a
                 deal it has been negotiating with "a leading international
                 software company." Directors are confident the deal will
                 proceed. 

                 Shareholders concerned that WEL Tech's chief
                 executive, John O'Hara, had left the company since its
                 purchase was flagged in January were placated by
                 executive director Rob Levison's endorsement of Mr
                 O'Hara's successor, Gavin Mitchell. 

                 Shareholders also endorsed a $4.1 million rights issue,
                 allowing them to subscribe for seven new shares for
                 each three they hold at an issue price of 2cps. 

                 Total fees for the four directors were raised from $30,000
                 to $100,000 and Mr Levison was granted share options,
                 to be exercised at various prices at various times over
                 the next two and a half years. 

                 Mr Levison told shareholders Spectrum would succeed
                 by keeping its investment focus on Australasian
                 companies with products able to be taken to
                 international markets, especially vertical software and
                 business-to-business applications.



                 09.06.2000 - By KARYN SCHERER 

                 United States cinema operator Reading Entertainment
                 signalled yesterday that it was serious about taking on
                 New Zealand's two main cinema chains, confirming that
                 it would go ahead with a $55 million complex in
                 Wellington. 

                 The company, which already has a stake in Hoyts'
                 Whangaparaoa multiplex and in Barry Everard's two
                 Auckland cinemas, indicated more than a year ago that
                 it was keen to develop a big complex . 

                 Work is to begin on the Wellington centre in
                 September. 

                 The complex is being touted as the capital's answer to
                 Auckland's Force Entertainment Centre, and will include
                 10 screens, 1100 carparks and up to 30 specialty
                 shops. It is due to be ready by Christmas next year. 

                 The move comes as the Commerce Commission
                 threatens legal action against the two main cinema
                 chains, Village Force and Hoyts, over their merger
                 plans. 

                 Independent film distributors and exhibitors strongly
                 oppose the merger, and one player claimed yesterday
                 that distributors would be happy to supply the new
                 complex because they were so upset about the merger.

                 Reading, which has struggled to establish itself in
                 Australia in the face of intense competition from Village
                 and Hoyts, will again work with Mr Everard in
                 Wellington, and his Berkeley Cinema Group will
                 manage the new complex. 

                 Mr Everard said yesterday the company was keen to
                 open further complexes. 

                 He also lashed out at the big chains, describing most
                 Wellington cinemas as Third World. 

                 "The fact is Wellington might be the last to get a
                 multiplex but it's certainly going to have the best in the
                 country." 

                 Two big distributors, Columbia Tri-Star and United
                 International Pictures, confirmed they were keen to
                 supply the new complex. 

                 Mr Everard said he was unsure whether two distributors
                 with links to Village Force - Twentieth Century Fox and
                 Roadshow - would also provide films. 

                 "We have satisfactory undertakings on supply. I can't
                 tell what they might do." 

                 The Commerce Commission said last August it would
                 fight the merger in court, but a date has yet to be set for
                 a hearing. 

                 The big chains, which now operate under the name
                 Village Force Hoyts, are understood to have told senior
                 staff that they are reconsidering their plans in the face of
                 the commission's opposition. 

                 Force chairman Peter Francis confirmed last week that
                 the merger plan could be dropped if it was unable to
                 reach agreement with the commission. 

                 However, distributors and exhibitors remain sceptical
                 about motives as the chains have already laid off staff
                 and merged their head offices. 

                 Columbia Tri-Star spokesman Andrew Cornwell said the
                 industry was getting impatient. 

                 "We're very keen to see the issue resolved as soon as
                 possible for all concerned. No one likes uncertainty so it
                 would be good to have a bit of clarification."



                 09.06.2000 - 

                 Commerce Minister Paul Swain yesterday likened
                 existing insider trading penalties to a burglar returning
                 stolen goods without further punishment. 

                 He said he was worried that New Zealand's lack of
                 criminal sanctions against insider trading had
                 undermined confidence in the stock market. 

                 His comments came in the wake of the scandal
                 involving former Fletcher Challenge chairman Kerry
                 Hoggard who this week was found by the Securities
                 Commission to have broken insider trading laws. 

                 Mr Hoggard bought 390,000 Fletcher shares last
                 December on the eve of a major company
                 announcement. He later repaid $58,000 to shareholders
                 who lost money when the stocks rose, as required by
                 existing law. 

                 Mr Swain said the Government wanted a debate on
                 making insider dealing a criminal offence. 

                 On the Kim Hill radio show he said: "It's a bit like a
                 burglar saying well if I pinch a stereo and sit on it for a
                 while and then I get caught, as long as I hand it back
                 that should be the end of it. 

                 "I don't think that's actually right and I don't think
                 society thinks that's right." 

                 Mr Swain expects a discussion paper to be issued in
                 August, with any law changes following next year. The
                 paper would canvass the possibility of joint actions
                 against insider traders, and giving the commission
                 powers to launch prosecutions. 

                 "With cases highlighted like this, there is a perception
                 that the rules aren't right, that people can play unfairly
                 and get away with it." 

                 He said by making the rules fair, investors would be
                 encouraged to return to the sharemarket.



                 09.06.2000 - By FIONA ROTHERHAM 

                 New Capital Market company e-Opportunity has made a
                 takeover offer for Auckland-based technology company
                 Selector Group as flagged in its initial public offer in
                 April. 

                 E-Opportunity was the second company to list on the
                 NCM, established by the stock exchange to make it
                 easier for small companies to access capital. After
                 listing as a shell company, each firm has 18 months to
                 make a key transaction. 

                 Selector shareholders are being offered 15
                 e-Opportunity shares for each share held. This values
                 Selector at $15.7 million, or $8.25 per share. 

                 This falls in the middle of the range provided by the
                 independent Australian company, Valuetech, a
                 specialist in valuing technology companies. 

                 E-Opportunity listed with two million shares, raising
                 $600,000 from the public and $200,000 from its three
                 directors. It will issue a further 28.6 million shares for
                 the scrip offer to Selector. 

                 Since listing in May e-Opportunity's share price has
                 risen from 50c to 63c per share. The first NCM
                 company, Mowbray Collectibles, is trading at 55c a
                 share, up from its April listing price of 50c. 

                 Selector develops computer software to help in staff
                 assessments and internet recruitment. It has just
                 publicly released e-Profiler following trials on the Wilson
                 & Horton job site and overseas. 

                 PricewaterhouseCoopers said the offer was fair. It is
                 conditional on approval by e-Opportunity's shareholders
                 and acceptances for at least 76 per cent of Selector's
                 ordinary shares. 

                 The offer is being sent to the stock exchange today for
                 approval. Selector's directors intend to recommend
                 shareholders accept the offer. 

                 E-Opportunity director, merchant banker Tony Bishop,
                 is non-executive chairman of Selector. He and fellow
                 director, Glaistor Ennor managing partner Jack Porus,
                 indirectly own Selector shares.



                 09.06.2000 - By DANIEL RIORDAN 

                 Ryman Healthcare has undershot its prospectus profit
                 forecast by 11 per cent. 

                 The retirement village and hospital operator yesterday
                 reported a March-year tax-paid profit of $12.56 million,
                 compared with its prospectus target of $14.1 million. 

                 The latest profit compared with the previous year's $6.19
                 million, recorded when the company was much smaller,
                 and before it listed on the stock exchange on June 29
                 last year. 

                 Joint managing director John Ryder said Ryman's result
                 was lower than expected for three reasons. 

                 The $25.4 million it raised on listing was $7.6 million
                 short of expectations, after a subdued response to its
                 float meant shares were issued at 135c compared with
                 the hoped-for 175c. 

                 Second, resource consents needed to expand its Ngaio
                 Marsh village in Christchurch were delayed by several
                 months and granted only three weeks ago. 

                 Third, it took longer than expected to achieve full
                 occupancy in the company's new hospitals attached to
                 the Malvina Major village in Wellington and the Ngaio
                 Marsh village. 

                 Mr Ryder blamed that on continued fallout from changes
                 to the Health Funding Authority's assessment process
                 of the elderly. 

                 "The HFA's managed care policy means people who
                 used to be quite active and come to rest homes now
                 don't, and quite frail people who used to go to hospitals
                 are now going into rest homes." 

                 Ryman announced a final dividend of 2.6cps, with no
                 imputation credits, payable on July 7, bringing the total
                 dividend to 5.2cps, or 41 per cent of after-tax profit. 

                 The prospectus forecast a dividend of between 40 and
                 60 per cent of after-tax profit. 

                 Mr Ryder was not predicting any numbers for the year
                 ahead. 

                 "But we have more facilities, our occupancies are
                 holding up in a competitive market and we're forecasting
                 a good increase in the year ahead." 

                 Ryman's share price fell 10c on the result to 180c. 

                 In January, it went as high as 226c.



                 Many irons in the fire for Shore boy

                 09.06.2000 - By KIM WILLIAMS 

                 Competitors of Auckland company Ecco Pacific should
                 have taken more notice of the determined new kid on
                 the block when it started in business eight years ago. 

                 Since its launch in 1992, the Glenfield importing and
                 distributing company's annual turnover has increased
                 twelvefold, and last October it opened its first Australian
                 branch, in Sydney. 

                 The get-up-and-go, stick-to-your-guns attitude of the
                 company was put in place from the beginning when
                 managing director Howard Mackley challenged himself
                 to have the firm up and running within a month. 

                 "I think we started on the first of November [1992], and
                 by the first of December we were trading," the
                 39-year-old said. 

                 The company ties itself to brands, bringing the products
                 into New Zealand and distributing them to leading
                 retailers and wholesalers. 

                 North Shore-born Mr Mackley, a former Westlake Boys'
                 High School student, credits his company's success to
                 careful client selection, sticking to his guns, and
                 refusing to compromise on goals and standards - even
                 at the risk of missing out on some business. 

                 He is not averse to international phone calls in the wee
                 hours either - it helped score Ecco Pacific's first big
                 contract, with Swatch Telecom. 

                 "I can remember setting my watch to wake up at one in
                 the morning to talk to the [Swatch Telecom] guy in
                 Switzerland, and he'd be in a meeting, so I'd set my
                 alarm for two o'clock ... this was an ongoing thing," he
                 said. 

                 "It took a year and a half of absolute persistence to nail
                 that agency." 

                 It turned out that Swatch Telecom was not actually
                 interested in doing business in the Southern
                 Hemisphere, let alone with "some little company in New
                 Zealand." 

                 "I think it was just getting in front of someone as much
                 as you can ... We wore them down, basically." 

                 Other brands distributed by Ecco (and its consumer
                 product subsidiary, Ventura) include 3M, Bosch, Tefal
                 and Rowenta. 

                 "We knew we couldn't be all things to all people, so we
                 took the high ground, and left a lot of our competitors to
                 fight it out in the commodity low ground," Mr Mackley
                 said. 

                 "While it's more difficult to make sales in the high
                 ground immediately, if you attach yourselves to those
                 brands and take the long-term view - and you spend a
                 lot of time justifying where you are and your customers'
                 customers have experience with those products - you'll
                 get repeat business. 

                 "We realise we miss out on a fair bit of business, but it
                 boils down to that very strong sense of identity, where
                 we want our customers to identify that Ecco will handle
                 only top-end products." 

                 When Mr Mackley and his two silent partners started
                 the business they had a small group of electrical
                 products such as screwdrivers, time switches and cable
                 ties - "the sort of thing you'd find in the back of an
                 electrician's van" - and four staff. 

                 "The whole thing was very much seat of one's pants.
                 We were finding our feet a lot, and we realised that we
                 had to be focused externally - getting those sales, and
                 paying the bills and paying salaries, that sort of thing." 

                 The company now employs 22 staff in Auckland and
                 eight in Sydney, and distributes everything from
                 phone-jacks to irons. 

                 "In a way I'm quite proud of what we've achieved,
                 because we have basically come from nothing, and
                 we've attached ourselves with leading international
                 brands. 

                 "I look at my staff and say, `without them, there's
                 nothing.' I'm like the conductor and they're the
                 orchestra. A conductor on his own is going to be
                 useless." 

                 Mr Mackley said a key focus in his company's vision
                 was its symbiotic relationship with clients. 

                 "At the end of the day, we're not really two separate
                 entities. 

                 "We have the same objective, and that is to get
                 productivity and use it somehow, and the faster and
                 smoother you can do that, the better." 

                 Two coups were contracts with 3M, one of the world's
                 leading manufacturers of electrical, data and
                 communications goods, and Bosch
                 Telecommunications, where once again persistence
                 paid off. 

                 "We just kept knocking on [Bosch's] door, started
                 building relationships with BellSouth [now Vodafone],
                 and a few things fell into place at once," Mr Mackley
                 said. 

                 "We were given some samples, BellSouth said they
                 wanted the product, we established the business and
                 Bosch said: `You guys have got the relationship, you've
                 established the business, you may as well have it.' 

                 "I think a lot of other people would have felt defeated. 

                 "We probably did feel defeated at times, but we
                 continued to put the effort in, and the rest is now
                 history, because we've now established Bosch to be a
                 very strong player in the cellular market in New
                 Zealand." 

                 Ecco Pacific's contract with 3M paved the way across
                 the Tasman. 3M was happy enough with Ecco to offer
                 the company its Australian distribution contract. 

                 Mr Mackley predicts that 50 per cent of this year's
                 turnover will come from Australia, because of the market
                 size and the relatively small number of independent
                 distributing companies there. 

                 "Nobody has a problem dealing with us, because we're
                 not a competitor wholesaler, and a lot of international
                 brands are actually happier dealing with a company that
                 can have access to the whole wholesaling market rather
                 than just part of it."

FlyingPig's postcard after its launch could come back to haunt the online retailer. 
 
FlyingPig backer wants out 
 
04.09.2000 - By KARYN SCHERER 
Entrepreneur Eric Watson is considering quitting his investment in online retailer FlyingPig, amid global uncertainty about the future 
of shopping over the internet. 
New Zealand's highest-profile online store, launched with much fanfare less than a year ago, hopes to find a new investor by the end 
of the month to pump more money into the business. 
However, documents distributed to potential investors confirm that it is also considering bids for the entire company. 
Mr Watson's hopes of publicly floating the company have been dashed by international jitters about internet-based retailers. 
In June, FlyingPig was forced to call off a merger with Australian e-tailer TheSpot after the Australian company failed to raise enough 
money. 
A few weeks later, FlyingPig laid off half its staff after Mr Watson and other investors indicated that they were no longer prepared to 
keep pumping millions of dollars into the business. 
Originally set up by former Whitcoulls head Stefan Preston and his business partner, Adam Keller, FlyingPig is now largely controlled 
by three companies with links to Mr Watson: Whitcoulls, the Pacific Retail Group and Advantage. 
The decision to look for a new investor comes as several e-tailers are talking to pay-TV operator Sky about the launch of interactive 
television in New Zealand. 
The launch will enable Sky's digital customers to shop online, and Sky is believed to be talking to at least one Australian e-tailer keen 
to test the new technology ahead of its introduction in Australia. 
The move also comes amid tentative talks between several online stores about joining forces to create a NZ supersite. 
According to information distributed to potential investors, FlyingPig sold $260,000 worth of books, videos, software and stationery 
in July. Half the sales were books ordered through the Whitcoulls chain, which is also for sale. 
FlyingPig predicts that monthly turnover will pass $500,000 by December and will exceed $1.2 million by the end of next year. 
However, the figures also show that it is struggling to recoup its costs, which are running at $350,000 a month. Despite spending just 
$10,000 a month on marketing, it is still losing $200,000 a month. 
Among the companies believed to be carrying out due diligence is Australian e-tailer Dstore. Like FlyingPig, Dstore unashamedly 
modelled itself on American online superstore Amazon. 
Its backers include some of Australia's best-known businessmen, as well as Singapore's Goh brothers, who also own a chunk of the 
Stirling Sports business in New Zealand. 
Dstore held talks with FlyingPig this year, but they could not agree on terms. 
The Australian company originally predicted that it would launch a rival New Zealand site by May. 
Dstore's 29-year-old chief executive, David Gold, said on Friday that it was no longer in a hurry "as clearly the competitive imperative 
has been taken out of the equation." 
He confirmed he was "taking a look at partnering with a number of players" in New Zealand. He also claimed he was looking at "a 
couple of acquisitions." 
However, Mr Gold warned he was not interested unless he could scoop up the assets at "rock-bottom prices." 
Although it claims to be Australia's most successful e-tailer, Dstore has also yet to prove it is financially viable. 
Its wealthy investors have ploughed more than $40 million into the company. They do not expect a return until 2002. 
Mr Gold conceded that the company's main problem was sorting out how it would deliver goods in New Zealand. 
"Ideally that's through a partnership and that's taking a bit more time than we expected." 

Telecom told to give away its rural services 
 
04.09.2000 - By PHILIPPA STEVENSON 
Newcall Communications wants the Government inquiry into telecommunications to give networks back to rural 
communities. 
Newcall's managing director, Norman Nicholls, says a recommendation that Telecom meet the needs of rural customers 
by extending its service to include "slow-speed data" would condemn rural customers to substandard service. 
Agriculture officials have reported growing concern about the "digital divide" between rural and urban telecommunications. 
Traditional copper wire, which gives 95 per cent of Telecom's rural customers 14 kilobyte-a-second internet access, has 
been replaced in cities by high-technology lines capable of 33 kb/s and 56 kb/s services. 
Telecom has estimated that it would cost $550 million to provide all rural customers with 33 kb/s access, the generally 
accepted minimum for using the internet. To upgrade the existing rural copper network to give all rural customers 14 kb/s 
access would cost $230 million. 
Mr Nicholls is proposing community-owned networks, as in the US, which had around 1400 "local exchange carriers." 
He says that while such services would be uneconomic, telecommunications are vital to the rural sector. 
"As with any crucial service, customers are prepared to pay a fair price for value. They should have the opportunity to 
influence the 'price versus quality' in their area. 
"At the same time it should be recognised that having rural customers on the network is important to urban people and city 
businesses. 
He says the features of such an alternative approach should be: 
* Majority ownership of the network through regional trusts (similar to some power companies). 
* Fully commercial operations that set their own prices, make capital investment decisions and raise capital. 
* Access to a rural telecommunication fund, built up through a levy on all toll calls (likely to be less than 1c a minute). 
Mr Nicholls suggests a trial covering a defined area with 10,000 to 20,000 customers. Based on Telecom's 200,000 
uneconomic customers, he says New Zealand could have 10 to 15 private local exchange carriers, to which Telecom 
should transfer existing assets at no cost. 
"Since Telecom says it is costing upwards of $120 million a year, or $600 a customer, it can be argued that Telecom 
should pay the company to take them away." 
He says the trial should last two to three years and cover contracting out activities such as design, installation and 
network management to other suppliers, including Telecom. 
Interconnection and service agreements could be put into place with other companies and additional revenue earned from 
services such as messaging and call waiting. 
Meanwhile, Federated Farmers is saying Telecom's competitors should contribute to the cost of upgrading rural lines to 
improve internet access. 
Telecom has said it supports the concept of encouraging and enabling New Zealanders to fully participate in the 
information economy, but this was a social goal and should not be "over-burdensome" on commercial telecommunications 
businesses. 
It said such moves should be paid for by the Government. 


Bricks and mortar firms fight back 
 
04.09.2000 - By ADAM GIFFORD 
The risk of companies losing key staff to internet startups is dropping as bricks and mortar companies create hybrid 
internet models internally. 
Cathy Benko, Deloitte Consulting's leading e-business consultant, says that is one of the outcomes from the major trends 
which are emerging as e-business gets into mainstream areas. 
These trends include the emergence of new kinds of hybrid companies, increased hurdles to launching businesses, a 
reassessment of the whole "dot com" model, and new opportunities for business incubators and accelerators. 
Many "big dumb companies" have also become enlightened and are crashing the dot com party. A year ago the dot com 
startups were seen as threatening them. 
Ms Benko says established companies are in a better position to profit from e-business because they can bring real 
products, real customers and real revenues to new business opportunities. 
Deloitte Consulting itself has established a "mothership" model, where it is spinning off business opportunities into "pods." 
These pods involve partnerships with other major companies, so they launch with global alliances, financing and products 
in place. 
Rather than the share options, which in recent times lured many staff at United States companies away to startups, the 
staff transferring to these pods are given equity in the whole portfolio of pod companies which come under the Deloittes 
umbrella. 
While this approach may not promise the stratospheric rewards dot com startups were promising, "there's not the same 
risk either." 
Ms Benko says incubator or accelerator firms which inject venture capital or expertise into other firms, now see ventures 
spun off from existing companies as a better target customer than dot coms. 
"We don't think there is real money to be made in startup incubation. There are over 800 accelerator organisations out 
there. It's real needle in a haystack stuff, so if you were to really support the marketplace where would you go?" 
Those of the 2000 top global companies which are doing spin-offs and carve-ups, are the best market, she says. 
"These are the guys that can use that help." 
Ms Benko says hybrid companies are able to launch with proven talent and business expertise seconded from their parent 
organisations. 
"When you can bring resources to bear from a bigger company, you have a big advantage. You can source people who 
are proven in your space." 
Hybrid companies are more likely to be able to go to market with a complete solution, rather than the unproven 
components many dot coms are offering. 
She says it's now half-time for dot coms. 
"I don't think there is a dot com out there which isn't taking the time to look at its viability." 
However, there may still be considerable value in dot coms, which is why many are now being merged with or acquired by 
older companies. 
"There is a lot of consolidation in that space. Startups may be your dance partners," Ms Benko says. 

Pressures will test inflation lid: banker 
 
04.09.2000 - 
An ailing currency, a weak domestic economy and high oil prices will challenge the Reserve Bank as it tries to keep a lid 
on inflation, says Deutsche Bank NZ chief economist Ulf Schoefisch. 
The currency hit its lowest level of 42.08USc on Friday, driven mostly by the strong United States dollar but also by 
concern about New Zealand's high current account deficit, which weighed in at 8.2 per cent of gross domestic product in 
the year to March. 
The Reserve Bank is charged with keeping inflation within a 0 to 3 per cent range, with an ideal of 1.5 per cent. It also has 
a policy of non-intervention in the foreign exchange market. 
Mr Schoefisch said: "I don't think the bank can do much to defend the currency, short of stepping in to raise short rates to 
10 to 12 per cent, which would, of course, be unacceptable from a domestic standpoint." 
The bank could now do little else but sit back and let it all blow over, he said. 
"Certainly the bank has not got the tools. Currency intervention does not help and it's not realistic to raise interest rates to 
double digits. 
"Ultimately, people will have to accept that this adjustment in the currency had to come sooner or later, given our current 
account deficit." 
Reserve Bank Governor Don Brash, in announcing on August 16 that official rates would stay at 6.5 per cent, said 
inflation looked set to hit the upper end of the bank's range towards the year's end, from 2 per cent in the year to June. 
But Mr Schoefisch said higher inflation, given high oil prices and the low currency, appeared likely to be a longer-term 
problem. 
"Inflation is going to go up and stay up there for longer. 
"The longer inflation stays higher, maybe around the 3 per cent mark, the more problems Brash will have in getting it back 
down under 2." 
While the kiwi dollar is not the only currency to suffer in reaction to the US dollar, it has depreciated further than most 
other currencies - about 20 per cent this year. 
Mr Schoefisch said there would be concern overseas about kiwi dollar assets, despite NZ-US 10-year bond spreads of 95 
basis points at Friday's close. "That premium is just not enough at this point." 

O'Sullivan: Transtasman citizenship? The move has already begun 
 
04.09.2000 - 
When Finance Minister Michael Cullen floated the prospect of a common citizenship for New Zealanders and Australians the reaction 
from his political boss was damning. 
Aussie Rules, Okay? may be the reality on transtasman rugby fields, but forget about taking any steps which might lead to Australians 
dictating the political and business turf as well. 
The facts are: 
Prime Minister Helen Clark's quick putdown may have won her a few Brownie points with some voters, but New Zealand business 
has already forced the game to begin through the big splurge of transtasman investment. 
The prospect of expanding the Closer Economic Relations (CER) agreement between Australia and New Zealand to the Asean free 
trade arena is the other - and more potent - driving force. 
Former Rogernomes such as Foreign Minister Phil Goff and Trade Minister Jim Sutton are driving that. But other ministers such as 
Paul Swain are also having an influence. 
There is one over-riding issue, though: do the politicians on this side of the Ditch still have the foresight and guts to take the steps that 
really matter to ensure that business has a reason to thrive and exist here? 
It's no mistake that Motorola last week jilted New Zealand for Australia's overtures. The Labour-Alliance Coalition has removed our 
competitive advantage by wiping the Employment Contracts Act, it reneged on an election promise to introduced tax write-offs for 
research and development and it refuses to lower New Zealand's corporate tax rate to either match or better the 30c in the dollar 
Australia is moving towards. 
On top of that, the kiwi dollar is through the floor, some 40,000 New Zealanders are expected to shift to Australia before this year is 
through, and the Government is risking the wrath of Pakeha by introducing Treaty of Waitangi principles across a range of policy 
areas they do not understand. 
Harmonisation of Australian and New Zealand business laws had been on the Closer Economic Relations agenda since 1988. There 
has been some progress on issues such as consumer protection and recognition of professional qualifications, but both countries still 
operate separate securities and company law regimes which are the key determinants of how business is played. 
Increasing the driving force to speed the process is the transformation of New Zealand's largest company, Telecom, into a vigorous 
player in the Australian market. With Telecom now operating successfully on both sides of the Ditch, the push towards merging our 
stockmarkets and speeding the harmonisation of business laws is inevitable 
New Zealand companies, such as Lion Nathan, which have shifted head office to Sydney are a recent chapter of the transtasman story; 
others included formerly New Zealand owned companies such as Bank of New Zealand, which passed into National Australia Bank 
hands, and TrustBank, which was tucked under the Westpac umbrella - both of which are effectively controlled from across the 
Tasman. 
Business has also been driving the current push through the advancement of proposals such as a transtasman currency - another 
proposal which was swatted down by the politicians. But business has at least got a voice at the ministers' table on the current CER 
discussions - for the first time in the history of CER. 
The discussions centre on wiping obstacles to transtasman business to achieve greater compatibility in disclosure regimes, manage 
cross-border insolvency, protect intellectual property rights and get greater consistency in legislation affecting e-commerce. 
But the more fruitful talks centre on expanding CER into Southeast Asia - using the draft agreement New Zealand has struck with 
Singapore for a Closer Economic Partnership as a precursor. That agreement has the advantage of being both compatible with the 
WTO and Apec commitments to liberalise trade in goods and services by 2010. 
The former Rogernomes are in the vanguard on the Singapore agreement and are driving the Australian angles. But the Prime Minister 
is still out on a limb of her own making. 
Helen Clark has not adopted the language of the free-traders, preferring to quote the somewhat nebulous notion of fair trade. Having 
campaigned against the claimed ills of free-market regimes, she is now forced into getting Parliament to legitimise the forthcoming 
agreement with Singapore. 
Chances are that if Helen Clark extended the right of legitimacy decisions to ordinary New Zealanders, they would vote for common 
citizenship with Australia as well. It's only a matter of time. 

Between the lines: Rural communities suffer on the wrong side of a 'digital divide' 
 
04.09.2000 - 
What better roads were to rural communities last century, telecommunications should be in this one. But, worryingly, the signals are 
decidedly dodgy. 
Paved roads and better vehicles gave farmers and other rural dwellers the ability to travel further faster and have greater choice in the 
businesses and services they patronised. 
Easier travel also offset difficulties caused by the steady reduction of more local facilities from playcentres to post offices even as it 
contributed to their demise. 
Of more use than tarseal to people in a sparsely populated countryside is a telecommunications service which links them to the world. 
Computers and the internet, along with the advance of telephone services, offer even more promise to rural people than urban 
counterparts who may have the option of going into a shop as well as phoning it or visiting its website. 
Rural people have shown that they appreciate this by hooking up to the internet at a greater rate than their city cousins. 
A Ministry of Agriculture and Forestry study found that 61 per cent had computers and 80 per cent of computer owners had internet 
access. This gave an internet adoption rate of almost 50 per cent - higher than in cities. 
Yet increasingly, the term "digital divide" - coined to describe people who cannot participate in the new technology because they are 
disadvantaged by lack of wealth or education - is being applied to a gap between urban and rural groups. It exists because of the poor 
state of the telecommunications infrastructure - dodgy telephone lines and insufficient cellphone coverage. 
More than half the people in the survey had trouble just using the telephone, including the emergency 111 service. Nearly 70 per cent 
bemoaned the slow speed of internet access and three-quarters had problems with cellphone coverage. 
Solutions are on the way but, MAF says, not quickly enough. Two-way satellite connections for the internet are not expected until 
between 2002 and 2004, and costs are initially expected to be high. Broadband wireless will provide high-speed internet access but not 
for up to five years. Signal quality may still be a problem. 
Affordable satellite solutions for cellphones may be five years away. 
All this at a time when farmers are increasingly acting to shorten the supply chain between them and their markets, and looking to new 
technology to help bridge the gap between their farms and customers who are often on the other side of the world. 
There is also rapid development of on-line services targeting farmers with everything from their own farm production data, the latest 
research findings and weather updates to virtual supply stores where they can buy overalls to fertiliser. 
New Zealand needs to make the investment to ensure that country folk can travel as swiftly along the internet super highway, as they 
have along the tarsealed one. 

Former Fletcher Challenge Energy executive John Blundell. Herald Picture / Kenny Rodger 
 
Capstone gold could have been platinum 
 
04.09.2000 - By GEOFF SENESCALL 
If Fletcher Energy had taken part in the last capital-raising of Capstone Turbines before Capstone listed on the US Nasdaq market two 
months ago, a further $1.7 billion would have been added to its price tag. 
That is because, until around 1998, Fletcher Energy owned 20 per cent of Capstone. But Fletcher's decision then to revert to being just 
an oil and gas producer diluted its holding to 11 per cent. 
Given the relative insignificance of the investment at the time nobody batted an eyelid. 
But with Capstone shares listing at $US16, then rocketing to $US92, the whole picture has changed. 
In spite of the dilution, Fletcher's 8.12 million Capstone shares are still worth, on paper, around 520c each. 
That compares to a closing Fletcher Energy share price on Friday of 871c. So Capstone is still a chunky bite to get through for any 
prospective buyer wanting Fletcher Energy's exploration assets. 
But the fact that the Capstone investment would have swamped Fletcher's oil and gas exploration business if the holding had been 
maintained is not lost on at least one of the firm's former executives, the now-retired John Blundell. 
He is the man who fought long and hard to interest Fletcher Energy in making an investment in the company five years ago. 
While reluctant to openly criticise Fletcher, Mr Blundell is obviously disappointed at its decision to abandon its alternative energy 
operation. 
"This technology has the potential to do to the Huntly power stations of this world what the PC did to the mainframe," he says. 
Mr Blundell is not alone in this view. The August 5 edition of the Economist had a front-page splash on the "micropower" revolution 
happening in the US. 
Micropower is the generation of electricity by small-scale fuel cells and gas turbines, which is what Capstone is all about. 
According to the Economist: "It could be every bit as dramatic as the revolution that hit the world's telecommunications industry in the 
1980s." 
Mr Blundell estimates the market size for generation, transmission and distribution worldwide at about $US1 trillion a year. 
The investment in Capstone was no accident. Mr Blundell and his small development team at Fletcher Energy were instrumental in 
driving it forward. The team had been set up to look at the future needs of energy markets. 
They quickly became aware of the need for distributor generation technology, which generated electricity onsite, Mr Blundell recalls. 
"We knew the [environmental] constraints on coal plants, which generate around half the power in America, and nuclear, which 
generates about a third ... So basically, the insatiable demand in the US for electricity was going to have to come from a new 
technology." 
Mr Blundell said his team had been keeping a close eye on new turbine technology. 
"Quite fortuitously I came across an obscure article in the Society of Automotive Engineers' journal about a small gas turbine concept 
that a retired engineer ... Robin Mackay, was arguing was the solution to the Californian vehicle emissions debate." 
He tracked down Mr Mackay in Palos Verdes, California. 
"So it started from there. We travelled back and forth many times to the US and talked to him." 
When it came to the issue of funding, Mr Blundell says the Fletcher board initially flagged it away. 
But the Blundell team persisted and Fletcher ended up taking a 20 per cent shareholding in one of Capstone's early capital-raisings 
around five years ago. 
Capstone also had the backing of US venture capitalist Ben Rosen and other East Coast financiers. They had already taken the 
technology past the concept stage. 
But the focus was entirely on the motor vehicle. 
"We pushed long and hard to try to hook them over to the distributor generation concept, which they weren't interested in. But that all 
changed when the motor car guys opted for fuel cells, not the Rosen hybrid flywheel. 
"If you want any proof as to whether or not the push for distributor generation came from us, just look at the fact that they gave away 
the entire marketing rights outside North America for stationary generation in return for Fletcher's first investment. Capstone had to 
pay Fletcher $60 million to get them back just prior to its listing." 
Mr Blundell says the payment means that Fletcher's net investment in Capstone is around zero. 
"You look back now and it looks easy. But there were times when Capstone was pretty close to the wire. Not everyone wanted to 
participate. They had trouble getting in new investors. We had our own internal battles of straying from the oil and gas producer 
basis." 
Most people are not willing to take such a long-term view. "I make the comment that the reason why it has taken 12 years is because 
that is how hard it is." 
But what Capstone shows is that "we can mix-and-match it with the best." 
Till the plug was pulled some two years ago, Fletcher had around 150 engineers in California. "We are talking something about 300 
man-years of engineering R&D. It's been a big project. If we talk about the knowledge economy, this is it." 
Mr Blundell admits that Capstone was a punt for Fletcher - something no one could be sure was wanted. 
But, as Fletcher Challenge's gross capital expenditure since the 1987 sharemarket crash is $20 billion, Mr Blundell says problems 
didn't lie in Capstone. 
"Five Capstones and we pay off the nation's debt. And what do we do? Plant more pine trees." 

Scientists lag in pay stakes, except IT 
 
04.09.2000 - By JILLIAN TALBOT 
Pay packets for scientists in the primary product sector are dragging behind those in other sectors. 
But those who have made a link to information technology are commanding significant pay increases. 
Mercer Cullen Egan Dell's general manager, Wayne Peat, said the latest salary survey by the company showed 
agriculture, horticulture, dairy and environmental science salaries were trailing other employment disciplines by up to 50 
per cent. 
This contrasted with IT salaries, which leaped more than 30 per cent in the March year. 
Auckland University dean of science Professor Ralph Cooney said that although salaries in the traditional science area 
were not that high, certain areas were "extremely well paid, here and overseas." 
"The growth areas are more in cross-discipline areas than in the disciplines themselves." 
One example was bio-informatics, a combination of biology and information technology, which had led to the discovery of 
the human genome. 
However, Professor Cooney said academic salaries were getting "incrementally worse," with big differentials noted 
between New Zealand and the United States and Britain. 
The amount of research funding in New Zealand was also lagging overseas funding levels. 
In one year, Britain's research budget increased by 30 per cent. 
"We do remarkably well on a shoestring but it will get increasingly difficult in the years ahead," Professor Cooney said. 

Bloom in exports goal for flower researcher 
 
04.09.2000 - 
Auckland flower research company Multiflora Laboratories says it wants to expand the $7 million export market for calla 
lilies. 
It is using an advanced tissue culture technique which is expected to give growers a start on other exporters by producing 
bigger tubers that will flower earlier. 
The company expects growers will plant 120,000 of its initial mini-tubers this year. The plants will be kept growing in a 
tissue culture medium for six months longer than normal. 
Multiflora managing director Sandra Simpson said the plants would then go into the ground for six months before being 
dug up again, so that growers would get larger tubers that would fetch better prices overseas and produce flowers earlier 
than usual. 
She said the early flowering could help give New Zealand growers the edge against competitors in the lucrative markets 
of the United States, Japan, Taiwan, Singapore and Europe. The lilies are New Zealand's second-most valuable cut 
flower crop after orchids. Top stems can fetch between $3 and $4 overseas. 
New Zealand's competitors include South American, African and Asian countries, although some New Zealand growers 
have lilies planted in places such as Kenya to provide a counter-seasonal supply to the lucrative Northern Hemisphere 
markets. 

Fletcher Forests shifts focus with new products 
 
04.09.2000 - By PAULA OLIVER 
A heartening results announcement from debt-ridden Fletcher Forests last week is the first strong indication that the 
company's shift of focus towards high-margin products is working. 
Forests returned a profit of $81 million, a significant increase on last year's effort of $55 million. 
Driving the increase was growth in high-margin value-added product sales, which climbed to 53 per cent of overall sales. 
Forests have seized upon the value of processing logs into products for export, rather than just selling the log. 
Chairman Dr Roderick Deane proudly pointed to Forests as being "a very different company from the forestry organisation 
of some years ago," and much less susceptible to the vagaries of commodity pricing. 
Certainly Dr Deane has a lot of evidence to back his transformation claim. 
Forests' Taupo mouldings plant increased its production by 22 per cent over the past year, to cope with a growing export 
market for high-margin products in the United States. 
Finishing products for repairs and remodelling make up most of the US sales, which have been captured through taking a 
stake in two distribution firms that supply the do-it-yourself (DIY) chain Home Depot. 
Significant investment has been made in kilns to dry timber and give it more stability, while a new product, Origin I-beam, 
was successfully launched this year. 
The results come two years after a collapse in commodity prices hit Forests hard during the Asian economic downturn. 
Log prices slumped, and spokeswoman Ginny Radford said that Forests was fortunate it had already begun a push for 
value-added products. 
"There has been a total shift in our strategy, and we have a much more focused approach now," she said. 
"We had already begun the change before the Asian crisis, and for Forests it made the difference between being knocked 
around by Asia or being devastated." 
Ms Radford said the Japanese home-building market presented a great opportunity for Forests, and a plant at Kawerau 
was heavily involved in developing specific products that met stringent Japanese building requirements. 
"They have an extremely careful market, and all products must be certified. We've got that accreditation at the Waipa 
sawmill, and we are able to manufacture things like the mouldings to go around doorways." 
The potential of the US market is the reason Forests has actively pursued certification from the Forest Stewardship 
Council, a world body pushing for sustainable forest practices. 
Two large DIY stores in the US have announced that from 2002 they will not take wood products which are not certified - 
resulting in Forests leading the charge for the standard. 
"We haven't got the certification yet, but all the surveys have been done and we are awaiting the result," said Ms Radford. 
"The consumer markets in the US are particularly aware, and that's why we moved quickly down the certification path." 
New Zealand remains the greatest market for Forests' manufactured products, making up 48 per cent of sales. But 
overseas markets are growing, and Ms Radford said tremendous opportunities existed in the US. 
A swift marketing programme has ensured the Origin brand name is being recognised worldwide, while the company's 
biotech interests in growing smart trees should see further development of value-added products. 
Dr Deane said: "The product solutions strategy designed to counter the log commodity cycle has been highly effective. 
"It is particularly encouraging to see our strategies paying off and bearing fruit." 
Fletcher Building also revealed evidence of a transformation at last week's results announcement, unveiling tremendous 
growth in sales for its specialised Gib board range and high-density particleboard. 
Chief executive Terry McFadgen said the conscious shift towards high-margin products was what had lifted profits despite 
a drop in sales. 
As speculation about a Forests sale grows, its present owners will be heartened by the results of its strategy so far. 

Leo Mangos, chairman of the Labour Party's Primary Industries Council. Herald Picture / Nicola Topping 
 
Appeal to open up pipfruit industry 
 
04.09.2000 - By PHILIPPA STEVENSON agricultural editor 
The domination of monopoly apple marketer Enza by corporate interests has brought calls for the immediate deregulation of the 
pipfruit industry. 
Two separate appeals have been made for the Government to act quickly to remove Enza's almost sole right to export the $600 million 
apple crop now the company is controlled by investment firms Guinness Peat Group and FR Partners. 
Leo Mangos, the chairman of the Labour Party's Primary Industries Council, and Rex Graham, the chairman of vocal Enza critics 
Independent Pipfruit Growers, promised vigorous campaigns to support their pleas for immediate deregulation. 
"It is not appropriate for a corporation to have a monopoly. It should have to face the harsh realities of the marketplace like anyone 
else," said Mr Mangos, a former chairman of the Fruitgrowers Federation's kiwifruit sector. 
"I will be advising my council to urge the Government to move quickly and warn the corporate raiders to back off, because they will 
not have protective legislation for long." 
Mr Mangos' comments were "a shot across the bows of corporate raiders, and the Government." 
He added that Agriculture Minister Jim Sutton could "not procrastinate on this, he does not have the luxury of time." 
"The Government cannot stand idly by and watch an industry self- destruct," he said. If it had not received the message by the time of 
the Labour Party conference in November, "there will be fireworks." 
Mr Graham said it was "diabolical" that two major corporates had control of Enza, which growers were locked in to supplying. It was 
untenable that growers had no choice. 
He met Enza chairman Tony Gibbs on Friday to ask his help with a managed deregulation of the industry, but was told that the export 
monopoly was Enza's greatest asset. 
Mr Graham said his group would enlist growers, Maori and political groups to wage an all-out campaign for the deregulation of Enza. 
A spokeswoman for Mr Sutton said the minister was committed to a review of apple export regulations and would like to see broad 
support from the industry before embarking on any great changes. 
Mr Sutton had ruled out making any changes before 2001-2002 to the regulations which allow only apple exports complementary to 
Enza. 
The Government would look at any suggestions for change that had majority support, did not disadvantage minority shareholders and 
was in the public interest, the spokeswoman said. 
Mr Mangos, who favours grower cooperative single-sellers, said it was too late for the apple industry to return to the model. 
It should be deregulated, so groups of growers could compete in the marketplace. 
"The corporates will pick the eyes out of the marketplace ... go into the highest-price markets and take the best of them," Mr Mangos 
said. 
He said there was a strong chance board assets, such as post-harvest facilities, would be sold off and that Enza could be sold to 
overseas fruit companies such as Dole or Bonita. 
"There could be a loss of the plant patent rights to the new varieties of apples developed by growers from retained profits and taxpayer 
funding through HortResearch," he said. 
"I don't think a Labour Government should stand idly by and allow that to happen." 
The majority of Enza's shareholding is in grower hands, but Mr Mangos doubted small growers would be able to exercise any control 
because of the corporate dominance of the board. 
It was "the beginning of the slippery slope for the small grower," whose apple varieties may soon be unwanted by Enza, and whose 
shareholding was also insufficient to give an adequate return, he said. 

The destructive power of Varroa mites on the development of bee pupae is easy to see. Herald File Picture 
 
MAF urged to deal Varroa bee mite a knockout blow 
 
04.09.2000 - By PHILIPPA STEVENSON AND NZPA 
Environment Waikato has called for vigorous efforts to contain the bee-killing Varroa mite in the North Island, as some beekeepers in 
the South Island confirm that an invasion would break them. 
The regional council has urged the Ministry of Agriculture and Forestry's Biosecurity Authority to aim to eradicate the mite, which 
could devastate bee populations in New Zealand. 
The Government decided against a $70 million eradication attempt after advice that it had only a 10 per cent chance of success. It 
opted for slowing the spread in the North Island and keeping the mite out of the South Island for as long as possible. 
But in a submission to the authority, Environment Waikato said containing Varroa in the North Island's northern regions must be 
pursued, and a vigorous control programme should start immediately, with buffers put in place to remove feral bees. 
"The Government must be willing to pay fair compensation [to beekeepers] and not delay in destroying hives and preventing 
movement. Inter-island border control should have been done months ago," said the council, which offered to provide staff and feral 
bee control. 
In the South Island, some beekeepers warned MAF officials that the mite would be the last straw for their businesses. 
Bryan O'Neill, of Southern Honey Exports in Oamaru, said many apiarists had already faced a 30 per cent drop in honey prices, higher 
fuel costs and a 30 per cent rise in the cost of sugar. 
He said they would be unable to afford Varroa infestation - expected to cost $40 to $55 a hive to treat. 
But most of the 35 or so industry representatives at a meeting with officials seemed happy with MAF's initial plans to monitor and 
control the spread of the mite. 
Among the proposals is a three-tier surveillance plan, involving sentinel hives at ports and "movement corridors," a targeting of high-
risk areas, and random sampling of hives throughout the South Island. 
Beekeepers were worried about what would happen after the two-year Government-funded control period, particularly whether they 
would be left funding a bureaucratic programme offering little practical support. 
MAF plans to wipe out the mite whenever it is found in the South Island, which is considered viable because numbers are likely to be 
low. 
Mites are thought to have inhabited North Island hives for at least three seasons before they were found, which had allowed numbers 
to build up. 


Rural delivery: Global push on red meat worth it 
 
04.09.2000 - By TONY LEGGETT* 
New Zealand's image as a red-meat exporter is overdue for a makeover. In fact, it needs a facelift. 
The opportunity is rapidly disappearing for New Zealand red-meat producers and exporters to lock in their position as providers of 
safe, natural food. Other countries are racing for the high ground as increasing numbers of health-conscious consumers crave food that 
they can eat with confidence. 
Consumers have never before paid so much attention to food safety. Crises such as mad cow disease and various E coli outbreaks have 
seen to that. 
New Zealand could not be better placed to grab a chunk of its own high ground. To do it, we need a global positioning campaign for 
red meat. 
It must be constructed to allow meat exporters the opportunity to leverage off it with their own company brands. 
The days of meat exporters fighting each other at the farm gate, and in the marketplace, may be drawing to an end. 
But is enough progress being made by them and Meat New Zealand to position red meat in a premier slot in the minds of consumers 
around the world? 
Exporters know that the real enemy is not each other. It is those nations who export competing proteins such as chicken, pork and fish. 
So, why not join hands where it is appropriate, and between countries, to promote the positive benefits of red meat? 
Promoting the health and nutritional benefits of red-meat consumption is just one area where every participating country could benefit. 
Aligning our sector with other countries would also add a lot of grunt to the meagre promotional dollars applied in this area by Meat 
NZ and meat exporters. 
Meat NZ budgeted to spend $11.5 million on its in-market services division for the past 12 months. 
Spent in isolation, it is a drop in the bucket. Matched with investments from red-meat producing countries it could pay for meaningful 
programmes which have wider impact. 
New Zealand has a wonderful story to tell about its environment and its meat production methods. Sure, there are some risks with any 
form of elitist marketing strategy. But it is a gamble worth taking. 
Meat NZ director John McCarthy favours a global promotional campaign drawing together food, wine, and tourism interests to 
develop a more complete New Zealand story. It must be explored. 
New Zealand has the lamb rosette, conservatively valued at £80 million ($272 million) and highly successful in Britain. 
It may be one of the most recognised brands with over-45-year-old British housewives, but its influence is weakening without further 
investment. 
A new generation of consumers has entered the market, seeking to satisfy a different set of demands or requirements to their parents. 
Meat NZ has also rolled out its "New Zealand beef story" through Asia over the past year. 
But support from the meat export sector is mediocre. 
Surely, there is a place on the international stage for the New Zealand Beef and Lamb Marketing Bureau, that lean but effective team, 
winning world acclaim for innovative campaigns such as Ironstein and Iron Brion. 
In spite of decreasing funding from the meat industry and farmers, it continues to prove the value of targeted campaigns which 
highlight the nutritional values of red meat consumption within New Zealand. 
Could the bureau's highly successful Quality Mark be extended internationally? 
Research last year showed that two-thirds of New Zealand consumers preferred to buy beef and lamb with the Quality Mark symbol. 
The challenge for meat companies will be to agree on terms for a fully funded promotional campaign. 
Several firms are meeting Meat NZ staff in Wellington today and high on the agenda is meat promotion. Let's hope common sense 
prevails over one-upmanship. 
* Tony Leggett is editor of Country-Wide, a monthly rural newspaper. 

                 Millions in airwaves sale

                 08.07.2000 - By RICHARD BRADDELL 

                 A couple of months ago, British telecommunications
                 companies bet $72 billion in an auction of third
                 generation mobile telecommunications radio spectrum. 

                 On Monday, New Zealand telcos will begin placing their
                 own bets in a similar auction that begins here. 

                 How much the spectrum will sell for is a difficult
                 question. Estimates have ranged up to an improbably
                 high $650 million. If the British experience is translated
                 into local terms, the New Zealand spectrum would be
                 likely to go for around $1.5 billion, or the possible cost
                 of building a couple of networks. It will not, for any
                 number of reasons. 

                 The first is that the New Zealand auction has attracted
                 surprisingly few bidders; a dozen including five SOEs
                 seemingly intent on preserving existing user rights and
                 none from overseas. 

                 With Telecom, Vodafone and Telstra Saturn being the
                 only bidders with obviously strong financial support, a
                 dose of reality has settled in and expectations are that
                 the New Zealand spectrum could now go for between
                 $50 million and $200 million. 

                 That aside, the amounts paid in Britain have so shaken
                 the investment community that they have been a factor
                 driving the recent slump in telecommunications share
                 prices globally. 

                 If impending auctions in other countries draw bids at
                 similar levels, the balance sheets of some of the
                 multinational operators could be seriously weakened. 

                 In fact, bidders paid so much in the British auction that
                 the Government has had to stagger payments over
                 several months so that they do not upset monetary
                 policy. 

                 But why bid for the spectrum in the first place? The
                 answer lies in a new third generation of mobile cellular
                 services it will support. These will most likely be based
                 on a broadband version of CDMA, an enhanced digital
                 cellular technology. 

                 Telecom is rolling out a narrowband version of this
                 technology. 

                 CDMA has become the technology of choice in third
                 generation (known as 3G) because it overcomes
                 limitations of prevailing cellular technologies which tend
                 to be better at either voice or data but not both. CDMA
                 is great for voice and data and it is the 3G version's
                 much higher bandwidth or delivery capacity that has
                 telcos and business salivating over its m(for
                 mobile)-commerce and multimedia capabilities. 

                 The services that 3G will bring are only, we are told,
                 limited by the imagination. For instance, if you were to
                 get lost in an unfamiliar city you would just pull out your
                 mobile videophone, dial a number and a map of the
                 locality would appear indicating where you were and
                 even the way to a restaurant or bar, if that was what you
                 were looking for. 

                 Canny retail chains might also use the ability inherent in
                 mobile networks to identify your location and send you
                 messages when you are close to one of its stores. 

                 But some services typically associated with 3G are
                 already coming online on existing 2G networks. 

                 New Zealanders with WAP enabled GSM phones are
                 starting to get stock quotes, sports scores and scaled
                 down internet. 

                 3G will distinguish itself by being able to deliver full
                 stream video on the hoof. That could be very useful in a
                 rescue situation where images could be videoed back
                 from the scene so engineers could advise searchers on
                 the best way of going about finding trapped people. 

                 But whether there would be sufficient demand for
                 full-stream mobile video to justify building a new network
                 is a big question. 

                 Another problem is that demand for many services will
                 be limited, if only because their complexity may
                 challenge consumers who already have trouble
                 programming their home videos. 

                 A more mundane reason for the hot demand for 3G
                 spectrum in Britain is that existing 2G spectrum is
                 already crowded, and demand for present generation
                 cellular is burgeoning, providing room for new entrants
                 as well as existing players to build new networks. 

                 Demand is growing in New Zealand, but with a
                 population less than a tenth the size, mobile operators
                 have all the spectrum they need. 

                 Even Australia's much larger market, executives at
                 Telstra's Melbourne research facility are on record as
                 saying, will struggle to support a 3G network. 

                 Meanwhile, 2.5G services such as WAP, a
                 trimmed-down internet protocol suitable for smaller
                 cellular screens, and GPRS, a packet data system, are
                 being introduced to New Zealand. 

                 There are other problems with 3G. As one Telstra
                 executive said, when a vendor shows you a 3G
                 video-enabled phone, they show you just one, because
                 that is all they have. 

                 It will be three years before equipment is widely
                 available. 

                 And even then, 3G will only perform to full specification
                 in urban areas because of the prohibitive cost of
                 cellsites in the country. 

                 There is also the question of who might use 3G
                 services, and who will be able to afford them. 

                 These issues have not gone unnoticed by parties
                 interested in New Zealand's spectrum auction. 

                 This week Maori interests and Ihug, the country's
                 second largest internet service provider, were in court in
                 Wellington in an effort to block the auction. 

                 While the Maori interests were seeking to protect rights
                 to a taonga, or treasure, Ihug's action was concerned
                 with a portion of second generation spectrum that is
                 also on the block. 

                 Indeed, given the uncertainties about 3G, the 2G
                 spectrum is regarded by Ihug, and seemingly the Maori
                 claimants, as being every bit as important, if not more
                 so. 

                 The reasons are twofold: the first being that 3G is still
                 some time off while 2G technology is available today.
                 The second is an International Telecommunications
                 Union ruling in May that 2G spectrum in the 2Ghz band
                 that is being sold from Monday can also be used for 3G
                 purposes. 

                 As Telstra Saturn chief executive Jack Matthews said,
                 the concern is that if a network operator does not get to
                 2G, then it will not make it to 2.5G, and 3G may come
                 too late. 

                 Ihug's view is that market incumbents Vodafone and
                 Telecom are growing so fast that by the time a new 3G
                 network is operational, there will be only the dregs of a
                 potential customer base remaining. The window of
                 opportunity, Ihug argues, is less than a year. 

                 Its proposal, as outlined in the High Court, would be to
                 buy a 10 MHz block of 2G spectrum and use 2.5 MHz
                 of that to get a mobile network built. 

                 Ihug is understood to be seeking $40 million in
                 additional funding. 

                 The auction has already been delayed several times by
                 Maori claims at the Waitangi Tribunal, and carrier
                 disquiet that Telecom or another carrier could foreclose
                 the market by buying all the spectrum. 

                 The new Government, responding to carrier discontent,
                 delayed the auction yet again in February and then
                 divided the 3G spectrum into four lots, to be sold to
                 separate owners, with one lot reserved for Maori
                 interests at 95 per cent of the average purchase price. 

                 This week's unsuccessful Maori action, which will now
                 go to the Court of Appeal, argued that the Crown had
                 consulted insufficiently before rejecting a Waitangi
                 Tribunal recommendation that part of the spectrum
                 simply be given to Maori. 

                 The Ihug action, which was rejected out of hand by the
                 High Court, was aimed at getting similar restrictions on
                 the 2G portion up for sale. 

                 Restrictions were opposed by Vodaone, Telecom and
                 Transpower when Ihug raised the matter with the
                 Ministry of Economic Development in March. 

                 But with the International Telecommunications Union
                 ruling changing the landscape, the case for another rule
                 change becomes all the more compelling.


                 Unhappy Air NZ chief flies the coop over
                 contract row

                 08.07.2000 - By DANIEL RIORDAN 

                 Air New Zealand managing director Jim McCrea abruptly
                 left the airline yesterday, apparently over a dispute
                 concerning his $1 million contract. 

                 His sudden departure after a lifetime with the carrier is
                 said to be linked to changes proposed to his
                 employment contract under a new structure with
                 recently acquired Ansett Australia. 

                 Mr McCrea was unhappy with those changes, a source
                 close to the company said. 

                 Members of the Air NZ management are being
                 reshuffled as part of integrating the two airlines, with
                 changes expected to be announced during the next few
                 weeks. 

                 Mr McCrea left after nine years in the top job and 44
                 years with Air NZ and its predecessor. 

                 Sir Selwyn Cushing has stepped in as executive
                 chairman while a worldwide search for a replacement
                 gets under way. 

                 While Mr McCrea's departure was no surprise, its timing
                 certainly was. 

                 Most of the market analysts the Business Herald
                 contacted said they had expected him to leave once the
                 deal with Ansett Australia was clinched late last month,
                 but had expected it to be much later this year or even
                 early next year. 

                 Much of their focus yesterday was on the role played by
                 Singapore Airlines in Mr McCrea's departure. 

                 Relations between Mr McCrea and Singapore head
                 Cheong Choong Kong became strained after Air NZ
                 effectively blocked Singapore's attempt to buy half of
                 Ansett Australia. 

                 Singapore instead took 25 per cent of Air NZ. 

                 Air NZ issued a press statement in which Mr McCrea
                 described the completion of the Ansett Australia deal as
                 a "natural turning point" in a development strategy he
                 had been driving in his nine years in charge. 

                 "Now ... it's time for me to look for a fresh challenge." 

                 Sir Selwyn, in the same statement, said Mr McCrea
                 had made a major contribution to the airline's
                 development. 

                 One rumour had Mr McCrea joining Hong Kong-based
                 Cathay Pacific. 

                 A Cathay Pacific spokeswoman said the company did
                 not comment on market rumour. 

                 Local analysts paid tribute to Mr McCrea's stewardship
                 during a turbulent time for Air NZ. 

                 Strategically, he will be remembered for taking the
                 airline into Australia, an often tortuous process that
                 culminated in last month's deal with Ansett Australia. 

                 Air New Zealand shares rose after the news, with the A
                 shares, available only to New Zealand residents, closing
                 5c higher at 180c. 

                 The B shares, available to all comers, closed 12c higher
                 at 221c. 



                 The credit ratings of major New Zealand companies are sound, but
                 some risks remain. Herald Picture / Bastiaan Beentjes

                 Agency tags NZ corporates' risk

                 08.07.2000 - By BRIAN GAYNOR 

                 Standard & Poor's, the United States-based credit
                 rating agency, has just released two important reports
                 on New Zealand's major borrowing organisations. 

                 The analysis of Australian and New Zealand companies
                 concludes that the deterioration in credit quality has
                 slowed, but the outlook remains negative. The study of
                 this country's rated organisations is headed, "New
                 Zealand's credit quality sound, but risks remain." 

                 The two reports are extremely useful because they
                 assess the financial strength of our companies against
                 an international benchmark. They also look at these
                 organisations from a lender's perspective instead of an
                 equity or sharemarket viewpoint. 

                 A Standard & Poor's credit rating is an opinion of the
                 credit worthiness of a debt issuer and its ability to meet
                 its financial obligations. A long-term rating is the ability
                 to repay loans with a maturity of one year or more. 

                 The highest credit rating is AAA. Standard & Poor's
                 says a borrower with this rating is in an extremely
                 strong position to repay its debts. 

                 The rating scale moves down through AA, A, BBB, BB
                 and so on. The lowest rating of D indicates that the debt
                 issuer has already defaulted on its borrowings. 

                 Within each rating band are two sub-sections. For
                 example, within the A band there is A+, A and A- and
                 an outlook that is either positive (the rating may be
                 raised), stable (it is not likely to change), negative (the
                 rating may be lowered) or developing (it could be raised
                 or lowered). 

                 The highest-rated borrowers are sovereign states.
                 Among the AAA-rated countries are France, Germany,
                 Japan, Singapore, Switzerland, Britain and the United
                 States. 

                 New Zealand has an AA+ rating, as have Australia,
                 Belgium, Canada, Denmark, Finland, Ireland, Spain,
                 Sweden and Taiwan, but it is the only country in this
                 band to have a negative outlook. 

                 Standard & Poor's believes that a cyclical upturn will
                 lead to better short-term growth prospects [for New
                 Zealand]. But the vulnerability posed by rising private
                 sector debt, high external debt and chronic balance of
                 payments pressures, which are the highest of all AA
                 sovereigns, make the economy more susceptible to
                 external shocks. 

                 The survey of Australian and New Zealand corporates
                 covers 231 organisations. 

                 The highest-rated Australasian company is Australian
                 Postal Corporation, with AAA (stable). At the other end
                 of the scale is Centaur Mining & Exploration, with B-
                 (negative). 

                 The agency's conclusion is that the credit outlook for
                 Australasian companies has stabilised but is still
                 negative. The analysis highlighted several important
                 credit trends: 

                 The deterioration in the financial profile of the surveyed
                 companies has slowed. 

                 Operating margins have improved but the return on
                 funds employed has weakened because of the
                 under-performance of newly commissioned assets, low
                 inflation and the low interest rate environment. 

                 In response to demands by shareholders, Australasian
                 corporates have raised debt and used share buybacks
                 to return equity to shareholders. 

                 In the past 12 months five companies have been
                 downgraded for every one upgraded. 

                 There is still downward pressure on credit ratings
                 because one-third of the companies have a negative
                 outlook. 

                 The 24 rated New Zealand companies, including three
                 now domiciled overseas, have a credit rating between
                 AA+ (negative) and BB+ (positive). 

                 There is minimal risk associated with these companies.

                 A recent study by Standard & Poor's, covering 1981 to
                 1999, showed that a BBB-rated organisation had a 4.3
                 per cent chance of defaulting and a BB-rated borrower a
                 15.8 per cent chance. Standard & Poor's reported that
                 there had been deterioration in New Zealand's corporate
                 credit rating because companies were seeking growth
                 through exports and overseas investments and this
                 strategy was being mainly funded by debt. 

                 The study concluded: "In almost all New Zealand
                 industries, certainly in the dairy, telecommunications
                 and airlines industries, we are witnessing domestic
                 companies stepping outside the New Zealand economy
                 and investing in large economies, principally Australia." 

                 In a lot of these cases, the acquisitions or expansions
                 are debt-funded, and that has had an impact on credit
                 quality. The investments may be positive in a business
                 sense and in the longer term, but their reliance on debt
                 funding means that there is a price to pay in terms of
                 credit quality. 

                 The heavy reliance on debt is a reflection of the poor
                 performance of the New Zealand sharemarket and our
                 low personal savings rate. 

                 In the past 12 months, Telecom's rating has been
                 lowered from AA- (negative) to A+ (stable) because of
                 the $1.6 million AAPT purchase, which was debt
                 funded. 

                 Air New Zealand was cut from BBB (negative) to BBB-
                 (negative) when it announced it had bought the
                 remaining 50 per cent of Ansett. 

                 The outlook for the Dairy Board has moved from stable
                 to negative because of a potential investment in Bonlac
                 Foods, a Victorian-based dairy company. 

                 Two other listed companies also suffered downgrades. 

                 Tranz Rail's rating was reduced because of its heavy
                 reliance on commodity exports and a small number of
                 large customers. 

                 Contact Energy's rating was reduced from A- (negative)
                 to BBB+ (stable) because of the potential for a gradual
                 weakening of its financial profile under new ownership. 

                 In the forestry sector, the credit rating of Carter Holt
                 Harvey was lowered from BBB (negative) to BBB-
                 (stable) following a debt-funded modernisation
                 programme, which coincided with low product prices. 

                 The credit-rating outlook for the company has been
                 changed to positive following the sale of its major
                 Chilean interests. 

                 According to Standard & Poor's, the sale proceeds will
                 be applied to debt reduction and give the group greater
                 flexibility to grow and to strengthen its core businesses
                 in Australasia and Asia. 

                 Fletcher Challenge has been placed on negative watch
                 following its decision to divest several operations,
                 including its paper division to Norske Skog. 

                 All the privatised Australian airports have a rating in the
                 BBB range but Auckland International Airport,
                 Christchurch International Airport and Wellington
                 International Airport are rated between A+ and A-. 

                 Standard & Poor's says the Australian airports have
                 been aggressive users of debt, but our airports have a
                 stronger financial profile that provides a cushion against
                 short-term fluctuations in passenger numbers. 

                 The rating agency gives the thumbs up to the New
                 Zealand banking sector. Asset quality is close to an
                 all-time high, although the growing level of private sector
                 indebtedness could put some pressure on the banks in
                 the medium term. 

                 The banks benefit from their close relationship with their
                 overseas parent companies, mainly in Australia. The
                 credit ratings of the New Zealand banks are above their
                 stand-alone risk profiles because of the high level of
                 foreign ownership. 

                 The rise in the number of New Zealand companies being
                 rated by Standard & Poor's is a welcome trend. 

                 A high credit rating allows companies to contain their
                 borrowing costs by issuing debt securities at a relatively
                 low interest rate. 

                 A standardised rating system allows investors to
                 determine whether the rate they are being offered is
                 consistent with the risk of the security. 

                 Several companies in the Australia and New Zealand
                 corporate survey, including UnitedNetworks,
                 Independent Newspapers, Sky City, Infratil, Fisher &
                 Paykel, TrustPower and Port of Tauranga, have yet to
                 receive a Standard & Poor's credit rating. 

                 A rating for these companies will assist in the
                 development of New Zealand's capital markets.


                 Geoff Palmer is another anti-0867 campaigner Telecom is likely to
                 give in to. Herald File Picture

                 Retreat by Telecom in 0867 battle

                 08.07.2000 - By MICHAEL FOREMAN 

                 Telecom New Zealand has dropped a Kiwi Share test
                 case against an internet user who had objected to
                 connection charges. 

                 It also appears the communications giant will not
                 pursue action against two other users who claimed that
                 Telecom's 0867 connection scheme broke the
                 agreement guaranteeing free local calls. 

                 Christchurch-based Clearnet user Mike van Lokven was
                 due to contest a Telecom bill for $562.53 of extra
                 "internet connection" charges in a Disputes Tribunal
                 hearing. 

                 But Mr van Lokven has now been told that Telecom has
                 withdrawn the charges and will credit his account for the
                 amount. 

                 The case has been adjourned indefinitely by the
                 Christchurch District Court. 

                 "It means it's been put on hold," said Mr van Lokven. 

                 "If [Telecom] decides to resume charging then we can
                 bring the case back into court without too much effort
                 on our part." 

                 The 2c-a-minute charges, which applied after 10 hours'
                 monthly internet use, ended last May when Telecom
                 reached an interim interconnection agreement with
                 Clear. 

                 However, Mr van Lokven and two other anti-0867
                 campaigners decided to continue their legal challenge. 

                 They maintained that the internet charges broke the
                 1990 Kiwi Share agreement, which guarantees a local
                 free-calling option for all residential customers. 

                 It seems unlikely that two similar cases, involving PC
                 World columnist Geoff Palmer and Brian Fairchild, an
                 internet user from Torbay, will proceed. 

                 Mr Palmer's hearing has been adjourned until July 26 in
                 Wellington, and Mr Fairchild has a hearing date set for
                 August 1 in the North Shore District Court. 

                 "The bottom line is that we don't have a dispute with
                 these people," said Telecom finance and media
                 communications manager Martin Freeth. 

                 He denied that the hearings would have represented a
                 legal test of whether the Kiwi Share applied to internet
                 access. 

                 "That was an agreement between Telecom and the
                 Government that these customers were not party too. 

                 "You don't have tests of this kind before the Disputes
                 Tribunal - it doesn't go to the substantive issues." 

                 Mr Freeth said Telecom was likely to be well disposed
                 towards the two other cases that were pending. 

                 Last month, the draft report of the Government's
                 telecommunications inquiry recommended that the Kiwi
                 Share obligation should be clarified to include local
                 low-speed internet connections.


                 Between the lines: Sceptics' trade worries
                 misplaced

                 08.07.2000 - 

                 Singaporean and New Zealand trade officials meet in
                 Auckland next week for their sixth and, it is hoped, final
                 set of negotiations on a closer economic partnership
                 between the two countries. 

                 The process is looked upon with scepticism, even
                 suspicion, by some business people, especially in the
                 textile, clothing and footwear (TCF) sector, the last to
                 enjoy significant tariff protection. 

                 Although Singaporean wages are substantially higher
                 than ours and only a tiny proportion of New Zealand's
                 TCF imports come from there, the concern is that the
                 rules of origin in the agreement will open a back door to
                 product from the sweatshops of Asia. 

                 Rules of origin specify the minimum proportion of value
                 added in Singapore needed for goods to qualify for
                 tariff-free entry into New Zealand and vice versa. 

                 Fears of a sell-out on the rules of origin threshold seem
                 to be groundless, however. 

                 Though the Singaporeans wanted 20 per cent, it is
                 understood a threshold of 40 per cent ex-factory cost
                 was agreed between Trade Minister Jim Sutton and his
                 Singaporean counterpart, George Yeo, in Darwin last
                 month. 

                 Under CER, the threshold is 50 per cent but New
                 Zealand has been advocating 40 per cent to the
                 so-far-unmoved Australians for years. 

                 A related worry is whether goods produced in
                 Singapore-controlled "free trade zones" in neighbouring
                 countries, principally Indonesia's Batam Island, will
                 qualify as Singaporean under the rules of origin. 

                 Batam Island houses an industrial park where about 200
                 firms, not all of them Singaporean, use cheap Javanese
                 workers in labour-intensive but often high-tech
                 manufacturing. 

                 Again the concern is misplaced. It is sovereignty which
                 counts for rules of origin, and the island is Indonesia's
                 territory, not Singapore's. 

                 The sceptics' next concern is enforcement. 

                 Can we trust Singaporean certification of the origins of
                 imported goods? Indeed, can we trust our own officials
                 to track down breaches of the rules? Or will it end up in
                 the too-hard basket next to the wound-back odometers?

                 Customs authorities can probably rely on watchful
                 competitors to alert them to any upsurge in imports of
                 dubious origin (remember that the vast majority of
                 Singapore's exports to New Zealand already attract no
                 duty; nor ours to them). 

                 Doubts about whether the authorities have sufficient
                 resources to police the agreement argue for greater
                 resources, not for abandoning the agreement. 

                 New Zealand, for its part, is seeking more liberal
                 treatment of trade in services like education, and
                 recognition of professional qualifications. 

                 As New Zealand and Singapore are already among the
                 most open economies to be found, the further direct
                 gains from a free trade agreement between them is
                 limited. 

                 The real point is to act as a catalyst to a wider trade
                 agreement between the Association of South-east
                 Asian Nations and Australia and New Zealand - a
                 grouping with a $US1 trillion economy.


                 08.07.2000 - 

                 Jim McCrea was one of that increasingly rare breed -
                 the one-company man. 

                 Born in New Zealand 60 years ago, he received most of
                 his early schooling in Canada. At 17 he joined Air NZ's
                 forerunner, Tasman Empire Airways Ltd, as an
                 engineering apprentice. 

                 He spent the next 26 years moving up the ranks,
                 becoming chief executive in 1991 and a board member
                 the following year. 

                 Mr McCrea was paid $1,114,082 in the year to June
                 1999. His June 2000 earnings will not be disclosed until
                 the company's 2000 annual report is issued later this
                 year. 

                 However, shareholders may have to wait a further year
                 to find out the size of the golden parachute he will
                 almost certainly receive, as he left after the company
                 closed off its books on June 30.

                 Brierley Investments wants $200 million for its stake in Sealord.
                 Herald File Picture

                 South Africa fish firm tests Sealord's
                 waters

                 08.07.2000 - By PAULA OLIVER 

                 A twin bid for Brierley Investments' stake in Sealord has
                 been confirmed, further fuelling speculation that a South
                 African frozen food giant wants to enter our waters. 

                 Brierley Investments' NZ general manager Arun Amarsi
                 said that an offer had been made for the 50 per cent
                 holding in Sealord, but would not give details of the
                 bidders. 

                 It is understood the Treaty of Waitangi Fisheries
                 Commission, which already holds the remaining 50 per
                 cent of Sealord, is one of the partners. Irvin and
                 Johnson, South Africa's largest supplier of fish to
                 markets, is rumoured to be the other. 

                 The South African company was one of several foreign
                 firms to put forward an ill-fated offer for the entire 50 per
                 cent stake in May, before the Government barred foreign
                 enterprises from owning more than 24.9 per cent of
                 Sealord. 

                 Since then, the Waitangi commission has been
                 sounding out potential overseas partners to make a joint
                 bid. 

                 It is understood Brierley Investments wants $200 million
                 for its stake in New Zealand's largest commercial fishing
                 company. Market sources indicate that price could
                 prove to be a sticking point for the deal. 

                 Sealord holds 23 per cent of the national fishing quota. 

                 Irvin and Johnson processes, markets and distributes
                 seafood, frozen vegetables and ready-to-eat frozen
                 meals throughout South Africa. It supplies french fries to
                 fast-food chains such as KFC and Wimpy in South
                 Africa, and American seafood restaurant chain Long
                 John Silver. 

                 Employing 6500 people, Irvin and Johnson had turnover
                 of $882 million for the June 1999 year. It has interests in
                 Australia, Monte Carlo, Mozambique, Namibia and other
                 African countries. 

                 Its major shareholder is Anglovaal Industries, a
                 family-owned organisation, with a 69 per cent holding. It
                 also has three black empowerment groups holding a
                 further 20 per cent. 

                 Irvin and Johnson has carried out several exploratory
                 fishing expeditions for orange roughy. 

                 The NZ Federation of Commercial Fishermen had
                 opposed a foreign company owning half of Sealord, but
                 president Peter Jones said the rumoured deal would not
                 affect his group. 

                 "There's nothing to stop them being 24.9 per cent
                 holders, and there are a lot of companies operating that
                 way," he said. "There could be advantages for them, like
                 breaking into new markets, and doing so without tariffs."

                 He had heard that there were still other interested
                 parties, so it was unlikely to be the only option. 

                 The Waitangi commission has pre-emptive rights over
                 the Brierley stake. 

                 Brierley indicated that if offers did not reach the price it
                 wanted, it would hold on to the Sealord stake,
                 describing it as a "valuable strategic asset." 

                 Mr Amarsi said it was not disappointing to see the sale
                 process stretched out. He could not give a date that the
                 offer would be considered by. 

                 A Japanese firm is rumoured to be still interested in
                 making a bid but market sources indicate that a
                 possible bid from Sanford will not go ahead.

                 business

                 08.07.2000 - By PAULA OLIVER 

                 The struggling wool trading industry has suffered a
                 further blow with carpet-making giant Cavalier
                 Corporation winding down the wool trading side of its
                 business. 

                 Managing director Alan James announced yesterday
                 that Cavalier's merchant scouring operation, E.
                 Lichtenstein & Co, would begin to scale down its
                 operation, and move towards supplying wool largely for
                 Cavalier's own carpet-making needs. 

                 Mr James said the company would remain involved in
                 providing scouring services to other wool merchants, but
                 there would be redundancies at the Onehunga wool
                 scour. 

                 Wool trading had consistently failed to produce an
                 adequate return on the high level of funds it demanded,
                 Mr James said, and Lichtenstein had been unable to
                 cover the costs of its capital. 

                 "The problem lies with the large quantity of wool that the
                 company has to own at all times to adequately hedge
                 its forward order book," Mr James said. "There is
                 insufficient margin in the business to provide an
                 adequate return on that, and we see nothing in the
                 forward outlook likely to change the situation." 

                 Roger Buchanan, the Wool Board's general manager of
                 policy, said the news did not come as a huge surprise. 

                 "Cavalier have signalled for some time that this is a
                 difficult part of their business, and it's not an area where
                 people have been making any money," he said. 

                 "There has been excess scourers for New Zealand's
                 scouring capacity, and we have seen some contraction
                 of that lately." 

                 Mr James refuted suggestions that the move was
                 related to the recent McKinsey report, which
                 recommended huge changes to the wool industry. 

                 He said Cavalier would sell Elco Direct, the procurement
                 arm of Lichtenstein, and hoped to free up $40 million in
                 capital that was currently employed in wool trading. This
                 would make Cavalier debt-free and give it the chance to
                 expand. 

                 Carpets had been responsible for well over 90 per cent
                 of the company's tax-paid earnings in recent times.


                 Anne Geddes

                 Equity house invests in services company

                 08.07.2000 - By DITA DE BONI 

                 Image Centre, a private Auckland-based internet,
                 multimedia and pre-press services company, has a new
                 shareholder. 

                 Venture capitalist Direct Capital Private Equity has
                 bought a 25 per cent stake in the company. 

                 Image Centre has an annual turnover of more than $12
                 million and a staff of 96. It hopes to use the capital
                 injection to expand its web development business in
                 overseas markets, further develop new media services
                 and increase staff. 

                 It may also list on the stock market at some stage. 

                 The company, which began life as a pre-press company
                 in Mt Eden more than 10 years ago, metamorphosed
                 about six years ago from a high-quality scanning firm to
                 an internet and multimedia company. 

                 Managing director Syd Atkins said it had since
                 experienced big dividends. 

                 "Our success has been driven by following technology."
                 The firm was in place before New Zealand found the
                 need for multi-media services. 

                 The firm's most famous website work of 200-odd sites
                 was executed for Kiwi photographer Anne Geddes. The
                 site attracted 25 million hits in its first four months and
                 now receives more than 30 million hits a month. 

                 Through Direct Capital, Image Centre is now linked to
                 New Zealand's largest print management company,
                 Moore Gallagher, in which the private equity house also
                 has a 25 per cent stake. 

                 Mr Atkins said Image Centre would benefit greatly from
                 being near to the Australasian print giant, because
                 Moore Gallagher customers often had website
                 development and other multimedia requests that could
                 be passed on. 

                 "We've had so much business locally and have not been
                 in a position to chase work overseas. Now we think we
                 will be able to expand our workforce by 25 per cent in
                 the next three to four months." 

                 Direct Capital director Mark Hutton said Image Centre
                 was a successful blend of "old economy" and "new
                 economy" businesses. 

                 "There is a place for a focused communications
                 company. This buy-in is exciting to us because it is a
                 good New Zealand story ... a company at the leading
                 edge of web development and being able to take that to
                 a global market, with our help."
Money drain or wealth
                 builder?

                 08.07.2000 - By MARY HOLM 

                 Q. My wife and I earn about $80,000 a year gross
                 between us, including income from interest. 

                 We have $240,000 invested in a fixed- interest
                 account at 6.5 per cent, with the interest being
                 reinvested, and not spent. 

                 We rent a house at $240 a week. We have no large
                 assets other than two cars. We are both 40 and
                 have two children, aged 12 and 9. 

                 We are not sure how best to invest our money. 

                 We have been considering buying a house and
                 taking out a $100,000 mortgage, but are not sure if
                 this is the best way to go, given that house prices
                 are not rising in the way they used to. 

                 If our needs are to have adequate housing and
                 provide for our own retirement, and preferably
                 become financially independent before retiring
                 age, what would you recommend that we do? 

                 I have been reading a book, Rich Dad, Poor Dad,
                 that recommends not investing in the family home.

                 A. You're different. Most families in your circumstances
                 would have bought a home without even thinking about
                 it. But are they right? 

                 A family home probably shouldn't be viewed primarily as
                 an investment. It provides accommodation, one of your
                 "needs." 

                 There is, of course, the alternative that you have chosen
                 - renting. And that might be financially better. 

                 It all depends on what assumptions you make about
                 mortgages; future rises in rent, house prices and
                 interest rates; what alternative investments you would
                 consider and so on. 

                 But there are non-financial issues, too. 

                 In New Zealand, it's hard to get a lease for several years
                 or more. So you can't usually do extensive decoration or
                 make other changes that would make rental
                 accommodation feel more like your home. 

                 And you can be forced to move at a time that doesn't
                 suit you. Most people, especially those with young
                 children, like the security of owning their home. 

                 Where investment - as opposed to accommodation -
                 really comes into the picture is when you're thinking of
                 buying a more expensive house than you need,
                 particularly if you will borrow lots to do so. 

                 If you do that, you benefit from living in more pleasant
                 surroundings. 

                 But, beyond that, you might not do as well financially as
                 you would investing in something else. 

                 In Rich Dad, Poor Dad, Robert Kiyosaki doesn't really
                 argue that you shouldn't own your own home. It's "better
                 than nothing," he says. 

                 What he does say is because home owners have to pay
                 rates, insurance, maintenance costs and, usually,
                 mortgage expenses, a home can be a financial drain
                 rather than something that builds wealth. 

                 And the bigger the home, the higher the expenses. 

                 "Most people work all their lives paying for a home they
                 never own," says Kiyosaki. "[They] buy a new house
                 every so many years, each time incurring a new 30-year
                 loan to pay off the previous one. 

                 "The greatest losses of all [from home ownership] are
                 those from missed opportunities. If all your money is
                 tied up in your house, you may be forced to work harder
                 because your money continues blowing out of the
                 expense column, instead of adding to the asset
                 column." 

                 While I don't agree with everything in Rich Dad, Poor
                 Dad, I think Kiyosaki makes some good points here. 

                 Owning a modest home makes sense. 

                 It gets you into the housing market. Even though house
                 prices aren't rising as fast as they used to, no one
                 knows what will happen in decades to come. 

                 But owning a home that puts you deep in debt - in these
                 days when interest rates are much higher than inflation -
                 may not be so smart. 

                 Where does all this leave you? Perhaps buying a
                 mortgage-free $240,000 house with your savings.
                 Perhaps going a bit more upmarket and getting a small
                 short-term mortgage. 

                 You could, for instance, get a 10-year loan of about
                 $85,000 and pay it off at the same rate as you now pay
                 rent. Or, given your incomes, you might manage a
                 larger loan or a faster payoff. 

                 Whatever you do, it would be good to be mortgage-free
                 around 50. And don't, then, trade up. Stay put, and
                 plough any former mortgage money and other savings
                 into a retirement fund. 

                 Q. The unit trust marketing manager (Money
                 Matters, June 17) gave only some reasons that a
                 financial adviser is a valuable person worth paying
                 a fee. Your reply goes to extraordinary lengths to
                 avoid facing up to this. 

                 As a certified financial planner and practising
                 lawyer with many years experience, I can assure
                 you lawyers do not charge fees based only on time
                 spent. 

                 Lawyers also take into account issues such as
                 specialty skills, urgency, complexity and, most of
                 all, responsibility for the amount of money
                 involved. 

                 You are wrong to suggest a fee should be the
                 same for a $1000 or $1 million transaction. I would
                 not accept clients with more than $1000 to invest if
                 I was not paid for these other aspects. 

                 Advisers organise clients' affairs, minimise
                 taxation and set good habits. They hold the client's
                 hand and educate. 

                 Advisers provide patience and discipline, without
                 which investment is devoid of strategy. 

                 Your attitude is understandable, as I have little
                 time for chain-store advisory services. But to
                 encourage people not to take advice could be
                 more damaging in the long run. Please be
                 constructive and not cynical. 

                 It is not correct to say clients do not need advisers
                 because they can learn to contradict their instinct
                 to sell and buy at the wrong times. Obviously this
                 is best done with a teacher. 

                 I believe I more than pay for fees in the short term,
                 definitely in the long term.

                 A. I started responding to you bit by bit. Then I realised I
                 was being as sensitive about every nuance as you
                 seem to have been about what I wrote in the first place. 

                 You make some good arguments which, no doubt,
                 balance some of the "extraordinary lengths" I apparently
                 went to - without even realising it. 

                 And I love your paragraph starting, "Advisers organise."
                 It sounds like something we chanted at Girl Guides. 

                 If only all financial advisers were as good as you say
                 you are, I would be happy to be constructive. 

                 But as long as they continue to be a mixed bag - which
                 you acknowledge - I will keep warning people to tread
                 carefully in Financial Adviser Land. 

                 Now for a word from a colleague of yours, who backs up
                 some, but only some, of what you say. 

                 Q. I am a financial adviser with 14 years'
                 experience and would generally agree with your
                 comments that the so-called portfolio monitoring
                 fee charged by many financial advisers can be a
                 problem - particularly so when that fee is based on
                 a percentage of the portfolio. 

                 In broad terms, I agree with you that it may not
                 take any more work to manage a portfolio of $1000
                 than one of $1 million. 

                 However, I also concur with the unit trust
                 marketing manager who pointed out that clients
                 who are "advised" are less likely to be deterred
                 from their investment strategy than those who are
                 not. 

                 This is certainly my experience. Our firm charges a
                 "flat" fee for "strategic financial advice" as against
                 merely portfolio monitoring. 

                 You make the point that people probably don't
                 need an adviser to be told to "hold on to their
                 investments." A great sentiment, but probably a
                 little naive. 

                 Even the best intention can be easily diverted by
                 the hot tip, the well-meaning advice from a
                 relative, the fad or changes in Government policy. 

                 A good financial adviser working strategically with
                 the client can and does make a difference. If so, a
                 reasonable fee can pay handsome dividends for
                 the client.

                 A. A couple of quick comments: 

                 First, I like your flat fee policy. I wish more firms would
                 do that. 

                 Second, a change in Government policy might be a
                 legitimate reason to change an investment strategy. 

                 Okay. That's five Q&As over the past few weeks on the
                 one topic. I think that will do. 

                 * Got a question about money? 

                 Send it to:
                 Money Matters
                 Business Herald
                 PO Box 32, Auckland
                 or e-mail: maryh@journalist.com.
                 Please note: Letters should not exceed 200 words. We
                 won't publish your name, but please provide it and a
                 (preferably daytime) phone number in case we need
                 more information.



                 08.07.2000 - By PHILIP MACALISTER 

                 If someone asks you what your most valuable asset is,
                 you probably say your house. But, unless you are
                 retired or close to it, you are almost certainly wrong.
                 The biggest asset you have is your ability to earn
                 income. 

                 The best way to illustrate the size of this asset is to
                 look at the potential earning capacity of a 40-year-old on
                 $65,000 a year. This person can expect to earn $1.63
                 million (in 2000 dollars) in the 25 years to retirement. 

                 Odds are this big asset is unprotected. With other big
                 assets, such as your house and car, you will more than
                 likely have them insured. It is far less likely your future
                 income streams are insured against accident or
                 disability which may force you out of work for lengthy
                 periods. 

                 Income protection, or disability income insurance, has
                 been a strong growth market in recent years, yet fewer
                 than 100,000 people are covered. 

                 There are 21 standalone guaranteed renewable income
                 protection contracts on the market in New Zealand.
                 Being guaranteed, renewable contracts insurance
                 companies cannot cancel individual policies and cannot
                 single you out for a premium rise. Instead, the contracts
                 have to be treated as a group. 

                 The basic philosophy behind income protection is that
                 the life office will pay you a portion of your wage or
                 salary if you have to stop work because of accident or
                 injury. 

                 This insurance has traditionally been bought by the
                 self-employed, whether they run a small landscaping
                 business or manage a medium-size manufacturing
                 business. But the case is growing for wage and salary
                 earners to consider buying a policy. 

                 The reality is the Accident Compensation Corporation
                 will not pay out in all situations, and pays less than in
                 the past. 

                 For instance, if you are forced out of work for an
                 extended period due to, say, a health-related condition
                 such as hepatitis or a stroke, then you will not have any
                 income unless you have insurance. 

                 Likewise, ACC is not likely to cover you for stress or
                 depression. 

                 Tower Health managing director Jim Minto says more
                 than 50 per cent of claims against income protection
                 contracts are for these types of non-medical events. For
                 these reasons income protection is "a core element" of
                 any financial plan. 

                 The simple appearance of income protection insurance
                 belies its complexity. American International Assurance
                 general manager David Whyte says: "Price is only one
                 factor and it is not the determining factor." 

                 Picking the right policy is about getting certain
                 elements right: the type of policy, the definitions used in
                 the policy document including what is a total disability
                 and what is a partial disability, the track record of the
                 insurer and finally the premium price. 

                 This type of insurance comes in two forms: indemnity
                 and agreed value policies. 

                 With an indemnity option the insurer will pay you 75 per
                 cent of your pre-disability income. With an agreed value
                 policy the payout is determined by you and your insurer
                 at the time you pay for the cover. The catch is that the
                 payout cannot be more than two-thirds of your
                 pre-disability income. 

                 While most people do not bother reading the fine print of
                 policy documents, it is well worth doing with income
                 protection. 

                 You will find that insurance companies use different
                 definitions of what is a disability and whether it is partial
                 or total. 

                 It can have a significant bearing on the payments made
                 if you have to claim. 

                 Further issues arise in the way the company may treat
                 other income earned while you are off work and the
                 calculation of this may impact on the level of payouts. 

                 Given the complexity, Mr Whyte says: "It is unlikely
                 that the average consumer is going to be able to make
                 a useful comparison without the help of a qualified
                 adviser." 

                 The other big warning is what is likely to happen to
                 premiums in the future. 

                 Many life companies are taking a bath on income
                 protection insurance. Consequently, premiums are
                 likely to skyrocket. 

                 In some cases in the past year, increases have been
                 double-digit. 

                 The primary reasons are poor past underwriting
                 practices and longer-than-expected claim periods. 

                 Companies in Australia and the United States have also
                 been struggling with these problems. AXA, in the 12
                 months to September 1999, lost $A22 million on
                 income protection in Australia. Life companies are
                 tightening up their claims management and trying to get
                 people back to work as soon as possible. 

                 They may start to make it much harder for people to
                 have extended lengths of time on a claim. 

                 In the United States, for instance, it is now difficult to
                 buy a policy which has a waiting period of less than 60
                 days. That is, you have to be off work for 60 days before
                 receiving a payment from the insurer. Also, benefit
                 periods are reducing and many occupations have been
                 moved into categories with higher premiums. 

                 Some US companies have withdrawn from this market
                 totally, and others have removed the bells and whistles
                 in their policies to bring down costs. 

                 Mr Whyte says the key lessons out of these changes
                 are that you should know the track record of a life
                 company's premium history before signing on the dotted
                 line. 

                 He contends that if a company has been increasing its
                 rates significantly, it is likely to continue doing so.
                 "Advisers need to look for [life] offices with a stable
                 price and benefits history." 

                 A final point people should consider when looking at
                 buying an income protection (or any sort of life policy) is
                 the claims paying ability of the company. 

                 At present, it is mandatory for non-life companies to get
                 an independent rating from an agency such as Standard
                 & Poor's. While it is not required of life insurers, some
                 have gone through the ratings process as it gives
                 customers a better feel for the strength of the company.

                 After all, with a life policy you want to know if the
                 company is likely to be around in the future if you need
                 to make a claim. 

                 * Philip Macalister is the editor of online money
                 management magazine Good Returns. Good Returns
                 provides news on managed funds, mortgages,
                 insurance, superannuation and financial planning.

Money: Actuaries dole out a dose of
                 realism for the future

                 08.07.2000 - By BRENT SHEATHER 

                 Over the past 20 years, returns from the US
                 stockmarket, as measured by Morgan Stanley Capital
                 International and in US dollar terms have averaged 17.9
                 per cent a year. 

                 Over the past 10 years the rate of return was 18.3 per
                 cent a year. This compares with a longer-term average,
                 1926 to 1999, of 11.2 per cent a year. 

                 Much of the outstanding recent performance has arisen
                 not as a result of higher profits but from the willingness
                 of investors to pay higher prices, in terms of multiples of
                 a company's earnings. In other words, shares have
                 become more expensive. 

                 According to Standard & Poor's the average
                 price-earnings ratio of companies in the S&P500 index
                 in December 1999 was 30 times. In 1980 it was 15.4
                 times. 

                 In other words, we're looking at much lower returns from
                 shares in particular, but also property and bonds, in the
                 future. 

                 The high probability of lower returns in the future has got
                 the usually staid and solemn Institute of Actuaries in
                 Britain very excited, so much so it recently formed a
                 working party to consider the implications of a
                 prolonged period of low inflation. 

                 Its conclusions are sobering and should be compulsory
                 reading for all those involved in the savings industry -
                 especially those poor devils just starting to save for their
                 retirement. 

                 The actuaries believe they need to provide leadership in
                 restraining unrealistic expectations as regards future
                 returns from investment markets generally. 

                 Over the long term, the return from equity investments
                 should be equal to the dividend yield plus GDP growth.
                 In the context of the British financial markets, which are
                 likely to be pretty indicative of global markets, the
                 actuaries believe long-term returns will be as follows:
                 equities 7 per cent a year and bonds 5 per cent a year. 

                 For a typical NZ balanced unit trust or pension fund,
                 they are saying we should expect pre-tax, pre-fee
                 nominal returns of just 6.2 per cent a year or, less tax,
                 inflation and fees, around 1 per cent a year. 

                 In contrast, some local luminaries assume 7 per cent a
                 year after tax, fees and inflation - seven times what the
                 actuaries predict. Readers just starting to contribute to
                 a pension should sit down: the paper produced by the
                 working party, published in March, concluded that an
                 individual who had paid 10 per cent of his salary for 30
                 years into a defined contribution pension and retired
                 today would receive an annuity equivalent to 70 per cent
                 of his final salary. 

                 Those retiring in 2010 would get 50 per cent, and people
                 retiring in 2020 would get 30 per cent of their final
                 salary. 

                 These are worrying statistics even for that small group
                 of retirees who do manage to put aside 10 per cent of
                 their salary for 30 years. The average wage or salary in
                 NZ is $33,000 a year; 30 per cent of this is $190 a
                 week. It costs the average retired couple around $420 a
                 week to live. 

                 The actuaries conclude that the answer to the problem
                 is that we should be putting more than 10 per cent of
                 our salaries away for our retirement - which is obvious
                 enough. However, this just may not be practical for
                 some individuals. 

                 There are a few other strategies we can employ,
                 especially those people with 20 or more years before
                 retirement. 

                 Among them are: 

                 Increase the equity and property component of the
                 portfolio. For example, a 20/20/60 portfolio should
                 generate a pre-tax, pre-fee, nominal return of 6.6 per
                 cent a year as against the 6.2 per cent a year forecast. 

                 Minimise annual fees - a 2 per cent a year fee takes
                 one-third of annual returns, a 0.5 per cent fee just 8 per
                 cent. 

                 Avoid capital gains tax. 

                 In the US and Britain, institutional investors are
                 allocating increased resources to venture capital funds
                 in the hope of achieving higher returns. 

                 A recent report by Merrill Lynch Mercury Asset
                 Management advocates a 10 per cent weighting in
                 venture-cap and concludes that the sector's reputation
                 for volatility is undeserved. 

                 The British Government has recently urged pension
                 funds to raise their allocations to the venture capital
                 sector. 

                 However, even a 10 per cent weighting in venture cap is
                 unlikely to add more than 0.5 per cent a year to the
                 long-term returns. 

                 In the US, gearing up one's portfolio through borrowing
                 has long been a popular get rich quicker strategy. The
                 problem is that in an environment of 7 per cent a year
                 equity return, the cost of funding could be prohibitive. 

                 The market for reverse mortgages needs to be
                 developed, possibly with Government involvement. 

                 Spare a thought too for those companies providing a
                 defined benefit pension - a pension which guarantees,
                 for example, a pension equivalent to your last year's
                 salary. 

                 Over the past 10 years or so some companies in New
                 Zealand and overseas have had to contribute very little
                 to their employees' subsidised super schemes because
                 the returns have been much higher than actuaries had
                 forecast. 

                 It is clear Government has a role to play here by
                 encouraging personal retirement planning through tax
                 breaks such as in Australia, the US and Britain. 

                 The trick will be to foster an environment which
                 encourages saving while ensuring that those
                 instruments which qualify for the tax incentives are
                 broad enough to promote a far higher level of
                 competition than the present farcical environment in
                 which virtually every equity unit trust has a 1.5 per
                 cent-a-year management fee.


                 08.07.2000 - 

                 WELLINGTON - The New Zealand dollar traded in a tight
                 range yesterday after banks sold themselves short. A
                 flat Australian currency did not help the kiwi. 

                 The kiwi ended the day at 45.94USc from 46.12c at
                 Thursday's close, and the aussie was down from 59.05c
                 to 58.76c. 

                 "As expected there was a tight range and there were a
                 few stops underneath 45.95c, where a lot of the banks
                 were targeting to see if they could push it a little bit
                 lower," a currency dealer said. 

                 "They did - it hit the stops and got down to 45.75c. The
                 banks got caught a bit short on the back of that and it
                 drifted back up towards the 45.90c to 45.95c level,
                 where we are now. 

                 "The only movement we really had was the attraction of
                 the stops. I think we're done for the day - if anything
                 we're stuck now in a 45.80c to 46.10c range," the dealer
                 said. 

                 "With New York overnight, obviously the stops have
                 been taken out of the bottom side so if anything, it
                 might go a little higher but there's nothing really special
                 out there." 

                 Yesterday morning, finance house HSBC said in a
                 commentary the New Zealand dollar looked precarious
                 at recent lows. "A break below the 45.80/90c region is
                 likely to give way to a test of the 45.40/50c level. 

                 "Failure to break convincingly back above the
                 46.25/35USc region should mean that the market
                 continues to focus on the downside for now."


                 08.07.2000 - 

                 Telecom headed into much friendlier waters yesterday,
                 pulling the overall market to a strong close for the week.

                 Main news of the day - that Air New Zealand's chief, Jim
                 McCrea, had quit suddenly - came as no surprise to the
                 market but there were mixed views on why the airline's
                 share price improved after the announcement. 

                 Telecom, which had been falling for a week and was
                 yesterday hit by a wave of overseas selling, glimpsed
                 740 yesterday before finishing up 35c, or 5 per cent at
                 735, to be down 10c over the past five trading days. 

                 Overall it was a good day on the market, with turnover a
                 high $161 million. Of that, Telecom accounted for $81
                 million but "half of that was done pre-market, carrying
                 over from Thursday's big volume but nonetheless pretty
                 healthy numbers," said Richard Leggat at Merrill Lynch.

                 "I think a lot of the selling in Telecom in the first part of
                 the week was offshore institutions making asset
                 allocation moves [at the start of the quarter] as opposed
                 to anything that was caused by a specific Telecom
                 event. On Thursday we saw the bulk of that selling
                 absorbed," he said. 

                 Air NZ A ordinaries gained 5c to 185 and its B shares
                 12c to 232 following the announcement on Mr McCrea. 

                 "I don't think it was totally unexpected. I think there has
                 been a little bit of friction between Jim McCrea, BIL and
                 SIA," said Mr Leggat. 

                 Jonty Edgar at Credit Suisse First Boston attributed the
                 gain in Air NZ to a sector move which had seen Qantas
                 firmer in Australia, rather than connected to the chief
                 executive leaving. 

                 The NZSE-40 capital index closed up 27.28 points, or
                 1.34 per cent, at 2067.91, with advancers outstripping
                 retreaters by 66 to 24 among the 144 stocks traded. 

                 AMP unwound some of its recent gains with a 103c
                 slide to $22.02, INL was off 15 at 400, and Sky TV 5c to
                 395. Carter Holt Harvey was steady at 180. 

                 Of the Fletcher stocks Energy was a standout with a
                 32c jump to 692 after its US investment, Capstone,
                 rose. 

                 Mr Leggat suggested that Energy had also been victim
                 of some asset divestment by US players and a softer oil
                 price. 

                 Fletcher Forests added 1c to 79, while Building slid 6c
                 to 229, and Paper 1c to 246. 

                 Baycorp appeared to run into profit-taking after its
                 "fantastic" run, ending down 55c at $11.45, Mr Edgar
                 said. 

                 "The Warehouse - up 10c at 555 - continues to be
                 stronger. There have been a number of broker upgrades
                 since their purchase in Australia." 

                 Among the small cap stocks, Frucor was again a
                 standout with an 8c rise to 181.



Payments sweeten dairy talks

A $300 million carrot dangled before dairy farmers could rescue a stalled plan to create a 
giant industry co-op.  Farmers who supply Kiwi Dairies and the New Zealand Dairy 
Group are likely to pressure company directors to resume talks on the faltering mega-
merger. The money would sweeten farmers' annual incomes.
 Dairy plan still on - Business Herald Cl.

Breakfast Briefing

Telecom releases Connectel

Telecom is calling for offers for its lines maintenance company Connectel which could 
be worth up to $240 million. The move is another step towards outsourcing all non-core 
operations.		C3

Race to use free airwaves

Unlicensed radio frequencies' potential for carrying data fast and cheap is creating a race 
between companies for market share.		C2

NZ's buying power declines

New Zealand's terms of trade declined 2.2 per cent in the last quarter of 1999 as import 
costs out-stripped export prices.		C5

Singapore chat lifts Air NZ

Air New Zealand's shares jumped in otherwise light trading on the expectation that 
Singapore Airlines will acquire a significant shareholding and board representation. The 
A shares gained 14c to 195c and the B shares 25c to 235c.	Markets C6 & C7

Information Technology

Crash questions for Domainz

Internet service providers are questioning the ability of the Internet Society of New 
Zealand to maintain the NZ registry after its web site for Domainz was out of action for 
20 hours.			C8

Hot debate over new language

The Internet's Tower of Babel or the language to empower the net? XML is seen as both. 
But despite its detractors it is gaining widespread acceptance as HTML's successor.	
	C10

Optimists bank on mega co-op soon

By Philippa Stevenson
Agricultural editor

Optimists in the dairy industry believe the crucial merger between Kiwi 
Dairies and New Zealand Dairy Group will be
agreed within 10 days, after the decision dropped squarely into farmers' 
hands yesterday.
The Kiwi and Dairy Group chairmen, John Young and Henry Van Der Heyden, 
have admitted reaching another
stalemate in the protracted talks.
In a joint statement, they said they had reached their final positions 
and were unable to agree on valuations for the
companies.
But no one in the industry spoken to by the Business Herald believes the 
mega co-op is a dead duck and both
leaders also signalled that more negotiations were possible.
Mr Van Der Heyden told a farmers' meeting that the door was still open to 
Kiwi. In a newsletter to his suppliers, Mr Young said: "This is not the end of the 
process."
One optimistic insider predicted that merger terms would be agreed within 
10 days. Dairy Farmers of NZ chairman
Charlie Pedersen said he was pretty positive about our ability to get it 
together," while Dairy Board chairman Graham
Fraser suggested new tactics.
In meetings over the next week, both companies are consulting their 
shareholders. "I believe Kiwi suppliers want
MergeCo just as much as Dairy Group suppliers do," Mr Pedersen said.
The stumbling block to immediate resolution is price. Each company thinks 
it is worth more than the other and is
demanding compensation.
Yesterday, at a three-hour meeting in Hamilton, nearly 300 Dairy Group 
suppliers supported their company's decision
to walk away from talks after Kiwi refused a merger deal in which it 
would have paid Dairy Group farmers 40c a
kilogram of milksolids, about $212 million.
Mr Van Der Heyden told the
meeting that the company had "prostituted" itself to lower the offer from 
the $1 a kilogram that it believed  it was worth
more than Kiwi. On 1998-99 production of about 532 million kilograms of milksolids 
that equates to $532 million. In the newsletter going to Kiwi suppliers today,
Mr young said Kiwi assessed its value as 80c to $1. 40 a kilogram of milksolids more 
than Dairy Group. 
On 1998-99 production of 386 million kilograms, that is $294 million to $515 million.
Both companies believe they will beat each other in future payouts and 
while Kiwi has offered to merge without any
money changing hands, Dairy Group has hung out for the 40c differential 
for its farmers.
After the Dairy Group meeting, Waikato farmer Kevin Wooding said 
shareholders believed their company's offer was
generous and had almost unanimously supported the directors' stance.
Farmers were disappointed at the stalemate because they believed the mega 
co-op was the best option for the
industry, especially as they had also been told at the meeting that a 
merged industry could achieve gains of $300
million a year. That equated to an extra 20c a kilogram, or about $10,000 a year to the 
average farmer.
"Farmers are not going to accept 20c being left on the table but they are not going to give 
away 40c to pick up 20c," Mr Wooding said.
Underscoring the gulf between the firms, a Kiwi supplier laid 
responsibility back at Dairy Group's door. Any differential
was a wrong move, said a Taranaki farmer who declined to be named.
"We've got to have a big company in which there are equal shareholders, 
not one-sided."
He suggested a different strategy, most likely an independent analyst 
whose company valuations could be accepted
by the rivals.
The call was reiterated by Mr Fraser.
"The companies have failed to agree on valuations," he said.
"Obviously they can't both be right. An independent valuation could establish the facts 
and break this logjam."
The latest breakdown came as management consultancy ERA Consulting Group 
released the findings of a study into the Australasian dairy industry that urged both 
countries to consolidate in order to remain competitive in the global market.
Kiwi chief executive Craig Norgate endorsed the thrust of the study.
"If we believe that in 10 years' time Australia and New Zealand companies can be 
competing with each other and still hold a place in the world in added value business, 
then we're dreaming,'' he said.
"This mega co-op thing is not the end. It's just the start and people need to remember 
that."

Two-year wait for dairy gains

By Philippa Stevenson
Agricultural editor

The dairy industry establishment board has surprised no one with a 
business plan showing annual gains from a mega co-op of at least $300 million.
The plan, which will be central to the industry's mega-merger application 
to the Commerce Commission, has been
worked on for the past two months by a 20-member team, including the top 
executives of the Dairy Board and the
Kiwi and Dairy Group companies.
As widely predicted since a preliminary version went to the companies in 
February, the outcome of the much-delayed
plan mirrors several other studies done over the past six years on the 
potential benefits to the industry from
integrating manufacturing and marketing.
An initial study in 1995 predicted annual savings of up to $296 million 
and a more detailed follow-up report later that
year forecast benefits of $270 million to $370 million.
Establishment board chairman Graham Calvert said yesterday that a 
conservative approach had been taken and
he was confident annual gains of at least $306 million were achievable at three levels.
Immediate gains of $10.5 Million could be realised from cost savings from 
the likes of buying power, administration
and staff overheads.
Benefits from improved production planning and co-ordination between 
manufacturing and marketing were estimated
to be $81 million.
The benefits of an integrated industry over the current system would 
realise a further $120 million.
Mr Calvert said that would add a
further 20c a kilogram of milk solids to the payout to New Zealand's 
14,500 dairy farmers, but the Kiwi and Dairy
Group companies have warned their shareholders the effect would not be 
immediate.
Dairy Group suppliers were told costs in the first two years, including 
staff redundancy payments of at least $81million, meant they would get only an extra 2c 
a kilogram in the first year and 17c in the second year. The full 20c - about $10,000 for 
an average farmer - could be realised in the third year.

Labour gambles with Lotto pay packet

Between the lines
Selwyn Parker

The contract of Lotto's new chief executive Ariane Burgess, is a showcase 
package that sets the tone for top public service jobs under Helen Clark's government. 
And it's not good.
But first, the details. Burgess could earn $270,000 in her first year in 
the job, if she performs. That's $150,000 less
than her predecessor, David Bale, who was essentially forced to quit last 
year over his "excessive" salary. If she
doesn't perform, Burgess' banks $255,000 because only $15,000 of the 
package hinges on her performance.
Burgess' base salary is $215,000 plus $20,000 for a car and $20,000 for 
superannuation, if she wants them. If she
doesn't, she still gets the $40,000 to do with as she wants.
Thus the Government has effectively cut the Lotto chief executive's pay 
right back to public service size, even though
it's a public service job in only the most technical sense. The tiny 
performance bonus tells the story. At $15,000, it's
ridiculous. In principle it's almost purpose-designed to encourage average 
performance.
Burgess could, like Bale, deliver a billion dollars over the term of her 
four-year contract to the Lottery Board and still
get only $15,000 per year for meeting performance measures. Or she could 
deliver half that amount and lose only
$15,000. This is an old-fashioned, look-back-in-anger contract that is 
way out of line with overseas practice.
It might please the envious. Lotto's weaker sales last year were blamed 
by some on public unhappiness with Bale's
salary. Let's see if Burgess's smaller package will help bring the 
punters back.
Lotto's parent, the New Zealand Lotteries Commission, got 73 serious 
applicants for the job - until they heard about the salary.
Several top overseas contenders told Commission chairman Geoff Thompson 
that the pay was way below the rates
for a comparable job elsewhere. Thank you, but no thank you.
So the small package dramatically reduced the field. Thompson is 
genuinely thrilled at the calibre of the chief
executive he's got but he's also amazed: "Ariane could earn much, much 
more in the private sector."
Burgess agrees. She says she's not in the job for money so much as the 
buzz of running Lotto. "Each individual lucky
enough to have a choice will weigh up what is important to them in life 
and choose accordingly, and that is exactly
what I have done," explains Telecom's former head of corporate affairs, 
and good on her.
Yet Lotto pays market rates for staff below the level of chief executive. 
As Thompson explains, if Lotto didn't pay
market rates it wouldn't get the calibre of staff it needs.
This is worth thinking about. For political purposes, only Lotto's top 
manager earns less than private-sector rates.

Internet without wires shape of things to come

By CHRIS BARTON

When Savoy Technologies, a subsidiary of listed property investor Savoy 
Equities, acquired 70 per cent of Safetynet
last month in a deal worth about $7 million, most said: "Safety who?"
But for Savoy chief executive Kerry Haycock, a controlling interest in a 
wireless data network made business sense.
"We can see applications for it. It had revenue and customers, and we 
understand where it's heading."
So, apparently, do others. Last month, hospitality company Wilson Neill 
snapped up wireless internet provider Radionet and its parent Onthenet for 75 million of 
its shares, worth about $11 million.
A few months earlier, National Business Review publisher Barry Colman said he was 
prepared to spend $15 million developing the internet and data network business of 
Alternative Futures, a company he eventually merged withWalker Wireless. The latter is 
seeking $20 million to expand its wireless network, probably by public float.
Making data ride the airwaves is no longer a technology trend; it's hot.
The common thread linking Safetynet, Radionet and Walker Wireless is their use of 
unlicensed general radio frequencies in the 2.4GHz, 5.8GHz and 900MHz bands to send 
and receive fast internet data for businesses with noTelecom landlines involved.
Prices range from $120 to $750 a month, depending on the speed and type of connection.
The big advantage for businesses is cost savings. The concern for Telecom must be the 
loss of so many business customers to these new players.
Safetynet senior network engineer Craig Sutherland says what is happening now is just 
the beginning. The company started 18 months ago, the result of a merging of his 
network installation business with the web design company World One Net Navigators.
Today, Safetynet has a growing multinational and public company client list including 
Richina Pacific and its construction arm Mainzeal, Pepsi - on the islands of Kauai and 
Maui in Hawaii - and United Airlines' sales network in Australasia.
Not all its business is wireless, although that is the significant growth area. Safetynet also 
specialises in virtual private network deployment using a mix of wireless and landline 
technologies.
Like Radionet, its wireless network is constructed so that every time it puts on another 
client, using aerials sprinkled on high points around the city, the network expands. That is 
why Safetynet prefers to keep ownership of the Lucent and Cisco technology it installs - 
renting it out, along with internet bandwidth, to its customers.
In August, the company got some much-needed financial and administrative advice in the 
form of RSM Management Services, the business advisory division of a "boutique" 
accountancy company. The result was that Kevin Wheeler and Craig
Wigglesworth took shares in the company in exchange for the services they provided. 
The pair became a permanent fixture as part of the Savoy deal.
Safetynet is taking $4 million to $5 million annually in revenue but expects big growth to 
about $12 million next year.
Mr Wheeler regards Safetynet as a "network architect," designing and building failsafe 
business connections employing both conventional landlines and wireless technologies.
It is that cutting edge combining the old with the new that attracts Savoy.
Clear has signalled that it is now serious about wireless, too, and has announced plans for 
a $120 million first-stage rollout of a broadband wireless network using licensed 
frequencies in the 26GHz range.
Dutch-based broadband satellite provider Chello has set up in New Zealand, joining 
internet provider ihug in pushing the boundaries of satellite-based fast internet. Ihug, too, 
has radio frequencies that it is using to "multicast" internet protocol-based TV 
programmes from Auckland's Sky Tower.
Then there are the "3G" (thirdgeneration) mobile frequencies about to go under the 
auction hammer in July. They, too, have the potential to deliver fast, multimedia-capable 
content "anywhere, anytime," suggesting in the not-too-distant future a very crowded sky.

Sending data over unlicensed radio frequencies is fast, cheap and attracting a growing 
number of investors with an eye for the future.

Look, No Wires: Savoy's Kerry Hancock (left) and shareholders Craig Wigglesworth 
(centre) and Keven Wheeler expect rapid growth from their Safetynet venture.

ConnecTel sale could net $240m for Telecom

By RICH BRADDELL

WELLINGTON - Telecom has pinned a "For Sale" notice to its network design, build 
and maintenance subsidiary, ConnecTel.
ConnecTel's general manager, Ian Frame, said there had been several expressions of 
interest in the company so it seemed sensible to formalise the process.
"This does not automatically mean that ConnecTel will be sold," he said.
Until recently, ConnecTel had 1100 staff. But with the completion of North and South 
Island tenders, it was left with just 40 per cent of Telecom's maintenance, a business it 
had to itself until it was made contestable in an efficiency review three years ago.
The contracts have three years to run, with two-year rights of renewal thereafter.
ConnecTel has twice as much of Telecom's business as its nearest competitor. But 
spinning it off could open it to contracts from Telecom's competitors as well.
Mr Frame said that at least six companies were competing for Telecom's maintenance 
business and the days when Telecom was the sole source of network expertise were gone.
An analyst said Telecom's decision was no surprise, since telecom companies around the 
world that were much larger than Telecom were now outsourcing their maintenance.
He said putting a value on the division was difficult.
But on the assumption of turnover in the region of $150 million and a 20 per cent profit 
margin, it could be worth about $240 million, a useful amount given the demands for 
capital faced by Telecom as it expands into new business areas and Australia.
Mr Frame said the sale could have significant benefits for ConnecTel and its staff.
"It has the potential to open up more options for new business. Just as Telecom is moving 
to contract out its design, build and maintenance work, so too are other companies which 
own communications networks in New Zealand and offshore."

Times Changing: ConnecTel used to have all Telecom's business but this has dropped to 
just 40 per cent of its maintenance. Among its more controversial works was the Telecom 
cellphone tower on Tiritiri Matangi Island for the America's Cup.

Gold and Resource to merge with Minproc

By FIONA ROTHERHAM

Macraes Mine owner, Gold and Resource Developments, is to merge next month with the 
lossmaking Australian mining engineering concern Minproc, in which it has, a 35 per 
cent stake.
Minproc shareholders and option holders approved the merger last Friday. 
Subject to court approval, it will take effect on April 3.
The merger terms are one Gold and Resources convertible redeemable preference share 
plus 14Ac cash for every two Minproc ordinary shares and 2Ac for every Minproc 
$A2.50 option held (other than those held by Gold and Resources
and its wholly owned subsidiaries).
Company chairman Brettney Fogarty said the merger would help position Gold 
and Resources as a technology-driven resource business with an annual $A160 million 
turnover, generating $A25 million to $A30 million profit.
Gold and Resources controversially took over Macraes in late 1998 by swapping 
convertible notes in itself for shares in NZ's largest gold producer, despite an outcry from 
Macraes' minority shareholders.
Macraes was literally a gold mine worth plundering by its 35 per cent stakeholder. It had 
consistent annual operating cash surpluses and around $17 million sitting in the bank. By 
comparison, Gold and Resources had virtually no operating cash flow and a $A15 million 
Rothschild loan due for repayment in July this year.
Gold and Resources' only other investment was its stake in Minproc. After racking up 
large losses in recent years, Minproc returned to profit last year, though it contributed a 
loss of $A1.2 million to Gold and Resources' December half-year net profit of $A14.2 
million.
It was a turnaround from the $A21.6 million 1998 half-year loss, which included a $19.8 
million writedown of the company's investment in Macraes before amalgamation.
Macraes contributed $A19.6 million profit to the latest half-year while the company's 
investment side made a loss of $A3.2 million.
Reflecting the strong overall performance, Gold and Resources is to pay a dividend of 3c 
a share. The company is dual-listed in New Zealand and Australia.
Production at the North Otago mine is up 3.3 per cent following the introduction of 
pressure oxidation while cash costs of production are down 28 per cent. A further 30 per 
cent lift in production and profit is forecast for this year.

'Bright future' without a future

By Adam Gifford

The National Government's "Bright Future" strategy has no future under a radical rethink 
of the country's information technology needs.
The strategy, announced last August by then Enterprise and Commerce 
Minister Max Bradford, aimed to channel funds into school maths and science, tertiary 
scholarships, a Higher 
Learning Sector Taskforce and a $36 million
"New Economy Research Fund."
Information Technology Minister Paul Swain said yesterday that Bright 
Future was always just an election slogan.
He said New Zealand needed to be seen as a net-smart nation. The 
Government's priorities were legislation permitting
electronic signatures in commercial transactions, and preparing for an 
e-commerce summit planned for August
However, the online ambitions contrasted with the several hours of pressure 
it took yesterday before officials located
and e-mailed to the Business Herald copies of the Ministry of Economic 
Development briefing papers on e-commerce Mr Swain was releasing.
He said that indicated how much needed to be done.
"The electronic age challenges fundamental things in the way Governments do 
business."
For example, he did not share the Inland Revenue Department's optimism that our current 
tax regime was sound in terms; of e-commerce, which could undermine nations' tax 
bases.
The papers identify a lack of coordination across government agencies, something Mr 
Swain said he would address. He said the Government had a role in providing an 
infrastructure and education to help small and medium-sized businesses get into the 
electronic age. He was pushing for government agencies to adopt electronic tendering 
and procurement processes.
"The previous Government had a minimalist approach. The Bright Future approach was 
pretty dim. A few scholarships was not a strategy. "
The briefing papers say that a future of high skills, high employment, a high value-added 
economy and reduced inequality depend on the Government understanding and 
developing the "New Economy."
The success of economic and regional development policies depended on factors 
including excellence in public education, encouragement of innovation and 
entrepreneurship, a research and development infrastructure, on-the-job training and 
focused development efforts that met local needs.

PM keen to help exports

WELLINGTON - Prime Minister Helen Clark will meet the Trade Development 
Board to discuss ways of boosting export performance.
Speaking from Chile via Radio New Zealand, Helen Clark said European and 
Canadian companies were winning contracts ahead of New Zealanders, partly because of 
Government-level backing such as export-credit guarantees.
She wanted "to see what facilitation the Government might offer to ease the way for our 
exporters, in the way the Europeans are easing it for theirs."
Helen Clark said that when she returned to New Zealand this week she would talk to 
Trade NZ to see how it might improve export performance.
The Prime Minister was in Chile to see Ricardo Lagos sworn in on Saturday as Chile's 
first Socialist President in nearly three decades.

Ombudsman 'vital for electricity disputes'

By RICHARD BRADDELL

WELLINGTON - The electricity sector needs an industry-funded ombudsman just like 
those in the insurance and banking industries, says a coalition of industry and consumer 
groups.
The Consumer Coalition on Energy said failure to give consideration to an ombudsman 
was a disappointing omission from the terms of reference for the Government's electricity 
inquiry.
The coalition said the institution of an ombudsman was essential to a durable solution to 
industry problems as disputes between consumers and suppliers, whether energy or lines 
companies, would become more common.
"Consumers cannot rely on the olden-days approach when the local power 
company was looked upon benignly and behaved accordingly," the coalition said in an 
open letter.
A proliferation of specials, packages and bundled goods and services would combine 
with new computerised switching, trading and settlement to boost sources of consumer-
supplier friction.
The coalition represents the Consumers' Institute, Federated Farmers, the Major 
Electricity Users Group and the Manufacturers Federation.
In citing the banking and insurance models, it is advocating that the industry set up its 
own ombudsman charged with handling lines and retailing complaints, and possibly the 
gas industry as well, rather than waiting for legislation.
Coalition spokesman David Russell said it was preferable that the industry agree on a 
code of practice.
"We believe the industry needs to agree now that an ombudsman's office is part of the 
preferred longer-term solution, otherwise other more costly and interventionist regulatory 
and policy options will be implemented will be difficult to unwind in the future."

Whistleblowers offered leniency as incentive

By BRIAN FALLOW

WELLINGTON - The Commerce Commission is hoping to improve its enforcement of 
competition laws by offering leniency to whistleblowers.
"Leniency means taking a lower level of enforcement action, or no action at all, against 
you in exchange for your information and your full cooperation," the draft policy says.
The commission's Commerce Act manager, Geoff Thorn, said the policy formalised the 
practice that had emerged on an ad hoc basis over the years as the commission exercised 
its discretion, especially in the area of restrictive trade practices.
"We do get calls from time to time where someone says, 'If I give you information how 
would this affect my position?'"
The draft policy, while not amounting to a promise, would give the commission 
something it could highlight to give a potential informant some comfort.
The policy applies to all the legislation the commission polices - the Commerce Act, the 
Fair Trading Act and the Electricity Industry Reform Act - but is most relevant to the 
restrictive trade practices provisions of the Commerce Act, where collusion tends to 
occur behind closed doors and is hard to prove.
The leniency-seeking whistleblower has to be prepared to cooperate with the commission 
during any subsequent investigation. Cooperation might also include giving evidence in 
court if necessary.
Whistleblowers may still have to pay compensation where the commission considers it 
appropriate.
Individuals or businesses are unlikely to be given leniency if they forced or encouraged 
others to take part in the activity for which they seek leniency.
Mr Thorn said the commission's counterparts in Australia and the United States had 
similar policies and had found them effective.
The commission could not provide immunity against a third party taking legal action.
The draft policy is open for submissions until April 28.

Broadway profit vow delivered 

By DITA DE BONI

Industrial holding company Broadway Industries has made good on its promise to reverse 
1999's losses in the first half of this financial year.
Company results announced yesterday showed a profit of $289,000 for the six months to 
December 1999.
In the same period last year, the company lost $1.21 million, which grew to a $8.07 
million loss for the year to June.
Earnings a share grew to $1.95 after a loss of $8.14 last year.
Shareholders' funds recovered slightly to $5.1 million, after dropping to $4.8 million in 
the last fullyear result from $20 million in 1995.
Broadway's revenue dropped 40 per cent after the closure last year of Mercer Stainless' 
food service business, reducing revenue from Australia to $1.4 million of the $2 $21.1 
million total revenue.
The company said photographic supplies division H.E. Perry improved sales 
10 per cent, and Mercer Building Products and Mercer Industrial had "much improved" 
margins.
Almost all surplus assets of the, Mercer Food Services business and the stock of sold-off 
packaging production business Protech products had found buyers. A property occupied 
by Mercer Food Services was sold in early March and the money used to pay bank debt. 
Chairman Ian Farrant described the result as a "modest turnaround" and said the company 
had "done" what it said it would do."
He predicted the firm would, trade profitably in the year to June, but he would not give a 
more precise sales forecast.
Broadway shares last traded at 33c.

Depreciation sees motelier lose $1 million in half year

WELLINGTON - Listed motel operator Manor Inns Posted a $1.02 million half-year 
loss, largely due to an increase in depreciation  costs.
The loss compares with a $638,000 loss for the six months to December 31, 1998.
Turnover was 7.4 per cent ahead of the previous half-year, at $2.46 million against $2.29 
million, but depreciation wiped $271,000 from the bottom line.
Depreciation costs were previously just $7000.
Manor Inns said acquisition costs of $116,000 also had an impact in this reporting period.
A competitive market continued to affect trading, and the company was focusing on 
operational efficiencies to improve performance. It expected its second-half result to be 
ahead of the same period in 1998. 
Manor Inns' shares ended down 1c at 16c, with just 2000 shares crossed. NZPA 

Tax 'a killer for fringe benefits'

 By BRIAN FALLOW

WELLINGTON - Planned changes to the fringe benefit tax regime will be another nail in 
the coffin of fringe benefits, says PricewaterhouseCoopers tax partner John Shewan.
"It's the old story of a trade-off between compliance costs and the desire to save a bit of 
tax," he said. "It's another incentive to move from providing fringe benefits to just paying 
more cash.
"Employers are sick of spending half their time working for the Government."
Revenue Minister Michael Cullen yesterday gave more detail on the policy of allowing 
fringe benefits that can be directly linked to an individual employee, such as cars and 
loans, to be subject to tax at a rate equating to their marginal tax rate.
At present fringe benefit tax is levied at 49 per cent, which equates to the top tax rate of 
33c, whether the employee benefiting is in that tax bracket or not. The anomaly will be 
exacerbated when the top income tax rate rises to 39c on April 1.
A new tax bill to be introduced to Parliament this month will require employers to 
attribute to the employee concerned cars used solely or predominantly by that employee, 
all low-interest loans and other fringe benefits with a taxable value of more than $1000 a 
year.
"Employers may choose between paying a flat rate of 64 per cent [equivalent to 39 per 
cent on cash in the employee's hand] or using rates of 27 per cent, 40 per cent or 64 per 
cent, whichever is appropriate based on the employee's tax rate," Dr Cullen said.
The flat rate might be appropriate for employers with mostly  high income employees or 
who only provided a few fringe benefits.
Benefits not attributed to an individual employee would be subject to fringe benefit tax at 
a flat rate of 49 per cent.
Group benefits such as pool vehicles could not be attributed unless there was a 
predominant user.
Employers might also wish to attribute low-value benefits, especially where a large 
number of employees receiving fringe benefits were on low incomes, Dr Cullen said.
An example would be medical insurance on which the premium per person was under 
$1000.
Most employers file fringe benefit tax returns quarterly. They can opt to pay the tax at a 
flat rate of 49 per cent or 64 per cent for the first three quarters, with a square-up process 
in the fourth-quarter.
Mr Shewan said he believed there had been a dramatic decline in the provision of fringe 
benefits over the years.

Bill for imports creeps up

By Brian Fallow

WELLINGTON - New Zealand had a harder time paying its way in the last quarter of 
1999, with the terms of trade declining 2.2 per cent.
That means 2.2 per cent fewer imports could be funded by a fixed quantity of exports.
The decline in purchasing power reflected a 5.5 per cent price rise in imports during the 
quarter, while export prices rose 3.2 per cent.
Bank of New Zealand chief economist Tony Alexander said that whereas economic 
distress between 1987 and 1990 was lessened by a substantial rise in the terms of trade, 
and the upturn of 1992 was assisted by another (though more modest) gain, this time no 
rise was occurring.
"Only if the Opec production restraint agreement falls apart are we likely to see some 
firm assistance to this current upturn from rising terms of trade."
Oil was the biggest contributor to the December quarter's import price rise, but even 
without it prices rose 3.9 per cent.
"There is not too much comfort there for the Reserve Bank," said ANZ Bank chief 
economist Bernard Hodgetts.
Given the prolonged weakness of the currency, it was a mystery that a surge in import 
prices had not come sooner, he said.
The export price rise of 3.2 per cent contrasts with a 7.7 per cent rise in ANZ's 
commodity price index over the same period. Not all exports are commodities, and the 
ANZ index captures spot prices that tend to lead the contract prices reflected in the 
official statistics.
Export volumes, which had surged 7.8 per cent in the September quarter, fell back 1.9 per 
cent in December.
Mr Hodgetts said this season's good growing conditions would show up in better export 
volumes in the March quarter.
"My concern is manufacturing exports, which are up only 1 per cent in volume terms.
"The strong growth [4.3 per cent] we saw in the March quarter has faltered since then in 
the face of intense competition from third countries."
The manufacturing sector was not contributing the strong lift in exports that it had in the 
mid-1990s, he said.
On an annual basis, merchandise export volumes were up only 1 per cent, though the 
figures are volatile and not regarded as the most robust that Statistics New Zealand 
produces.
However, Deutsche Bank chief economist Ulf Schoefisch said a lot of recent production 
had been stockpiled and had yet to be shipped overseas.
"That should help to bring up export volume over the first half of this year.
"Prices are looking better, too, so I think we will see a big turnaround of the trade 
balance."

Air NZ, Sky TV shine in soft trading

New Zealand 

Unusually strong gains by Air New Zealand provided a highlight in a thin, soft 
sharemarket yesterday.
The airline's A shares jumped 14c, or 8 per cent, to 195c and its Bs 25c, or 12 per cent, to 
235c. The gains followed a Business Herald report suggesting that better relations 
between Brierley and Singapore Airlines may have reopened the way for a deal over 
some of BIL's Air NZ stake.
"It would be nice to see a resolution there. The purchase of Ansett Australia is going to 
be a very good sensible long-term decision but the short term has proven to be bumpy 
[for Air NZ]," said Mark Devereux at Forsyth Barr.
"They are paying top dollar for Ansett" possibly raising market expectations that Air NZ 
would have to make a large cash issue at some stage. BIL itself added 1c to 38c and was 
the most active stock.
AMP added 52c to $20.67, amid speculation that National Australia Bank would make a 
bid. "AMP is a big complex company. Whether NAB wants to get their hooks into that 
multi-headed beast I am not sure. I presume they feel they have to now their hand's been 
forced by Commonwealth Bank [buying Colonial]."
After a session in which trading was halted for about a hour due to computer problems, 
the NZSE40 capital index closed down 11.47 points, or 0.57 of a percentage point, at 
2009.27 on low total turnover value of under $49 million. Weighing on the market was 
the effect of dividend payments which accounted for 14.46 points.
Telecom, which contributed $17.6 million to turnover, finished down 26c at 859c after 
exiting an 11.5c dividend.
Telstra was also in retreat with its head shares off 25c at 975c, and its instalment receipts 
28c at 611c.
The talk worldwide was that telcos were going to spin off their internet or mobile phone 
units and some major players were already doing this, Mr Devereux said.
On sentiment overall he agreed with other commentators that have linked the current lack 
of enthusiasm for the New Zealand market to investors ignoring it in favour of Australia. 
"Suddenly Australia is the flavour of the month. If you have involvement over there it's 
very hard for brokers to talk to clients and suggest they look solely
at New Zealand operations.
"And it's very hard to argue against it. The aussie economy has been rocketing along with 
very solid growth
During the trading halt, the exchange mistakenly reported that Sky TV had requested 
trading in its shares be suspended. Later, Sky TV said it had set up a new technology 
division. Its shares ended up 25c at 420c and its 49 per cent shareholder INL expanded 
19c to 940c.
 Also well in positive territory were Lion Nathan, up 14c at 345c, The Warehouse, 7c to 
872c, and Fisher and Paykel, 10c to 640c.
Fletcher Challenge stocks were mixed with Energy sliding 14c to 455c and Forests 
adding 1c to 54c, while Paper and Building were steady. - NZPA

Kiwi holds ahead of RB statement

WELLINGTON - The New Zealand dollar held steady yesterday ahead of tomorrow's 
Reserve Bank statement despite a weaker Australian dollar. 
Dealers said the kiwi was supported by the view the Reserve Bank will match an interest 
rate hike in tomorrow's quarterly monetary policy statement with further increases later 
this year.
The currency closed at 49.35USc against 49.28c around 9am and Friday's 49.38c finish.
BNZ chief dealer Mike Symonds said the market "almost universally" expected the 
Reserve Bank to lift its official cash rate by 50 basis points to 5.75 per cent.
"But what will be just as interesting will be the tightening profile that the Bank forecasts 
further out.
"We believe that, with higher growth and higher inflation later this year, the Bank will 
project a reasonably aggressive monetary policy path for the remainder of this year."
He said some traders were buying up kiwi in anticipation of this more aggressive stance, 
a move that was supporting the currency against other influences.
The kiwi blipped down on initial selling of the aussie dollar then rebounded later in the 
day, reaching a high of 49.37USc and a low of 49.24c.
The aussie closed at 61.22USc in local trading against 61.43c Friday.
A weaker aussie and steady kiwi saw the cross bounce to 80.61Ac around 5pm from 
80.39c Friday.
Against other currencies, the kiwi was buying 52.31 yen (52.60), 31.29 pence (31.20), 
0.9990 marks (0.9974), 0.8234Swiss francs (0.8199), and 0.51,111 euros (0.5102).
 Bond yields tightened across the curve in anticipation of tomorrow's rate increase, with 
April 2004s at 7.19 per cent (7.14) and November 2011s at 7.16 per cent (7.11).
Cash was static at 5.25 per cent and the 90-day bill rate was one basis point higher at 6.26 
per cent from 6.25 per cent. NZPA

Virus onslaught far from pretty
By MICHAEL FOREMAN

The Pretty Park worm which attacked public relations consultant Peter Verschaffelt may 
be much more dangerous than originally thought.
Mr Verschaffelt received the worm last week as an attachment to an e-mail from Canada 
and unwittingly passed it on to hundreds of media contacts.
On the same day, antivirus software company McAffee coincidentally upgraded its risk 
assessment of the closely related South Park worm from " medium" to "high." The 
reassessment was due to the worm's potential to create "e-mail storms," which can lead to 
significant network performance slowdowns.
Soon after the attack, Mr Verschaffelt was also informed that if certain chat programs 
were in use, Pretty Park could open up an IRC (internet relay chat) channel, causing 
further unauthorised "Trojan Horse" code to enter a system potentially within 10 seconds.
Mr Verschaffelt told the Business Herald that disaster was narrowly avoided when one of 
the businesses the worm was passed on to was the New Zealand branch of an 
international company with numerous offices worldwide connected by a network.
"They didn't have a virus scanner at all. Fortunately they didn't open up the attachment. If 
they had the consequences would have been truly horrendous."
Mr Verschaffelt hired Auckland-based security consultant Co-logic to help him minimise 
the damage to his clients, and had nothing but praise for their work.
The Pretty Park infection took place in spite of the presence of an antivirus program 
called Vet.
But Geoff Cossey, of Vet's New Zealand distributor, Chilli Systems, said: "Vet has 
detected the original Pretty Park for over five months, and its more recent variants within 
days of their discovery in the wild. Whether or not users avail themselves of these 
updates is, of course, beyond Vet's control."
Mr Verschaffelt said his copy of Vet was certainly less than five months old, but he could 
not be sure when it was last updated.
Calls quota nasty surprise for Compass

By Michael Foreman

Karim Hussona

Compass Communications became the victim of its own success when users trying to 
access its recently launched freenet service encountered line-busy signals.
Customers were told in an e-mail from the "freenet support team" that the company had 
become aware of the problems, which it initially blamed on Telecom.
"There are hundreds of lines available but Telecom is not forwarding the calls to these 
lines," the company complained in the e-mail.
It said freenet was investigating the problem but in the meantime, users could "dial our 
modems directly and bypass the 0867 service."
But Telecom spokesman Glen Sowry said that the 0867 system limited the internet 
service provider to 63 simultaneous calls on one telephone number.
He added that freenet had also been attempting to route calls through the Clear network, 
which were being rejected as Clear did not have an 0867 interconnection agreement with 
Telecom.
Compass chief executive Karim Hussona said that despite arranging hundreds of lines, 
the company had specified only two 0867 access numbers. Traffic was load-balanced 
between the two but a maximum of 126 calls could be handled at any one time.
"We weren't aware of the restriction of 63 calls per number," he said. "Now that we are 
aware of it we can do something about it."
As freenet's customer base had increased to nearly 7000 users last week the 126-caller 
maximum was clearly insufficient. Compass had arranged for three more access numbers 
to be provided, giving a maximum capacity of 315 simultaneous calls.
Mr Hussona said that it was natural for the company to try to use Clear, as both Telecom 
and Clear serviced Compass's national network.
"There was nothing restricting [this] in the agreement," he said, adding that he was 
unaware of the lack of an 0867 interconnection agreement between Telecom and Clear.
Compass hoped the service would be fully operational from tomorrow, following help 
from both the telecommunications companies.
Meanwhile, direct-access numbers for Compass modems were included in the original e-
mail to customers.
When it was pointed out that dialling the modems directly would incur a charge of 2c a 
minute after 10 hours' internet usage a month, Mr Hussona suggested users should 
approach Telecom for a rebate.
"I'm sure Telecom will be quite amenable."

Strong team, page by page

The Herald and the Weekend Herald did well in the 1999 Fletcher Challenge 
Paper Commonwealth Media Awards ... and so did these pages.
IT editor Chris Barton won the information technology category with stories about 
National Business Review's closure of its web site last year and New Zealand's lack of 
computer hacking laws.
The IT category was judged by Observer columnist John Naughton, who is also director 
of the Press fellowship Programme at Wolfson College, Cambridge.
The Herald won the award for newspapers with a circulation of 100,000 to 
250,000, and the Weekend Herald won the best weekly and Sunday newspapers category 
as well as the best paper overall. 

Domainz takes flak after server failure

Adam Gifford

The web site for Domainz, the company which administers the .nz top level domain, was 
out of action from Sunday afternoon until late yesterday morning because of a hardware 
fault at Wellington internet service provider Actrix.
Actrix marketing manager Steve Ritchie said a ram card in a Hewlett Packard server 
failed about 2 pm on Sunday.
A spare sent from Auckland by hardware supplier Trilogy was the wrong model, and the 
ISP had to wait until the next morning before the correct card arrived.
 Mr Ritchie said Actrix's mail services were restored within two hours, but web sites 
hosted by Actrix stayed down until about 10.30 am.
  The problem was seized on by some in the internet industry who disagree with the way 
Domainz and its parent, the Internet Society of New Zealand, are going about taking over 
responsibility for the .nz registry from Waikato University.
But Domainz chief executive Patrick O'Brien said most major registrars had links 
bookmarked directly to the university site and were unaffected.
Peter Mott, from Auckland ISP 2Day Internet, said he found it extraordinary an internet 
infrastructure provider could put itself in a position where its site was down for so long. 
While 2Day's automatic domain registration systems interfaced directly into the 
university server, once the system switched over in May it would be totally reliant on 
Domainz.
Mr O'Brien said the new system would be run on mirrored servers in Auckland and 
Wellington, so there should be no down time.
Mr Mott has developed a business registering names, and claims to be the largest 
registrar behind Xtra.
He said the system developed by Domainz and its site developer, Advantage 
Group subsidiary Glazier Systems, was unnecessarily complex and would be expensive 
for ISPs and customers.
"Name registration isn't core business for most ISPs, so they don't get excited about this. 
They just want to interact with the registry in a cost-effective mariner, but we are a 
registrar so we want to compete directly - we want the same access to the database 
Domainz has.
"If you want to register a name you must go through an ISP or Domainz and 
Domainz manages the database, so sets the terms and conditions of service and the 
price," said Mr Mott.
"We want to offer different things and we want to reduce the price to a third of what it is 
now.
"What we don't want to do is continue to be an agent because the new system is more 
complex and they are insisting on having a customer account for every domain name 
registrant, and they will charge a fee for setting up the account."
Despite setting up a consultation process, Domainz had not listened to industry concerns.
Mr O'Brien said the solution Domainz was putting in place would allow registrars to 
write directly into the database tokeep the domain registration details of their customers 
up to date.
When he had tried to visit Mr Mott recently to discuss the changes, "I was thrown out of 
his offices."
Ninety-five per cent of names in .nz were registered through an ISP rather than directly 
through Domainz. "If you go to their sites you will see each one has a different pricing 
model and services offered, so for Peter [Mott] to say there is not a competitive 
marketplace is rubbish."

Telecom tries a taste of, its own medicine

By ADAM GIFFORD

Telecom is about to eat its own cooking, commissioning esolutions, its joint venture with 
EDS and Microsoft, to develop an online procurement portal.
The portal, using Ariba ORMX software, will allow its preferred suppliers to transact 
online with Telecom's internal users.
Eight of Telecom's suppliers have signed up to participate: Fuji Xerox, Wickliffe Press, 
OTC Workplace Partners, New Zealand Liquor, Marshall Promotions, Moore Gallagher, 
Eurest NZ and Cafe Express.
Rachel Lee, Telecom's online purchasing project manager, says business-to-business 
electronic procurement is ideal for the sort of high-volume, low-value transactions done 
with such suppliers.
The esolutions BusinessExchange will lower Telecom's procurement costs and increase 
marketing and revenue opportunities for suppliers.
"Organisations find they may have a preferred supplier contract, but it may only be used 
by 5 per cent of staff. People continue to use another supplier because they think it's 
easier, or they go to a mate ... With this, Telecom will be able to direct all requests to the 
preferred supplier."
While she would not specify the amount Telecom expected to save, she said online 
transaction costs could be a tenth of the cost of paperbased, people-intensive systems.
Telecom plans to bring the portal live on May 15.
It will be hosted by Telecom, which, with AAPT, has an agreement with Ariba allowing 
it to offer its technology on an ASP (application service provider) model.

Sinesurf users left in dark over refunds

By MICHAEL FOREMAN

Sinesurf 2000, the Auckland-based internet service provider which went "off line" last 
month, is refusing to say whether it will refund out-of-pocket account holders.
When the Business Herald, contacted Ross Himona, whom a company search revealed as 
the sole registered director of the failed ISP, he was unable to say whether the company 
would go into liquidation.
"It could," said Mr Himona. "I am not sure at this stage."
He refused to discuss whether he would refund users whose accounts were debited before 
and just after Sinesurf's failure.
Mr Himona also refused to say how many users were affected, saying that this "was not 
the sort of information given out by ISPs."
Other creditors of Sinesurf are understood to include Telecom New Zealand, which is 
owed an undisclosed amount for wholesale internet provision.
Mr Himona, of Volga St, Wellington, is also connected with Maori Net, which billed 
itself as the "main Maori internet provider" but whose home page was inaccessible 
yesterday.
He is also registered as a director of Consultus Pacifique, which has no connection with 
the similarly named Auckland-based public relations  company Consultus.
Meanwhile, Auckland-based IT contractor Stephen Schmidt says his role in 
Sinesurf was not that of a "principal," as reported in the Business Herald last Tuesday.
His association with Sinesurf was limited to "helping out every so often with technical 
stuff they-couldn't handle," he said , and this service was performed voluntarily
"I was doing it for a friend."
Mr Schmidt refused to name the principals of Sinesurf and said he had not been in 
contact with the company for several months.
"As far I know, they have shut down."
 If Sinesurf goes into liquidation, it will be the second small ISP to fall this year, 
following the collapse of Meridian Internet in January.  

'Robust and felxible' software stands out in static market

By Adam Gifford

Greg Simmons

Danish "enterprise business solution" Navision Financials is fast grabbing market share 
among the mid-sized companies it targets.
 While the performance of many other vendors selling business financial and 
management software was static last year or fell because of the Y2K spending slowdown, 
Navision's revenue of 470 million Danish kroner ($123 million) between June and 
December was almost double that for the same period in 1998.
Greg Simmons, managing director of Auckland-based Navision integrator 
Avanti Solutions, said the product's robustness and flexibility had a lot to do with its 
increasing popularity.
"Out of the box, most products will do the same job. The difference comes from how it 
fits your business," he said.
 "We use Navision as a tool kit. We are a services company, not a software company. 
What we are about is helping people maximise their competitive advantage."
Ian Whiting, Navision's commercial operations manager for Australasia, said that 
Navision had won more than 200 sites since entering the Australasian market in late 
1998, including 30 in New Zealand. Avanti accounted for 11 of those.
Other New Zealand implementers are Madison Systems and Ernst & Young.
 Mr Simmons came across Navision Financials  when he worked for another integrator, 
Softlink Technologies, which was "burned" by a local  product that had proved to be "a 
pile of junk."
It evaluated mid-range offerings such as Great Plains, Solomon, Exchequer and Platinum, 
and settled on Great Plains just as Mr Whiting, then its Australasian contact, was shifting 
to Navision. He persuaded Softlink to go with the Danish product instead.
Softlink's Navision integration business was bought last June by Avanti 
Solutions, which wanted to replace One, an Australian solution that runs on the 
increasingly unfashionable Digital VMS platform.
Mr Simmons said that because the tier-one market in New Zealand was 
over-saturated, ERP (enterprise resource planning) vendors and their implementation
 partners were pushing unnecessarily powerful products on to mid-range companies. This 
left 20 or 30 user sites with $800,000 bills for systems.
"It's out of control. The consultants have a lot to answer for."
Avanti targeted mid-range companies, those needing 10 to 100-seat systems, which had 
unique business problems.
The average Avanti implementation is from $50,000 to $300,000 for licences. 
Mr Simmons said a 30-seat implementation was likely to involve about 200 hours of 
services, including project management, analysis, design and training, and a similar 
period for customisation.
While a version that ran on a Microsoft SQL Server database was available, most sites 
opted for Navision's own C/Side database.
"Everyone wants SQL, but when push comes to shove there is so much administration 
around it. Most people, even with a 30-user site, do not want a fulltime IT person."
Avanti managed most of its sites remotely, and Mr Simmons said there were few support 
issues.
"About 1 per cent of the calls to the help desk are software issues, the rest are requests for 
customisation and enhancement."

Internet to learn a smarter language

Michael Foreman

Proponents – and Bill gates is one – say XML will revolutionise the web, particularly for 
e-commerce.

The 'X' Factor: "Mr Web," Tim Berners-Lee, sees the new XHTML as linking the 
present and future internet.

'It's not a difficult technology to use or get your head around.'	Greg  Davidson
	Datacom

According to its most ardent evangelists, Extensible Markup Language (XML) is about to 
cause the most profound change to the internet since the arrival of the World Wide Web.
Where the web's present lingua franca, Hypertext Markup Language (HTML), was 
designed for the exchange of unstructured text documents between scientists, XML will 
organise data in meaningful categories - a concept similar to the fields in a database 
program.
The XML standard was published in 1997 by the World Wide Web Consortium 
(W3C), which is responsible for the continuing development of HTML and has been 
described as the closest thing the web has to a governing body.
A measure of the importance W3C attaches to XML may be gauged by its decision last 
January to name the fifth and most recent version of HTML as XHTML version 1.0.
W3C director Tim Berners-Lee generally regarded as "Mr Web" declared XHTML as the 
link that "connects the present web to the future web."
XML's protagonists say the language will help to allow the orderly presentation of web 
pages on anything from a television-sized monitor to a wristwatch.
It will also allow web pages to display different views of the same data to different users. 
For example, a telephone directory sorted by surname will sort itself by first name at the 
click of a button.
XML will also transform search engines and open the way for a new breed of intelligent 
web agent that will trawl for specific information.
The hit-and-miss quality of searches based on the occurrence of key words in text will be 
replaced by agents that can extract meaningful names, addresses, specifications or prices.
Search engines and agents will be able to compare apples with apples, and so comparison 
shopping or building specific industry mailing lists to order should become much more 
practical.
Finally, XML could act as a universal "hub" language, allowing easy transfer of data via 
the web between different applications such as databases or ERP (enterprise resource 
planning) systems.
For XML to live up to all these promises, the language must attract extremely broad 
industry support, and the indications are that this is occurring.
In the United States, a plethora of web sites, magazines and even trade shows have 
sprung up around XML, and the acronym seems to be on most web developers' lips.
In New Zealand, web development companies such as Datacom or Advantage Group are 
engaged in XML projects and even some of the smaller firms report they have at least 
one XML expert to call on.
"It's not a difficult technology to use or to get your head around," says Greg Davidson, 
head of internet development at Datacom.
In the IT industry, support for the language has even bridged the schism between Sun and 
Microsoft.
While Sun thinks XML will give its Java language - which is used for many advanced 
web functions - "something to chew on," Microsoft's Bill Gates says XML "will be at the 
centre" of tools and applications the company is to launch this year.
Foremost among these will be BizTalk Server, a product that is expected to represent 
Microsoft's big effort to harness the power of XML for e-commerce.
"BizTalk" refers to an industry initiative started by Microsoft and described as "a 
community of standards users" supported by vendors such as SAP and CommerceOne. It 
includes big technology users such as Boeing and BP/Amoco, with the goal of "driving 
the rapid, consistent adoption of XML to enable electronic commerce and application 
integration."
 BizTalk Server is expected to be launched this spring, but an example of just how 
powerful XML could be in business-to-business transactions is already provided by the 
launch last month of the E-business Module by British accounts software firm Exchequer 
Software.
Exchequer, which distributes its small and medium-business accounting package in New 
Zealand through Auckland-based Palladium Technology, describes this module as the 
first accountancy application to allow import-export information using standard e-mail 
and internet forms for orders and invoices.
"By enabling companies to automatically process web-generated orders, the E-business 
Module provides the final link in the supply chain," says Eduardo Loigorri, managing 
director of Exchequer.
E-business Module is the first of many applications (Office 2001 will be another) that 
will use eR15-X11L, one of many emerging subsidiary XML standards designed to 
describe data that is specific to an industry, in this case an e-commerce transaction. This 
standard will allow users of small accounting systems to link directly with the back-office 
systems of much larger organisations.
EBIS-XML has been developed by Basda (the Business and Accountancy  Software 
Developers' Association) and as well as being BizTalk-compliant, it is expected to be 
ratified by a United Nations e-commerce committee.
While eBIS-XML is likely to be taken up by just about every accounts or ERP software 
company, XML's detractors warn that hundreds or thousands of similar standards will 
lead to the "Balkanisation" of web development.
No longer will there be the single language of HTML. Anyone will be able to create his 
or her own XML standard.
Far from being a unifying force, some critics say, XML is the internet's 
Tower of Babel.

Music industry finally meets nemesis on net

Web Walk
Peter Sinclair

People Power: Napster's brilliance is its sheer simplicity

The Canutes of the global music industry continue to stalk the shores of cyberspace, their 
voices shrill with dread, commanding the tide of MP3 to retreat. But the waters are 
lapping at their feet.
They can hardly believe that a scrap of code is threatening to destroy everything they 
hold most dear, namely, their bottom lines.
The RIAA [www.riaa.com] has tried everything: humbug (its Soundbyting roadshow, 
"protecting music on the internet" at www.soundbyting.com, tours US campuses giving 
doomed lectures on the immorality of MP3); intimidation (ask www.mp3.com or 
Diamond Multimedia [www.diamondmm.com], maker of the Rio player); and violence 
(it got 22-year-old student Jeffrey Levy for criminal theft for swapping soundfiles with a 
friend - two years' probation, with compulsory urine tests and restrictions on net access).
 The Secure Digital Music Initiative [www.sdmi.org] is trying to set up specifications for 
secure   - and profitable - music downloads without any real demand (or hope of success, 
cracking technology being what it is).
Now, in a flurry of lawsuits, the RIAA is confronting the ultimate nightmare - an MP3 
distribution network which is swift, foolproof and beyond its reach. Devised by a 19-
year-old freshman, Shawn Fanning, it is named after his personal biorhythms: Napster 
[www.napster.com].
In only four months it has become the hottest thing on the web. Music is a human 
universal, making this small program the kind of seminal software - like Visicalc, the first 
spreadsheet, or Mosaic, the first graphical browser - which divides the future from the 
past, altering the way we do business and the way we live.
By shifting control of a major industry from vested interests to individual consumers, 
Napster's many-to-many software represents the spirit of the internet in its purest form. 
Its profound implications will not be lost on all those who live off copyright, like the 
publishing (see Bookmarks) and software industries.
The idea behind Napster is so simple you wonder why you didn't think of it yourself. It's 
just a distributed network which allows users to share music in MP3 format by briefly 
turning their PCs into servers when necessary to upload or download. Napster itself holds 
no music at all - that's up to millions of users round the world acting as individuals.
The functional interface sweeps you straight into "Oh wow!" territory. As yet (Napster is 
still in a v2.0 beta) there are no help-files or even an FAQ, and you don't need them; 
everything's absurdly easy. Just create a music-folder during the quick'n'easy setup, type 
the name of an artist or song you want, and watch the window fill.
After that it's just a matter of selecting whose connection you want to use, choosing if 
possible a "T" data-line, DSL, ISDN or cable. Double-click your choice, and you're 
switched to the Upload/ Download status window though most people continue to search 
and click as Napster queues their selection (it downloads three tracks at a time).
As they arrive, songs are automatically filed and catalogued there's a tab to view your 
library. And it's goodbye Winamp [www.winamp.com], Sonique [www.sonique.com] 
and the rest of them - Napster has an excellent programmable stereo player built in, plus 
online chat with music-lovers in a host of categories; all this in the free
648Kb download.
As I write - and it's some nameless small hour in America, not prime time - I have a 
choice of almost a million songsin more than 7000 personal music libraries.
Content changes as people log on and off - you really get a sense of the web as a living 
organism. If your download gets interrupted, Napster saves what you have and
queues the connection in a "Resume" window.
My collection is modest - in a couple of days I've acquired about 35 of my favourites, 
everything from Nazareth to Purcell. Sometimes it takes a while to find exactly what you 
want if it's a little obscure, but sooner or later someone with your taste in music will log 
on and you'll find it.
Many music-lovers download free "ripper" software - MusicMatch  
[www.musicmatch.com] is popular - which will convert tracks from their favourite CDs 
into MP3 code and store them on their drive so that others can enjoy them too.
The RIAA wants Napster outlawed - fat chance; it tried that already with Rio. Nor can it 
very well sue millions of individual music-lovers.
Its bosses need to read Tennyson: "The old order changeth, giving place to new, lest one 
good custom should corrupt the world ..."

Bookmarks

CREEPIEST: Riding the Bullet
Recovering from near fatal injuries last year, shudder-meister Stephen  King wrote 
Riding the Bullet- a 66-page "ghost-story in the grand manner."
Curious to see "whether this is the future," the author launches it today as an e-book in 
the first online market-test by a best-selling author.
 Advisory: $US2.50 at online bookstores only. 
www.simonandschuster.com

Breakfast briefing
Between the lines
Singaporean and New Zealand trade officials meet in
Auckland next week for what could be the final set of
negotiations on a "closer economic partnership,"
writes Arian Fallow. While Singaporean wages are
higher than ours, and little of New Zealand's textile,
clothing and footwear imports come from there,
there is concern the deal will open a back door to
products from the sweatshops of Asia.  E3
Telecom test case on hold
Telecom has backed down in a Kiwi Share test case
against a web surfer who refused to pay call charges
for internet access using the 0867 code. Last month,
the draft report of the Government's
telecommunications inquiry recommended the Kiwi
Share obligation be clarified to include local low-speed internet 
connections.  E3
Keep the wool from the door
The wool trade has suffered another blow, with
carpet-making giant Cavalier Corporation's decision
to scale down its merchant scouring operation E
Lichtenstein & Co. The firm will move toward keeping the wool in-house 
for its own carpet-making
needs.  E4
Double bid for Sealord stake
A twin-bid for Brierley Investments' stake in Sealord
has been confirmed, further fuelling speculation that a South African 
frozen food giant wants to enter NZ waters. Brierley Investments' Arun 
Amarsi said
an offer had been made this week for the 50 per cent
holding in Sealord, but he would not give details of
the bidders.  E4
iTouch goes to market
iTouch yesterday set the price range for its stock
market floatation - valuing the company at £325 million ($1.07 
billion). Dealings in the shares are
expected to start at the end of this month. There had
been speculation the initial public offering might be
delayed following the turbulence in technology
stocks in recent months.  E5
Weekend cheer for traders
Telecom headed into friendlier waters yesterday, pulling the overall 
market to a strong close. The company, which had been falling for a 
week finished
up at 735. The kiwi dollar traded in a tight range
after banks sold themselves short - influenced by a
flat Australian currency.  Markets E8 & E9
Money matters
Is a stash of cash better in the bank or in bricks and mortar? Being 
sensible about buying a home and paying your
mortgage off by the time you're 50 is among Mary Holm's advice.
Ell

Changes in the wind …

A willingness to pay extra for 'green power' would speed the switch to 
new energy sources in NZ

Green Power: Engineer Peter Van Meer tests a turbine nose cone at 
TrustPower's wind farm.

Trustpower's Tararua wind farm could double in size depending on the 
outcome of two environmental initiatives.
Expanding the farm near Palmerston North could make economic sense if 
the 
Government decides to adopt a
pollution tax, or if research shows Kiwis are keen to buy "green 
energy."
TrustPower has planning permission to increase from 48 to 103 the 
number 
of turbines on the farm.
Each turbine has the ability to power 200 homes when it is running to 
capacity.
But the relatively low price of electricity and the weak kiwi dollar - 
which makes buying new turbines from the United
States or Scandinavia more expensive - mean expanding the farm is not 
economical right now.
"At the moment it is a little hard to make a new one of these 
[turbines] 
make economic sense," said TrustPower chief
executive Jeff Williams.
The company spent about $50 million setting up the wind farm, or more 
than $1 million for each turbine.
That included planning consents and other expenses, so adding new 
machines would cost slightly less.
Mr Williams said TrustPower was exploring the possibility of selling 
green energy, with customers paying a premium
to buy electricity from the wind farm.
"If 1 per cent of New Zealanders would pay a small premium ... maybe $5 
a month for the average person, that would
[make a new wind farm economically viable].
"In some very [environmentally] conscious countries, 15 per cent of 
people say they would pay a premium. In
Australia it's about 5 per cent."
Expanding the wind farm would also be economically viable if the 
Government was to tax carbon dioxide polluters, Mr
Williams said.
There have been suggestions the tax, which would hit carbon 
dioxide-producing coal and gas-fired power stations, could be between 
$10 and $40 a tonne.
This would push power prices up by 0.5c to 2c a kilowatt.
"At the moment a $10-a-tonne tax
would be enough to make a new wind
farm look viable."
Under the Kyoto Protocol, New Zealand has promised to reduce emissions 
to
1990 levels by 2012.
Instead, emissions have been going up. Mr Williams said the company was
considering building green generation plants in Australia where 
retailers were
being forced to start sourcing energy from renewable sources. 
 - NZPA

BREAKFAST BRIEFING
All's Wel that ends well
Miner turned e-commerce investor Spectrum
Resources got the green light yesterday for its
new direction. About 50 shareholders attended a
special meeting in Auckland to unanimously
approve the company's $2 million acquisition of
software provider WEL Technology.  C2
Clear vision for the future
The Government's telecommunications inquiry will have to predict how the 
market will be in five years and work
backwards to regulatory solutions to ensure it gets there, says Clear 
Communications' legal counsel, Peter Waters.	C2
Curtain up on movie bids
Cinema operator Reading Entertainment could
take on New Zealand's two main cinema chains. It
is going ahead with a $55 million complex in
Wellington. The 10-screen complex is being touted
as the capital's answer to Auckland's Force
Entertainment Centre. It already has a stake in
Hoyts' multiplex in Whangaparaoa, and Barry
Everard's two cinemas in Auckland.  C3
Jackson no soft touch
The splitting of software giant Microsoft won't
have any impact on operations here, says New Zealand managing director Geoff Lawrie.
Yesterday, US District Court Judge Thomas Penfield Jackson ordered Microsoft to be 
broken
into two and said the company was
untrustworthy.  C3
Living Earth is growing
Waste Management New Zealand is teaming up
with compost maker Living Earth to expand its
municipal waste operations. Living Earth is already in a joint venture with Waste 
Management, running a composting plant in Wellington. They are now looking at similar 
ventures in Auckland and Christchurch. C4
Perky greenback hits kiwi
The sharemarket closed flat but in good heart yesterday, with widespread 
gains balancing losses from dominant
Telecom. The NZSE-40 capital index came back from early negative levels 
and the gloss came off the kiwi dollar as
the greenback looked a little perkier.
Markets C6 & C7
On the road to success
Fulton Hogan of Dunedin has won contracts worth $310 million to look 
after main roads in the south of Western
Australia. Managing director Jim Miller said the 10-year deal was with 
Roadcare, a joint-venture between Fulton Hogan and Australian firm Pioneer Road 
Services. The work covers 4500km of roads.
ENTREPRENEURS
A sure-shot winner
Since. Ecco Pacific began trading in 1992 its turnover has increased 
twelvefold. Formed by Howard Mackley, the Glenfield-based importing and distribution 
firm has already spread across the Tasman with offices in Sydney. Mr Mackley credits 
his success to sticking to his guns - even
if it means losing business. C5

 IN SHORT
S&P pulls back on Brierley rate
Standard & Poor's has lowered its rating on Brierley Investments to triple-B-minus from 
triple-B and affirmed the A-3 short-term rating.
The rating outlook for the former New Zealand investment company was 
stable, the agency said.
"The downgrade reflects the concentration of Brierley's investment 
portfolio in three core listed assets, which inherently reduces asset liquidity."
Two of the major investments of the company -Thistle Hotels and Air New 
Zealand - represent about 50 per cent of its investment portfolio.
The Chips are up
Helped by some one-off sales, listed company Mr Chips boosted annual 
after-tax profit by 92 per cent to $1.01 million and is budgeting to "comfortably" exceed 
this figure in the current year.
The result for the 12 months to March compared with $528,000 a year 
earlier, and was on total operating revenue ahead to $17.75 million, from $16.88 million 
previously.
Bridgecorp profit
Bridgecorp Holdings remains keen on listing, the company said in announcing 
a $4.88 million profit, up from $1.3
million previously. The company, which has moved its focus from property to 
finance, also recorded sharply higher
revenues up 163 per cent to $19,03 million in the 12 months to March.

Telecom helps put the cheer in a flat day

New Zealand 

WELLINGTON - The New Zealand sharemarket closed flat but in good heart
yesterday with widespread gains
balancing losses from the overwhelmingly dominant Telecom.
The NZSE40 capital index came back from early negative levels, the result 
of the market holding off to see the
ramifications of the United States court decision to split Microsoft in 
two. The key local index saw rises 
outnumbering falls 68 to 25 among the 145 stocks traded.
Smaller companies also grew in value, the NZSE-SCI capital index rising 
29.40 points to 5060.99.
"This was quite a good performance by the market," Ord Minnett's John 
Rattray said.
Telecom, with $42.14 million worth of shares changing hands, finished down 
18c at 785, but Mr Rattray said middle-
sized companies with consistent earnings were well sought after by domestic 
buyers.
Merrill Lynch's Richard Leggat said Telecom had come back after a good run 
recently, and his brokerage had downgraded expected earnings slightly.
Lion Nathan accounted for $46.35 million of that and closed up 2c at 445, 
with a parcel of 9.60 million shares
crossed. Mr Leggat said Ord Minnett appeared to have put through a
sizeable after-market sell order, possibly New Zealand institutions selling 
to one or more Australians as people adjust their index-weighted holdings after Lion 
shifted its primary listing to 
Australia.
On the other hand, possibly some had decided they no longer liked the stock.
Mr Rattray said there was "nothing abnormal" in the large Lion volumes
Sky TV, despite the weak currency which it exchanges for the currently 
strong US dollars it needs to buy
programming, and a slowing economy which will hamper take-up of its 
services, inexplicably jumped 35c to 420.
Tranz Rail continued to perform strongly, rising 25c to 385. It is now up more than 40 
per cent in three weeks.
Brokers said it is expected to be a big beneficiary of the boom in exports as a result of the 
low dollar.
"There is a terrific re-rating going on there," Mr Rattray said, following 
the sale of a lease on an Auckland rail line and the arrival of "impressive" new chief 
executive Michael Beard.
The stock may also be "in play" since Infratil revealed it had taken a 5 per cent stake.
Fisher & Paykel was up 11c to 689 after announcing an annual bottom line profit of 
$54.4 million, at the top end of expectations. The company gave no further information 
on the possible split 
off the healthcare products division into a separate company. - NZPA

Business as usual for Microsoft Nz

A breakup of the world's largest software company could change the face of computing 
worldwide, but its local chief is confident it will not happen.

Clashing Views: Judge Thomas Penfield (left) and Bill Gates. The judge says Microsoft 
is unwilling to accept it broke the law.

WELLINGTON - The court-ordered split of international software giant 
Microsoft in the United States will not have any
impact on the company's operations here, says New Zealand managing 
director Geoff Lawrie.
The company was confident it could overturn the order, he said.
US District Court Judge Thomas Penfield Jackson ordered Microsoft to be 
split in two in a final antitrust ruling
yesterday that could change the face of computing around the world.
He said the company would remain intact until all appeals were exhausted, 
and that he chose to break up the
company instead of imposing stringent restrictions because Microsoft had 
proved to be untrustworthy.
Microsoft chairman Bill Gates said the company would challenge the order 
within days.
"We will be appealing against
this decision and we believe we have a very strong case on appeal."
Microsoft has been given four months to break up the company, but has 
asked for a stay until it appeals.
Mr Lawrie said the company was not expecting any immediate impact from 
the court decision.
"That's not a case of denying the reality of what's going on over there 
but simply understanding the process that's
about to go through.
"Microsoft has already signalled that it will be taking this case to the 
appeals court and ... we will be filing for a stay of
the judgment."
Mr Lawrie said Microsoft had an extremely strong case - "not just based 
on sheer bravado but based on the facts and
the case law that exists around this, and on the precedent that we have 
within the appeals court."
The appeal was expected to take
at least a year, so it would be more than 18 months before any decision, Mr Lawrie said.
If the appeal was not successful, Microsoft would decide then how to 
proceed. "The shape of our industry is going to
be determined by the things that are happening within it - the new 
technologies and the competitive dynamics - rather
than anything that the Department of Justice decides.
"Long term we're certainly going to see change but it'll be driven by 
things other than the appeals court process."
Mr Lawrie said it would be business as usual in New Zealand while the US 
parent company challenged the court
decision.
Microsoft Australia managing director Paul Houghton said Microsoft would 
"continue to work with its customers and
partners across the country to ensure that they gain the maximum benefits
from the technology we have developed."
Judge Jackson's order mirrored Government proposals to split the company.
One of the new Microsoft companies would develop and sell operating 
systems such as Windows.
The other would own Microsoft's remaining software and online businesses.
If the judgment is upheld, it will be the harshest antitrust action taken 
against a US corporation since AT&T agreed to
spin off the "baby Bell" regional phone companies in 1982.
It is one of the biggest antitrust battles in history, often compared 
with the breakup of oil baron John D. Rockefeller's
Standard Oil in 1911.
Judge Jackson said in his 23-page order: "Microsoft, as it is now 
organised and led, is unwilling to accept the notion
that it broke
the law or accede to an order amending its conduct."
Under the order, Microsoft would also face restrictions on its business 
conduct, including giving
outside software developers greater access to the Windows source code.
Since it was founded in 1975, Microsoft has grown to become the
world's most valuable software company with annual revenues of more than 
$20 billion a year.
It has made Mr Gates one of the world's richest men and helped keep the 
United States at the forefront of the digital
age.
With 60 foreign offices, and its software used from Argentina to 
Zimbabwe, a breakup would eventually affect
computer users worldwide.
In its rationale for splitting the company, the US Government said the 
measure would prevent the Windows system,
which runs on more than 80 per cent of personal computers, from being 
used to force companies and consumers to
use other Microsoft products.
Cleaving the company in two could also encourage development of 
alternative operating systems and prompt versions
of programs like Microsoft Office to run on those systems.
Microsoft said a breakup would harm consumers by preventing it from 
developing integrated products.
-	NZPA, REUTERS, AAP

Shine goes off kiwi dollar

WELLINGTON - The gloss came off the New Zealand dollar yesterday as the 
greenback looked a little perkier.
"The kiwi drifted off early highs Thursday morning around the 47.30USc 
area. There was a slightly stronger US dollar
with the euro weaving back below the 96USc area," said Bank of New 
Zealand chief currency dealer Mike Symonds.
"The aussie dollar was also contributing to the kiwi's slightly weaker 
tone with the aussie drifting down from 
59.30USc seen early Thursday morning to 58.85USc. So that has shed about 
40 points and knocked the kiwi."
Employment data released in Australia had been close to expectations. 
"There was nothing really too much in the data which was surprising."
"I think this is a case of the market undergoing a little bit of a 
correction after some strong gains we have seen recently in both the kiwi dollar and the 
aussie dollar," Mr Symonds added.
The kiwi, which opened steady on its Wednesday's close of 47.31USc, ended 
yesterday lower at 46.95USc.
Bond prices were mostly four to six basis points weaker with the April 
2004s at 6.96 per cent (6.91 per cent at close yesterday); November 2006s at 6.92 per 
cent (6.87); and July 2009s at 
6.88 percent (6.82). - NZPA

Waste giants join forces in deal they can't refuse

Dirty Work: A bulldozer in action at the tip face of an Auckland landfill.

Rubbish firms get together to corner the compost-from-sewage market in 
three of the main centres

Waste Management New Zealand, the country's largest publicly traded refuse 
business, is teaming up with Living
Earth, the biggest compost maker, to expand its fledgling municipal waste 
operations.
Living Earth is already involved in a joint venture with Waste Management, 
running a $17 million ($8 million)
composting plant using sewage sludge in Wellington.
The partners said yesterday that they would buy out Living Earth's 
operations in Auckland and Christchurch to set up
similar opportunities in those cities.
No price was given, though both partners will contribute capital.
"[The opportunity] is not going to automatically happen," said Waste 
Management's chief financial officer, Grant
Tietjens, though he said continued dumping of Auckland's sewage sludge into 
the city's landfills was probably
politically unacceptable.
Living Earth produces more than 100,000 cubic metres of compost products a 
year, about 80 per cent of which
comes from its dominant position in Auckland's green waste market.
Mr Tietjens said Waste Management needed access to that green waste if it 
was to replicate its Wellington
composting operation in Auckland.
The two companies will now cooperate on that opportunity, which could arise 
as early as 2004, when a new site will
need to be found for sludge from the Mangere waste treatment plant.
The plant caters for more than half of Auckland's population.
Waste Management posted an 8 per cent rise in profit for the year ended 
December 31, to $11.7 million,
though it faced costs from buying and merging with rival Waste Care.
Mr Tietjens said the Wellington composting operation, which had been 
running for five months, was going well and was ahead of budget.
However, three years out, it would probably only contribute about $500,000 
to Waste Management's tax-paid profit.
Mr Tietjens said the plant's importance was to prove the technology and give Waste 
Management an advantage when developing operations elsewhere.
The Mangere facility, for instance, could be three or four times larger. - BLOOMBERG

Breakfast briefing

E-gateway targets e-commerce
An electronic portal targeting $3 billion a year in public sector buying expects to transact 
business-to-business e-commerce as well, soon after its August launch. Supplynet aims to 
trim
purchasing costs through an electronic market place.   C3
Guinness goes flat
Guinness Peat Group's share price remains in the doldrums, despite 
attempts to breathe life into the market with its new convertible notes. C3
Who is an employee?
The Law Society has thrown its weight behind criticism of the Employment Relations 
Bill's
definition of an employee. The definition is extremely wide-ranging and will cover 
almost all independent contractors, says the society in its submission on the bill.  C2
Realtors hail assurances
The Real Estate Institute welcomes assurances
from the Government that real estate
salespeople will not have their employment status changed by the Employment Relations
Bill.  C2
Sealord casts net
The country's largest fishing company, Sealord, expands its global fisheries 
network after investing millions in a new Argentine deep-sea fishing company called 
Yuken with around 150
staff.	C3
Rover  waiting for a tow
The threat hanging over  Britain's Rover car maker has been lifted following the
 Phoenix consortium's
 purchase of the Longbridge
 plant from Germany's BMW.
 Phoenix is now looking to start alliances with other car produces and its set to approach 
Honda of Japan and Germany's VW. Phoenix has scrapped plans for a new model due to 
cost. C5
Cheers to local brewery
Lion Breweries has confirmed it would begin production of Stella Artois 
in Newmarket shortly. The domestically brewed premium beer
should be available from next month. "The product will be the same only 
fresher," said a Stella spokesman. C5
ADVERTISING& MARKETING 
Print misses out on awards
This year's Axis awards - held to recognise the creative work of the 
advertising industry - was a damp squib for the print sector. Out of 100
bronze, silver and gold awards, just a handful went to print advertsing 
campaigns. C4

John Hemming

Kiwi's steady but tense

WELLINGTON - The New Zealand dollar was steady but tense yesterday amid 
fears of unstoppable momentum
selling after Tuesday's dive to almost a 14-year low.
"It's pretty ugly," a currency strategist said. "I can't see any positive 
surprises round the corner. I think people have pretty well had enough. The risk from 
here in terms 'the surprise event' 
are going to be to the downside."
Yesterday the kiwi traded in light volumes in a 47.85-08USc range, 
finishing on its lows at 47.86USc from 47.97Usc Tuesday.
Some said technically there is nothing to stop it free-falling to 45USc, 
but the analyst said that was a bit dramatic -
natural buyers would be there on the way down.
One analyst said if the Australian dollar continued to weaken there was no 
upside left for the kiwi. Yesterday, the
neighbouring currency firmed, finishing at 58.25USc.
But the aussie is plagued by concerns over Australia's interest rate 
differential with America.
The strategist said there was only downside risk for the kiwi from the 
Reserve Bank of New Zealand's monetary policy
statement next week. The bank will undoubtedly raise rates but possibly 
only by quarter of a percentage point rather than the favoured half point - in which case 
rates could well fail to keep 
pace with upcoming anticipated American rate hikes.
The next historical low for the kiwi is September 1985's 46.80USc.
However, WestpacTrust economist Michael Jansen was less gloomy.
"We are pretty optimistic for the outlook for global growth and global 
income growth in particular. And the outlook for soft commodity prices is pretty good. – 
NZPA

Trading eases and follows global trends

Wellington. – The New Zealand sharemarket fell in line with off-shore markets when it 
eased back yesterday.
"The market was weak but held up pretty well in the face of weak global 
markets," said Deutsche Securities broker Shane Gavegan.
The subdued sentiment follows disappointing trade Tuesday, when the NZSE-40 
Capital Index closed down 24.4
points (1.18 per cent) and the kiwi dollar glimpsed 14-year lows.
Yesterday, the NZSE-40 Capital Index dropped a further 8.51 points to 
2032.31 on moderate trade of $82.7 million.
Falls out-numbered rises 55 to 134 among the 142 stocks traded.
The NZSE SCI Capital Index clawed back its morning losses to finish 
virtually flat at 4961.38.
The good news was the continuation of corporate activity with CanWest 
announcing a bid for 44.9 per cent of
RadioWorks.
RadioWorks soared 155 to CanWest's bid price of 825. CanWest, the Canadian 
company which owns TV3, said it
had bought conditionally 19.9 per cent of RadioWorks, and was bidding for a 
further 24.9 per cent at $8.25 a share via
a stand in the market.
The stand would be made today and
premium over on Friday on a first-come, first-served basis. The offer was at a 23 per cent 
premium over RadioWorks' price on Tuesday. RadioWorks welcomed the bid but said it 
may not fully value the stock.
Eventures, which had a strong debut Tuesday, continued its form by adding 
3c to finish at 69c.
E-Opportunity's listed on the New Capital Market at 50c, its issue price, 
an expected price given that it was a cashed-up company.
The Auckland-based firm, which wants to develop computer software to help 
in staff assessments, experienced heavy
demand for its 1.2 million share issue.
Among the market leaders, Telecom fell 10c to 855, in response to the Nasdaq's 
weakness. Number two stock Carter Holt Harvey's rose 1c to 180.
Lion Nathan rose 1c after it announced it would brew Belgium beer Stella Artois locally.
Fisher & Paykel gained 10c to 645. There is speculation it will replace 
Lion in the top 10 Index when Lion moves its
primary listing to Australia on June 2.
Fletcher Paper held steady on 238 but Energy lost 3c to 505, and Forests 
rose lc to 84. Tower maintained its revival
after announcing a restructuring, rising 15c to 505 with the partly-paids 
rising 9c to 220.
Westpac NZ rose 9c to 730 and Baycorp dropped 55c to 875. - NZPA

Breakfast Briefing
Tariff freeze splits lobbyists
The Government's decision to freeze tariffs at current levels for the next five years 
pleased manufacturers but dismayed farmers and other free trade associates.	E3
Not so bad
Full-time employment grew by nearly 20 per cent while the Employment Contracts Act 
was in place – cause for a second think before it is replaced, Manufacturers' Federation 
chief executive Simon Carlaw says.	E2			Simon Carlaw
Commodity retreat
Commodity prices fell in March, the first retreat in five months, in spite of the fall in the 
kiwi dollar, according to the ANZ Bank's latest index.	E3
Real smile for beauty maker
A young chemist with a keen interest in cosmetics landed a $300,000 order to launch her 
range.	E3
Technology stocks suffer
Technology stocks suffered from Nasdaq's 258-point sell-off in most other markets. New 
Zealand slid nearly 1 per cent, the same as Australia, while London's FTSE100 was off 
1.6 per cent soon after opening on Tuesday. The kiwi dollar strengthened against both the 
aussie and the US dollar while the aussie reached an 18-month low.	Markets E8 & 
E9
Commercial Property
Restaurant cries foul on time
Downtown Convention Centre restaurant and bar owner David McCabe reckons AMP is 
trying to force him out a month before his lease is up so a start can be made on the 32-
storey tower proposed for the site.	E12

Briefly
High note to quarter
Carter Holt Harvey's net sales for the three months ending March 31, 2000, were $842 
million, compared with $702 million for the same period last year, the company said. Full 
details of its results for the year ending March 31 will be released on May 4.
Walker directorships
Broadband wireless company Walker Wireless will face the future with three new 
directors: Wilson & Horton chairman John Maasland, Liberty Press Group owner Barry 
Colman and former Xtra general manager Bob Smith.
Furniture shop fined
Upper Hutt-based Hazelwoods Home Traders – belonging to The North South 
Furnishings Group – has been fined $15,000 for making misleading claims about its 
furniture. Among other things, Hazelwoods sold pine pieces with a rimu-coloured vinyl 
finish as "solid rimu." It is the second North South company to be fined over misleading 
claims.

Air NZ leads the day as Singapore flies in

Singapore Airlines (SIA) waded into the New Zealand sharemarket, spending $141 
million on an 8.3 per cent stake in Air NZ, but outside that and the financials most stocks 
were weaker.
The Air NZ Bs, which foreigners can own, ended up 20c at 275, with those sellers who 
missed out on SIA's stand at 300 still able to exit at a higher price than yesterday's close.
Some 6.6 per cent of Air NZ was bought off institutions overnight.
Last night SIA got Government approval to build an 8.3 per cent stake in Air NZ. That 
move apparently indicates it will buy Brierley Investment's 16.7 per cent of Air NZ held 
through the B shares. If that happens, it will take SIA to 25 per cent which is the limit a 
foreign airline can own.
JB Were broker James Reid said it was not clear what would happen next, but 
Air NZ would see more corporate activity.
Qantas and Lufthansa have both been circling Brierley's stake.
The action accounted for $365 million of total market trade valued at 
$472.47 million.
Scaling of sales is yet to take place. Brierley Investments closed steady 
on 42.
The NZSE-40 capital index finished down 19.05 points at 2135.22 as market
driver Telecom shed 15c to 965 on trade worth $49 million.
Smaller stocks also lost ground, the NZSE-SCI capital index falling 32.36 
points to 5350.11.
The financial services companies have gained on the back of merger 
manoeuvres in Australia. An Australian media
report said that Westpac had been in talks with AMP about an alliance or 
possible merger.
"The only one which has continued to do well in terms of the leaders is The 
Warehouse. It's still a very good story and
a good play on the strength of the local economy," Mr Reid said.
Among the technology listings, Advantage Group dropped 25c to 485,
ephone eased 2c to 52, IT Capital gave up 5c to 50 and its options fell 2c 
to 33, Tag Pacific dropped 9c to 66 and its
rights fell 5c to 16, but Strathmore firmed 3c to 38.
In the finance sector, AMP gained 50c to 1911, and Colonial rose 5c to 955, 
while Tower shed 4c to 466 and its partly
paids lost 9c to 201. The Warehouse added 5c to 455.
Elsewhere, Auckland Airport eased lc to 235, Contact fell 5c to 254, Lion 
Nathan was down 4c at 348, Natural Gas
Holdings fell 1c to 128 and Sky TV firmed 2c to 482.
The Fletcher camp was weak again. Building was down 5c to 220, Energy slipped 20c to 
490, Forests was down 2c at 74, and Paper eased 1c to 228. - AAP

Aust dollar woes continue

WELLINGTON - The New Zealand dollar reached an 11-month closing high 
against the Australian dollar yesterday as the aussie's woes continue.
The kiwi, holding up against the aussie's depressing influence, was valued at A83.72c at 
close against A83.18c
Monday. It last closed above A83.70c in May 1999.
Currency strategists see the kiwi's cross rate with the aussie climbing 
as high as A86c later this year.
The kiwi's gains came as the Australian unit was again hammered 
yesterday, with negative economic news dragging down a currency already plagued by 
heavy selling.
The aussie reached a fresh 18-month low on its home market and finished 
here at US59.48c against US59.77c on Monday.
National Australia Bank said March quarter business confidence slumped as 
interest rate rises bit deeply - the
latest evidence that Australia's economic growth is softening.
Local dealers said volumes were light in trading here, although the 
kiwi-aussie cross had seen some action.
However, the Australian dollar was weighing on the kiwi.
"The aussie's still looking pretty sick ... Kiwi's reasonably bid, it's 
doing quite well. It keeps on wanting to pop on the
topside but aussie's relatively depressed so it's keeping us down here," said one 
Wellington-based dealer.
The kiwi made modest gains to end at US49.80c against US49.72c on Monday 
and tracked a tight US49.60-85c range.
On the debt market, yields rallied modestly across the bond curve.
Ninety-day bills ended at 6.49 per cent from 6.48 per cent. – NZPA

Accountant doesn't add up to standard

Geoff Senescall meets a Queen St bean-counter whose idea of a role model is Russian 
mystic Rasputin.

Terrier: Bruce Sheppard's Brierley campaign is just one of his crusades on behalf of the 
little people.

'Once I pick up something I am disinclined to let it go.'	Bruce Sheppard
	Accountant

Unconventional is probably an apt way of describing Bruce Sheppard. 
Sandals, shorts and short-sleeved shirts are
normal attire for the portly 41-year-old Queen St accountant.
Then there is the beard - not a close-cropped designer job to complement 
the dark suits that male bean-counters
typically wear.
Rather, it is one that shears seldom see.
In fact, when he gained notoriety by poking the borax at Brierley 
Investments wearing a steel helmet to a packed
annual meeting in Auckland last November, he could have passed for Cuban 
strongman Fidel Castro.
When asked about the similarity, however, Mr Sheppard tugs his beard and 
muses that he would probably prefer to
be likened to another hairy chap, the Russian mystic Rasputin.
"Castro uses force of power to deliver his result. Rasputin delivered the 
result, albeit not a particularly pleasant one
because he was not a very honourable soul, using influence and persuasive 
power.
"Influence is far more strong and enduring than physical force."
Certainly, Mr Sheppard's ability to use his tongue quickly became 
apparent when he took on the Brierley board at the
company's last stand in this country before it moved offshore.
After initially coming across as a crank in military headgear by calling 
for a minute's silence out of respect for
Remembrance Day, he soon had chairman Sir Selwyn Cushing turning to the 
company's financial controller for advice
as he peppered the board with questions.
Even the normally vocal shareholder rights campaigner and Business Herald 
columnist Brian Gaynor happily took a
back seat as Mr Sheppard hit the company with query after query.
A Brierley shareholder, he had only decided to go to the meeting the day 
before.
"I got an annual report. I was aware of Selwyn's share options and I just 
got annoyed.
"How dare they call a meeting like this on Remembrance Day [the day the 
First World War ended]," said Mr Sheppard, noting that his grandfather was a Gallipoli 
veteran and his father fought in the Second World War.
"How can they cause the damage and mayhem that they have, enriched 
themselves in the way they have, and
sanctify all this on a day like Remembrance Day?"
Certainly the meeting proved an ideal opportunity to remind shareholders of the
suffering of previous generations and compare that with the suffering 
meted out to them by a public company.
As for the helmet, he said it simply felt a fitting thing to do. He, was 
actually tempted to get a bayonet as well, but
thought he might be arrested.
Although he initially viewed the meeting as a bit of sport, Mr Sheppard 
quickly became aware of the depth of feeling
among disillusioned shareholders sceptical about the company's move overseas.
Having bought his shares at just under 50c (they are 42c now), his pain 
was relatively light compared with those who
had stuck with Brierley over the years and lost thousands.
So irked was he by the shareholders' plight that, five months later, he 
is still agitating in the background.
Since the meeting he has fired off a letter to Sir Selwyn raising more questions about the 
ethics of his 15 million options. 
-"Once I pick up something I am disinclined to let it go."
Mr Sheppard points to a 2 1/2-year fight with the Institute of Chartered 
Accountants where he ended up winning
concessions from rule changes affecting smaller members.
Then he battled Mercury Energy, trying to stop its takeover of Power New 
Zealand because he felt it was not fair on
Mercury customers. The Auckland power crisis ended that row.
Too often, he said, smaller shareholders were trodden on. Ideally, he 
would like to set up a body, similar to one in
Australia, which acted as advocate for their rights.
When he is not fighting, he is working at his accounting firm, Gilligan 
Sheppard, in the Smith and Caughey building.
He started his career at Inland Revenue, then made the seemingly logical 
move to a big accounting firm, Lawence
Anderson Buddle (now Deloitte Touche Tohmatsu). But he quickly decided 
this was not for him.
"I preferred servicing little people, endeavouring to enrich their 
environment and lives as much as possible to the
extent that an accountant can do that."
So 15 years ago, with partner Kevin Gilligan (now retired), he set up an 
accounting practice, which now has 20 staff.
"When the business started out, it was a reasonably aggressive tax 
practice," he said. But the 1987 sharemarket crash saw business grind to a halt.
"We then moved more into risk-management strategies to ensure business 
people could contain the level of liability
they have on board.
"We did quite well, and that continues to be one of my professional 
skills.
"Today the firm has a reasonably diverse client base, including a number 
of quite wealthy individuals and families."
As the wealth of clients built up over the years, it became increasingly 
clear that they needed more than just the
normal accounting advice: they also wanted to talk about investment 
strategies.
"Accordingly I developed an interest in investment analysis. We now 
produce a six-monthly newsletter on
investment, among other things."
But what about the Brierley investment? Mr Sheppard admits it was simply 
a mistake. It looked cheap at under 50c, "but I obviously got it wrong."
Brierley is not the only investment he admits to not getting right. He 
recounts with great amusement, an investment in
a venture that was looking to make square trees.
"It sounded like a great idea at the time."
Looking back, the only comfort was that Goodman Fielder and Air New 
Zealand also backed the idea by providing services free.
But venture capital is an area he is interested in.
"About 10 years ago I saw there was a desperate need for someone to 
provide networking service to put people with
ideas together with people with management skills and people with money. 
Generally the three are mutually exclusive.
"In the early 90s, I started syndicating mezzanine property finance 
packages to developers who had a bright idea and
financed a number of apartment developments, office and retail 
developments and the like.
"Generally those consortiums made an internal rate of return between 18 
per cent and 120 per cent a year.
"From that we started to receive a number of inquires from people with 
bright ideas. For every nine nutters who came
with an idea, you usually got one that worked."
In choosing investments, Mr Sheppard puts great store in integrity.
"Generally a venture will be successful if the interests of the company 
are put first, along with the interests of
shareholders and staff."
When it comes to staff, he is passionate.
"The problem with modern society is the number of hours of work people 
are expected to do is rising all the time.
"We now have overemployed people and unemployed people. We don't have 
employed people.
"I suspect the approach to business is actually wrong because what you do 
eventually is burn your employees out."

Work on tower fuels downtown dispute

Stars & Gripes: The site of the dispute between David McCabe, AMP and Lion Nathan.

By FIONA ROTHERHAM
The owner of two downtown Auckland restaurant/bars is crying foul as AMP 
begins work on its 32-level office tower.
David McCabe reckons AMP is trying to push him out a month early from his 
lease for the Stars & Stripes bar by the
Downtown Convention Centre in Albert St, and that preliminary work on the 
tower is turning away customers.
Lion Nathan held the head lease on the prime waterfront site with 85 years 
left to run.
Mr McCabe said it "almost swore" there would be no triggering of a 
demolition clause when his family company
signed an 18-month lease at a high rent just seven months ago.
"When Lion Nathan gave us an 18-month lease we thought that indicated 
nothing was going to happen. That's why
Stars & Stripes agreed to pay five times the rent we were paying for Cal 
Neva [his other restaurant]."
AMP, as head lessor, also agreed to the 18-month sub-lease.
Both AMP and Lion Nathan denied the allegations.
"It is a complex situation and we're working closely with him, but we're 
not going into too much detail through the
media," said AMP Asset Management acting property head Anthony Beverley.
Lion Nathan denied giving Mr McCabe any such assurances and said its staff 
acted properly.
"Everyone was very aware of the short-term nature of the place," said Lion 
Nathan director Mike Smith. "He may well
have had expectations or hoped that it wouldn't happen so fast, but that 
has not happened."
Mr McCabe's family company, IBA, poured in more than $200,000 upgrading 
the rundown property as it cashed in on
the America's Cup
success. It also owns several other restaurant/bars in Auckland.
"To the extent that he did spend money on the property, he got that back 
during the Cup anyway," Mr Smith said.
AMP and Lion Nathan reached agreement for an undisclosed sum on vacating 
the lease, the last obstacle in the way
of constructing the tower.
Mr McCabe claimed he had been told the settlement was close to $4 million 
but both parties deny it was that high.
Lion Nathan is now chasing Mr McCabe for around $100,000 in back rent.
"We don't want to end up in a punch-up with him," said Mr Smith. "It is very difficult to 
negotiate with people when they are thrashing around like this."
The Cal Neva site, also on Albert St, was leased directly with AMP on a 
month-by-month basis.
The restaurant has just shifted to Newmarket after getting four months' 
rent relief.
Mr Beverley said AMP had a deal with Mr McCabe that he had reneged on.
Lion Nathan said it received no rent relief on its lease and even if it 
had, was not obliged to hand it on to the sub-
tenant. 
Stars& Stripes' lease falls due at the end of May although Mr McCabe
said AMP wanted him out a month sooner.
Access difficulties caused by construction work coupled with the end of the 
America's Cup had seen turnover drop 70 per cent.
Mr McCabe said his written agreement with Dennis Conner to help promote the 
bar was valid until the end of the year, but replacement waterfront buildings were 
difficult to find. He is bitter that AMP would not offer him a replacement site
in its new tower. Its design involves office and retail but no bar. 
AMP board approval  for the project is expected in the next six weeks.
See adjacent story.

West City to double
St Lukes Group is about to start work on doubling the size of its West 
Auckland mall, WestCity. The expansion
programme will be finished in 15 months. WestCity, already refurbished in 
1997, will gain two new wings - eight
rooftop cinemas with seating for 1800 people - and extra carparks. The $80 
million project is expected to generate
around 600 building-trade jobs. The company has just completed the first 
stage of its $100 million Glenfield Mall
redevelopment.
Be precise please
The country's largest property investment company, AMP Asset Management, 
has welcomed the Securities
Commission property syndicates report, saying a number of "less reputable" 
companies were hurting the sector's
credibility. It is estimated New Zealanders have invested around $1 billion in property 
syndicates compared 
to $2.6 million in listed property trusts.
The commission found that while existing laws  
were adequate, some property syndicators were fudging their rates of 
return, using obscure and inconsistent wording,
and marketing the syndicates as being similar to fixed interest 
investments. It plans to be more active in drawing
attention to cryptic offer documents and to take action where appropriate.
Room for expansion
Sony New Zealand is moving from rented offices in Albany to its own 
open-plan building in the Akoranga Business
Park, Northcote. The new, 1400 sq m building, worth $5 million, has a 
concrete roof so that more floors can be added
as Sony expands.
In-house marketing
A wholly-owned Trans Tasman Properties Ltd subsidiary is making an 
on-market offer through Forsyth Barr for TTP's
convertible capital notes. In a stock exchange notice, it said the
maximum number of notes it will acquire within 12 months is 7 million.
Big-city blues
Confidence in the Wellington commercial property market for the next six 
months is failing, while there is more
uncertainty about Auckland's. The latest Massey University Real Estate 
Analysis Unit survey shows 33 per cent of
respondents expect an improvement in Auckland and 40 per cent predict the 
status quo. Long-term confidence in the
Christchurch market continues.
High-profile sale
Auckland city's landmark Norfolk House, housing a number of well-known High 
St restaurants and the law firm Glaistor Ennor, is for sale. The 2127 sq m office and retail 
building is close to the proposed $60 million Chancery shopping mall project and to the 
recently opened Somerset Grand Metropolis hotel. The property, has a current net annual
rental return of around $612,000.

Planned office block would dwarf waterfront towers
By ANNE GIBSON

AMP Office Trust's new office block, Waterfront Tower, will be the 
tallest Auckland waterfront structure at a towering
34 levels, including two levels above the top office floor at level 32.
The tower, in the shape of a triangle with the corners nipped off, will 
be built on the waterfront corner site bordering
Quay and Lower Albert streets.
Sketches of the building have just been published, with AMP keeping the 
design a closely guarded secret.
However, it was an AMP tenant, the Downtown Convention Centre's managing 
director Sally Mandler, who blew the whistle.
She announced in March the fate of the centre and mourned its demolition.
Then the Auckland City Council passed sketches onto The Herald, since a 
planning application had been lodged,
making the drawings available to all-comers.
The 34-level structure will dominate the city skyscape, dwarfing 
neighbours at 1 Queen St (formerly the Air New
Zealand building) and Quay Tower. It will certainly block views of the 
harbour from the central business district.
Amusingly, the tower was designed by architects at Stephenson & Turner 
who reside in the 21-level Quay Tower.
Quay Tower's tenants will lose the expansive views they have enjoyed 
since their building went up in the late 1970s.
AMP has put asset manager Murray Jordan in charge of the project and he 
has travelled to Sydney to look at towers there.
AMP said recently it still had a long way to go before the tower was 
built. In a stock exchange announcement of April
4, AMP confirmed there was -"strong interest" in the tower, but said 
there were still several factors that needed to be
finalised before it could commit to construction.
"These factors including finding suitable contractors, final feasibility 
results and completing the pre-leasing process,"
said AMP Asset Management acting head of property, Anthony Beverley in 
Wellington.

Breakfast Briefing
Digital divide
Increasingly, the term "digital divide"- coined to describe people in society who could 
not participate in the new technology because they were disadvantaged by lack of wealth 
or education – is being applied to a gap between urban and rural groups.	
	Between the lines D2
Salary drag
Agriculture, horticulture, dairy and environmental science salaries are trailing other 
employment disciplines by up to 50 per cent, according to the latest survey. In contrast, 
IT salaries have continued to rocket.	D3
Forests shift focus
A heartening profit performance from Fletcher Forests last week is the first strong 
indication that the company's shift of focus towards high-margin products is working.
	D3
Agriculture
Knockout blow urged
As some beekeepers in the South Island confirm that a varroa mite invasion would break 
them, MAF has been urged to make all efforts to contain the mite in the North Island.
	D4
Red meat needs facelift
The opportunity is rapidly disappearing for New Zealand's red meat producers to lock in 
their position as providers of safe natural food. Exporters know the real enemy is not each 
other.	Rural Delivery D4

Letter
With outstanding speed, corporate raiders have purchased enough shares from foolish 
apple growers to give them a cornerstone share in Enza, the farmers' commercial export 
company, and now control the board as this holding allows them to do.
Unfortunately, most farmers do not realise the power which a cornerstone shareholder 
has to seize control of a company.
As the corporate raiders in this takeover are noted asset strippers, I am afraid apple 
growers are in for much lower returns than they have seen before. Now the dairy farmers 
can see how important it was to retain their present structure, and never to make their 
shares tradeable.
The wool industry must note what has happened to Enza and not vote their Wool Board 
out of existence and disperse its funds, as suggested by the McKinsey report. Set up 
efficient sales companies to deal direct with end users of wool, but retain full control of 
them through an efficient Wool Board. If you lose control of your product you will really 
become peasants of the lowest order, and you will deserve to.
G.M. Finlayson

In short
Record sales of fertiliser
BOP Fertiliser Group's sales have hit a record volume of 1.21 million tonnes for the 
1999-2000 year.
BOP Fertiliser said its record sales increased group revenue to $310 million ($301.4 
million last year), and produced a pre-tax operating profit of $25 million.
The company's big rival, South Island-based Ravensdown Fertiliser, also reported record 
sales of 1.26 million tonnes for the year, 19 per cent up on the 1999 year.
The chairman of BOP Co-operative Fertiliser, peter Jensen, said the group retained 
earnings of more than $2.5 million, contributing to a $2.5 million lift in shareholder 
equity and an improvement in the company's equity ration from 58 per cent to 59 per 
cent.
Dairy contract
New Zealand Dairy group has awarded a $50 million contract to build a new milkpowder 
plant at its Clandeboye site, in South Canterbury, to Niro (NZ).
The contract is part of a $106 million expansion which will boost production of high-
value milkpowders at Clandeboye.
The plant will process up to 3.5 million litres of milk a day and produce up to 13.5 tonnes 
of milkpowder an hour.
The expansion is expected to be completed this time next year and will make Clandeboye 
the company's biggest manufacturing site.
Wool taskforce
Mid-micron woolgrowers are setting up a taskforce to look into future markets for New 
Zealand's apparel wools.
Business Patrick Murray will head the taskforce investigating marketing prospects for 
mid-micron wools, which were dropped by Wools of New Zealand this year, and 
sidelined in the recent McKinsey consultants' report.
A former strategic marketing manager for Enza, Mr Murray will try to establish whether 
a business case exists for New Zealand's mid-micron wools in local and international 
markets.

Power price up
Electricity prices in the wholesale market increased last week.
This was mainly due to morning and evening transmission constraints across the Cook 
strait cable and the central North Island.
As a result, New Zealand index values rose by 8.70 per cent over the week to close on 
Saturday at 4.8580 c/kWh.

