The Government has today released a further Discussion Document as part of its review of the regulatory framework that will apply from 2020, which sets out final views on the approach to UFB fibre services, and new proposals for copper services for feedback.
The Government has departed from the previous combined copper and fibre regulated asset base proposal. The key changes are:
· The final decision is that UFB fibre will be regulated under a traditional utility style building block model framework. The initial valuation of the UFB fibre network will be determined by the Commerce Commission based on unrecovered historic costs. For an initial period until 2023, Chorus will be regulated under a revenue cap with anchor products. The price of the initial voice and broadband anchor product (100/20Mbps) will be set based on 2019 prices, adjusted for inflation. The form of control can be reviewed by the Commission from 2024, subject to approval by the Minister. Unbundling is required with prices set commercially until 2024, when the Commission can investigate whether or not prices should be set on a cost-oriented basis.
· The proposal is that copper will be de-regulated and the Telecommunications Service Obligation (TSO) will be removed where UFB or other fibre is available.
· In other copper areas, prices will be set at 2019 prices with no inflation adjustment and the TSO will remain in place.
“The proposal to treat copper and fibre separately in the regulatory framework is a change from the Discussion Document in July 2016. This raises some additional complexity for regulatory implementation, such as cost allocation, that we will need to consider carefully. In addition, it raises questions around incentives to invest in the high cost rural areas currently served by copper. We look forward to engaging further on this, to ensure that customer needs are met, along with consideration of whether investors can earn a fair return,” said Vanessa Oakley, Chorus General Counsel and Company Secretary.”
A copy of the Discussion Document can be found here www.mbie.govt.nz/telcoreview. Chorus looks forward to considering today’s announcements in more detail, participation in the review and completion of legislation this year.
Energy and Resources Minister Judith Collins has today announced a Market Study into fuel prices/returns to be undertaken by the Ministry of Business, Innovation and Employment (MBIE).
The Fuel Market Financial Performance Study, which is expected to be completed by the end of June is designed to determine how fair petrol and diesel prices are at the pump.
“MBIE data shows that fuel margins have more than doubled over the last five years. The Market Study will report on fuel company returns and will include in-depth analysis of oil companies’ finances.
The Study will focus on the returns on average capital employed against cost of capital, across different parts of each business. It aims to determine if companies are making super-normal profits or not. Other financial benchmarks may also be used.
“The advantage of a Fuel Market Financial Performance Study is that it can be done reasonably quickly and it will help to build a more informed picture of the overall performance of the fuel market. However, it will require the industry to cooperate with MBIE.
“I have spoken to the oil companies this week and I am very confident that they will work with MBIE and provide the required information in a timely manner. It is in the best interests of everyone, including oil companies, to make sure New Zealand has quality, reliable and reasonably priced fuel,” Ms Collins says.
The terms of reference for the Study are being consulted on with industry and will be finalised and released shortly.
| A beehive release | February 9, 2017 ||
Size matters to CEVA. The world's fourth largest logistics company has just moved into what it claims is one of the biggest sheds in the southern hemisphere, a half-kilometre-long storage and distribution facility equivalent to eight MCG playing fields in size.
Netherlands-based CEVA Logistics occupied the new $80 million single span building in Melbourne's western suburbs in August last year, part of a rationalisation that has also seen it consolidate into similar, although smaller, "super sites" in Brisbane and Perth.
"There's huge demand for this site," said CEVA's Australia and New Zealand managing director Carlos Velez Rodriguez.
The building acts as a staging, storage and distribution point for companies as varied as General Motors Holden, Mazda, Michelin and Continental tyres, NBN Co's equipment, items for Caltex's service station convenience stores and Accent shoes.
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Honda and Hitachi are teaming up to lower the cost of electric vehicle manufacturing. The motorThe motor pictured is from Honda's NSX supercar.
As electric cars become more common, manufacturers are battling to find new ways to improve their hardware and lower costs. Over at Honda, the desire to improve its battery-powered cars has led to a new partnership with Hitachi, which has a long history of building motors for electric vehicles.
Given the global push toward tighter emissions standards and the growing popularity of electric vehicles, both Honda and Hitachi are looking to lower the cost of mass producing motors. Should they be successful, the partnership could lead to cheaper electric cars for the masses – a situation where everyone wins. To make it happen, the two companies have signed a memorandum of understanding to generate a "technological synergy" between supplier and manufacturer designed to "strengthen their competitive advantage and business foundation for the motors at the core of an electric vehicle."
Although the project will initially be based in Japan, there are plans to expand the joint venture with manufacturing and sales operations in North America and China. The two companies will be working in tandem, but they won't be exclusive – Hitachi will keep working with other manufacturers, and Honda will continue to use motors it builds in-house in Japan in some of its cars.
All up, the joint venture will be worth ¥5 billion (US$44,750,000) with Hitachi shouldering 51 percent of the load. The new (unnamed) joint venture company will be formally be signed into action at the end of March 2017, with work set to begin in June.
This isn't the first time Honda has joined arms with another manufacturer or supplier for cheaper, more advanced alternative powertrains. Earlier this year, the Japanese giant and GM teamed up to develop lower-cost hydrogen fuel cells, although that US$85 million deal represents a more significant investment than the Hitachi tie-up.
| Source: Honda by Scott Collie ||
Building consent data released today by Statistics New Zealand shows building consents are at their highest level since 2004. However, the industry needs to readdress the way it looks at skills training if it is to meet future demand.
To the year ending December 2016, 29,970 new homes gained building consents. This is the highest number since 2004 but still well below the high of 1973 when about 40,000 new homes were consented.
Almost all regions showed good growth particularly Manawatu/Whanganui (49%), Northland (43%), Hawke’s Bay (32%), Nelson (34%) and Otago (29%). Auckland fell just short of the 10,000 mark with 9,930 consents which was a 7% increase on 2015. The only regions to have negative growth were Southland (-1%) and West Coast (-17%).
Building and Construction Industry Training Organisation (BCITO) Chief Executive Warwick Quinn says he expects this upward trend to continue in 2017. Quinn says this rate of construction is at New Zealand’s long-running normal rate of 6.5 builds per 1,000 people and a response to the record low rate of construction during the global financial crisis (GFC). In 2011 the build rate fell as low as 3.1 builds per 1,000. Quinn says the number of homes that weren’t built during the GFC is double the number that weren’t built during all other recessions combined and New Zealand is still playing catch-up.
While the turnaround is welcomed, Quinn says 30,000 consents per annum is the new normal based on our population, but that level does not replace the shortfall developed during the GFC. He says New Zealand built about 45,000 fewer homes over the past 10 years compared to the previous ten, yet the population grew by about 480,000.
“It is no surprise to anyone that Auckland is the worst affected with about 4-5 years of backlog based on historical build rates. Other regions have significant backlogs as well including Bay of Plenty (3.7years), Northland (2.7years) and Tasman/Marlborough (2.5 years),” says Quinn.
Quinn says that while BCITO has a record 10,000 apprentices in training more are needed to meet building demand.
“While 10,000 apprentices is a new milestone for us it is also our new normal and must be increased if we are to successfully fill the skills gap in construction,” Quinn says.
“We tend to get a surge in apprentice numbers each year from about March and it will be interesting to see if that continues in 2017,” says Quinn. “Most of our growth comes from those firms that traditionally have apprentices, but in order to get the increase in apprentice numbers that we need, we also need to increase the number of employers who train. In order to do that we need to ensure training programmes align more closely with their business and meet employees expectations”.
BCITO has been working closely with the Tertiary Education Commission and the New Zealand Qualifications Authority in order to progress this. At the end of 2016 BCITO got the go ahead to pilot an alternative skills model that is aimed at increasing the number of firms that train and attract more people into the trades. Quinn says there has never been a better time to get into construction with a strong forward work projection and great job security.
| BCITO release | February 9, 2017 ||
The Taxpayers’ Union says that the focus on petrol margins earned by fuel companies, is a classic ‘bait and switch’ by politicians to avoid questions about the enormous taxes they impose at the pump. Responding to Energy and Resources Minister Judith Collin’s announcement of a market study into fuel prices/returns to be undertaken by the MBIE, Jordan Williams, Executive Director of the Taxpayers’ Union, says:
“While an examination into petrol company fuel margins is welcome, it is a bit rich to blame high fuel prices on the fuel companies when the amount of tax on fuel is nearly 20-times the reported profit by fuel companies on a per litre basis.”
“Z’s net profit on fuel is around 5 cents per litre. In comparison, at the current price of 91 octane total tax is 97 cents per litre.”
“If MPs were genuine in their desire to find out who is rorting motorists, they’d be examining petrol taxes, not just fuel margins. Until they do, their concerns about petrol prices are little more than crocodile tears.”
| A NZTaxpayers Union release | February 9, 2017 ||