Politics

Robertson soothes Air NZ after Jones’ harsh words

Finance Minister Grant Robertson wrote to Air New Zealand in the wake of Shane Jones’ public war with the airline, promising the Government would not interfere in its decision-making.

The letter - also sent to the power companies in which the Government holds a majority stake - outlined a nine-year maximum for board chairs’ reigns, after which their reappointment would not be supported barring “exceptional circumstances”.

In March, Jones, who is Regional Economic Development Minister, hit out at Air New Zealand’s board over its decision to cut back on its regional services, including ending its Kapiti service. Jones said Air NZ board chairman Tony Carter had “long since outlived his usefulness”.

"Obviously you'd start with the chairman … I'm telling that board, in terms of the growth and connectivity in provincial New Zealand, it will not increase unless that board changes," Jones told RNZ at the time.

Prime Minister Jacinda Ardern said Jones’ remarks about the regions were understandable, but his call for resignations was “a step too far”.

Jones followed up those remarks with more criticism in May after the airline announced a 5 percent increase for domestic fares, saying the news was an “affront” given problems with its service.

Grant Robertson Letter to Board Chairs by Sam on Scribd

Robertson’s June letter to Carter, along with the board chairs of Genesis Energy, Mercury NZ and Meridian Energy, came a month after Jones’ latest remarks and appeared designed to assuage concerns about the Government’s intentions.

Commitments made to the companies by Treasury in late 2014 “still stand”, he said, confirming that shareholding ministers “expect the companies to continue to make commercial decisions, while of course taking into account the full impact of those decisions”.

“We confirm that the boards and management, not shareholders, are responsible for decision making by the companies.”

However, Robertson said ministers reserved the right “to make public comments on matters relating to the companies or their performance”.

Boards would continue to be responsible for finding and proposing candidates to become directors, and for deciding when existing directors should retire.

Shareholding ministers would “in normal circumstances” support the board’s candidates for election or re-election, and not put forward its own alternatives.

“These commitments regarding board appointments hold for as long as ministers continue to be comfortable (as we are now) that the company is performing well, the board has the appropriate mix of skills and experience, the candidates proposed by the board are appropriate, and that the proposed candidates have no unmanageable conflicts of interest,” Robertson said.

Shane Jones has not held back in his criticism of Air New Zealand. Photo: Lynn Grieveson.

He added that there was “one further caveat”: that ministers believed board chairs should normally serve for a maximum of nine years, and would not support their re-election beyond then barring exceptional circumstances.

The same restriction applied to directors, although Robertson said there were circumstances where someone could serve for longer.

Pointing out that the Finance Minister had to sign off on new board chairs, Robertson said he “strongly encourage[d] you to consult with me on this, well in advance of the transition to a new chair”.

In July, one month after Robertson’s letter, Carter announced he would retire as chair in 2019 - his ninth year in the job - saying he had informed the board of his intentions last year.

“The broader worry, not just for these companies but across the business community is the risk that at any given time Shane Jones might decide that he needs a bit more publicity and have a crack.”

National’s economic and regional development spokesman Paul Goldsmith said Robertson’s letter showed the work that the Government had to do as a result of Jones “shooting his mouth off on a regular basis”.

“It sounds like the Minister of Finance is trying to reassure those boards that indeed the rules that applied before still apply...that’s the only interpretation you can put on it.”

The fact that Jones had repeated his criticism of Air New Zealand after Ardern had dressed him down showed she wasn’t able to discipline him effectively, Goldsmith said.

“The broader worry, not just for these companies but across the business community is the risk that at any given time Shane Jones might decide that he needs a bit more publicity and have a crack.”

He said there was “an element of reasonable practice” in the nine-year limit for board chairs and directors, as long as there was discretion to ignore it if necessary.

Carter told Newsroom Air New Zealand had not asked for the letter from Robertson, but its contents - including the nine-year maximum - were “very much in line with our own corporate governance guidelines”.

His decision to retire was driven by those guidelines, and pre-dated Robertson’s letter, he said.

The Government has made further efforts to heal the Air New Zealand wounds, with Ardern appointing airline chief executive Christopher Luxon - also the subject of attacks from Jones - as head of her new business advisory council.

Robertson said his letter was sent "because as a new Government we wanted to reaffirm to board chairs our approach as a shareholder".

Newsroom is powered by the generosity of readers like you, who support our mission to produce fearless, independent and provocative journalism.

Comments

Newsroom does not allow comments directly on this website. We invite all readers who wish to discuss a story or leave a comment to visit us on Twitter or Facebook. We also welcome your news tips and feedback via email: contact@newsroom.co.nz. Thank you.

PARTNERS