ACT leader Rodney Hide has attacked government plans to make Telecom pay the lion's share of a splurge on rural broadband – but says he does not intend resigning over the issue.
Hide, who is also Regulatory Reform Minister, branded the plans a breach of National's own regulations policy and a "sad indictment" on the government.
He released a strongly-worded letter to telecommunications Minister Steven Joyce that signals one of the biggest fallouts between ACT and National since the parties agreed to govern together.
"I'm very displeased and the reason I'm displeased is not only is it poor law-making, it also sends a signal to any investors into New Zealand that their investment isn't safe, and therefore it makes it tougher to get the sort of infrastructure and the sort of investment we need to grow the economy," he said.
He rejected suggestions his reaction would harm ACT's relationship with National, saying both accepted there would be differences at times.
Joyce said ACT's opposition would not stop legislation, as the Maori Party, with many rural constituents, was in favour.
This week, Joyce confirmed plans to force Telecom to bear most of the cost through changes to the Telecommunications Service Obligations, which effectively regulate the company.
Telecom will pay most of the $300 million to be raised through a new levy to increase broadband cover and speed, and from July will also pay the full cost of providing phone services, at a loss, to 58,000 rural customers.
Telecom warned the moves would wipe $168 million of its pre-tax profits over three years. Its share price fell 4 cents to a record low of $2.17 when the plans were announced on Tuesday.