Cullen Blocks Sale Of Airport

[Libertas]

The Government has moved to protect New Zealand's "gateway to the world" from falling into foreign hands by rushing through new powers to block the sale of Auckland International Airport.


The changes were pushed through Cabinet yesterday and enacted within hours in what the Government described as a move to protect New Zealand's major strategic assets.

They almost certainly spell the death knell for a Canadian pension fund's bid for control of Auckland airport.

Under the changes, ministers will be able to block the sale overseas of any land or assets if it runs counter to the need to maintain New Zealand control of strategically important infrastructure on sensitive land.

Finance Minister Michael Cullen said the changes had been made in response to the uncertainty and debate surrounding the Canadian Pension Plan Investment Board's offer to airport shareholders.

"There has been a high degree of public debate about the merits of handing over control of New Zealand's main gateway to the world to foreign interests."

Under the Overseas Investment Act, the Canadian Pension Plan bid would have required final signoff from government ministers, because it involved sensitive land.

The changes rushed through yesterday add another weapon to the Government's arsenal of national interest tests that must be met before such a sale is approved.

The government ministers delegated to consider the partial takeover bid, if it proceeds, are Associate Finance Minister Clayton Cosgrove and Land Information Minister David Parker.

Dr Cullen said the new regulation, which was introduced by an order in council, brought New Zealand into line with a number of other countries, including Australia, which restricted foreign ownership of airports.

"New Zealand already has foreign ownership restrictions on Telecom and Air New Zealand in addition to our generic Overseas Investment regime."

The announcement was delayed till late last night, apparently because of the need to wait for the Australian stock markets to close.

It is the second time the Government has acted against the airport sale; last week Dr Cullen announced urgent measures blocking a multimillion-dollar tax break that would have sweetened the Canadian pension fund's bid.

http://stuff.co.nz/4424217a13.html

I think this is shocking government intervention and is not sound policy for helping a market economy.

[CJ]

No.

To elaborate further, if they wanted to block the sale, they should have done so months ago. The offical offer went out in December but was widely talked about months before , and even before that, an offer from Dubai Aerospace. By waiting until it appeared the sale was going to go through (yes they admitted this was the reason for the change), they have significantly altered the playing field (it is no longer level!!).

If they dont want strategic assets held outside NZ, there are a few options:
- government buys them; or
- restrictions on share ownership put in place (AirNZ use to have 2 types of shares, overseas shareholders could only own one type), or
- a list of assets which cannot have more than XX% foreign ownership.

This has cost myslef (as a shareholder), all Aucklanders and manakau residents (through council ownership, and all New Zealanders (through cullen fund investment) a lot of money.

[artemis]

I am now waiting for Dr Cullen to offer to buy my shares at the bid offer price. As several commentators have said this is theft of private property.

Mind you, the majority of NZers will have a kneejerk reaction to any sale offshore. So Cullen has probably picked a fight many will support, even if they have no real idea what's going on.

Discl. I have already voted to sell into the bid.

PS The poll wording is not quite right as the bid has not been blocked yet. It will definitely be worth watching if shareholders vote for the bid ....

[PC]

Hey!
Get in line behind the Telecom share holders!

[artemis]

Hey!
Get in line behind the Telecom share holders!

Indeed!

I used to work for Telecom not long after the split into NZ Post, PostBank, Telecom. Quite a few of the people in my group were the grey cardy brigade. Most knew more about their rights than their responsibilities. People who think it should have all stayed in public hands as a government department either have short memories or need their heads read.

[Hound]

The Labour led Govt under Helen Clark knew about this sale months ago. Why did they not intervene back then? This all smacks of political expediency to pander to the redneck vote.

Auckland Airport needs foreign capital for future development.

[Josko]

Yes,

Great move by the Government, unfortunately there is a short term impact on the value of the shares which will eventually recover, though if you were willing to realise a profit on the investment that is called investment risk.

BTW I have some idea and I am not a redneck....

[cube]

they should have done so months ago. The offical offer went out in December but was widely talked about months before , and even before that, an offer from Dubai Aerospace. By waiting until it appeared the sale was going to go through (yes they admitted this was the reason for the change), they have significantly altered the playing field (it is no longer level!!).

But then it would have been over a year to the election, and the plebs would have forgotten about the benevolent govt. that stopped the jewel in the paper hat of Auckland's assets being sold off to those wicked Canadians!

Much better to wait .... and wait.... and wait... and then trip John Key up because he's not sure if its a good thing or not (whatever 'it' is, was or maybe notwithstanding any 'its' he's commented on, or may have commented on before or in the future!)

cube

[CJ]

Yes,

As the only one of the current 30% in the above poll who voted yes and has disclosed themselves, can you elaborate on your reason.

Taking away the short term investor side of things my view is:

If it is a strategic asset that should be kept in NZ hands, then the it should be owned by NZ hands (ie the govt/councils) or specifically restricted to NZ ownership (AIRNZ use to have separate classes of shares and special restrictions in its constitution). It is already over 40% owned by foreign investors.

Also question if it is strategic. It is an airport, it cannot be moved overseas. They could increase landing charges etc (not in the interests of NZers) but as a monopoly, this can be regulated by the Government. As it stands, AIRNZ (owned majority by NZ Govt) is refusing to pay many millions to the airport on the basis the charges are an abuse of a monopoly position.

this is my opening statement.

[Josko]

As the only one of the current 30% in the above poll who voted yes and has disclosed themselves, can you elaborate on your reason.

Sure CJ,

Thanks for asking....

I see no positive outcome from having 40% of the Airport owned by a foreign investor.

I think there is quite a difference between the Air New Zealand Asset and the Auckland Air Port Asset especially the large component of prime real estate.

It is easier to buy Aeroplanes then it is to build an International Airport.

As we already have an Act that covers foreign ownership of land I see this intervention as an extension of that policy, control over foreign Land ownership rather then control over foreign investment in public companies.

Cheers,

[CJ]

I see no positive outcome from having 40% of the Airport owned by a foreign investor.

What negatives do you see?

Not wanting to distract you from my question above, I also make the following comments:

To some extent this isn't even an extention of existing policy. Ministers already had the power to reject, now it is just more explicit.

My main issue with this is timing. AIA has been in foreign hands (up to 40%+) for many years, why decide to do this now, and make a mokery of our free market.

[Josko]

What negatives do you see?

Same negatives with any Foreighn ownership, profits taken overseas.

To some extent this isn't even an extention of existing policy. Ministers already had the power to reject, now it is just more explicit.

My main issue with this is timing. AIA has been in foreign hands (up to 40%+) for many years, why decide to do this now, and make a mokery of our free market.

I wouldn't say it is making a mockery of our free market, though the timing is interesting and I would believe them when they say they never thought the deal would go through, but investors are single minded when it comes to realising a profit and they obviously deduced that they need to have a backstop just in case.

It is a popular decision for a reason and I believe that reason to be good, nothing positive has come about from foreign ownership in our countries assets, and drastic steps are being taken to recover from that, look a the success of Kiwibank, problem with an asset like AIA getting into the controlling hands of foreigners is that it is not that easy to build another Airport in Auckland, the asset is too valuable and one of the reasons places like Australia also protect these type of assets from foreign ownership.

[CJ]

Same negatives with any Foreign ownership, profits taken overseas.

This is a reason for all assets not to be sold overseas, not just strategic.

The cullen pension fund invests overseas, so why shouldn't the Canadian pension fund invest in NZ?

I think we should just agree to disagree on this one. Cullens support is below 30% on our little poll here (though with the sample size, the error is probably + or - 50%)

[Josko]

No problem, property investors are generaly liberal, so I expect the margin of error to be more like 55%.

[captaincrab]

More ignorance from our labour government which is plain pandering to the xenophobes out there who cant add and therefore realise that 40% is a Minority shareholding.
Cullen is a hypocrite in that the Super Fund itself invests in 50 countries around the world and has in fact invested in Companies that have shares in Airports!!!
NZ needs cash and foreign investment is the only way to get it.
If we need another airport we willl just build one. Why on earth should we give the power of Veto to a Government Minister. Bias is too prone to creep in and lets face it, they have no idea. Look at the farce Chris Carter got into over Whangamata. He got very badly embarrassed by the Courts.