Armstrong on Auckland Airport
John Armstrong reviews the latest move by the Canadians:
An unadulterated shareholding of 40 per cent is widely considered to amount to control. However, the act’s criteria refer to “control” – not “ownership”. The distinction is important because the ministers’ decision is open to judicial review.
I am sure the Canadians were aware of this point.
The Prime Minister, who declined to comment on CPP’s move, yesterday suggested a 25 per cent stake fell within the definition of control if the remaining shareholding was widely dispersed, as it is in Auckland Airport’s case.
However, limiting CPP’s voting rights to 24.9 per cent would give the pension fund less influence than that of the Auckland and Manukau City Councils when their two holdings are combined – arguably not control.
The PM’s knowledge and experience of commercial law is limited, to say the least. As Armstrong points out two local Councils will have a combined greater controlling stake.
What is interesting is that her comments strongly suggest it is purely about politics, and not about any actual concern about control of strategic assets.
The law requires the two ministers to decide on the basis of Overseas Investment Act criteria – not political factors. Yesterday’s move by CPP effectively makes it that much harder for Parker and Cosgrove to say “no” without sounding political and ending up in the courts.
I have little doubt it will go to court, if turned down. The comments by all the other Ministers, the off the record briefings, and the decisions by Cabinet to keep changing the rules will make it almost impossible for the Ministers to argue they were not affected by political factors.
March 11th, 2008 at 7:27 am
So once again Labour attempt to lay a political banana-skin for National but end up skidding on it themselves?
March 11th, 2008 at 8:06 am
So much for all the “Slippery John” taunts then – mind you, it sounds as though Cullen has his mind on other things at the moment…….
http://wellingtonhive.blogspot.com/2008/03/cullen-coup-plot-gathers-strength.html
March 11th, 2008 at 8:32 am
Will a coup from within the ranks of the sullen socialists mean the victorious slime balls will celebrate with sulphuric acid champagne and caustic crackers? The plot thickens.
March 11th, 2008 at 8:32 am
Cullen? Only thing worse than that for labour would be Mallard!
March 11th, 2008 at 9:02 am
it is completely and utterly about politics.
lying pricks are cullen and co.
March 11th, 2008 at 9:29 am
The Canadians latest offer plays right into the hands of the Govt if they elect to take the smart road.
That is, to approve the investment on the grounds effective control of the Board has not passed to the Canadians.
This will be win/win for all.
On the one hand, the Govt can assert that their firm stance prevented control of a strategic asset passing to foreign ownership. Their “stated” mission (and yes a populist one) accomplished. They can embellish this by stating a Key led Govt would clearly have just stood aside and allowed control to pass overseas.
At the same time, those shareholders who do take up the Canadinans offer, cash in their investment at a premium price.
Everyone’s a winner.
If the Govt doesn’t approve the deal, then they deserve all criticism coming their way.
As I see it, the Canadians have just handed Cullen a major gift. Will he accept it? Their record this term doesn’t suggest the smartest decisions are always made.
March 11th, 2008 at 9:37 am
Bloody incomptent the NZ Labour government.
Millions of dollars wiped of the shares of ordinary NZders and Labour doesn’t care one bit.
And they want you to sign up for Kiwisaver.
You can’t trust Labour not to nationalise people’s Kiwisavers retirement savings in the future.
March 11th, 2008 at 9:40 am
I don’t see control or ownership is so important, in the circumstances this has been presented. Those circumstances have never been described but are widely assumed to include the ability to use the airport in the case of some sort of national or international civil disruption.
Correct me if I’m wrong but in those circumstances, no matter who owns / ‘controls’ the airport it can and would still be simply taken by the authorities for use while those circumstances remained.
Further, is it really that ’strategic’ (implying national security etc) when there are countless other airports around, both military and civil. And again if it was needed then it would simply be taken by the military.
I don’t actually see the point in all this and it has certainly been either avoided or missed by the politicians.
Mind you, all of the above has probably already been bloggified over the last week. I been lost in strategic combat for a while
March 11th, 2008 at 9:58 am
Yes, VTO, the point has been made, but you said it very well there. Thinking Kiwis with a brain, that is, about 1% of us, understand this. Unfortunately, there is actually votes to be won by politicians playing on ignorance and xenophobia.
It’s been posted before, but here is a link to Michael Bassett’s article on the subject.
http://www.michaelbassett.co.nz/articleview.php
March 11th, 2008 at 10:00 am
Michael Bassett: (excerpt) (for those who came in late)
“…..Cullen, Goff, Clark and I voted to sell an unbundled, publicly-owned Telecom at a huge price, much more than we expected to get at the time. Americans were the principal buyers. Helen Clark was then Deputy Prime Minister. She and the rest of us also voted for the establishment of airport companies from the publicly-owned airfields. We all knew at the time that what the Labour government was doing was correct, and in the best long-term interests of the country. We made those decisions in election year, consciously knowing that not everyone agreed. Once upon a time, Cullen Clark and Goff possessed guts and were driven by principles; they were capable of making the correct decision, not pandering to the views of those who couldn’t come to grips with what was in the country’s best interests.
No longer. Each of those ministers knows that trying mid-stream to block a Canadian minority bid for shares in the airport is wrong, and that they are destroying New Zealanders’ wealth. They also know they are passing a signal to the wider financial world that instead of being governed by honorable, predictable politicians, New Zealand has fallen into the hands of financial buffoons. They don’t care. If this means that overseas investors pull out and won’t invest here any longer, why worry? They’ll do whatever it takes to stay in office.
There is no valid argument against the purchase by foreigners of shares in New Zealand’s companies. Kiwis can purchase shares abroad. At least one New Zealand company has significant interests in European airports. Why can’t Canadians buy into ours? After all, they can’t uplift the airport or the buildings and take them away. The Canadians can’t stop us flying planes. If the airport were to change its operations or its inter-airline dealings in a manner that was anti-competitive, or not in New Zealand’s best interests, then New Zealand’s Commerce Commission would be down on them like a ton of bricks. And behind the Commerce Commission is the power of the government – something that should only be used in dire emergencies – to legislate against anything not in the country’s best interests. A bid for a minority share in Auckland Airport by a Canadian pension fund most certainly doesn’t fit that category.
Ministers are playing on the economic and political ignorance of voters. The New Zealand Herald this morning rightly labels them guilty of “xenophobia”. Whipping up a populist storm against foreign control is an old political game…..”
March 11th, 2008 at 10:51 am
DPF wrote:
The same goes for her knowledge of science, & economics.
In fact the only thing the PM can talk about with any authority is abstract social paradigms influenced by gender & cross country skiing.
March 11th, 2008 at 10:53 am
ha ha NX well said. Comes from being such an obsessed lifelong student of politics.
She lives in a world vastly different to me and I imagine the vast majority of NZers
March 11th, 2008 at 10:56 am
Let the Canadian’s buy it – Owen Glenn will build us a new one – Whatever !
March 11th, 2008 at 10:58 am
Agree NX – maybe thats why JK etc are so scary, they actually have life skills outside of the goldfish bowl called politics.
March 11th, 2008 at 11:29 am
A caution for pollies who thirst
for power, and getting in first
for what you intend
may turn out in the end
to obliterate you in one burst
March 11th, 2008 at 2:25 pm
# burt Add karma Subtract karma +2 Says:
March 11th, 2008 at 10:56 am
“Let the Canadian’s buy it – Owen Glenn will build us a new one – Whatever !”
Many a true word spoken in jest, burt.
March 11th, 2008 at 2:28 pm
Clark and Sullen are commercial pygmies. Neither knows one end of the commercial law from the other.
A judical review should find for the canadians they have bent over backwards after being shafted to try and show they will comply even with a retrospective change that should have been signalled to them before now..
there is an old legal maxim
Let he who comes to Court do so with clean hands.
A Court worthy of the name should see the government for what it is A dishonourable player who knew or ought to have known yet stayed silent until the 11th hour and then changes the rules for political gain destroying its citizens wealth in the process.
The Canadians on the other hand have acted within the law and honourably at all times.
However given the low quality of the current Judicary and their baise towards the Socialists sadly we will see the manipulation of the law so they can find for the government not wishing to upset their masters.
March 11th, 2008 at 3:12 pm
PhilBest
I wouldn’t be surprised if all this jockeying with the canadians is because Owen Glenn wants to buy it and Labour are trying to keep it available. Nothing would surprise me from Labour as they contort the formal process to please their big business backers.
March 11th, 2008 at 3:26 pm
Actually the original deal, before the loophole was shut off, involved the Canadians getting a tax benefit precisely because they were below the 50% ownership level.
That aside, the point about the asset not being maintained means that the asset they have on their books becomes less valuable over time. The charge of profit striiping and not re-investing can be levelled at any investor: foreign,mestic and even the gummit.