Kiwiblog

It is good to see the media focusing on the hypocrisy in the Government over Auckland Airport and Wellington’s electricity network. In the former example they moved heaven and earth to stop the private owners selling a minority stake to a Canadian pension fund. And for the latter they say there is no issue at all, despite it being 100% sale of a crucial monopoly.

So the NZ Herald editorial is welcome.

It is hard to find in these decisions any consistent policy that might guide foreign investors. The sensitivity of Auckland Airport had nothing do with its land, abutting Manukau Harbour, and it is hard to believe the Government’s comfort with the Vector sale has anything whatsoever to do with the land under the power lines.

It’s ridicolous. Is Dr Cullen really saying that all the hysteria he whipped up about asset sales (overlooking Winston sold it in 1998) was about the land under the airport, and not the airport itself? Yeah, right.

But for reasons that remain unexplained, Labour does not regard an urban electricity network as “strategic infrastructure”.

If that phrase has any meaning it must apply to power lines. A line network cannot be practically duplicated for the sake of competition. It is the classic natural monopoly. If line networks are not kept in public ownership they require careful regulation, as Telecom has shown, to prevent them gouging consumers or denying access to competing traffic.

Now again, so there is no confusion, I have no problem with the sale of the power lines. They will be subject to price regulation as most monopoly assets are. My problem is the hypocrisy.

Vector, as it happens, is a quasi-public entity, owned by a trust elected by Auckland consumers, whom it rewards at the expense of its consumers elsewhere. Wellington’s network has not been sold from this form of ownership wholly into the hands of a private company. It is a privatisation in anyone’s language. Yet the Government was more concerned about the partial sale of an airport in which two Auckland councils would have retained significant stakes. It will defy investors’ understanding.

This is a good point. This sale is far more of a privatisation than Auckland Airport was which was private fund managers selling to other fund managers. Vector is a public trust selling to a private entity.

The Government has steadfastly declined to publish a list of assets it regards as “strategic” because it has no consistent definition in mind. The public and potential investors are left to conclude that a property becomes “strategic” simply when it suits politicians to regard it so. At least that means that assets as vital as power lines can attract foreign investment when their luck is in. But this country’s process of approval should be better than a lottery.

Even Labour Party President Mike WIlliams has agreed that here should be a list of these so called strategic assets.

What this means is that each time Labour in the campaign tries to whip up populist sentiment on the basis of its actions in “protecting” Auckland Airport, their bubble will get pricked by reminders of the Wellington power lines, and Helen Clark’s lofty pronouncement that “asset sales will be a defining issue” looks as hollow as “carbon neutrality”, “closing the gaps” and “top half of the OECD”.

Bernard Hickey reacts to news that a Hong Kong company is buying the Wellington electricity network by blogging that the Government has a choice between hypocrisy or stupidity.

The government now has to choose between blocking the deal, which would be stupid and dangerous, or approving the deal, which would expose the government’s recent comments on foreign ownership of strategic assets as politically motivated and opportunistic hypocrisy. I suspect it will choose hypocrisy and hope no one notices.

Indeed, they appear to be doing so. They have this magical invisible list of strategic assets which they won’t let anyone else see. And whether or not an asset is strategic or not seems to be pure political whim.

But let us look at the difference between Auckland Airport and the Wellington power lines:

1. Electricity is arguably the most vital utility
2. Every Wellingtonians uses electricity everyday, while relatively few Aucklanders use the airport every day
3. While inconvenient there are other airports Aucklanders could use, while Wellingtonians have no other option for getting electricity to their homes.
4. There are alternatives to air travel such as car, bus, train and boat. There is no real alternative to electricity

So how on Earth you must wonder does a Government deem a Canadian pension fund buying a 24.9% voting stake in Auckland Airport an evil evil takeover which must be stopped at all cost, yet having the richest man in Hong Kong buy 100% of Wellington’s electricity network not even worth a pause for consideration?

Is this the same Prime Minister who declared at her Congress that asset sales were a defining issue? WHat has happened to the lofty rhetoric in just two weeks?

Now please don’t think I against the sale. I think foreign investment is good and necessary in New Zealand. Without it we would be a lot poorer than we are. I would not stop either deal. But the Government’s hypocrisy is massive.

Bernard looks at the issue further:

Just a few weeks ago two junior ministers in the government decided to block a deal to sell a significant stake in Auckland Airport to a Canadian pension fund. They did so after Finance Minister Michael Cullen shifted the goalposts near the end of the bidding process by saying the Overseas Investment Office should consider blocking foreign acquisitions of strategic assets on sensitive land. This cost Auckland Airport shareholders dearly and damaged New Zealand’s reputation as a reliable place for foreign fund managers to invest. It was a blatantly opportunistic, political decision with little rhyme or reason apart from it helped Labour in the polls, marginally.

So the question now is: Do Michael Cullen and Helen Clark believe that Wellington’s power network is a strategic asset on sensitive land?

The availability of power to the nation’s capital sounds strategic. Would the Beehive work without power? What about the Ministries of Defence, Foreign Affairs, Agriculture (Biosecurity), Education and Health? Sounds important and strategic to me. What about the Reserve Bank of New Zealand and Treasury? Don’t they manage our financial system and wouldn’t they be our crisis managers in a financial crisis? Then there’s a mere trifle of around a tenth of the population needing that network to keep working and living.

Bernard also points out the proposed buyer has connections to the Chinese military, and there have been official warnings in the US about him. So the question again is:

But will our government judge a man who was considered by the US government to be a security threat as safer than bunch of Canadian pension fund managers to run a network supplying power to the heart of the nation? Looks like they will. …

This just shows the naked hypocrisy of the Auckland Airport decision. If Auckland Airport is a strategic asset on sensitive land then surely Vector’s Wellington power network is too. If so, the government should reject this latest deal.

Having said that, I think the government should choose hypocrisy over stupidity. We need the money and we can’t afford to damage our reputation as a safe place for international investment any more than it already has been.

I agree hypocrisy is preferable over stupidity in this case, but people should be in doubt the total lack of consistency in the two cases, and that Auckland Airport was merely about polls, not what is good for New Zealand or even a honest belief for or against foreign investment. I can respect people who honestly believe foreign investment is bad. The trouble with Helen and Michael is they know it is good (otherwise would block this deal), but when down in the polls revert to xenophobia to ramp up hysteria against foreigners investing in NZ.