Auckland Airport

Given that the Government was willing to break the law in 2005, and steal  $800 000 taxpayers money to win (or steal) an election in 2005, and then greatly restrict our right to free speech with the Electoral Finance Act, it should come as no surprise that the Government is willing to resort to xenophobia and damage the economy in a desperate bid to retain power this November.

The Government has changed regulations under the Overseas Investment Act 2005 by adding the regulation that it can consider when blocking a sale:
“(h) whether the overseas investment will, or is likely to, assist New Zealand to maintain New Zealand control of strategically important infrastructure on sensitive land.”
No doubt this was done in relation to the bid by the Canadian Pension Plan to buy a 40% stake in Auckland Airport.

There are two big downsides to this decision.
1) Government interference with private property rights. People spend money to obtain property, and thus should have rights to it. The Government has no moral right (except perhaps in a few special cases) to tell an Auckland Airport shareholder who they can and can’t sell their shares to. The decision led to a massive $300 million being wiped of Auckland Airports market value, and led to a loss of value in Auckland airport shares by 20%. I pity the Auckland Airport shareholders who have their assets reduced in value by a completely arbitrary nanny state violation of their property rights. Would you like it if the Government confiscated 20% of your savings?
2) The action might deter future foreign investment in New Zealand. Investors like certainty, and changing the rules so late in the game, when the Canadian Pension Plan has already invested money in its share buying bid, will not help this. It also damages New Zealands reputation as a country that welcomes foreign investment. A future foreign investor, when deciding what airports to buy shares in, might remember this episode and think, “don’t want arbitrary government action to wipe out some of the value of my shares, I’ll invest somewhere else”. And with each New Zealander on average spending $1.14 for every cent we earn, a current account deficit of 8% of GDP, we desperately need foreign investment to help outsource our savings (which our very low) and inject money into our economy. As for the dividends flowing overseas, the money from the sale can be invested to make similar amounts of money here. The visible hand gives a good summary of the costs and benefits of foreign investment. And an added economic downside (which will have a greater effect on the daily lives of many voters than the ownership of Auckland Airport) is that it will push up interest rates here.

So what are the benefits of the move? Keeping New Zealand assets in New Zealand hands is the one most often mentioned. But as the Press points out, regardless of who owns what shares, they are subject to the same regulations and desire to maximise profits, and the Press rightly concludes that “it is doubtful if it is much more amenable to the national interest … under its present ownership than under Canadian ownership”. And just what is that present ownership? 40% in overseas hege funds. So the issue is about whether it should be owned by foreign hedge funds or a Canadian pension plan, not a xenophobic desire to keep NZ assets in NZ hands.

So why then did the Government make the move? Maybe this has something to do with it.

Hat tip: Kiwiblog

Explore posts in the same categories: Auckland, Economy

One Comment on “Auckland Airport”

  1. […] of our hands for the last 10 years (since the Government sold its shares in 1998). As I pointed out here 40% of the Airport is owned by overseas (mostly US) hedge funds, and another 14% is already owned […]

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