Written By: - Date published: 11:10 am, March 4th, 2008 - 89 comments
Categories: assets, economy, labour, tax -
Tags: assets, economy, labour, tax
The government has made a series of moves to prevent strategic New Zealand assets being exploited by foreign companies. Last week tax law was changed to prevent the Canadian Pension Fund avoiding tax in its bid for Auckland Airport. Yesterday, the government changed the Overseas Investment Act to give Ministers veto power when strategic land is up for sale. The government will also change tax law to stop oil drilling companies offsetting costs from their foreign operations against their tax in New Zealand; previously foreign companies were able to extract our oil and sell it without New Zealand getting our share in tax.
It is good to see the government taking this stance to protect our assets. Already, foreign owners take $15.4 billion (8% of our GDP) in profits from the work of New Zealanders every year, most of it dividends from former public assets that were sold off too cheaply in the 1980s and ’90s. Foreign owners also have a bad record of asset-stripping the New Zealand companies they own; extracting maximum profits while running important pieces of infrastructure (like our rail network) into the ground. We do not need more prime New Zealand assets falling into foreign hands.
Other parties have warmly received the government’s moves, except for National, which has been conspicuously silent. The public deserves to know: would Key have acted as the government did or would he have stood by while foreign companies bled this country?
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Well I have decided to accept the offer and see what happens. And I actually dont think we will get a worse airport
It’s nice that you don’t think so, but history suggests that you are wrong. What incentive do overseas owners have to invest and improve the airport? What incentive do they have to do anything except take the profits out of this country, asset strip the airport, and sell off the corpse? That’s pretty much what happened to the railroads, why should this be any different?
You say the airport will be worse off and use the railways as an example. Huh? This is a private company.
Not sure what your point is here. Once someone has ownership of an asset, it doesn’t matter who used to own it. Overseas owners of Auckland Airport could do what they liked with it. Why would it not follow the same pattern as the railways?
Put aside your pro-labour position for a second.
Mine isn’t a pro labour position. It’s a pro Kiwi ownership position. Winston Peters does a lot of the public running on this sort of issue, and I’m certainly not pro NZ First.
You oppose this because its foreigners.
I have no problem with foreigners, lovely people, married one, spent years living and travelling in various “foreign” countries. I have a problem with foreign ownership of key assets, and the repatriation overseas of billions in profits that should be spent and invested in this country.
Are you a racist or a xenophobe?
No. Are you?
Because your opposition cant be about privatision (because that is not the issue) its about foreigners.
As above, my opposition can be about who controls a key asset, what their motives are, and where the profits go.
Oh and btw: I voted labour in the past 3 elections. So I am not the ‘kiwiblog right’.
I never said that you were. Glad to hear that you voted Labour in the past 3. I didn’t!
“I have no problem with foreigners, lovely people, married one, spent years living and travelling in various “foreign’ countries. I have a problem with foreign ownership of key assets, and the repatriation overseas of billions in profits that should be spent and invested in this country.”
Would you support a law that banned New Zealanders from owning overseas countries “key assets”?
“It’s nice that you don’t think so, but history suggests that you are wrong. What incentive do overseas owners have to invest and improve the airport? What incentive do they have to do anything except take the profits out of this country, asset strip the airport, and sell off the corpse? That’s pretty much what happened to the railroads, why should this be any different?”
Well hangon – they own 40% – with 25% voting rights. How does that equate to stripping the asset. The history of the canadians is sound, so where is the problem. And lets be honest here – the private sector does a better job running business than what governments do.
But again – how dare the government interfear at the last moment in this. Its my asset – not theirs. If you are opposed to foreign ownership – why dont you start buying shares.
But again – how dare the government interfear at the last moment in this. Its my asset – not theirs.
And again: how dare the govt sell public assets in the first place? It’s our asset – not theirs. Two-edged sword, matey.
To which I could add: the standard of literacy in this country really has gone shockingly low.
“And again: how dare the govt sell public assets in the first place? It’s our asset – not theirs. Two-edged sword, matey.”
Yup – they probably shouldn’t have sold it. But now that they have – sorry, get lost. If I sell you my house, once its yours its yours. Ican’t then stop you from selling it to someone else, or telling you what alterations you cant do, or what colour you can and can not paint it. Its yours now.
Well hangon – they own 40% – with 25% voting rights. How does that equate to stripping the asset.
It doesn’t. Stripping assets is what happens when owners (with that business plan) get 51% voting rights.
The history of the canadians is sound, so where is the problem.
History is a useful indicator, but not a guarantee forever. And this isn’t about just Auckland Airport. It’s about putting into law certain new principles and considerations that affect a process (which already exists in law) governing major overseas investment. These new considerations apply to the airport (right now) and also to other major assets (in the future). In short, what’s at issue here is a principle, not just the specific example of one airport (though that obviously did drive the timing).
And lets be honest here – the private sector does a better job running business than what governments do.
Sometimes, and sometimes not – e.g. railways.
But again – how dare the government interfear at the last moment in this.
How dare they not? It’s the government’s job to protect the country. Perhaps they learned something from the ideological madness of the 80′s, when we opened our tiny economy pretty much completely to the world. Didn’t work out so well for us. Now we’re getting some common sense back into the picture. Other countries regulate foreign investment in assets like airports – why shouldn’t we? Have you actually read Cullen’s press release?
http://www.scoop.co.nz/stories/PA0803/S00025.htm
Yup – they probably shouldn’t have sold it. But now that they have – sorry, get lost. If I sell you my house, once its yours its yours. Ican’t then stop you from selling it to someone else, or telling you what alterations you cant do, or what colour you can and can not paint it. Its yours now.
Exactly! Exactly want we don’t want overseas owners saying to us…
But its the board and the shareholders call….
Point of order rOb
In this instance government places boundaries on what they can call not society. Not debating the rights or wrongs of that but it was a governmental call to scuttle this deal.
As a matter of interest what level of foreign ownership do you believe will be acceptable for government in this instance and would you agree that it would be prudent that there was clarity provided as to which assets will be captured under the new legislation.
Blogs like parliament have their fair share of lunancy and bombast mixed with productive debate.
From my personal perspective I don’t really have an issue with the Canadian pension fund gaining a minority stake in the Airport on the face of it they appear to have acted well throughout their entire bidding process.
I’d also like some direction from government as to which assets the legislation/regulation will/does apply to as it may effect who I would invest with, I doubt that I’m alone in that wish
rOb
If that’s the case one of us has turned to the dark side ?
Must do some real work now have a good day – weather in Auckland is cak hopefully better where you are
And because society doesn’t want them to demonstrate the same attitude that you have demonstrated above, society places boundaries on what they can call. As it places boundaries on many things.
Point of order rOb
Heh! Let’s hope blogs never get as bad as parliament!
In this instance government places boundaries on what they can call not society. Not debating the rights or wrongs of that but it was a governmental call to scuttle this deal.
What is the relationship between government and society? Society delegates the job of running things to its elected government, hence the actions of government are to a large extent expressions of the will of society. Plus, look around the msm this morning. Is society in general supporting or opposing this government action?
As a matter of interest what level of foreign ownership do you believe will be acceptable for government in this instance
I have no idea. I believe in certain economic principles, but I’m not enough of an economist to put specific figure on a specific circumstance.
and would you agree that it would be prudent that there was clarity provided as to which assets will be captured under the new legislation.
It’s my understanding that it isn’t new legislation, but a new regulation within existing legislation which clarifies that certain factors must be considered in the existing process of approving significant overseas investment. But certainly, in general, legislation should be as clear as possible.
HS, I’ve no disagreement with any of that.
If that’s the case one of us has turned to the dark side ?
Perhaps!
Must do some real work now have a good day – weather in Auckland is cak hopefully better where you are
Likewise I’m sure. Alas, cak weather in my little corner of paradise too, but then looking at the map, it seems to be cak all over…
http://www.metservice.co.nz/default/index.php
Can somebody please tell me what the definition of a strategic asset is?
Sean – try this: http://www.publicaddress.net/default,4853.sm#post4853
http://www.nzherald.co.nz/section/466/story.cfm?c_id=466&objectid=10496385
The reason why foreign ownership is bad news for any economy. Wealth is created here, sold to overseas owners who then move that wealth offshore and the country is left poorer.
Probably doesn’t really belong in this specific thread but it kinda fits.