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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So the Canadian Pension Plan is going to bring us new super-advanced computers we couldn’t otherwise buy ourselves?
Just like with the rail network aye? Remember those super-fast bullet trains and top of the line overseas tracks they got us?
Given that they are not a computer company, I suspect that is doubtful. But do you think fpr Canty UNiversity it would be better and cheaper designing and building its own supercomputer (or commissioning a local one) or buying one from Cray? How well did the railways yards do in designing and building diesel locos locally?
rjs131 comes out with the ultimate dumb-arse comment – if it’s so great why don’t you go there? A favourite of good jokers such as Burqa Bob since way back.
Why don’t you pop over to Somalia if you’re such a huge opponent to Government regulation
On a serious note, I wonder how the country’s right-wing economists can (at the same time) protest against the block of foreigh ownership of our assets, and complain about our poor balance of trade and current account deficit. Nothing to see here people….
The change in rules is stupid and desperate. It simply removes the right of Kiwis to choose to whom they wish to sell to. What next I can’t sell my house to english immigrants if they don’t vote Labour. No one is putting a gun to the heads of those selling shares.
The result will be that the cost of funding the massive current account deficit simply rises as the risk premium for doing business in NZ has just increased. Lets say 0.25% gets added to the international risk premium for this would be normal. That means that every NZer has just had to pay more for what benefit? zero!
If he wanted to do, then do it right. Put it out for consultation. There is already the rules for local authorities for them and strategic assets.
Insider, do you think we should sell Canterbury University to Cray in the hope that they give it some supercomputers? Bit of a flawed argument there, there’s a difference between financing capital and selling ownership.
Thanks for the link Rob much appreciated
Oh boo hoo Horis feels his freedom has been taken away. Why do you righties always see freedom expressly in terms of the free market? Why can’t you just go to that small government haven that is Somalia and leave us normal people to live in a social democracy? Please.
HS, not sure if this is Ruth’s source, but:
http://www.scoop.co.nz/stories/BU0803/S00049.htm
Let me be really clear. I own shares in the airport. They are mine – not yours, and certainly not the governments.
“No it doesn’t – it belongs to the people of NZ due to it being a part of NZ and if they decide that it shouldn’t be sold to foreign owners then tough biccies to the shareholders. I should also mention that it’s a natural monopoly and shouldn’t even be in private hands.”
Sorry what kind of planet are you on. The shares are mine because I paid for them! They are not yors. You or the government have no right, morally or politically, to tell me what I can and can not do with my property, or who I can sell them too.
This is an issue that the electorate will love and every last one of the talking heads from the Banks, Price Waterhouse Coopers, Goldman Sachs and Fran O’Sullivan will loath.
Here is another sleeper issue that (though I say myself) I picked ages ago that people are mentioning more and more on the blogs: Price regulation of “Kiwi basics” like milk and cheese.
“You or the government have no right, morally or politically, to tell me what I can and can not do with my property, or who I can sell them too.”
Turns out you’re wrong about that.
Correct me if I’m wrong, but without the State, you couldn’t do a bloody thing with your shares, given that there’d be a lack of, whatsit, civilisation mebbe?
sdm, would you be happy to sell your shares to Ahmadinejad? Would ya be pissed when the Government said no?
I’m sorry but reality will always impinge on your fallacious market utopia buddy, get used to it.
No worries HIGHERSTANDARD. But woah! – are you sure about that all caps thing?
“No one is putting a gun to the heads of those selling shares. ”
Forgive me if I’m wrong but in a takeover situation, if an acquirer gets a certain number of acceptances to buy the shares in a company (90%, say) the other shareholders are then required to sell their shares to the acquirer at the offered price. Takeover code anybody?
Let me be really clear. I own shares in the airport. They are mine – not yours, and certainly not the governments.
If you owned a gun, it would be yours, not the government’s. But there would still be limits on what you could do with the gun. Hint – not allowed to shoot people.
You or the government have no right, morally or politically, to tell me what I can and can not do with my property, or who I can sell them too.
Turns out you’re wrong about that.
This is an issue that the electorate will love and every last one of the talking heads from the Banks, Price Waterhouse Coopers, Goldman Sachs and Fran O’Sullivan will loath.
I think it’s the other way around my good man
Most NZers couldn’t care less about investing and this sort of thing. They’d rather watch 15 men chase a ball around a field.
Now they might get interested in that Burqua Bob or whoever!
Steve P,
You see, the Canadian Pension Fund does not need a functioning international airport in Auckland; New Zealand does. The Canadian interest is purely to extract as much profit as it can.
I was starting to wonder if it would ever happen, but I agree with you on something.
That’s why the Dubai Aerospace deal made a heck of a lot more sense than this one. They would have had a vested interest in improving Auckland International Airport (and making money as well, no doubt).
Oh spare me. Comparing the Canadian bid to the Iranian regime is a long bow my friend. Particually now that their have been sanctions placed on the regime, I really dont think its a worthwhile comparasion.
Comparing shares to shooting someone. Come on. Is that the best you can do. I am not talking about using my shares to hurt anyone – rather im talking about the government interfearing in something that it has nothing to do with. I own something. Someone else wants it. They come up with a price. I choose to accept or decline. The government shouldn’t come into it. Its between the buyer and the seller. Its a private company. If it was an SOE, owned by the state, fair enough, the government can choose what it wants to do. But we are talking about private property. I wonder if the governments decision can be challenged in court…
Pablo – you are very much confused over the rights of a small minority (in the case of 90% level compulsory acquistion right) against the rights of the ordinary shareholder to have their rights to sell to whom they choose removed.
NEWS ALERT but Right now Auckland Airport is more than 40% owned by foreign interests…All CPIB would be is a single shareholder focused on value creation better that than some collection of hedge funds like there is at the moment.
Robinsod – I have no issues with Govt, I just don’t like desperate corrupt ones. This decision will just make Nationals win this year a little bigger.
As usual, Key fumbles and mumbles when asked where he actually stands:
“Mr Key accused Dr Cullen of political opportunism and undermining confidence in New Zealand as an investment destination.
But Dr Cullen seized on Mr Key’s comments, saying National would allow strategic assets to fall into foreign control.
Mr Key said National would have issues over majority foreign ownership of Auckland Airport, “but we are more relaxed about minority ownership”.
Asked by journalists if he supported what the Government had done last night, Mr Key said: “Well, no, I think we have got to be very careful about making a change to investment law… which has been purely done for political reasons.”
Mr Key was asked numerous times whether he supported the Government, but was equivocal in his answers.
“We have to wait and see exactly what they are doing. What I am saying is when it comes to strategic assets in terms of majority ownership, there is a completely different test in my view to a minority ownership.”
Mr Key said it was not clear from the Government’s statements about what limit it was placing on foreign ownership of strategic assets and he was happy with the existing rules and laws.
“It is not immediately obvious to me the law is not working.”
(Herald report)
Why does he always have “issues”? Is he a magazine?
Gobsmacked
It’s always fascinating that two people can read different things into what people are saying if the Herald has quoted him correctly it’s perfectly clear to me where he stands on this issue.
sdm: Comparing shares to shooting someone. Come on. Is that the best you can do. I am not talking about using my shares to hurt anyone
The point to that analogy is that society applies limits, e.g. limits to the use of “your property”.
And yes you are talking about using your shares to hurt people. If Auckland airport is sold off shore, and we get a worse airport and worse services out of it (e.g. railways fiasco), then other Kiwis suffer for your profit. In this case, society recognises the danger, and has decided to apply limits.
But not clear to the reporters who had to keep asking him.
http://www.stuff.co.nz/blogs/insidethebeltway/2008/03/04/labour-cock-a-hoop-over-airport-move
Bill English to the rescue … and wasn’t that great footage on TV3, Key wriggling and Bill standing behind him, no doubt counting the days until the inevitable coup (in 2009).
Nice to see you like the press again – I saw the footage briefly on TV one think you may be getting a bit ahead of yourself.
Yeah I saw the TV1 footage as well and it was quite poor I thought – focused almost exclusively on the interests of shareholders and investors, and the based on the assumption that interference in the market is a cardinal sin. Watching TV1 you also would have had no idea that Key had fluffed his lines so badly, and so tragically, under questioning from the press today.
Got to admit I am more interested in the shareholders, investors and what’s happening with the airport as an asset than I am with John Key and whether he fluffs his lines or not
i’d hate to have a PM that couldn’t be relied on to get his lines right. that’d be like having GWB for PM.
i don’t think such a PM would be very secure in their cabinet for very long either.
You or the government have no right, morally or politically, to tell me what I can and can not do with my property, or who I can sell them too.
Well, the govt had no right to sell my stake in public infrastructure to private interests in the first place, but they fucking did it, and you guys seem to have cheered them on in the process. Forgive my lack of sympathy when you discover it’s a two-edged sword.
Got to admit I am more interested in the shareholders, investors and what’s happening with the airport as an asset than I am with John Key and whether he fluffs his lines or not
Sure, but their interests shouldn’t dominate the piece. The future of AIA is a matter of importance to all New Zealanders.
John Key’s fluffing of his lines was of interest because here’s a man who’s asking us to make him PM, and he can’t even tell us where he stands on blocking foreign control of our assets. His background, his neoliberal ideology and his big business backers all tell him he’s against democratic controls on capital markets, but then he wants to keep being Mr Happy Smiley who says whatever people want to hear. This issue has exposed the contradiction.
Key didn’t fluff his lines.
He knew what he thought, and he knew that it wouldn’t be popular, and he didn’t have any lines prepared.
Well put PB. Vernon Small points out that Kevin Taylor is on holiday at the moment. Having seen Key’s performance today I’m pretty sure that’s no coincidence – without his spin machine and carefully honed lines Key ties himself up in all kinds of knots.
Sorry Tane
But I thought he was quite clear on where he stood from my recollection of the news item.
Has a problem with majority ownership but no issue with minority ownership … that’s what I heard while making the kids dinner anyway – I may be incorrect
PB – dead on. I said essentially the same thing at No Minister:
Lies are hard to maintain – did y’all catch Key on the news, trying to reconcile his view that NZ should be up for sale to the highest bidder with his awareness that voters don’t agree? That’s a lot of months of pretence he’s got to maintain – good luck with it, John mate. Don’t think you’ve got it in ya though.
Heh, over at blogblog good old burt posted a link to Bassets latest output.
Basset reckons that Labour will try and paint Key as having a secret agenda, cause the left is good at fibbing about that.
He then explains that the Nat’s need the wimmins votes but the dainty wee ladies would be scared of the necessary policies that we need to prevent the terror that afflicts this land, (as far as I could make out brown people are having too many babies or something. (cf any Basset column from before he got the sack for lying)).
The “so called academics” would also object, with their numbers and stuff, (which contradict the feelings Basset got when he saw some Maori in Rotorua, which make the numbers non reliable and the academics “so called”).
To get around this Basset reckons Key should be non specific about policies and avoid talking about the necessary solutions. Which I guess is why he made such a big deal about the threat of “secret agenda attacks”. But he probably should have put more than a couple of paragraphs between the contradiction.
I’m glad he’s not in my paper anymore, he’s too damn stupid.
Ooh look. boston legal.
G’night.
” And yes you are talking about using your shares to hurt people. If Auckland airport is sold off shore, and we get a worse airport and worse services out of it (e.g. railways fiasco), then other Kiwis suffer for your profit. In this case, society recognises the danger, and has decided to apply limits.”
Well I have decided to accept the offer and see what happens. And I actually dont think we will get a worse airport – simply put they need capital. The board has recomended acceptance, and I do not believe this is about foreign control. Its a bid to become a minority shareholder, and I note the letter from the Director dated 28 Feb states that.
And my decision is largely in spite of Cullen.
You say the airport will be worse off and use the railways as an example. Huh? This is a private company. Put aside your pro-labour position for a second. You oppose this because its foreigners. Are you a racist or a xenophobe? Because your opposition cant be about privatision (because that is not the issue) its about foreigners.
And the actions of Cullen are simply appaling. He intervenes today? Why didnt he come out 8 months ago? If he kills this he will have wasted peoples time and money. He has also devalued the company, which arguably has done more damage than anything else.
Oh and btw: I voted labour in the past 3 elections. So I am not the ‘kiwiblog right’.
Have just grabbed the information below regarding the Canadian Pention Plan Investment Board taking theses comments at face value I can’t see why we should have any concern regarding their minority shareholding of AIA.
“Today CPPIB said it was continuing with the offer, following the announcement of the new regulation.
CPPIB representative Graeme Bevans said the board had from the outset carefully structured its proposal to take into account that the airport was a sensitive asset of national importance.
CPPIB’s intention had always been to be a long-term minority shareholder without a controlling interest, he said.
It had entered into a deed which restricted its ability to vote on resolutions to appoint and remove directors of the airport company.
Independent adviser Grant Samuel had also confirmed in its report that CPPIB would not control AIAL following a successful offer, Mr Bevans said.
In late 2007, the airport board had approached CPPIB asking it to make a full takeover offer for the airport, which CPPIB declined because of its belief that it was appropriate for it to have only a non-controlling interest.
“We have always been clear that our desire is to hold a minority stake in the airport, not a controlling one,” he said.