The government's rush to protect the future ownership of Auckland International Airport could be seen as too little, too late, ABN Amro Craigs broker Chris Timms says.
With control of New Zealand assets in the media, banking and energy sectors already gone, the argument could be made that the Government's decision to limit foreign ownership of key assets was too late.
‘‘However, in principle, it remains sound and consistent with the tougher foreign ownership rules that exist in Australia. The disappointing aspect is the reactive, last-minute nature of the decision, compared with a well-constructed policy framework that could provide markets with greater confidence.''
Finance Minister Michael Cullen announced on Monday that there would be greater protection for New Zealand's major strategic assets through new Overseas Investment Act provisions introduced by an Order in Council.
The changes had been made in response to the uncertainty and debate that had emerged surrounding the Canadian Pension Plan Investment Board's (CPP) offer to shareholders in Auckland International Airport.
The unexpected move came just a week after the Government announced it would legislate against a multimillion-dollar tax break the CPP planned to use to extract greater returns from the airport.
In an interview, Dr Cullen said there was no doubt in his mind that the New Zealand public believed that strategic assets should not pass into overseas control.
He did not think the move would affect New Zealand's international reputation as a destination for foreign investment.
‘‘It doesn't cover everything in the country and it's certainly not nationalisation. The Government isn't taking over the airport.''
Mr Timms said the CPP bid for 40% of Auckland International Airport closed on March 13.
Assuming the bid was successful, the announcement by Dr Cullen cast a darker shadow over the final condition of the bid - obtaining Overseas Investment Commission approval by April 11.
Market reaction suggested that approval would not be forthcoming. It was difficult to believe that the approval decision would come down to a question of substance over form, such as a 40% holding as prima facie control relative to CPP's argument that its voting and other deed restrictions would render it a minority holder.
‘‘We acknowledge it is not over until it is over and this is yet another twist to the saga,'' Mr Timms said.
The Green Party yesterday called for a ‘‘clear list'' of strategic assets the Government did not believe should be sold to be added to the appendix to the Overseas Investment Act.
‘‘This would make it clear to investors what strategic assets are off limits, and which ones are still up for grabs. Australia has such a list and protects most of its key telecommunications and other infrastructure, along with its banks.''
The call by the Greens sits well with calls by Business New Zealand for a list of strategic assets to be released by the Government.
Green MP Sue Kedgley wanted the National Party to release a list of which assets it would allow to be sold to overseas investors so that the public knew which might be for sale to the highest foreign bidder.
