I’d love to be on the left. You can write posts with no reference to the real world. I bet that makes blogging a lot more fun.
With shareholders in Auckland International Airport happy to have the Canadian Pension Plan in control, the deal is now in the hands of the government.
“Control”? Since when is 25% voting rights “control”?
But it’s hard to see it succeeding at that stage. The criteria in the Overseas Investment Regulations 2005 include:
- Whether the investment is beneficial to New Zealand (no; it’s speculation, not productive investment, and brings nothing to the table other than a threat of asset stripping);
How exactly the pension fund is going to “strip assets” with only 25% voting rights, or how come they never mentioned this when they talked about investing for the long term (as pension funds do) is not explained…
- Whether refusal will adversely harm our international reputation or breach international obligations (no; most countries protect strategic assets such as airports, and our reputation can only be enhanced by refusing to play host to a dodgy tax scam);
I think on this one we can differ on a point of view (rather than point of fact in the previous point). If we refuse this very benign investment in an asset that can’t be moved and is already heavily regulated, our international reputation will be (and already has been) hit.
In fact, it’s thanks to the government kicking those small local investors in the guts that this deal got off the ground.
- whether the investment will “assist New Zealand to maintain New Zealand control” (well, duh).
Actually, we don’t know how many of the shareholders were foreign already. So there’s actually a theoretical possibility that this gives “New Zealand” more control. It certainly doesn’t mean that “New Zealand” looses it, that’s for sure.
In addition, there’s the basic test laid out in the Act itself of whether the investment will create or retain jobs, introduce new technology, increase exports or competition, or increase development investment. The answer to all of these questions is again “no” (again, its pure speculative investment, people buying an asset with the hope of screwing monopoly rents from it.
Sometimes I read posts, and I wonder if the writer was on drugs, or with some sort of logic death wish.
While I’ll grant that you can strip assets, at Auckland airport the money is made from having aircraft land, and charging fees for that. Those fees are heavily regulated.
IS is obsessed with the failings of capitalism, and clearly hates speculators. Trouble is, he has no concept that you can invest, but not be a speculator. He has no idea how long-term investors invest for a steady stream of income over the long term. Boring, safe investment – the polar opposite of speculation. No, if some foreign people are coming in, they want to strip assets. There is no other possible explanation, so roll out the conspiracy theory.
In this case, the monopoly is only good for as long as it is not exploited, since there is another airport possibility opening up at Whenuapai. Charge high fees, and suddenly you find yourself with completion and your income cut by a third or more, and with fixed costs, that third is your profit and then some.
This is simply not the sort of “investment” we need, and it provides nothing beneficial to New Zealand).
Clearly handing money to New Zealanders in exchange for shares is not beneficial in Palmerston North, even if the money is more than shares are currently worth. We should note that those shares are worth less thanks to our Mr Cullen, does that count as “beneficial to New Zealand”?
Hard as it might be to imagine, but those dollars paid over will now be freed up to invest in other New Zealand ventures. (Or even better, buying overseas assets that will actually gain significantly in value over the long term. Then, we can bring all that lovely money back here and be a rich country for a change.)
Given the legal criteria, it’s hard to see how the CPP’s application can succeed. But I’m sure the worshippers of the free market will kick and scream when they are inevitably told to piss off.
Oh, now I get it. He’s screaming now because he expects us to scream later.