The Herald editorial headline says it all. The editorial pulls no punches either.
Finance Minister Michael Cullen says he does not think the Government’s urgent toughening of overseas investment rules will affect this country’s reputation with foreign investors. How could it not? A Canadian pension fund’s bid for a 40 per cent stake in Auckland International Airport has now had two crippling shots fired across its bow. Neither could have been contemplated by potential overseas shareholders when they began examining the airport, given New Zealand’s long-standing and economically essential open door to overseas investment. Now, that has been superseded by Government intervention at the drop of a hat and without consultation. How could foreign investors not be reconsidering this country as a destination for their money?
This is the crux of the matter. The Government has intervened in the market, proof that Labour has become Muldoonist. The last thing this country needs is meddling Government Ministers, but that is exactly what we have got. Worse still, they changed the rules without even putting it before the parliament. But why now?
If the Government genuinely viewed this as the right policy, it could have acted when the airport first attracted overseas interest. The only other possibility is that it sees its days as numbered and, mindful of its place in history, is indulging in the sort of activity that might be expected of a left-leaning government.
If so, why does it not simply buy the shares and return the airport to public ownership? At the moment, it is taking ownership rights from the hands of shareholders, as well as undermining the value of their holdings. That is not a recipe to inspire confidence in the sharemarket.
Exactly, Labour has effectively destroyed the investment of many Kiwi’s by intervening and stifling a legitimate sale of a publicly listed tradeable commodity. Cullen has rocks in his head if he thinks that this knee-jerk reaction won’t affect the country, effectively spiking any attempt to have tax cuts this year, but then perhaps that is Cullen’s masterplan.
This country’s alarming current account deficit means foreign investment is imperative. But twice in quick succession, and without warning, the Government has acted in a way that can only prompt a reassessment of the risk of investing here. Investors hate uncertainty as much as anything. And if the Government intends the new overseas investment rule to be some sort of legacy, it will be disappointed. Unlike some of its policies, this one will not survive a change of government. Economic circumstances dictate as much.