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Posted at 2:06PM on 5 Mar 08. Permalink.

Everyone seems to be ignoring the fact that Auckland Airport really *is* strategically vital infrastructure.

I agree, but what exactly is the risk posed by foreign investment here - that the Candians will rip the runways up and ship the whole airport home to Vancouver, or that they will simply bowl it and whack up townhouses instead? Cos at the moment, most objections I've seen appear long on nationalistic rhetoric but short on actual detail.

Posted at 2:16PM on 5 Mar 08. Permalink.

e.g. Rather than build a terminal extension to increase capacity, they might choose to increase fees to price out less profitable flights to, I dunno, Chile or something. It doesn't have to be dramatic or malicious to have a big flow-on impact for the rest of the country.

Posted at 2:18PM on 5 Mar 08. Permalink.

Does it? I'd kinda thought that reducing the current account deficit meant that *reducing* the country's reliance on foreign investment was imperative, especially given that the investment income deficit for the last recorded quarter (Sep 2007) was $3,255m – that's nearly 90% of the $3,628m current account deficit.

Killer point. It would be nice to see the Herald's editors respond to that. Unfortunately, they don't respond to anything.

I though Mark Weldon had a pretty good take on it on Morning Report today: as a policy move, it's very much in line with international trends, but the manner and timing of it are more ... unusual.

Posted at 2:25PM on 5 Mar 08. Permalink.

but what exactly is the risk posed by foreign investment here

When it comes time to build the second runway to enable growth to be accommodated, a major foreign investor might say "I don't think we want to spend that money, eh! Its no rind off our bacon that the NZ economy suffers through not expanding vital infrastructure. "

A kiwi private investor might say the same thing I suppose, but one would hope they would be more inclined to "take one for the team" in the short term in order to enrich "New Zealand Inc." in the long term.

Look at what happened to infrastructure investment when we sold off the railways. Admittedly, I suppose 40% of AIA isn't a full controlling interest but it is a big chunk of shares to vote in one direction.

Anyway, with the coming reduction in global travel due to sky-high fuel prices and increasing carbon footprint awareness, won't airports become white elephants? We may want to buy shares in the Onedin Line instead... "Arrr, splice the main brace and furl the jib me hearties. Last one up the old sea-dog gets a lick o' the cat"

Posted at 2:30PM on 5 Mar 08. Permalink.

Rather than build a terminal extension to increase capacity, they might choose to increase fees to price out less profitable flights to, I dunno, Chile or something. It doesn't have to be dramatic or malicious to have a big flow-on impact for the rest of the country.

Yes I accept that, however the profit-gouging you suggest appears to be a risk with private ownership full-stop, not limited only to foreign investors. If,say, Eric Watson wanted to buy 40% of AIA would that suddenly ok because he has a NZ passport? Your objection seems not to be so much about foreign investment, but private investment.

Posted at 2:50PM on 5 Mar 08. Permalink.

We spend more than we earn. We need to borrow from foreigners to do that or we need to encourage foreign investment

What a shame there are only those two alternatives, eh? Because clearly we could never ever spend less than we earn.

Anyway, there's sleight of hand there. As I understand it, the Canadians were not proposing to provide new capital to fund growth in the business. They merely wish to own a chunk of the existing company and hence its income. That kind of investment does absolutely zip for us. All it does is direct a stream of income out of the country for good.

Posted at 2:52PM on 5 Mar 08. Permalink.

I can't really agree with you about the Maorimander. Yes, it's not proportional, but the seats are still contestable - they're not guaranteed to the Maori party. If they win all 7, good on them. Any small party could try to do the same thing, win more than their national percentage by winning a bunch of electorates instead. Indeed, it's what Jim Anderton is likely to do. It's not like winning those Maori electorates is a turkey-shoot with no serious competition. They're up against Labour at least. They must be touting a message that appeals to people on the Maori roll better than Labour are.

Nor am I alarmed by Maori holding the balance of power. I generally disagree with most of what they say, but in a strange way I'm glad they have seized such a position after over a century of powerlessness. It is a young and inexperienced party, and perhaps the only way that the nation can grow is for the Maori to forge a coalition with National. If they could do that, and it could hold together without being a parochial shambles, I would be most impressed with both parties. I actually think the Maori party would be quite a good party to keep the more ideologically scary parts of National in check, since they are, if nothing else, all about keeping NZ in NZ (albeit preferably Maori) hands.

Should there be no Maori seats? I suggest that if there were not then the gerrymander would be even worse. The Maori party would win no electorates, and would probably be below the threshold and get no representation at all. That may suit everyone who is not Maori, but it would hurt Maori representation seriously. I don't like the idea of stripping 7 seats off Maori just because they might hold the balance of power.

Posted at 2:58PM on 5 Mar 08. Permalink.

On those pesky Maori seats and that overhang

This is why I hate MMP. Should have been STV.

Look at the totally disproprtionate, distorting and dangerous (3Ds!) influence wielded by the extremist religious parties in Israel, another MMP country.It's getting that representational balance right, but not letting*cue cliche* tail wag the dog...

Kill MMP: STV and an Upper House please.

Posted at 3:00PM on 5 Mar 08. Permalink.

I don't see any reason at all why an Eric Watson or whoever would be any more or less likely to invest appropriately than a Canadian pension fund.

It's a monopoly. It needs regulation, whoever owns it. Suggesting that a Kiwi investor would be more inclined to run it in the public interest than a foreigner is wishful thinking at best and racism at worst.

Posted at 3:01PM on 5 Mar 08. Permalink.

Hang on. Aren't the Westies wanting to build their own airport? So how strategic is this Manukau site? Perhaps it is only strategic because the govt is now effecitvely legislating it to be one. WHat chances of a north shore airport now that the Govt has 'invested' so much in Manukau?

Bangkok and Hong Kong had strategic airports and they built another one to replace each of them.

Ben

While I actually agree with your argument about disenfranchising the Maori party (which is an important issue to consider), you can't have it both ways when in the same post you say they are contestible.

Posted at 3:12PM on 5 Mar 08. Permalink.

I don't see any reason at all why an Eric Watson or whoever would be any more or less likely to invest appropriately than a Canadian pension fund.

It's a monopoly. It needs regulation, whoever owns it. Suggesting that a Kiwi investor would be more inclined to run it in the public interest than a foreigner is wishful thinking at best and racism at worst.

Precisely. Once an asset is privately owned, that elusive "rational" investor is going to do the same thing regardless of nationality.
And let's not forget - 40% of AIA is already owned offshore, mainly by hedge-funds who were on the whole looking to sell into this, i.e at worst we would have transferred ownership from short-term focussed foreign hedge funds, to a long-term focussed foreign pension fund.
Way for the save there =|

Posted at 3:13PM on 5 Mar 08. Permalink.

The situation with the Maori seats would be exactly the same if there was a successful "South Island party" or "Wellington party" that scooped the general seats in a particular locality.

Maori seats are simply an alternate way of grouping people into an electorate. The Epsom electorate is "people who live in Epsom", the Tamaki Makaurau electorate is "people who identify as Maori and live in Auckland".

The Maori seats are, in any case, a taonga and not for us whiteys to take away. If Maori want to get rid of them, they will.

(It would be possible to implement a system where any organised group of people, like students or farmers, could choose to have their own electorate. I doubt any would, but it would remove the (groundless) accusation of racial preference).

Posted at 3:13PM on 5 Mar 08. Permalink.

Kill MMP: STV and an Upper House please.

No and NO! STV is funky code for FPP. Just look at Ozzie. Upper House? Why?

While I actually agree with your argument about disenfranchising the Maori party (which is an important issue to consider), you can't have it both ways when in the same post you say they are contestible.

I think you may have mistaken me. Removing the Maori seats would kill the party. But that doesn't mean the existence of the seats makes the party. They had to make the party themselves, and win those seats. They actually used to be guaranteed Labour seats, and that was not the point of them at all.

Posted at 3:16PM on 5 Mar 08. Permalink.

Ben

I'd add that you are happy with MP having the overhang because of the way they are behaving. What if that behaviour changed? Would you be so comfortable? That is a better test of the issue.

I'm with Keith that the seats need to be addressed, and the pressure will increase if the MP uses that to put in govt a party that did not gain the largest number of votes. Also the number of Maori seats will likely increase as it is based on census population of those identifyign as Maori (as opposed to Maori seat enrolments) making the overhang potentially worse. I'm not sure if it is healthy in the long term to potentially give such a minority vote party the balance of power.

Posted at 3:16PM on 5 Mar 08. Permalink.

BTW, the "us whiteys" wasn't to say that everyone here is white, or that white/Chinese/Native American people aren't entitled to an opinion on the Maori seat issue.

Posted at 3:19PM on 5 Mar 08. Permalink.

Once an asset is privately owned, that elusive "rational" investor is going to do the same thing regardless of nationality.

Surely though a New Zealand based investor has more of a stake in the continuing economic prosperity of NZ as a whole, which can be affected by how the airport is run.

Posted at 3:20PM on 5 Mar 08. Permalink.

The Maori seats are, in any case, a taonga and not for us whiteys to take away. If Maori want to get rid of them, they will.

Some time ago, a commenter on Kiwiblog whined that since there was a Maori Party, there should be a Rich White Guy Party.

It was pointed out that he & his ilk were free to vote for ACT - but this comment has just convinced me that few want them.

Posted at 3:25PM on 5 Mar 08. Permalink.

A NZ-based investor at the least is more likely to keep some of the dividend stream here.

Posted at 3:26PM on 5 Mar 08. Permalink.

Killer point. It would be nice to see the Herald's editors respond to that. Unfortunately, they don't respond to anything.

Well, the Government has responded. It's called the Cullen Fund and Kiwisaver. As a result of these two initiatives there *will* be more investment overseas which in turn will see more returns to NZ from those investments.

Private companies need to be encouraged to do their bit as well, both in the import substitution game and getting overseas.

Posted at 3:30PM on 5 Mar 08. Permalink.

If Maori seats are such a Taonga why do only about half Maori voters enrol in them and they have some of the lowest turnouts in elections?

"Surely though a New Zealand based investor has more of a stake in the continuing economic prosperity of NZ as a whole, which can be affected by how the airport is run."

Really? Got any evidence? Frankly I think that is a huge assumption. Did Fay Richwhite have such concern over rail? What about Alan Gibbs and Telecom?

Posted at 3:37PM on 5 Mar 08. Permalink.

If all Labour party voters chose Progressive for their electorate vote a Labour/Progressive government would be almost gauranteed. Splitting a vote that way can give a 60% increase in the value of the vote over someone who votes for the same party & electorate. The fact that the Maori seats do this shows these are the smartest electorates in New Zealand.

Posted at 3:43PM on 5 Mar 08. Permalink.

A NZ-based investor at the least is more likely to keep some of the dividend stream here.

If said NZ investor (say Auckland City Council, or the Cullen fund) instead put their money into an overseas investment, they'd get a stream of dividends from overseas.

It makes sense for any large investor to have a globally diversified spread of investments, ensuring that risk is spread. That's why the Cullen fund invests overseas and why the Canadians do the same.

If the Cullen fund put all it's money in NZ, then a downturn in the agricultural sector (just for instance) would impact it's ability to pay out super - right at a time when the Governments current revenues were being impacted by the same situation.

Posted at 3:44PM on 5 Mar 08. Permalink.

its not it's. And it should be "our"

Posted at 3:44PM on 5 Mar 08. Permalink.

I'd add that you are happy with MP having the overhang because of the way they are behaving. What if that behaviour changed? Would you be so comfortable? That is a better test of the issue.

You so didn't get me, but I get that a lot so it's not your fault. I'm not happy with the Maori party because of the way they are behaving. But I accept the overhang as a uniquely Maori privilege acknowledging their unique position in NZ. Their right to have seats they can enrol to vote in, which are numerous in proportion to Maori numbers in the population, is a very important and hard-won political right. That most Maori don't choose to use it doesn't mean they shouldn't have it.

I'm also not terrified of them holding the balance of power for 2 reasons:
1. As a partner for National, they are likely to temper National's more destructive elements, particularly towards Maori, who are certainly amongst the most likely to be disadvantaged by a swing to the right.
2. I don't believe the whole 'balance of power', 'tail wags the dog' argument anyway. Every single MP is a tail, and they all wag. ACT could break away from National. Greens could break away from Labour. Individual MPs could tear away from their party (like Turia did in the first place). There is even the seldom discussed, but actually quite sensible, possibility of a Grand Coalition, since Labour and National are just nicking each other's policies these days anyway. I don't think it's unfair in a room of 11 people, if 5 think one way and 5 think the other, that the remaining person holds the 'balance of power'. Whichever way they swing is still the majority, and everyone in that majority can opt out at any time, so they all hold the 'balance of power'.

Posted at 3:46PM on 5 Mar 08. Permalink.

It's unfortunate that for every Lloyd Morrison, there are maybe 10 Fay Richwhites. The real culprits of the whole issue are the Dancing Cossacks.

The last time we had an upper house (the Legislative Council), it had become little more than a rubber stamp for the House of Reps by the time it was dissolved in 1951.

Posted at 3:48PM on 5 Mar 08. Permalink.

A NZ-based investor at the least is more likely to keep some of the dividend stream here.

For sure, but what does that have to do with restricting control?
And like I said, 40% is already offshore owned by short-term money-plays who were keen to sell into the offer so no change.

AIA was well and truly already a private company with significant offshore holdings. This play is going to make zero difference to that but with the lovely side effect of screwing with our risk profile internationally...

I'm all for local ownership of NZ assets (hell, I'm all for NZ ownership of foreign assets!) and like the Super Fund and Kiwisaver primarily for the benefits it will eventually bring in this area - but if you want to start to bring already offshore owned assets "back into the fold" this doesn't help.

Posted at 3:49PM on 5 Mar 08. Permalink.

Really? Got any evidence? Frankly I think that is a huge assumption. Did Fay Richwhite have such concern over rail? What about Alan Gibbs and Telecom?

Oh for sure, it's purely speculation on my part - but so is the assertion that there is no difference between NZ based or overseas investment. I just think it's a valid point that the airport is hugely important economically. Although you're probably right, it's unlikely such a macro view would be taken when considering the company bottom line.

Posted at 3:58PM on 5 Mar 08. Permalink.

Really? Got any evidence? Frankly I think that is a huge assumption. Did Fay Richwhite have such concern over rail? What about Alan Gibbs and Telecom?

In both those cases, there were actually large foreign shareholders who took huge dividend incomes out of the respective companies, at the same time as they ran down capital investment.

New Zealand government debt was retired with the $4.2 billion Ameritech and Bell Atlantic paid for Telecom in 1990, which was good, but it's actually hard to see what value they brought the company after that -- Rod Deane once muttered something about the "advice and assistance on projects" they provided, but it's hard to see what advice would have been commensurate with the cash they took out of the company. Their chief influence was probably on the size of dividends.

So that's one reason to be wary of big foreign shareholders moving into established businesses. Perhaps the Canadians were in it for the long haul, but a 30% voting bloc is a pretty big one if they suddenly decided to rip out cash and exit.

I'm also in agreement with Stephen about the different forms of investment. Vietnam is taking billions every year in foreign direct investment, but it's nearly all for new ventures.

I don't buy that this sort of restriction is a major barrier to equity investment in transport infrastructure, if only because everyone else, including the Australians and the Canadians (who are moving from federal to regional ownership of airports) is doing it. The manner are timing are another matter.

Posted at 4:01PM on 5 Mar 08. Permalink.

The fact that the Maori seats do this shows these are the smartest electorates in New Zealand.

Nicely put. And good idea too. Naturally National could do the same thing with ACT. Just so long as they can convince everyone that would normally vote for them to vote for ACT, and so long as they could trust ACT with more than half of their votes in parliament :-).

If there is a marriage of convenience between the Maori party and the Maori seats, that is only the fault of the other parties for failing to contest those seats in a way that appeals to those electorates.

I guess the overhang itself is somewhat 'unfair', even to Maori. All the Maori who don't care to enroll on the Maori roll and don't want the Maori party are losing out on the overhang factor. They could, however, get it back by putting themselves on the Maori roll and voting en masse for someone they think represents them better. If that happens to be Labour, then it is Labour's fault for not conveying the message to those Maori better that their vote is worth more in the Maori roll.

Posted at 4:04PM on 5 Mar 08. Permalink.

Lots of assets are hugely important economically. What about Trade Me? Yet that is foreign owned. There are a whole bunch of power stations, a refinery, petrol stations, lots of tv and radio assets that are considered critical for a state of emergency (couldn't get more local interest than that).

Hell, even the national power grid is owned by an overseas bank http://bernardwoolley.blogspot.com/2005/05/wachovia-corporation-owns-si-grid.html