Cullen's move on Auckland Airport has far reaching effects

A cynical move by Michael Cullen to gain votes in the 2008 Election by
blocking an Auckland Airport sale will have far reaching effects.

The Battle for the Airport-NZ Herald

Latest Airport News:

• Key accused of being 'slippery' over Auckland Airport
• Cullen's shock move hinders airport bid
• Canadian's push on regardless of Cullen move
  

Michael Cullen's move today to put a stop to a partial sale of Auckland International Airport(AIA) to the Canadian Pension Plan Investment Board(CPPIB) has more far reaching effects than putting the brakes on this deal.

Below is the piece of legislation that has been changed, in relation to the airport merger, and it is sufficiently vague enough to cause major uncertainty, for investors, domestic and international, and business in New Zealand.

"Whether the overseas investment will, or is likely to, assist New Zealand to maintain New Zealand control of strategically important infrastructure on sensitive land."

Who decides what is "strategically important" and on what basis do they apply the new legislation?

Is the Warehouse(WHS) a strategic asset?

Business and investors need certainty, you only have to look at current market conditions to figure that out, and the new legislation leaves everyone guessing.

This uncertainty, apart from the retrospective legislation passed today, and mooted tax changes, means that foreign investors will be thinking twice before looking at putting their capital in a country that treats foreign investors like Putin's communist Russia treated foreign oil companies over the last few years.

It also means that private property rights don't mean anything in this country anymore(just like in Putin's Russia) and with the stroke of a retrospective pen your property isn't really yours anymore.

I own Auckland Airport shares, they belong to me and nobody else and in a free country I should be able to do what the hell I want to do with them.

Contrary to Labour party spin the Airport isn't a state asset, it is privately owned, by many individual Kiwis and and some bigger institutions and the playing of the "we cant sell such a "strategic asset to a foreign buyer" card makes no sense because it is already owned by 40% of off shore investors.

It seems to me that Labour playing this card in election year will be appealing to the paranoia of those people who think the National party are going to sell "strategic assets" and Labour will try to get votes from it.

Cullen mentioned that other countries have similar laws to prevent strategic assets from "going overseas"-although you would have to have pretty big container to fit the Airport into it and ship it off- they may well do or not but their laws were in in place before any important deals were being negotiated and to change conditions of a deal as it is being done is like playing the shell game with a blindfold while on crack.

The immediate affects of Cullen's finger in your pie has been enormous. Billions of dollars have been lost from the capital value of Auckland Airport and therefore shareholder's pockets. The NZX's other companies plunged in value today because of the uncertainty that Cullen's pen stroke brought to the market.

Other companies who may be deemed "strategic" by Cullen and his communist misfits will be wringing their hands in the hope they wont be next. The listed power companies, ports and others will clearly be affected.

The interest still in the wings by Australia's Origin Energy for its sister company Contact Energy(CEN) would seriously be in doubt under the new criteria. Similarly other foreign companies will consider our country's barriers too hard to negotiate. Takeovers and mergers, an essential part of successful capitalism, will prove too cumbersome to consider.

As I have canvassed before in previous articles, Cullen's move now appears to be arrogant in the extreme. His party and lapdogs in crime, Winston "Baubles" Peter's NZ First, made their feelings clear when takeover talks were mooted with Dubai Aerospace Enterprise almost 9 months ago and they were staunchly against any sale.

To move now is unlawful(it was but they will change that law) immoral and is a clumsy attempt at gaining votes from voters who think capitalism is a dangerous thing.

The cost to CPPIB and Auckland Airport shareholders has been many millions-on top of the couple of billion in lost capital for Auckland Airport shareholders.

I have been a very impassioned advocate for not selling my shares over the last 9 months, because I could see the investment as a good long term one.

I was tempted, when news first broke of a sale all those months ago, to sell at the market price that day of around NZ$3.65 but decided not to. Now I think those people who sold were wise beyond any education one could buy.

Given the interference over the last few weeks I am now going to give two ticks for the deal, it may send a message to Labour what the real owners of this asset want to do with their property but I doubt whether Cullen will listen or care.

I know this deal isn't going to happen and have said so for many months now but the interference by politicians in private property issues has me questioning my holding in such a company mired in political dead weight and sticky fingers.

I sold my Port of Tauranga shares a few years back because I couldn't contend with local Auckland politicians and Winston Peters(again) interfering in merger proposals with Ports of Auckland. That deal was ended after months of expense for Port of Tauranga.

Business needs certainty in New Zealand, especially now as the proverbial is hitting the fan hard.

That means overseas investment is needed. Today's approach by by the extreme left wing business haters in Labour and NZ First has been another nail in the coffin for NZ INC because that much needed capital is going to dry up.

The move today is reminiscent of a much troubled National Government, led by Robert Muldoon, who in its final months, regulated and nationalised the life out of our economy and then went on to lose an election in 1984 in spectacular fashion.

Ironically it was Labour who then swept into power and with the wise direction from Roger Douglas transformed the economy into a far more sustainable one.

Sadly Douglas was stopped before he was finished, by the very same people who have foisted the current heavy burden on our economy today.

Only fools don't learn from history and surely Cullen, a Dr of History himself(not in business or economics) shouldn't be as foolish as he has been over the last few weeks.

We surely cant afford a repeat.

Related Share Investor reading

Fran O'Sullivan: Cullen's shock move hinders Airport bid
Cullen's move on AIA tax plan Anti-Business
NZ Herald: Airport Deal not so sweet after tax break blocked
NZX Press Release: AIA directors recommend shareholders sell
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

Disclosure: I own AIA shares

Share Investor 2008

Fran O' Sullivan: Cullen's shock move hinders airport bid

5:00AM Tuesday March 04, 2008
By Fran O'Sullivan

Finance Minister Michael Cullen

*Commentary from Share Investor to come-Why I'm going to sell.

NZ Herald-The Battle for the Airport

The Government has urgently toughened New Zealand's overseas investment rules, putting a new hurdle in the way of the controversial Canadian pension fund's bid for a 40 per cent stake in Auckland Airport.

The unexpected move comes just one week after the Government announced it would legislate against a multimillion-dollar tax break that the Canadian Pension Plan Investment Board planned to use to extract greater returns from the airport.

Finance Minister Michael Cullen said greater protection for New Zealand's major strategic assets will be delivered under an order-in-council requiring Cabinet ministers to take into account New Zealand control factors when considering overseas investment applications affecting a very narrow range of strategically important assets.

Dr Cullen said yesterday's changes had been made in response to the uncertainty and debate that had emerged surrounding the Canadian offer to Auckland Airport shareholders.

"There has been a high degree of public debate about handing over control of New Zealand's main gateway to the world to foreign interests.

"The Canadian Pension Plan bid was always going to require consideration under the Overseas Investment Act and there has been speculation that ministers would use existing conditions under the act to reject the offer. The Government's move today is to be clear about the fact that New Zealand control factors will be taken into account as part of the national interest tests to be applied under the act."

The Auckland Airport board has been strongly opposed to the Canadian bid, taking the view the strategic asset should stay under New Zealand control. Chairman Tony Frankham has personally briefed Prime Minister Helen Clark on critical board decisions ahead of shareholders.

The Canadian fund has to achieve acceptances from 40 per cent of shareholders for its offer of $3.655 a share by the March 13 closing date.

Fifty per cent of shareholders who take part in a separate vote must give their approval for the bid to proceed.

The Overseas Investment Office must then approve the Canadians' application by April 30, or it will lapse.

The Government's unexpected move yesterday came as a shock to the Canadian fund's lawyers last night.

Dr Cullen said the change would allow greater protection for New Zealand's strategic assets and would bring the country into line with the likes of Australia, which restricts the ownership of airports.

An order-in-council was passed to insert a new clause in the regulations requiring ministers to consider "whether the overseas investment will, or is likely to, maintain New Zealand control of strategically important infrastructure on sensitive land".

Dr Cullen emphasised the ministers considering the bid - Associate Finance Minister Clayton Cosgrove and Land Information Minister David Parker - had not played any part in discussions over the new regulation.

He also said nothing about an acceptance of any Overseas Investment application.

"New Zealand already has foreign ownership restrictions on Telecom and Air New Zealand. This process has moved quickly to provide maximum certainty to markets regarding the Government's intentions."

EXTRA HURDLE
The Overseas Investment Office must now consider:

"Whether the overseas investment will, or is likely to, assist New Zealand to maintain New Zealand control of strategically important infrastructure on sensitive land."

Related Share Investor reading

Cullen's move on AIA tax plan Anti-Business
NZ Herald: Airport Deal not so sweet after tax break blocked
NZX Press Release: AIA directors recommend shareholders sell
AIA profit stays grounded
Softening opposition to CPPIB bid for AIA
Directors of AIA bribe brokers not to sell
What is Auckland Airport worth to you?
Second bite at AIA by CPPIB might just fly
AIA new directors must focus on shareholders
Auckland Airport merger deal nosedives
The Canadians have landed
AIA incentive scheme must fly out the window
Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

Disclosure: I own AIA shares

Share Investor 2008

Monday Gossip: Carmel Fisher lands a big one

In the wake of the very successful Fisher Funds(MLN) Investment management company's well telegraphed losses from holdings in credit company, Credit Corp and an investment in the crumbling ABC learning centres and consequent share price drops for the company's investment vehicles. Carmel and Hugh Fisher have splashed out on this NZ$8 million plus cliff top house in an exclusive street in Takapuna, so it ain't all that bad.

Investors in Fisher Funds had done well up until recently but credit crunches and stifled lending has had a big impact on Fishers growth funds especially.

Pumpkin Patch Ltd(PPL) in which Fisher has a sizable stake in, is worth way less than half it was just several months ago, similarly Rakon(RAK), the chip manufacturer, and many of the company's holdings have a horrible story to tell.

In what could be a sign of the pear shaped nature of the investment business at the moment chief investment officer Warren Couillault left the company last week and quit his shareholding at the same time.

The final announcement of his departure was made after weeks of speculation as to why he was leaving and came after were told by Fisher management not to accept deals on Fisher Fund's behalf.

Now I don't want to poke the boney finger just for the hell of it but Couillault should take some of the blame for getting into some of the risky investments that he did.

"The currency is pretty hard to tread water against,'' Couillault said about results from Rakon a few weeks back. Investors have been aware of this for some time but Fisher's ploughed more money into the stock as it got "cheaper".

At head office though, just around the corner from their new house, management are playing a blame game of their own. Blaming everyone else but themselves for the poor performance from their investment picks. Pointing the finger at the currency and "market conditions" for their investment woes.

Now I previously picked this company as one of the best in the business, in terms of results by comparison to other fund managers, and the professional way the company was run. Laying the blame at anyone but yourself is a recipe for long term disaster when it comes to business and investing.

We are all subject to the current "market conditions" but Fisher Funds and their managers were instructed to invest allot of clients funds in "high growth" and smaller cap companies. Having said that, things will work themselves out in the long run but management need to take the short term flak.

These companies are riskier even in good times but the economic slowdown we are facing makes investing in them a far bigger risk. With that sort of strategy when the shite does hit the fan one can only blame oneself for making that choice.

Bad managers blame everyone but themselves, good managers take the rap and move on.

Carmel should well remember that when she looks out at Rangitoto tonight.


Share Investor Friday Free for all: Edition 8 - Scroll down to end for related story






c Share Investor 2008

Herald Poll and Political Animal commentary

c Stan Blanch 2008



While in her own mind and those of her Labour party colleagues, Helen Clark is still the preferred Prime Minister , the all important voters are thinking something else entirely.

This morning on Newstalk ZB Aunt Helen blamed "volatility" in the polls, when talking about the loony Greens support wavering wildly since the Heralds last poll and by implication the idea was that the poll was not to be trusted. She had another go at the paper for its poll accuracy.

This and the polls of the last 10 weeks cannot be ignored by the former high flying minister.

A definite trend has emerged and the outcome looks like a hiding for the Labour party not seen in generations.

Voters could be forgiven for forgetting about party allegiance's and voting for a winning party, National, least they waste their vote on the big loser.

Hitch your train to the wagon Abner, cause its on a non stop trip to Wellington to take out the trash.


Key Joins his party at No 1 position

5:00AM Monday March 03, 2008
By Audrey Young, NZ Herald

John Key (right) has overtaken Helen Clark as New Zealand's preferred Prime Minister.

National leader John Key has overtaken Prime Minister Helen Clark in popularity in the latest Herald-DigiPoll survey, and his party has extended its lead over Labour to 18 points.

It is the first time since May last year that Mr Key has been ahead of Helen Clark as preferred prime minister, although his lead is only two points.

National has been ahead of Labour since Mr Key became National leader in December 2006 but apart from a surge in his popularity in May because of his role in the anti-smacking-bill compromise, Helen Clark has convincingly led the preferred prime minister polling. That has reinforced the view that despite poor party polling, she is Labour's strongest asset.

But in the past month, Mr Key and the National Party have both gone up 7 points in the survey.

Mr Key is preferred by 46.3 per cent of decided voters and Helen Clark by 44.3 per cent in the poll, conducted between February 11 and 28.

In January, Helen Clark was ahead of Mr Key by 10.5 points.

New Zealand First leader Winston Peters polled 3.3 per cent. Trade Minister Phil Goff, often tipped as the next Labour leader, scored no support as preferred prime minister.

The gap between the two main parties is so wide and coalition partners so limited for Labour - the Greens are below 5 per cent - that National could easily govern alone if the poll's figures translated to votes.

National is on 54.5 per cent (up 7 points), 18 points ahead of Labour on 36.5 per cent (down 2.2).

In the January survey, the gap between the parties was only 8.8 points.

Gender bias between the two leaders persists - men disproportionately favour Mr Key and women disproportionately support Helen Clark as prime minister.

The poll shows that voters aged over 60 have a strong bias towards National and New Zealand First.

It also shows that New Zealand First supporters have a strong preference for a coalition with National over Labour (90 per cent v 9.1 per cent) and that Maori Party supporters are not overwhelmingly disposed to a Labour deal - 57.1 per cent of Maori Party supporters would favour a deal with Labour, but 42.9 per cent would favour a deal with National.

The poll was conducted after an intense political start to the year in which both leaders made "state of the
nation" speeches and announced policies on youth crime, education and training.

Polling began after both leaders visited Waitangi, where Mr Key's meeting with Tame Iti received top billing, as did Helen Clark's aversion to Te Tii Marae.

Helen Clark hinted at media bias, saying last night through a spokesman: "Obviously the Leader of the Opposition has had a lot of publicity since the beginning of the year." She believed Labour polling was holding up and was reasonably close to the 1999 result - 38.74 per cent - when Labour took office.

"The important issue now is who has the best plan for the future," she said.

Mr Key did not believe he'd had more publicity than Helen Clark at the start of the year "and in fact she got enormous coverage from the [Sir Edmund] Hillary funeral ... not that that was political."

He believed they both received extensive, though contrasting, coverage at Waitangi.

He said he never thought his hongi with Tame Iti would damage him in the eyes of the voting public.

"I thought the mood of the nation has moved on and they started looking at Helen Clark fighting the battle that has been and gone and I think they responded positively to me wanting to engage and make a day of national celebration rather than harbouring some sort of historic dispute."

Support for the Greens is showing some volatility, falling to 4.4 per cent from 9.1 in the previous poll and 3.5 in the one before that.

New Zealand First is down 0.7 points on 2.1 per cent.

Falling below the 5 per cent threshold means neither party would win seats in Parliament unless they won an electorate.

Mr Peters has not yet confirmed that he will try to regain his former Tauranga seat, won last election by National's Bob Clarkson.

The Maori Party polled 1.5 per cent (up 0.5), United Future 0.4 (up 0.4), Act 0.4 (down 0.3) and the Progressives were unchanged on zero.

Tax cuts remain the issue most likely to influence votes, 20.7 per cent of those polled listing it top.

* The poll was of 734 respondents, and results presented are from decided voters only. The margin of error is 3.6 per cent.

Related Political Animal reading

Helen Shoots herself in both feet
Colmar Brunton Poll and comment

c Political Animal 2008